MemberWorks Inc., a loyalty program company that was sued two years ago in Minnesota for allegedly abusing private customer information it had bought from U.S. Bancorp, has named an all-star consumer advisory board to help it enforce stricter marketing guidelines.
In doing so it followed the lead of Household International Inc., a subprime lender that in February similarly named an advisory board of political heavyweights to counsel it on operational and legislative issues. Its group including former Sen. Connie Mack, R-Fla., and Thomas F. McLarty, who served in the administrations of presidents Carter, Bush, and Clinton worked out a set of best practices that Household adopted just ahead of congressional hearings into subprime lending practices.
MemberWorks is a Stamford, Conn., company that designs and sells loyalty program memberships to consumers. Its six-member consumer advisory board includes a former state attorney general and three former heads of state consumer protection offices.
Its a challenge for both the company and for us, said the boards chairwoman, Patricia A. Royer. But the thought is to lead an industry or an activity into being successful for consumers. She is a former director of the New Jersey division of consumer affairs and recently retired as vice president of consumer affairs at Merck-Medco Managed Care LLC, a provider of prescription drug insurance.
MemberWorks advisory board member Frank J. Kelley, a partner in the Lansing, Mich., law firm Kelley Cawthorne and former Michigan attorney general, said that before being approached for the role, he knew little about the company and nothing about the suit brought by Minnesotas attorney general and settled by MemberWorks. Ive made no prejudgments, he said. Probably, thats better.
Mr. Kelley said he considers protecting privacy to be one of the most difficult tasks in todays consumer culture. The board, he said, will try to come up with standards and recommendations that work.
The online advertising agency DoubleClick and a lot of companies have had problems because of this new computer, e-market age, he said. All kinds of things are being exchanged. I think everybody but your wife and daughter are selling all the statistics they have about you to somebody else.
Other members of the consumer advisory board are: Mary M. Heslin, the principal of Heslin Consulting and a former commissioner of Connecticuts consumer protection division; F. Nicholas Willard, the director of government affairs at the health information company WebMD Corp. and a former counsel to the American Association of Retired Persons; Dianne Goss, an independent legal consultant and former chief of the consumer protection division of the Ohio attorney generals office; and Robert D. Marotta, a lawyer in the Columbus, Ohio, law firm Kegler, Brown, Hill & Ritter and former counsel to Merck-Medco. MemberWorks said it plans to name one more appointee soon.
MemberWorks, whose alleged misuse of customer data put it in an unflattering consumer affairs spotlight, is clearly hoping to be seen as proactive in its efforts to address its image problem.
George Thomas, a MemberWorks spokesman, said the Minnesota lawsuit settlement is old news. The advisory board, he said, has absolutely nothing to do with the lawsuit.
Mr. Thomas added that since the consumer privacy protections of the Gramm-Leach-Bliley Act took effect July 1 MemberWorks cannot buy or share customers financial information with other companies. He said all financial institutions with which MemberWorks does business are fully compliant with that law.
