FINANCIAL PRACTICES PRINCIPLES FOR MAILING LIST TRANSACTIONS
By The Direct Marketing Association, Inc.
Identification The Direct Marketing Association's Financial Practices Principles for List Transactions are intended to
provide assistance to the list community so that fiscal stability and responsibility are no greater risks in list transactions than they are in other forms of commercial transactions. The principles are intended to focus the
attention of those who participate in list transactions on the potential financial implication of how they transact business. The manner in which the principles should be implemented, however, is left to the independent business
judgment of each party to the transaction.Every member of the list community is encouraged to take these princi-ples into account when developing its own business procedures. This will help assure all parties that the financial
aspects of a trans-action are carried out with diligence and professionalism. To help list professionals achieve that goal, each principle isfollowed by a series of questions to help amplify the meaning of the principle and to give
guidance on how it should be followed.All involved in the transfer, rental, license, sale, or exchange ofmailing lists--owners, managers, compilers, brokers, advertisingagencies, users, and their suppliers and agents--should employ
theseprinciples. I. Identification of Parties Each participant in a list transaction should be identified by full and proper name and complete street address, scope of authority, andon whose behalf it is
participating in the transaction. If a partici-pant is another's agent, verification of the participant's authority should be obtained from the principal. * Has each party been identified by full corporate name? * If a party
does business under one or more assumed names, has eachof them been identified? * Have all affiliates and related companies of each party beenidentified? * If a participant in the transaction other than the list owner isto
receive payment, on whose behalf is such payment to be received? * Has the authority of one acting on another's behalf (e.g., listmanager, broker, service bureau, advertising agency, etc.) beenverified for each step of the
transaction? * Have all suppliers, vendors, service providers been identified (e.g., lettershops, service bureaus, printers, etc.) and, for each, has the scope of its authority been verified?
II. Preliminary Financial Screening Prior to entering into a list transaction, each party from whompayment will become due should be adequately screened for credit-worthiness. * For each party from whom payment will
be received and for which aprior business relationship and method of doing business have notbeen established, have credit references been received? * Have bank references been checked? * Where a prior business relationship and
course of dealing have notbeen established, are adequate safeguards and payment procedures inplace (e.g., advance payment)? * Has a payment/credit history file been created? III. Compensable Usage Should Be Defined The
agreement should set forth what constitutes a use and under whatcircumstances, if any, rented names may be retained by the listuser. For each such use and retention, it should be clear whetherpayment is due to the list owner.
* May second and subsequent uses be made of the list without furtherpayment to the list owner? * How are multi-buyers treated? * May the list user retain names or match code for purposes of future suppression?
* May the list user retain names for non-list specific data? * Which, if any, of the above require payment to the list owner? * Is any use or activity that is not specifically prohibited by theagreement permissible? * Is any
use or activity that is not specifically permitted by theagreement prohibited? * May the list user add information to the rented list before usage? * For each of the above, is there any additional charge, and is itclearly set
forth in the agreement? IV. Method and Basis for Payment The agreement should clearly set forth how payment is to becalculated and whether, and under what circumstances, allowances and discounts are available. If
there is a broker or manager involved, the agreement should clearly identify to whom payment should be sent and what the basis for commission are, and on whose behalf payment to a broker or manager is to be received. * Is each
party entitled to payment assured of an effective method of collection, including, if financial circumstances warrant, directpayment without going through usual channels? * How many names are being rented?
* What are the allowances, if any, for duplicates? * What are the allowances, if any, for undeliverables? * Are there any special requests or selection criteria and, if so, what are the charges for them?
* Has sales or use tax been accounted for? * Is there a net name arrangement and, if so, what is the method ofverification? * Have duplicates and multi-buyers been removed?* Is there a reuse discount?
V. Payment Terms Payment terms should be clearly set forth and agreed upon and shouldinclude, in addition to the information concerning method and basisfor payment, to whom and on what date payment is to be made
andunder what circumstances there may be adjustments. * Does the agreement set forth when the user's payment must be madeto the broker (if any)? What safeguards or collection proceduresare in place in the event such payment is
not made when scheduled? * Does the agreement set forth when the broker's payment must be madeto the manager (if any)? What safeguards or collection proceduresare in place in the event such payment is not made when scheduled? *
Does the agreement set forth when the manager's payment must bemade to the owner? What safeguards or collection procedures are inplace in the event such payment is not made when scheduled? * Is the agreement clear as to what
constitutes grounds foradjustment to the payments required by the contract?* What documentation must be provided before the list user is entitled to such adjustments?
* Is computer verification required before allowable adjustments maybe made? VI. Books and Records - Substantiation - Monitoring Each party to a list transaction should take appropriate measures toassure prompt and
full payment to all parties entitled to be compen-sated. Adequate procedures, records, and controls should beestablished so as to detect potential problems and to allow forcontingency plans.Books, records, and accounts should be
established in a manner thataccurately reflects the corresponding list transaction and which will clearly identify receipt, use, and transfer of payments made with respect to each list transaction.A party entitled to payment
pursuant to a list transaction uponrea-sonable request should be provided with adequate documentation that payments received are accurate and complete. * Has the broker received an invoice in a timely fashion from themanager? *
What steps or procedures have been implemented with respect tofuture orders from that list manager? * Has the list user received an invoice in a timely fashion from thelist broker? * What steps or procedures have been
implemented with respect tofuture orders from that list broker? * Has the list user made timely payment to the list broker? If not,what precautions or steps have been taken with respect to thesubject transaction? * What steps
or procedures have been implemented with respect tofuture orders from that list Browser Fixed
