Italy: New Marketing Techniques Versus Consumer Privacy: The Italian Approach

Last Updated: 5 September 2007

Article by Avv. Felix Hofer*

1. In the 90ies the marketing industry in Europe was hit by revolutionary events: the impact of the information society with its striking new technologies offered ways of approaching consumers nobody would have even dreamed of just a few years earlier.

Marketing Gurus were eager to invent new definitions, to coin sexy acronyms and to dispense their wisdom about how to target consumers in more and more aggressive manners as well as about how to reach effectively very specific (sometimes micro-) groups.

2. But soon legal experts started warning about some risky side effects of this marketing frenzy. To all those familiar with legal developments throughout the European Union it was quite clear that the new - and so popular - techniques and practices were evidently on a crushing course with the key principles set by the Directives nos. 46 of 1995 and 58 of 2002 on processing of personal data1. Nevertheless those warnings were not taken seriously, were rather considered as out-of-tune voices and were perceived as the usual wet blankets. There were basically two reasons for this: (a) every marketer felt that he simply couldn't afford not being in the game, (b) most of the national watchdogs in charge of granting domestic implementation of the Directives' provisions in a harmonized way, had initially chosen to follow a relaxed and flexible approach in order to avoid a too dramatic impact of the new rules on an entire industry sector.

3. This idyllic situation came to an end when consumers became more and more annoyed by too aggressive marketing practices and started objecting to what they perceived as an unacceptable interference into their personal intimacy.

The 'everything goes' period turned into a real crisis, when spamming crossed the 50% percent ratio of all electronic communication present on the Internet. So, where are we now2 in the clashing relationship between electronic marketing and consumers' privacy?

Privacy Commissioners throughout the European Union have tightened the reins and are looking closer and closer into marketers' practices. Their understanding for the industry's needs has clearly weakened, their attention has definitely shifted to focusing on effective protection of the targeted public's private sphere. More and more rules and guidelines are issued in order to limit excessively intrusive marketing practices.

During the last five years the Italian Privacy Commissioner has delivered a number of specific guide-lines, directed at ruling various aspects of marketing.

4. Since March 2003 the Authority addressed correct use of MM3 through some specific guide-lines.

In the Commissioner's view:

- taking pictures with a mobile phone for strictly personal purposes (e.g. for individual entertainment, cultural interests) and sending them to a restricted group of friends or family members had to be considered as legitimate use,

- as long as occasional communication of personal data (i.e. images) for pure personal use occurred, the provisions on processing of personal data would not become relevant,

- but also in those cases the author of such kind of communication had to grant safety of the collected data and could be hold liable for damages caused to other subjects by improper data handling,

- data subject's specific consent had always to be sought, when systematic diffusion of pictures or videoclips to a broader public (e.g. through posting on the Internet) or 'pyramid communication' was performed,

- journalists in principle have not to achieve data subject's consent, but have to comply with their ethic code's provisions,

- specific consent eventually obtained, when required, would not exempt from complying with other rules referring to uses different from data processing (e.g. Section 10 of the Civil Code governing abuse of a person's image, the rules of the Copyright Act),

- when temporarily storing such messages and making them available to destinees on the Internet, Telcos have to adopt additional cautions, meant to grant due respect to the 'freedom of communication' principle and to preserve secrecy of the message's content.

5. A couple of months later (in May 2003) the same Authority, facing widespread complaint about misuse and excessive use of such practice, ruled on SMS of public interest (reference is to text messages delivered by communication providers or public entities for so-called 'institutional purposes'4).

The Italian Privacy Commissioner felt that, save cases of public disasters or emergencies, SMS messages of this kind could not benefit from any exemption and were therefore subject to explicit in-advance consent from targeted data subjects.

According to the respective guide-lines:

- two cases are to be held distinct: (a) when a phone service provider acts on behalf of a public entity (but using its own data bases without transferring subscriber data to the public entity), (b) when the messages are directly diffused by a public entity (making use of its own address list),

- in the first case (e.g. when a provider informs about traffic restrictions on behalf of an Administration), explicit in-advance consent of the targeted public has to be sought and data subject's rights have to be granted,

- in the second case (i.e. when a public entity approaches directly subjects who have spontaneously submitted their contact data for receiving a specific information, e.g. on an application filed), the administration may freely address those subject through SMS messages, without asking for in-advance consent (but if the contact is established for a purpose different from that which the subject has submitted its data for, then explicit consent is necessary).

6. At the same time5 the Commissioner addressed the issue of unsolicited commercial communication diffused via e-mail and set general rules for such practice.

