Prepared Statement of Jerry Cerasale.
Re: House Telecommunications Subcommittee Hearing on Spam.
Date September 28, 1998.
Source: Jerry Cerasale.  This document was created by scanning a paper copy of the statement, and converting it to HTML.

TESTIMONY OF JERRY CERASALE
on Behalf of DIRECT MARKETING ASSOCIATION
Before the
SUBCOMMITTEE ON TELECOMMUNICATIONS, TRADE AND CONSUMER PROTECTION
COMMITTEE ON COMMERCE
OF THE UNITED STATES HOUSE OF REPRESENTATIVES

SEPTEMBER 28, 1998

Good morning, Chairman Tauzin and members of the Subcommittee. It is an honor to be asked to testify today on behalf of the Direct Marketing Association concerning unsolicited commercial e-mail, its current use and potential use in the marketplace.

I am Jerry Cerasale, Senior Vice President, Government Affairs for the Direct Marketing Association (The DMA). The DMA represents over 4,100 corporate members who are direct marketers, both domestic and international, and their suppliers and support services.

The DMA is very interested in any regulation of electronic commerce. Fully 87 percent of DMA members are involved in some form of electronic commerce. While most established marketers are using interactive media in the form of Internet-based sites, many of which are now conducting transactions profitably, very few at this time are using e-mail for marketing to prospective customers.

Yet the interactive marketplace is extremely dynamic. Marketers are poised to capitalize on unsolicited commercial e-mail as a communication to potential customers. While the consumer and business-to-business marketplace will undoubtedly determine the future effectiveness of this channel, our members want to preserve the freedom to test and integrate unsolicited commercial e-mail.

We strongly believe that no method of communication for commerce should be eliminated -- including unsolicited e-mail.

Currently, e-mail has proven to be popular and vital for servicing current customers. With the rapid changes in communications technology, we foresee businesses that have established relationships with customers by way of other media, testing e-mail as part of the communication mix. We see possibly household American brands -names that consumers know and trust -- testing e-mail as a sales, service, marketing or other information-based communication vehicle.

However, The DMA does agree that many current uses of unsolicited e-mail are not appropriate for legitimate marketing. In fact, these current uses may well be poisoning the well of commercial e-mail in the minds of consumers, and they must be curtailed. We believe that Congress should examine approaches to eliminate inappropriate uses without eliminating the medium of e-mail altogether. We can envision, for example, the use of e-mail to deliver coupons to consumers, a very different and far more positive use of e-mail than the current stream of often fraudulent and adult oriented offers that have no other target than an e-mail address.

Marketers have been very creative in providing products that American consumers want through the traditional media of mail, telephone, and direct advertising. The DMA, wants to keep the new option of electronic communication open, not eliminate it by government regulation, either domestically and internationally.

We also believe that there are market forces that discourage legitimate companies from engaging in mass unsolicited e-mailing. The direct marketing field is very customer-oriented, and legitimate companies must provide good customer service, not anger their customers. Legitimate marketers are interested in a long-term business relationship with customers, and a means of communications which angers them is not financially viable.

Direct marketing is a growing business which meets the needs of time-pressed consumers. It is also growing rapidly in the business-to-business market as businesses discover the time-saving convenience of ordering directly. The economic impact of direct marketing in the United States is $1.2 trillion annually, creating over 12 million American jobs. Direct marketing-generated e-commerce alone is likely to top $4 billion this year, and $30 billion by 2002. We're all familiar with this astonishing growth, and measure of marketplace acceptance.

Direct marketing is also growing rapidly internationally. American companies can export products without the need to build any infrastructure in foreign countries. All that is needed are a means to solicit orders, accept orders, and deliver the product. Electronic commerce is a new medium that offers companies and customers throughout the world the convenience of at-home or at-the-office shopping. Any attempt to regulate electronic commerce must be tempered by consideration for its vast potential for commercial growth, convenience to customers, and new jobs created.

Electronic commerce, of which e-mail is a part, is new. It must be allowed to mature--with all its growing pains. The government, however good its intentions, should not strangle electronic commerce at birth. There are ample means to combat fraud in existence, and there are bills in Congress now which can provide American consumers with the mechanisms to avoid unsolicited e-mail.

The DMA position on unsolicited bulk e-mail is that individuals should be able to opt out from receiving it. The DMA has established principles for marketing on-line in conjunction with the Interactive Services Association.  One section of these principles is "Unsolicited Marketing E-Mail". The principles state:

• Solicitations posted to news groups, bulletin boards, and chat rooms must be consistent with the forum's stated policies.
• On-line e-mail solicitations should be clearly identified and should furnish a means to opt out.
• Individuals whose e-mail addresses have been collected from on-line activities should be offered a means to opt out.
• Operators of chat areas, etc., should inform individuals that any information disclosed in the chat area may result in unsolicited messages.

Any e-mail marketer should abide by the "rules of the forum" unless the marketer has an existing relationship with the addressee. Thus, the rules on e-mail established by Internet service providers, AOL, for example, would apply to all e-mails sent to an AOL address. We understand that unsolicited e-mail can increase costs and use up server capacity. This approach gives Internet service providers some control over the use of their capacity and costs.

The DMA envisions a two-pronged opt-out program for unsolicited e-mail.

The first prong of any opt-out plan is that the recipient of an unsolicited bulk e-mail should be able to request that the marketer not send any more e-mails to that address. This could be done via the reply key. Consumers must also know with whom they opt-out. Thus, e-mail marketers must tell consumers who they are. This is also part of any legitimate marketer's program. You cannot create a long-term business-customer relationship if the potential customer does not know who you are.

The DMA is actively working on the second prong for opt-out. We hope to have in place early next year an "e-mail preference service" (e-MPS). An e-MPS would allow consumers to add their e-mail addresses, on line, to a list at no charge; marketers would then use this list to delete the addresses from their e-mail list. This is similar to The DMA's mail and telephone preference services, which have been working in the marketplace for many years (MPS began in 1971 and TPS in 1985). In addition, starting in July 1999, DMA members will be required to use e-MPS as well as MPS and TPS as a condition of membership.

With these two prongs, consumers can limit all e-mail through e-MPS or company specific e-mail through the reply key opt-out. Moreover, Internet service providers can create and then market different "rules of the forum" concerning e-mail.

This approach is far superior to banning the use of e-mail to reach prospective customers. E-mail, the Internet, and the World Wide Web are still new means of communications for most Americans. They are also ever-changing technologies. The DMA believes that these new forms of communication should be allowed to grow and mature. Prohibition of e-mail will not allow the growth of the medium. New filtering technologies, more rapid access, and new means of connection to the Internet could alter the use and efficacy of e-mail solicitations. Electronic commerce, e-mail in particular, will continue to evolve and change. A ban on the use of commercial e-mail is premature at best and may be counterproductive by "chilling" advancement of certain new technologies.

Mr. Chairman, The DMA pledges to work with you and your subcommittee, the industry and other interested parties to find a solution for this important e-commerce issue.

Again, I thank you for the opportunity to be here today, and I am available to answer any questions.