How to Stop Mail Fraud
Many in the international DM industry believe that response rates have been seriously hurt over the past
few years by the sheer scale of fraudulent postal mail and email which has been contaminating the market
-place. I'm not talking here about the "esoteric" offers which offer "hope" to "desperates" and which are
harmless (even positive in their effect on the recipient), but the hard, criminally fraudulent offers
which say you drew 6 "lucky" numbers in a lottery (which you never entered in the first place), you have
to email a particular person to collect one million Euros (or US dollars) and then in Step Two you're asked
to pay US$2,500 (or whatever) as a processing and handling fee and not to tell anyone else about it for
"security reasons".
Many thousands of innocent people around the world have fallen for this scam and they tell their friends
about it when they discover they didn't receive any "Prize Money" (and never will).
I believe the credibility of many completely transparent and authentic DM offers has been damaged by offers
such as these simply through association. All direct mail gets hurt because of the criminal activity of a few.
Here is another kind of offer I received recently (just as fraudulent – but perhaps more insidious since
it's cleverly written and slightly believable – despite the spelling errors):
Envelope-to: Thornton@MLAresponse.com
Date: 15 Mar 2005 19:14:37 +0000 (GMT)
From: dr_fexil martindr_fexil_martin@yahoo.co.uk
Subject: BUSINESS PROPOSAL>>James Thornton
To: Thornton@MLAresponse.com
Dear Sir,
I write to you based on a request by an investor and his need for investment/funding in your country.
My name is Dr. Fexil Martin, a financial consultant and I work with a reputable financial services firm.
My company most times represents the interests of very wealthy investors. Due to the sensitivity of the
position they hold in their society and the unstable investment environment of their country, they evacuate
majority of their funds into more stable economies and developed nations where they can get good yield for
their money.
I was recently approached by a Reserved Client, whom I had personally worked with a few years ago with a
proposal. What he request is an individual such as yourself, who will be willing to receive money on his
behalf abroad, and put it to good use for a period not exceeding 6 years for a start.
The client has offered these terms:
1. 10% commission paid to me and my foreign partner of the total funds successfully evacuated. The funds
in question are over 13.2Million US Dollars.
2. The funds will be used by the foreign partner for six years as a loan without any interest. That is,
you do not pay any interest on the money but you give the client 50% of all profits after tax that
accrued from the use of the funds. If these terms are agreeable to you, kindly let me know and I will
provide you with all necessary information and procedures involved. A copy of your response should be
sent to my private mail:
Sincerely yours,
Dr. Fexil Martin
PS* The client is willing to make available the fund to your possession and in your country within 3days of
confirmation of your capabilities
I believe there's a simple solution to dealing with garbage like this. This is to widely advertise specific
fax numbers or email addresses in Europe, Asia and the USA which are managed by the FBI, Interpol, Scotland
Yard and other law enforcement agencies to which recipients of fraudulent mail are encouraged to fax or email
the materials they have been sent. The police can then masquerade as the recipient (most of this kind of mail
is personalized to an individual name), track down the criminals and charge them. The cost of doing this could
be funded by the UPU since their postal administration members are suffering reduced mail volumes due to the
scale of mail fraud, the disgust this generates amongst the general public everywhere and the negative knock-on
effect it has on direct mail worldwide!
I have put this proposal to the chair of the UPU's Security Committee and copied Charles Prescott, Chairman of
the newly formed Consultative Committee (email: cprescott@the-dma.org). I am still awaiting their feedback.
* * * * *
Someone Somewhere is Doing Something About It
Yesterday I spoke at some length with Jonathan Taylor of the U.K.'s Office of Fair Trading. I understand they
are actively engaged in setting up a cross-border network to fight "mass mailing" scams called ICPEN
(International Consumer Protection and Enforcement Network). The Federal Trade Commission (who claim that
billions of dollars a year are lost by consumers to mail fraud) are also connected with this network.
Jonathan Taylor agreed that my fax number proposal described above could work well but his view was that
criminal enforcers (ie. the police) had other things to do and may not be willing to spend time chasing
the high-level gangs who operate international mail fraud – many of them based in Canada and the USA and
"fronting" through lettershops in Amsterdam and elsewhere.
