Marketing Privacy: A Solution for the Blight of Telemarketing (and Spam and Junk Mail)

90 Pages Posted: 28 Apr 2002

See all articles by Ian Ayres

Ian Ayres

Yale University - Yale Law School; Yale University - Yale School of Management

Matthew Funk

Simpson, Thacher and Bartlett - Exempt Organizations

Date Written: March 5, 2002

Abstract

Unsolicited solicitations in the form of telemarketing calls, email spam and junk mail impose in aggregate a substantial negative externality on society. Telemarketers don't bear the full costs of their marketing because they do not compensate recipients for the hassle of, say, being interrupted during dinner. Current regulatory responses that give consumers the all-or-nothing option of registering on the internet to block all unsolicited telemarketing calls are needlessly both over- and under-inclusive. A better solution is to allow individual consumers to choose the price per minute they would like to receive as compensation for listening to telemarketing calls. Such a "name your own price" mechanism could be easily implemented by crediting consumers' phone bills (a method analogous to the current debits to bill from 1-900 calls). Under this rule, consumers are presumptively made better off by a regime that gives them greater freedom. Telemarketing firms facing higher costs of communication are likely to better screen potential contacts to find consumers who are more likely to be interested in their solicitation. Consumers having the option of choosing an intermediate price will receive fewer calls, which will be more tailored to their interests and will be compensated for those calls they do receive. But giving consumers the right to be compensated may also benefit some telemarketers. Once consumers are voluntarily opting to receive telemarketing calls (in return for tailored compensation), it becomes possible to deregulate the telemarketers - lifting current restrictions on the time (no night time calls) and manner (no recorded calls). For example, if the prohibition against tape-recorded messages were repealed, we could imagine local grocery stores or movie theaters using the telephone to provide consumers with useful information about specials. And faced with increasing caller resistance, we imagine that survey groups, such as the Gallop Poll, might welcome the opportunity to compensate survey respondents so that they might be able to produce more representative samples. We apply similar "name your own price" solutions to internalize the externalities of unsolicited spam email and junk mail.

Suggested Citation

Ayres, Ian and Funk, Matthew, Marketing Privacy: A Solution for the Blight of Telemarketing (and Spam and Junk Mail) (March 5, 2002). Available at SSRN: https://ssrn.com/abstract=303303 or http://dx.doi.org/10.2139/ssrn.303303

Ian Ayres (Contact Author)

Yale University - Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203-432-7101 (Phone)
203-432-2592 (Fax)

Yale University - Yale School of Management

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States

Matthew Funk

Simpson, Thacher and Bartlett - Exempt Organizations ( email )

425 Lexington Avenue
New York, NY 10017

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