According to those rules:

- domestic statute law considers e-mail accounts as 'personal data' and therefore makes them benefit from the specific protection granted to data subjects' privacy sphere,

- such accounts may be legitimately used for promotional or advertising purposes only if data subjects have allowed this kind of use through specific and explicit in-advance consent,

- consent is necessary also when e-mail addresses are achieved and processed through automated means6 or devices without any intervention of an operator,

- the fact that e-mail addresses may be publicly available7 or easily accessible8, does not exempt from the obligation to seek for consent before targeting account holders9,

- massive delivery via e-mail of unsolicited commercial communication therefore results in an illicit nuisance to the targeted public10 and in an infringement of the existing provisions on protection of personal data,

- data may actually be held as 'publicly available', only if the respective information is contained in registers, lists or documents to which a specific legal provision imposes (or allows) indistinct access for the general public11,

- the practice of sending – after having achieved data subject's explicit consent - a mere confirmation message and announcing that commercial communication will follow is to be encouraged, as it actually allows to verify both, the recipient's persistent agreement as well as the correct identification of the targeted address with the subject previously submitting its consent for receiving promotional messages,

- infringement of the provisions on correct use of personal data may result (according to the level of the offence) in:

- a desist order issued by the Privacy Commissioner,

- a fine for minor violations12,

- compensation of damages procured to the offended data subject,

- criminal sanctions13,

- in compliance with the implementing provisions of the EU-Directive no. 58 of 200214, in in some cases companies may be allowed to inform their existing clients about products or services similar to those for which previously a business relationship had been established15,

- with respect to messages sent on behalf of third subjects as well as to companies maintaining data banks and selling address lists, it's been made clear that in such cases all requirements and obligations on data subjects' in-advance information and consent achievement have to be duly fulfilled (companies buying lists are required to make sure that data subjects had properly agreed to the diffusion and transfer of their personal data; in addition data subjects must be informed about the new location and the new handler of their data),

- data subjects' rights as to data access, control on their origin and correctness, request for their modification and – easy and free of charge – withdrawal of consent previously given for specific uses must be strictly granted in any case (being therefore obvious that commercial communication delivered anonymously or not originating from an identifiable sender results in illicit conduct),

- if do-not-call or -not-send lists are set up, it's not allowed to charge costs for registering with such lists,

- consent to data processing has always to be positive and explicit, consent by implication (or through silence) is not valid,

- with respect to to unsolicited mail originating from foreign countries the Commissioner stressed that, even being in such cases the application of Italian law problematic, recipients are not totally left without defense, as they can: (a) gain access – usually possible via on-line communication – to the authorities of the country of origin in charge of controlling the processing of personal data and file a complaint, (b) in all cases16 in which the illicit conduct results in a criminal offense, address the local authorities, as for those conducts Italian jurisdiction is given as long as the the practices' harming effects occur inside of Italian territory.

Those rules have been constantly enforced by the Authority through a number of decisions rendered on specific complaints17

7. But the Italian Privacy Commissioner had occasion to express his views also in some rather peculiar cases, definitely outside of the typical context of marketing practices. So, he questioned18 a local Municipality for having set up19 a video surveillance system, implying up to 32 cameras and recorded tapes stored for 15 days, in order to monitor the interiors both of a morgue as well as of its mortuary chapel and to control visitors and mourning relatives, totally unaware of the practice. The Commissioner felt that this was definitely a conduct too intrusive into the private sphere of those attending, especially in a place where visitors were likely to expect particular sensitiveness and respect. He also found that a clear and unacceptable disproportion occurred between the scopes pursued and the measures put in place, while also the storage period of the recorded tapes appeared to be excessive. Therefore an immediate cease injunction was issued and the Municipality complied with it without objecting.

8. A few months later the Privacy Commissioner was called to render an in-advance opinion on a new regulation, proposed by the Ministry for Home Security and meant to rule the collection, storage and transfer (to Police and Enforcement authorities) of personal data processed by the local Hotel industry.

In its opinion20 the Authority commented on the draft text of the proposed new regulation as follows:

- the proposed indiscriminate collection of personal data had to duly consider the principles of proportionality and adequacy, as established by the EU Directives and by international Treaties or Conventions21, which require Hotel Management to: (i) achieve the data of just one member of a family (and not of all components), (ii) store them properly and safely, (iii) transmit them to police or Enforcement Authorities not on a routinely basis, but only on specific request and for certain purposes of crime prevention,

- forcing Hotel Management to achieve – over a guest’s particulars – additional information (as its private home address, date of arrival and other indications) appeared to be excessive,

- clear and specific indications were necessary as to how and when personal data transfer should be performed and as to which security measures should be adopted to this purpose; while further storage at Hotel offices could be considered legitimate only for specific, objective reasons (as accountancy, invoicing, filing of tax declarations)

- the proposed interactive access to Public Authorities’ data bases (through web applications) for data feeding purposes had to be accompanied by proper cautions and technical barriers (as digital or certified signature of the sender and proper guarantees as to data recipient’s identity) in order to prevent improper use or interception of the collected and transferred data22,

- finally storage and access to personal data by Police and Enforcement Authorities required detailed instructions and guidelines for public officers in order to grant legitimate data use only in the light of crime prevention and public security.

