Introduction 

Chairman Stearns, Ranking Member Towns, and members of the Subcommittee, thank you for the opportunity to participate in this timely hearing and to share Acxiom Corporation's perspective on how the current flow of information powerfully underpins the vibrancy of the new American economy.   

As your Subcommittee continues to explore the issue of privacy in the responsible manner that this series of hearings evidences, we strongly support the concept that a balanced approach to the use of information must be achieved.  We believe that inappropriate use of information to defraud or discriminate against consumers should be illegal, as it is already in most situations.  Furthermore, the relatively free flow of information we find today in the U.S. has significantly contributed to our nation's economic growth and stability by enhancing variety in consumer goods and services, by facilitating lower domestic prices as compared to foreign markets, and by accelerating the speed and ease with which transactions can be completed.  We believe that it is imperative that consumers be protected from fraud and discrimination while the benefits to both consumers and businesses are preserved.   

When privacy laws and implementing regulations overreach, the results can be devastating:  legitimate businesses suffer irreversible damage, and consumers unintentionally lose many advantages.  It is our hope that by sharing our story with you - as well as by separating information myths from reality - we will aid you in evaluating an appropriate legislative direction. 

About Acxiom Corporation 

Founded in 1969, Acxiom Corporation has more than thirty years experience in customer data management services, technology leadership, and awareness of and sensitivity to consumer and business privacy concerns.  We are based in Little Rock, Arkansas, with operations throughout the United States, Europe, and Asia.  Our annual revenues approach $1 billion.  Our company has over 5,000 employees worldwide:  with over 2,800 of them working in Arkansas, almost 1,000 in Illinois, more than 200 in California, and 170 in Arizona. 

Acxiom's business includes two distinct components:  database managment services and information products.   

            Database Management Services 

            Acxiom's database management services, which represent ninety percent of the company's revenue, include a wide array of leading technologies and specialized computer services.  These services help large companies improve and boost customer loyalty, retention, and market share by making accurate "customer recognition" possible across multiple lines of business and across multiple points of sale, including the Internet, call centers, and retail outlets.   

            Customer recognition is critical to delivering an exceptional initial customer experience, retaining that customer, honoring consumer preferences about how personal information is used, and improving business profitability.  Although e-commerce has increased consumer product availability, it also has made customer recognition more difficult.  

            Acxiom's database management services assist companies in better managing their customer information to address this need.  For example, it is not uncommon for a company's databases to contain several different names and address variations for the same person.  We provide services that will accurately recognize a particular individual.  Our services can save a company millions of dollars when, for example, unwanted duplicate catalogs or other mailings are eliminated.  Moreover, we assist companies maintain up-to-date records to ensure that their customers' opt-in or opt-out requests are properly honored.  

            Informational Products 

            Acxiom also offers a complementary line of information products that represent the remaining ten percent of our gross revenues.   Our InfoBase^® information products allow businesses to make smarter and faster strategic decisions, streamline customer communication at every point of contact (Website, telephone, store, wireless, and more), personalize and target various communications, and strengthen relationships with their customers.  The majority of our testimony today further explains these products.

The Economic Need for Acxiom's Information Products 

Acxiom's information products help fill an important gap in today's business to consumer relationship.  Think back to 1901.  The local shop owner knew his customers and his market well.  The shop owner was familiar with what they bought, what they liked to do, how they spent their time and something about their family.  Today, large and small businesses are trying to achieve the same level of knowledge about their customers' interests and needs as the small shop owner enjoyed a hundred years ago.  This need for knowledge is not new.  In the current environment, however, with customers shopping remotely via the Internet, on the phone and through catalogs, securing information about customers that allows companies to better serve them is more difficult to accomplish. 

In our information-based economy, companies grow by exceeding consumer expectations with unparalleled products and services of the highest quality.  Despite technological advances, businesses do not instinctively know what their customers want and need.  Acxiom's information products provide the additional knowledge necessary for businesses across diverse industry sectors to stay in touch with and to satisfy their customers in order to achieve profitability and market growth.   

Our role is to help businesses systematically recognize and engage consumers who, with the aid of our information products,  are believed to be those with a likely interest or need for their products, or services.  While changing technology, such as the Internet, has largely reshaped the mechanics of how commerce is conducted, the basic strategy of marketing remains constant - the operational need to focus a company's marketing efforts on those most likely to have an interest or need in their products or services. 