But at least something is now being done about mail fraud in an organized way. If you'd like to explore what
you can do to help fight an activity which is seriously damaging your industry and your livelihood, you
should contact "Scam Busters" at the UK's Office of Fair Trading: email scams@oft.gsi.gov.uk or telephone
+44 207 211 8111. If you have any other ideas, let me know...
* * * * *
Excellence Recognized in the Postal Industry
I stopped over in Brussels for a couple of days last month to help judge the "World Mail Awards" organized by
Triangle Conferences. I sat on the Marketing and Service Awards Judging Panels with Charles Prescott of the
DMA, Alastair Tempest of FEDMA, Aad Weening of EMOTA and Steve Smith of the Christian Science Monitor and
chaired by Ken Mckeown of the UPU. These Awards (followed by a black tie dinner) have been escalating in
importance over the last few years since the results are now being taken very seriously indeed by the winners
as well as (I understand) by the losers! This is good – since it focuses attention on, and gives recognition
to, companies and postal operators in the industry who deliver excellence.
The beneficiaries of "excellence" are customers and amongst customers the biggest, single sector by far is the
direct mail industry. It was interesting to listen to the talk during the postal conference the following day
for a few hours in the morning (before I left for Geneva). The move towards full liberalisation is inexorable
and one can't help but feel empathy towards national postal operators who are obligated to continue providing
a universal service is rural areas (where it's hard to be profitable) while facing competition in the cities
where competitive pricing from private operators takes more and more business away from them. Mailers, of
course, are funding this trend by demanding universal service from public operators but at the same time
supporting private postal competitors offering them city to city delivery at lower prices.
It was also interesting to hear of the trend amongst larger mailers towards switching direct mail printing to
locations where they can benefit from lower postal costs and switching postal service access to places where
they can benefit from lower printing costs. (Both Eastern Europe and Asia were seen to be candidate locations
in this respect).
* * * * *
The number of "International" Credit Cardholders in India Has
Grown 40% in the Past 12 Months
The number of credit card holders (including supplementary cardholders) in India is reported to have grown to
43.3 million – a growth of around 40% – in the last 12 months. This is a significant figure since every one
of these cardholders can use their card to charge a US dollar purchase made from a direct mail or mail-order
offer received from offshore. It is now no longer absolutely necessary to establish an onshore presence in
India with all the costs, bureaucracy and headaches this involves – including the obligation to pay the Indian
Government 43% of your profits before they can be remitted back to your headquarters.
How and why has this tremendous growth come about? It boils down to aggressive marketing by Cititbank,
Standard Chartered, ABN Amro, ICICI, HSBC and HDFC amongst others. Most of them use DSA's (direct selling
agents) who tend to employ sales tactics bordering on the unethical... promises to waive annual fees, low
interest rate offers and so on without the knowledge or consent of the banks who pay them commissions!
(Nevertheless DSA's are also widely used by the periodical publishing industry to build subscriber
databases in India).
Anyway, the result represents a large number of Indian consumers (and businessmen) who hold credit cards
who could not be identified and reached previously when mailing into India from offshore.
MLA has a client currently generating excellent response from Indian consumers, mailing into India from
Singapore and receiving response back in Singapore. They have no legal presence in India whatsoever –
and no local headaches. However their offer is in rupees (they are able to clear cheques locally). Around
68% of their current responders use cheques, 30% use a credit card charge and 2% cash. If their offer was
in US dollars they would certainly receive a higher percentage of credit card orders.
* * * * *
Marketing of "International" Credit Cards in China to Begin Next Year
This accessibility to the Indian market through US dollar and other foreign currency offers which can be
charged by any Indian credit cardholders and then processed offshore is in stark contrast to the current
position in China where very few consumers indeed hold "international" credit cards which can be used to
make a US dollar or foreign currency purchase received through the mail from offshore.
The marketing of international credit cards by several banks in China will begin next year and we all hope
the future growth of international credit cardholders in China will be as spectacular as it has been in
India over the past 12 months. This will enable all of us to do DM business in China more easily – if the
Chinese Government allow it...
