Editing out direct marketing?

Brian Robertson can little have known where his actions would lead when in 2002 he asserted his right to opt out from his name being taken from the Electoral Register and used for direct marketing. By the end of 2010, it could be that nobody’s name will be available for DM via the edited ER.

Between now and 23rd February, the Ministry of Justice is carrying out a review of proposed changes to the EER. Among the options it is considering is the complete and immediate removal from sale of this data. One surprise about the review is how passive the DM industry appears to be in its response and the extent to which the opinions of commercial data owners, who may have a vested interest in seeing EER removed from the market, are being allowed to drive the data industry’s response to the MoJ.

The trigger for the review was the unexpected recommendation made in July 2008 by Dr Mark Walport and then Information Commissioner Richard Thomas in their Data Sharing Review. In deciding whether the ER was still fit for purpose as a register of voters, they saw a conflict between its public role and private usage.

They wrote that: “selling the edited register is an unsatisfactory way for local authorities to treat personal information. It sends a particularly poor message to the public that personal information collected for something as vital as participation in the democratic process can be sold to ‘anyone for any purpose’. And there is a belief that the sale of the electoral register deters some people from registering at all.” In Recommendation 19 of their review, removal of sale of the EER was proposed.

Permission to buy the EER dates back to the Thatcher era when a law was passed requiring local authorities to make a copy of their ER available to anybody who wanted it. With direct mail just starting its growth as a mainstream medium, commercial data owners saw an opportunity and began to routinely capture the full ER for rental to clients. (It should be noted that some LAs continue to this day to resist this requirement by only offering a paper version, rather than an electronic file.)

The value of the full ER as a democratic tool is for politicians to decide. What should concern anybody with an interest in data at a UK population level is that removal of the EER from the market would mean there was no longer a single, universal and objectively-created source of data on all adults.

One problem in objecting to any such removal is of course the fact that nearly half of all adults have exercised their right to opt-out. The progressive erosion of access to this data since Robertson won the legal right is a powerful argument in favour of ending EER access.

MoJ’s review document is cautious on this point, however, noting that “feedback from others suggests that the abolition of the Edited Register may have an impact on the economy and on wider society.” While not putting an actual value on this, the Ministry’s Impact Assessment notes that a combination of costs and savings for businesses, charities, the voluntary sector and the public sector would arise. Those costs chiefly relate to the need to find individual data from other sources with potentially higher prices.

Commercial data owners are in an ambiguous position in this review, especially those which are part of a credit referencing agencies. Access to the full ER for credit rating purposes is not part of the review, yet removal of the EER would give their marketplace a boost.

Neil Munroe, external affairs director at Equifax, recognises the ambivalence of the situation: “There are a number of issues and options that need to be considered in the Ministry of Justice’s consultation on the future of the Edited Electoral Roll. Equifax is in the process of considering each of these, because any changes could have an impact on the services we offer to our clients.”

He adds: “There are clear benefits in this data for individuals and business and we recognise that the right balance needs to be achieved to give people the ability to vote, but also to facilitate positive and fair social inclusion. Equifax is therefore looking at all the issues when deciding its position on this matter.”

What makes the response of data owners harder to predict is that the usage of data from EER has gone far beyond simple lookalike matches for direct mail. With the explosion of e-commerce, companies now have a far more complex set of information needs, many of which continue to be supported by this data set.

Jan Smith, industry relations director at Callcredit Information Group, argues: “Removal of the edited ER for marketing purposes would have massive impacts on the industry. Although alternative data sources are available, the ER is a significant contributor to UK consumer universe volumes.”

She points out that, “impacts would be felt not only in consumer targeting, but also in occupier verification. The imposition of such legislation would contradict the Government stance on data protection in terms of keeping data as up to date as possible.”

Debt collection has been one of the growth areas for EER usage, since it is often the only way for a credit services provider to trace a customer who has moved on without providing a new address. Many online companies use EER-derived data sets for verification at a level below that of credit referencing (not least because of the cost of full screening) with one estimate finding 80 per cent of e-commerce merchants using it to fight online fraud.