With Acxiom's information products, companies have been able to accomplish goals such as:    

• A kitchen and bath store used age to recognize their elderly customers in order to offer them a new senior-lifestyle product line of kitchen and bath enhancements - shower grips, bath stools, large print stove dials, large print clocks, and better grip door-knob covers.  

• A bookstore used age to recognize the right audience to promote a new line of large-type books, including large-print Bibles. 

• A major publisher used the knowledge of which subscribers had younger children in the household to promote a new publication for kids, which was co-branded with Crayola. 

• A computer software company used the knowledge that certain households owned a computer to promote in-home access to educational software. 

• A computer manufacturer employed information on households that did not have computers to offer a special purchase price in order to encourage the use of educational and in-home financial management software. 

• A retailer used the knowledge about which customers in their area had swimming pools to offer special products and prices for pool toys and supplies, as well as an inventory management resource to determine how much merchandise of this type to stock in each local store.  

• A local bass fishing supply store launched a catalog to reach customers outside their store trading area by knowing which households had a passion for their specialty - fishing. 

• A small tool company expanded their customer base by mailing catalogs to professionals interested in power tools at a discounted price. 

• A local day care program promoted a special offer to single moms in their local community. 

• A literacy program in English was focused on reaching non-English speaking families in rural areas. 

Without the use of our information products, each of the businesses in the preceding examples would have been less effective in communicating with their existing and potential customers.  Consequently, the real winner in the use of information to engage consumers is the consumer. 

The following chart has been provided to assist the Subcommittee in understanding the information marketplace from a more macro perspective, as well as the key role that Acxiom plays in this interchange.

 Consumers expect to complete transactions quickly, obtain the best price possible, and be able to choose from a wide variety of products and services -  as reflected in point A on the chart.  Businesses - point B on the chart - respond to the expectations by working hard to understand their customers and their market.  To do this effectively, they need information beyond that collected during the sale.  If the information cannot be collected directly from the consumer, then it is available from two sources - either directly from other merchants - point C - or from information compilers, including Acxiom - point D.  Information compilers use public information, primarily obtained from the government, or in some cases collected from other businesses - point E - that obtain the information through their relationship with the consumer - point F. 

Information Product Development 

Acxiom begins its information product development with the identification of a marketplace need.  For example, in order to achieve growth and product objectives, businesses may need to know something about the characteristics of a household.  Is it a single adult household, or is it a married couple?  Do they have children, and if so, are they small children, teenagers, or college aged?  Other relevant characteristics might include whether the household has an interest in certain hobbies, such as cooking or gardening, or participates in certain activities - do they play tennis, golf, or both?  Such characteristics are extremely relevant in determining whether a consumer in that household may want to learn more about a product or service.  

Once a particular information need by business has been identified, Acxiom compiles or acquires the relevant information from a variety of sources and aggregates it by household.  This is a complex process which varies on a case-by-case basis.  However, it is important to emphasize that in all such efforts, any data collected is general in nature and not specific to transactions or events.  It does not include details on specific actions that an individual has taken, confidential medical information, or specific information regarding children.  Once the data is collected, Acxiom must clean, integrate, and package the information into a product that meets the marketing needs and information demands of businesses.  We invest significant time and resources in developing these products.  Finally, a successful information product provides Acxiom's customers with enough of the right information to solve their specific business problem or need.  

Acxiom does not sell data on one individual or one household at a time.  We do not sell information to the general public.  Information is sold by the thousands of elements or records to qualified businesses.  We perform a credit check on all prospective customers.  Once we are satisfied about our customer's qualifications, we require them to sign a contract that binds their use of the information acquired from us for specifically articulated purposes.  Acxiom and our customers typically enter into long-term contracts - one, three, or five years - for use of a particular information product. 

 Categories of Acxiom's Information Products 

Our information product offerings provide needed intelligence for three primary functions:  (1) our directory products provide telephone information necessary to locate, verify or contact consumers by phone; (2) our enhancement products provide the information businesses need to better understand their customers and their market; and (3) our list products provide access to consumers who are potential future customers.    As mentioned earlier, these products comprise about ten percent of Acxiom's gross revenues.  

Directory Products: 

            Containing name, address, and telephone number, Acxiom's line of directory products are compiled primarily from the white and yellow pages of published U.S. and Canadian telephone directories - 5,900 different directories in the U.S. alone.              

