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DMA Study: Californians Mortgages, Credit Card Bills, Goods And Services Cost Much More With Opt-In
Household Mortgages Could be $1760 More, Credit Cards Charge Almost $1 Billion More in Interest, State Loses Over $2 Billion in Tax Base, Charities $1.6 Billion
NEW YORK, January 24, 2002 – The Direct Marketing Association (The DMA) today announced a first-of-its-kind study that attaches a cost to the negative economic impact of an ‘opt-in’ privacy regime in the state of California. The Hidden Costs of Privacy: The Potential Impact of ‘Opt-in’ Data Privacy Laws in California study, authored by two independent Columbia University researchers, reveals that data restrictions would take money out of consumers’ pockets, punch a leak in state coffers and reduce charitable aid.
Among the costs most directly felt by consumers and taxpayers would be:
"Marketing data is the life blood of our economy. It enables us to get quick and easy credit and low-rate mortgages; it even gives us discounts at our supermarkets," said H. Robert Wientzen, president & CEO, The DMA. "Responsible marketers know that the survival of their businesses relies on being responsive to their customers’ preferences – they do not need government to legislate that. In light of this study, lawmakers need to view the entire economy as a potential unintended victim of legislation that restricts marketing information."
The three sectors observed in the study would all face increases in costs. Financial services companies would face increased search costs, an inability to securitize debt and added compliance costs. Direct marketing and e-commerce companies would be forced to spend between $189 and $594 million on additional advertising, as well as millions more on compliance. Charitable organizations’ search costs would also increase by diverting more of their funds toward fundraising – not direct aid.
"Our data suggests that a third-party sharing opt-in scheme would increase direct mail campaign costs by 12 percent and simultaneously could potentially decrease person-to-person contributions by 10 percent," said Michael Turner, Ph.D., executive director, Information Services Executive Council, The DMA. Turner, who today also released a groundbreaking study on the impact of data restrictions on charitable organizations in the United States, included a state of California economic model of the impact in this study. A copy of The Impact of Data Restrictions on Fundraising for Charitable & Nonprofit Institutions study is available at http://www.the-dma.org/cgi/registered/whitepapers/restrictionsonfundraising.pdf after 3:00 PM ET.
"The data released today shows the significant but often hidden costs of a data restriction policy that uses opt-in," said Peter Johnson, Ph.D., the primary author of the study. "When we looked at a diverse, but economically significant range of economic activities – financial services, charitable giving and direct marketing – we found that the aggregate costs of this severe data restriction regime could run, by our conservative estimates, into the billions of dollars for Californians. Needless to say, a study of the full spectrum of California’s diverse and heavily data-dependent modern economy would likely yield significantly larger figures."
A copy of the The Hidden Costs of Privacy: The Potential Impact of ‘Opt-in’ Data Privacy Laws in California can be downloaded at: http://www.the-dma.org/cgi/registered/whitepapers/costofprivacy.pdf after 3:00 PM ET on January 24, 2002.
The DMA is the leading and largest trade association for businesses interested in interactive and database marketing, with almost 5,000 member companies from the United States and 53 other nations. Founded in 1917, its members include direct marketers from every business segment as well as the nonprofit and electronic marketing sectors. Included are catalogers, Internet retailers and service providers, financial services providers, book and magazine publishers, book and music clubs, retail stores, industrial manufacturers and a host of other vertical segments, including the service industries that support them. According to a DMA-commissioned study, direct and interactive marketing sales in the United States exceeded $1.7 trillion in 2000, including $110 billion in catalog sales and $28 billion in sales generated by the Internet. The DMA's Web Site iswww.the-dma.org and its consumer Web site is www.shopthenet.org.