Directory services providers have also become major users of the EER with 192.com calling it “unique and irreplaceable”. It has argued that the cost of building a replacement would be immense. The company also pointed out the register’s roll in the growing area of genealogy, allowing people to find family members.

Direct marketing is probably the least sympathetic user of the register, since opting-out has become a substitute for registering with the Mailing Preference Service for many consumers. Even so, the MoJ recognises the argument that, “consumers benefit from this as a means of informing their consumer choice and may eliminate the need for them to undertake greater product research.”

For large organisations, many of these uses have become intertwined with each other, putting EER data at the heart of a nexus of data operations, from customer validation via direct marketing through to collections. Utilities are a prime example where losing the right to licence register data could have important consequences.

June Williams, insight capabilities manager at British Gas’s customer insight unit, believes users should be pressing for more, not less access. “Are we not better off with a legislated extension of the use of the full Electoral Roll to companies who meet specific criteria?” she asks.

“Reputable companies in the industry have useful mitigation scenarios around EER being abolished. However, less meticulous businesses will inevitably create and sell data pools labelled as ‘universes’ which may degrade the direct marketing industry, rather than maintain or improve standards tackling the issues at hand,” says Williams.

When the issue was discussed at a meeting of the Demographic Users Group, which represents a wide range of large-scale clients, a more hedged position emerged, however. It was noted that most organisations licence EER data from a value-added reseller and will simply expect those suppliers to come up with new and more creative ways to supply name and address data.

DUG argues that there is a potential trade-off in this situation with removal of EER from commercial sale being offset by access to a national address register. To support the 2011 Census, the Office for National Statistics is estimated to be spending around £12 million to build a NAR. Currently, this register is not planned to be made available as a public resource, something that has been described as a “scandalous waste of money”.

Reacting to a discussion of this issue in Parliament during 2009, Keith Dugmore, director of DUG, said: “The use of a single address register by everyone – including government, commercial companies and emergency services – would eliminate much inefficiency and confusion, and is obviously in the public interest. It will save money and time and could save lives. The government should grasp this opportunity now and ensure that address lists held by Ordnance Survey, Royal Mail, and Local Government are used to create a single universal register for the public good.”

This is the data marketplace in 2010 seen from the broadest possible perspective. Whether submissions to the MoJ build into a persuasive case for swapping EER for NAR remains in doubt. While commercial data owners could continue to build new and reliable data sets based on such a source, their competitive instincts might take over and lead to the scenario which Williams fears.

Indeed, most commercial data owners have a relatively narrow view of the EER issue and how it may affect them. Seen from a purely direct marketing perspective, the evolution of data since 2002 suggests there is little to fear. “Should the roll vanish, undoubtedly some companies would certainly feel its absence. But equally, with so many other diverse sources of data now in existence, the marketplace could not just still function, but continue to select and target consumers in highly effective ways,” says Martin Dawson, client services manager at Abacus.

He points out that, “it is rare for a business to directly rent and mail the electoral roll without there being some form enhancement or selection criteria appended by a lifestyle company.” As the volume of lifestyle data has grown, so the reliance on EER as a source has reduced.

Making the case for continued access to register data will not be an easy task for the data industry, not least because of the potentially conflicting interests at play. Even more significantly, MoJ is not considering any expansion, only business as usual or the axe. Alongside any formal submissions, data users therefore need to be working on their own mitigation strategies.

Facts & Figures
Six Options Under Consideration by MoJ

Six Abolishing the EER

• Abolish the EER as soon as practicable.
• Set a timescale or trigger for abolition of the EER.
• Abolish the EER as soon as practicable, but extend access to the full ER for other purposes to be decided.

Retaining the EER

• Retain the EER, but impose restrictions in legislation on who can purchase it and for what purposes.
• Replace the current opt-out provision with an opt-in.
• Improve guidance for the public about the EER.