* * * * *
If DM is About Permission and Dialogue… We Should
Keep Telling This to Governments
I notice that 64 million U.S. consumers have now signed up for the Federal Trade Commissions
"Do Not Call Registry". The big question, which everyone in the DM industry is asking is whether
this is the first step down a slippery slope leading to 'do-not-mail', 'do-not-email' and
'do-not-talk-to-me' lists both in the USA and in other countries around the world.
This is where Direct Marketing Associations have a role to play in providing a channel of
understanding and dialogue between mailers, service providers, consumers and governments. Both the
DMA in the U.S. and FEDMA in Europe are doing a solid job in this respect. Elsewhere the support
level given to local DMA's tends to be weak by comparison. It is in the interest of stakeholders
in local DM industries everywhere to establish, fund and support stronger local DMA's who can lobby
on their behalf. As John Greco, President and CEO of the DMA in the US, put it recently: "If some
of the privacy legislation being discussed gets enacted, we're out of business…"
* * * * *
New Data Protection Law in Japan
A couple of months ago the Japanese Government finally introduced new Data Protection Law so stringent and
complex few can fully understand it. My friend Jon Lambert of Acton who continues to operate a list business
in Japan, has given me more than one lengthy, very articulate monologue on the subject, and I still can't
understand clearly what the new rules are. One thing is clear and that is both mailer and listowner names
must appear on the outer envelope so that consumers will know in future to whom they can address complaints.
They will also be able to complain to a new independent Privacy Organization sponsored by many of the
prefectures in Japan who are actively building a suppression file.
What Acton has done is to match their gathered and responder files against lists in the public domain such as
the Telephone Book and the Property Registry and when those names match successfully they can be rented legally.
Meanwhile the Japanese Direct Marketing Association (JDMA) consisting of 20 or so of the largest mail-order
merchandising companies (with not one foreign member) has done little or nothing to dialogue with the
Government on the new data protection law – hoping and expecting the stringent conditions will keep foreign
competitors out. This is now unlikely to happen due to the initiative described above of a few Japanese list
companies such as Acton.
* * * * *
Postal Theft in Australia?
From time-to-time at postal conferences I come across senior representatives of Australia Post. They often
strike me as somewhat sanctimonious in their pronouncements – as though their services are ultra reliable
and "whiter than white" in every respect.
It was therefore with more than a little interest when I heard that one of the major current affairs TV
programs in Australia had recently run a story about a major theft problem within Australia Post. It was
reported that large amounts of money and products are being stolen internally and companies have even been
established to clear the funds and the stolen products.
My informant is a major Australia-based international mailer. They have been telling Australia Post for
over 2 years that much of their inbound mail is not being delivered. To prove this they began to run an
extensive testing program six months ago in which they found that in the best month 10% of their test mail
went missing and in the worst month 32% went missing. These are very serious numbers indeed and I hope (for
the sake of all international mailers) that Australia Post are doing something about it. What seems to have
been happening at Australia Post can happen just as easily (if not more easily) in post offices elsewhere.
It's important for mailers to be vigilant and to report anomalies immediately to local postal representatives
so investigations can be started right away.
* * * * *
The US Dollar Rally "Ain't Over Till It's Over"
Most of us engaged in multinational DM use Euro offers across EU markets and US dollar offers elsewhere
-- unless we're marketing in larger local markets in local currencies. Our "offer" pricing is therefore
based on the Euro-US dollar exchange rate which has changed direction quite radically over the past few
weeks. There are equally forceful arguments being put forward by the U.S. dollar bulls and by the U.S.
dollar bears as to which way the U.S. dollar will go in the weeks and months ahead.
Many of us need to take positions on this right now, and we must all feel like the misspoken U.S. baseball
great Yogi Berra who once said wisely: "It's hard to make predictions, especially about the future."
Will the U.S. dollar rally falter and change direction again sometime soon? Once more let Mr.Berra have the
last word: "It ain't over... till it's over...!"
* * * * *
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