9. More recently23 the Authority turned its focus on marketing and commercial practices, and specifically on the services and activities of call centers, Telcos, Internet connection providers and companies offering Internet related services. An increasing number of specific complaints and widespread discontent of the general public about frequent unsolicited phone calls, performed even at most inconvenient moments and literally inundating the targeted persons with extremely aggressive and intrusive marketing offers, induced the Commissioner to flag this particular industry sector a clear warning.

In order to properly emphasize the seriousness of its concern the Privacy Commissioner: -

- opened24 formal infringement proceedings against five major phone services and Internet providers25,

- addressed them with specific injunctions,

- requested them to cease the excessive and illicit practices within a fixed deadline,

- firmly invited them to come up – in a three month period - with a set of good business practices,

- announced more drastic and stringent measures in case the targeted companies should fail to seriously changing their business habits.

In general terms the interested companies were instructed to:

- halt the practice of using collected phone numbers for commercial purposes without having obtained inadvance consent from the targeted public,

- make all existing data bases conform and compliant with the provisions governing processing of personal data,

- inform all users – when initially contacted – about the origin and the use of their personal data,

- acknowledge the contacted person’s decision to not be disturbed in the future,

- immediately stop any undue use of previously collected personal data for activating unsolicited services (as high speed connections, answering services, etc),

- properly supervise call centers they eventually rely on and to make sure that those companies comply with all provisions on data handling.

10. Dealing with a complaint filed by a couple targeted with unsolicited promotional material (magazine focusing on topics of interest to mothers of newborns) delivered after a stay at a hospital's maternity, the Authority felt necessary looking into marketing practices meant to take advantage of hospitalized persons. In the course of its inquiry The Commissioner found that promotors, acting on behalf of a publishing house, had contacted hospital staff providing them with special coupons, which they could record on the – sometimes unaware - patients' personal data and then send in as patients' free subscription to a certain magazine. Hospital staff basically acted as the promoter's in-house reference contact and was rewarded through premiums and free gifts, assigned on the basis of the number of coupons with subscription requests received.

The Authority held26 the practice as illicit on the following grounds:

- by distributing and then collecting the coupons, the hospital staff involved had performed "data processing",

- such activity, being rewarded through free gifts and premiums, couldn't be considered as occasionally and spontaneously performed, but clearly took place in the interest of the publishing house,

- therefore hospital staff had actually performed as "persons in charge of processing personal data", a position that – requiring direct supervision and constant direction by the "data controller" (in the case, the publishing house) – appeared to be totally inconsistent (if not radically clashing) with their status and duties as hospital employees (a status that already had qualified them – even if for very different purposes – as "data processors" active on behalf of the hospital's administration),

- the requirements and obligations established as to in-advance information and consent achievement of the targeted persons as well as to their right of consent withdrawal had not been legitimately fulfilled,

- some of the failures appeared to be significant to an extent that notice to the competent attorney general had to be made for eventual criminal prosecution.

11. Also employees' on-line habits at their working places have given rise to multiple attention: from marketers, trying to reach potential customers in the context of their jobs, from employers worried about staff's time spent on-line for mainly private reasons. In recent years we've therefore seen employers peeping into employees' e-mails or Internet surfs at their job desks and sometimes firing staff for improper use of online accesses at work. On the other side such control practice necessarily involved justified concern about undue violations of employees' privacy sphere.

With the Unions addressing the problem and labour courts getting more and more involved, the Italian Privacy Commissioner felt is was time for issuing specific guide-lines on the topic.

According to those guide-lines27:

- private and public employers may not control their employees' email and Internet use as a standard practice (e.g. employees' constant distance monitoring), but only exceptionally,

- modalities of such control may be determined by the employer, but taking into due account employees' rights as well as principles fixed by union agreements (Unions' involvement in the process is recommended),

- employers are required to adequately and explicitly inform employees on how e-mail and Internet access at the working place should be properly used and about both, the fact that control will be performed as well the technical means to be used to this purpose,

- systematic monitoring of websites accessed by employees is not allowed, content control on e-mails and web pages' analysis may be performed only in very limited (and predetermined) cases,

- a corporate policy should be agreed with the Unions on how and when to perform such exceptional control,

- proper safety measures for avoiding improper uses of email or Internet access have to be put into place in order to limit as much as possible follow up controls on employees.