            For example, we license some of our directory products to companies as an inexpensive form of directory assistance and to Websites that provide free nationwide directory assistance.  These Web-based directories benefit consumers in many ways, such as providing help in finding friends or family members with whom individuals may have lost touch.                        

In all our directory products, Acxiom respects a consumer's choice regarding unpublished numbers.  The names and numbers we include in these widely-used directories are derived only from those consumers who have elected to have their number made publicly available by their local telephone carrier.  Moreover, for consumers who contact us in writing, through our Website, or by calling our toll-free Consumer Hotline, Acxiom offers the option to opt-out of this service if, for instance, the consumer wants to keep a published number in the local printed telephone book, but not have it available on a Web-based directory. 

Enhancement Products: 

            Acxiom also offers businesses lifestyle, demographic, and interest data on their customers to enhance the company's knowledge about their customers and provide a better understanding of their customer's desires, needs, and changing characteristics.  Demographic data includes such information as the makeup of the household - single, married, with or without children.  Lifestyle data might include information such as home ownership, retirement status, or average income strata of the neighborhood.  Interest information would identify a passion for cooking or golfing.  

            This demographic, lifestyle and interest information is added to a company's already-existing customer files, known as "response lists."  The information is general in nature.  We do not provide detailed transactional information.  We license enhancement information to qualified businesses through a menu-oriented approach.  Businesses license only the data needed for a particular business decision or process.  In many cases, we have pre-packaged information groups to meet common or recurring business needs for specific industries.

             How might a business use enhancement information?  First, it is used to better understand the interests and needs of current customers. Second, enhancement data is employed to identify the best market segments for up-selling or cross-selling particular products.  Finally, demographic, lifestyle, or interest data can help identify characteristics common in a business' best customers in order to target similarly-situated prospective customers who may be more likely to have an interest or need for the company's products or services.      

List Products: 

            Acxiom offers prospect lists as a third type of information product.  These lists are built from a variety of information sources, and represent broad coverage of the population.  Prospect lists, which contain much of the same information contained in our enhancement products (including demographic, lifestyle, and interest information), differ from a particular company's response lists in so far as they contain information about consumers with whom the company has had no prior relationship.  

            Prospect lists allow businesses to take the information about their best customers and apply that knowledge to selecting likely households of potential new customers.  Acxiom sells prospect lists to businesses, not-for-profit organizations, and political parties and candidates. 

Data Sources for Acxiom's Information Products 

The information we acquire to build our information products is obtained from three general types of sources - public information, self-reported information, and summary customer information from companies who have consumers as customers.  Acxiom compiles or acquires this information from several hundred carefully chosen sources with whom we have cultivated and maintained long-term contractual relationships.  

Public Information:  Public records and publicly-available information are the foundation of Acxiom's information products.  The types of data that Acxiom acquires or compiles include: telephone directories and other types of publicly-available directories, property records, and other state and county public records.  This information provides the basic names, addresses, and general demographic information, such as home ownership, profession, and the age of members of a household. 

Self-Reported Information:  Surveys and questionnaires are an additional source for demographic information and provide much of the lifestyle and interest information we acquire.  Consumers are asked to voluntarily complete surveys, such as those contained on warranty cards, from a variety of companies asking for specific information.   In these cases, the consumer is customarily provided the opportunity to opt-out of further use of the information beyond that of the company conducting the survey.   

Information from Merchants:  Acxiom acquires some information directly from companies who sell products and services to consumers.  In these instances, we ensure that consumers have received an opportunity to opt-out of their information being shared with a third party, such as Acxiom.   Also, we only receive very general summary information that indicates possible lifestyle or interest data.  We never receive detailed transaction information.  Rather, general information that we acquire is used to extrapolate lifestyle or interest characteristics.  For example, knowing that certain households subscribe to a magazine on golf would indicate that those households have an interest in golf, just as the fact that those households ordered that subscription from a Website would indicate that they are Web-enabled. 

In some cases, Acxiom compiles information directly from the source, such as the telephone directory and the property records.  In other cases, Acxiom acquires this information from other reputable information providers, who perform the original compilation, or we acquire the information directly from the business holding the relationship with the consumer.  Acxiom carefully screens all information providers and businesses from which we receive information to assure that the information has been legally obtained and is appropriate for the intended use. 

