Negative form of Marketing?

By Ted Chen & Daryl Chin

A 'NEGATIVE option' form of marketing, where clients have to 'opt out' of a deal, has riled company owners, with the Advertising Standards Association of Singapore (ASAS) receiving 12 complaints against one company so far.

The company, Singapore Information Services (INSIS), a trade directory publisher and subsidiary of Global Yellow Pages, has sent invoices to potential clients telling them that they will be listed in many directories - and will have to pay for the listings - unless they opt out.

But company owners and marketers find the method 'unethical' and want such practices stopped.

When director of Netfrontier Pte Ltd Raymond Chng received such an invoice on July 14, he almost paid for something he had not subscribed to.

'I could have paid it right away or forwarded the invoice to my colleague, who could think it is an invoice that I had verified, and proceed with the payment,' said 46-year-old Mr Chng.

Said Ms Lisa Watson, 58, chairman of the Direct Marketing Association of Singapore: 'From an ethics perspective, we believe any communication that uses false or misleading claims to 'trick' the consumer into taking an action should be questioned.'

The invoice, the second of two mailed by INSIS to Mr Chng, said the company should send a cheque for $390.55 (with GST) payable to INSIS. It said that company owners need to 'call, e-mail or fax' should they want to opt out.

The first invoice, dated June 3, asked for payment but made it clear that the company would be charged only if it were to subscribe to the listing service.

Mr Chng said he has had no prior contact or arrangement with INSIS or Yellow Pages.

The strategy used by INSIS is known as a 'negative option', said Ms Watson. This is where customers of a product or service have to take action for something not to happen.

Some examples of negative option strategies include books that are mailed to a person's home, with the receiver required to pay for them or ship them back. Two years ago, the Quality Paperback Book Club in the United States came under scrutiny for doing so.

Sellers use these tactics to 'help achieve their short-term sales objectives', said Mr Dennis Toh, 34, a Temasek Polytechnic lecturer on marketing.

'Sending invoices and pushing sales forcefully do not foster good customer relationship, but create negative and bad vibes towards the brand,' he said. 

Ms Belinda Ang, 29, a digital marketer, said these tactics were 'definitely wrong'.

'Professionally, any form of advertising should be an opt-in and not the other way round,' she said.

Last Wednesday, INSIS ran a half- page advertisement in The Straits Times stating that it had sent two mailers with 'pre-billings' directly to companies.

Unlike the invoice received by Mr Chng, the advertisement explicitly stated that clients can 'ignore the mailers if they do not wish to use the service'.

It is not known if INSIS ran the advertisement because of complaints.

'My fear is that most people won't know' that they are not obliged to pay, said Mr B. Tan, 39, who works in a law firm, and had received a second invoice on July 12.

'Prior to the ad, people may take the view that they have to pay,' he said. 'Such unsolicited services and charges should not have a place in our modern economy.'

Another local businessman, Mr Amos Ong, 38, was not too pleased with what he called 'preying on the unsuspecting and honest'.

'If this one gets away with it, then very soon we, businesses and consumers alike, would be receiving letters, followed by invoices for all kinds of services imaginable,' he said.

A check with the Consumers Association of Singapore shows that under the Consumer Protection (Fair Trading) Act Regulations 2009 for business to consumer transactions, a goods and services opt-out scheme is an unfair practice and the consumer can refuse to pay for the goods and services.

However, in the case of INSIS, the transaction is done between businesses and therefore the regulation does not apply. General contract law will apply instead.

In a response to these concerns, an INSIS spokesman maintains that the invoices were meant to 'inform subscribers of the availability of the service'.

'We wish to emphasise that subscribers who do not respond to the notices will automatically not be included,' he said.

So far, none of the complainants to The Straits Times had paid by mistake.

ASAS said it may look into the matter during a committee meeting this week.