Plans to build a giant database to allow dozens of energy firms to target potential customers with cheap tariffs have sparked warnings that the direct marketing industry could be set back 20 years to the dark days of junk mail.
While some, including Royal Mail and Whistl, will no doubt be licking their lips at the prospect of new revenue streams, there are fears the move could trigger a return to the bad old days when credit card firms mailed customers into submission.
The plan follows an 18-month investigation into the energy market by the Competition & Markets Authority. It has proposed that anyone who has been on a standard tariff for three years or more will have their details automatically put on a central database, set to be launched by 2020 and managed by regulator Ofgem.
The competition regulator has insisted only “targeted marketing” will be permitted but with nearly 40 suppliers in the UK energy market, households could be inundated. Although a decision on whether to limit the number of letters each company can send has yet to be made, even if companies were only permitted to send three each, customers could receive more than 100 mailshots.
The Information Commissioner’s Office has given its support to the plan, although it has yet to say how customers will be able to opt out of the database. In a statement the ICO admitted that “this may require individual consent or additional legal requirements to enable the sharing of consumer data with Ofgem or energy suppliers”.
The co-founder of collective switching company TheBigDeal.com, Will Hodson, branded the plans “naive”, adding that the proposal “would take exploited customers out of the pan and into the fire of a thousand cynical sales pitches”.
And Which? executive director Richard Lloyd has also expressed concerns. He said: “Sharing customer data in the hope that the least engaged customers, stuck on the most expensive tariffs, will switch is a big gamble.
“We will be seeking assurances that this will be done in a tightly controlled way that does not put people’s information at risk or result in consumers being bombarded with junk mail, nuisance calls or scams.”
However, one industry insider said: “The likes of Capital One and MBNA unwittingly turned direct mail into public enemy number one. But through better targeting, the discipline has worked hard to shed this image and consumers are now far more receptive to it.
“The CMA may have good intentions but it is the shear number of firms operating in the sector which is the worry, and let’s face it, energy firms are not exactly known for their subtle marketing. If people start to feel overwhelmed, it could send the industry back into the dark ages, and tarnish all direct mail with the ‘junk mail’ brush.”
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