The information Acxiom collects on an individual or a household is always incomplete.  Acxiom does not have information on every individual, and we do not have the same kind of information on all individuals.  For example, we may or may not have the telephone number of a household.  We may or may not have property information.  We may or may not have lifestyle or interest information.  Our goal as an information provider is to provide sufficient coverage of various data elements to meet the market needs for that particular piece of information.  

The following chart summarizes the process Acxiom uses to take information from a variety of sources and to develop specific information products designed to meet the business needs of various markets.  

Acxiom has a long-standing tradition and engrained culture of respecting consumer privacy in the development and marketing of our information products.  I have been employed by Acxiom for 27 years, and I have been responsible for privacy oversight since 1990.  Privacy has been my full-time job over the past three years.  

Since Acxiom does not have a customer relationship with individual consumers, we do not routinely have direct contact with the individuals whose data we hold.  Therefore, we ask our customers to refer any individual consumer to Acxiom who may inquire about the sources of data they have obtained from us.  Since 1997, we have posted our privacy policy on our Website, before it was an established and common practice.  Acxiom maintains a Consumer Care Department to handle consumer inquiries.  We also provide consumers who contact us in writing, through our Website, or by calling our toll-free Consumer Hotline the option to opt-out of all of our marketing products. 

Our privacy policy is designed to adhere to all Federal, State, and local laws and regulations on the use of personal information.  In addition, Acxiom follows the industry self-regulatory guidelines of a number of trade associations in which we are active members, including the Direct Marketing Association, the Online Privacy Alliance, and the Individual Reference Services Group.  These guidelines include posting a notice that describes what data we collect, how we use it, to whom we sell it, as well as what choices consumers have about the use of that data. We recently certified under the European Union Safe Harbor and have applied for and are in the final stages of being certified for the BBBOnline Seal.   

Acxiom is also an active member of the Privacy Leadership Initiative and the Coalition for Sensible Public Record Access.   We believe that consumers should be educated about how businesses use information.  To that end, we publish a booklet, entitled "What Every Consumer Should Know About the Use of Their Individual Information," which is available both on our Website and upon written or telephone request.   

Acxiom takes its responsibility toward protecting consumer information seriously.  Beyond the industry accepted guidelines which we follow, we have also established our own guidelines which are more restrictive than industry standards.  For example, we do not provide Social Security numbers or other personally identifiable information about children in any of our products.  Moreover, we only capture the specific information required to meet our customers' information needs, discarding the remaining data, when we compile information from public records.  These voluntary information practices are internally and externally audited on a regular basis.    

Myths about Information Providers  

With the full picture of Acxiom's business operations now outlined to better explain what we do, I believe it is important to close by reiterating for you what Acxiom does not do.  Over the years, a number of myths have developed about the information industry that require clarification.  Please allow me to set the record straight: 

• Acxiom does not have one big database that contains detailed information about all individuals.  Instead, we have many databases developed and tailored to meet the specific needs of our business customers - entities that are carefully screened and with whom we have legally-enforceable contractual commitments.  

• Acxiom does not provide information on a particular individual to the public.  The information we sell is provided only to qualified businesses for specific legitimate business purposes.  I cannot call up from our databases a detailed dossier on any of you, let alone me.

• The information we provide cannot be used, according to existing law, for decisions of credit, insurance or employment.  These activities are regulated by the Fair Credit Reporting Act and such uses are prohibited under our contracts. 

• Acxiom does not contribute to the nation's identity theft problem.  We do not sell Social Security numbers or credit card numbers to anyone, nor do we sell credit or other detailed personal financial information that could be used to steal someone's identity.

• Acxiom does not develop any information products containing sensitive information.  We define sensitive information as personal information about children, medical information, and detailed financial information.  The only exception to this would be a situation where the consumer has opted-in to volunteer such information for distribution or where the information may be a part of the public record.

•  Acxiom does not sell detailed or specific transaction-related information on individuals or households, such as what purchases an individual made on the Web or what Web sites they visited.  The information we provide is general in nature and not specific to an individual purchase or transaction.  For marketing purposes, businesses need information about the household, not the specific individuals comprising the household. 

* * * 

Mr. Chairman, on behalf of our over 5,000 associates, Acxiom appreciates the opportunity to appear today to share with the Subcommittee a detailed overview of our core business operations.  We also wish to thank you, Mr. Chairman, for the deliberative and thorough approach with which this committee has studied the appropriate and inappropriate uses of information in our economy.  Acxiom is available to provide any additional information the Subcommittee may request.