DMA Reacts to Texas Letter
The Direct Marketing Association sent a letter yesterday to the Texas Attorney General’s office expressing its concern about the content, tone and misleading nature of a letter delivered recently to many list professionals.
“Our members were very concerned, especially about the high fines and the fact that they didn’t understand that they have to have knowledge of the error in order to have liability,” Jerry Cerasale, senior vice president of government affairs said yesterday. “We want to set the record straight and are asking the attorneys general for assistance.”
The Texas letter, signed by John Greytok, a special assistant to AG John Cornyn, warned “list brokers and other people who provide names and addresses” that a new Texas law governing sweepstakes prohibits many common practices. Each violation is subject to civil penalties of $5,000 to $50,000 including fines that could reach into the billions depending on the number of names mailed in to the state. The fines apply equally to the person who provided the names and addresses and the mailer. It was sent to 1,200 businesses and dated Oct. 12.
The DMA responded yesterday in a letter signed by Cerasale and addressed to Greytok. It read in part, “The letter demonstrates a lack of understanding of the nature in which lists may be shared with companies who engage in marketing activities and exaggerates the exposure of entities who share such lists to the punitive provisions of the law.”
One of the biggest misunderstandings lay in the fact that the letter did not make it clear that persons who provide names or addresses that are used in conducting a sweepstakes are liable only when they know that the information is used for a sweepstakes that is in violation of the law, Cerasale said.
“Because your letter does not explain that knowledge of the violation is necessary to incur liability under the law, your letter has a chilling effect on people involved in a $45 billion a year industry,” the letter said.
The DMA letter continued, “Your letter suggests that many DMA members may be liable for billions of dollars in fines for an unknown error by a company offering a sweepstakes, which is not a correct statement of the law. Unfortunately, your letter may be interpreted as a threat to legitimate and prominent businesses and organizations that engage in legal marketing activities.”
The letter also did not make clear that the law does not apply if the most valuable prize to be awarded is less than $50,000. The statute, which takes effect Nov. 1, lists 16 possible offenses.
The DMA plans to file a request for the names and addresses of every person the letter was sent to so the association can contact them to explain the provisions of the law pertaining to list providers. The DMA suggested that the AG’s office do the same. “In order to assure that your letter is not misinterpreted, The Direct Marketing Association requests that you take the same action in your official capacity,” the letter said.
The Texas letter prompted much anger and confusion in the list community and caused some list managers and brokers to consider removing the state from mailing lists or to encourage sweepstakes mailers to omit the state.