The recommended safety measures should include:

- a specific list indicating websites contextual to employees' working performances,

- filters able to prevent employees from accessing websites included in a 'black list' or to pirate URLs (renown for illicit downloads of music or multi-media files),

- eventual separate e-mail accounts offered to employees for personal/private correspondence or signaling – through specific indications - that the e-mail used is a working address (e.g. info@..., ...@office ..., ...@company...),

- a system for automated reply in case of employees' absence,

- a request to employees inviting them to designate a specific person, authorized to access their e-mail accounts in case of their absence and to forward to a manager messages inherent to work, urgent or requiring immediate reaction,

Finally, in the Authority's view, in cases of discovered improper conduct, employer's control should proceed gradually, i.e. should focus on a department, an office, a team and should initially lead to a first warning issued to the respective corporate group, while individual control should be performed only if such measure results not successful,

Peculiar measures should apply to employees held to perform special duties in their labour relationship (e.g. confidentiality requirements, etc.).

12. Marketing has definitely become more complex and clearly needs to take privacy concerns into due account. Longstanding practices and deep rooted business habits will have to be adapted to the requirements of the legislative provisions governing processing of personal data.

As marketing necessarily involves the handling of a substantial amount of personal data (e.g. for monitoring, profiling purposes), companies ignoring this aspect could easily find themselves into troubled waters and face rather unpleasant side effects to their promotional campaign:

- fines for non-compliance may be applied,

- the Privacy Commissioner could force them – through specific injunctions – to significant, short-term and therefore sometimes costly changes affecting not only their marketing practices, but also the company's structure and organization,

- last but not least, resulting several of the violations to the Privacy Code in a criminal offense, a notification to the competent attorney general for eventual criminal prosecution is an all but exciting perspective.

How is this going to develop in the future? There is no need to claim for special powers of anticipation in order to be able to predict that the problem of finding a proper balance between marketing practices and protection of consumers' personal data is doomed to become broader and far more serious very soon.

Let's just think about how intensely manufacturers, distributors, retailers and other business sectors (and especially the multinational players) are pushing28 the shift towards a widespread use of RFID technology! The implications of such development with respect to privacy are simply obvious.]

* Felix Hofer is a founding and naming partner of the Florence (Italy) based law firm Hofer – Loesch – Torricelli.

Footnotes

1. Some aspects of the problem are also addressed by EU Directive no. 31 of 2000 referring to e-commerce.

2. When spamming has reached the astonishing amount of approx. 80% of all electronic communication.

3. i.e. Multimedia messages – images and sound – diffused via mobile phones.

4. i.e. for diffusing information of general interest as cultural events, traffic conditions, general deadlines for tax paying or renewing permits.

5. i.e. in May 2003 and with the clear intent to pave the way for the implementation of EU-Directive no. 58 of 2002, which sets basic principles on privacy and electronic communications.

6. e.g. by using a specific software program.

7. e.g. on the Internet.

8. e.g. in a chat room or in a forum.

9. The same goes for e-mail addresses published on websites or contained in Internet providers' data bases as well as in lists of domain name registrants.

10. As recipients are forced: (a) to spend time on checking the messages found in their in-boxes in order to select relevant mail from spam, (b) to sustain higher costs for longer on-line connections, or (c) to incur in additional spending for installing filter systems, finally (d) to dedicate specific attention to prevent access – e.g. from minors - to improper content.

11. Therefore occasional achievement of data somehow accessible – e.g. a mailing list – does by no means exempt from seeking data subject's consent. The Privacy Commissioner finds additional confirmation for its position in the provisions contained in Legislative Decree no. 185 of 1999 (implementing EU-Directive no. 7 of 1997 "on the protection of consumers in respect of distance contracts"), which establish a ban on the use of unsolicited e-mail communication by suppliers for commercial/promotional purposes.

12. Usually non-compliance with administrative burdens.

13. When illicit data processing is performed with the specific intent of damaging the data subject or of achieving a profit; as an additional sanction the publication of the judgement in the national press may be ordered.

14. i.e. the Directive on privacy and electronic communications.

15. Where the clients will have to be – preventively and properly - informed that (a) they will receive commercial communication, (b) they have the right – at any time – to refuse such communication through a simple opt-out system and without any charge of costs.

16. Absolutely frequent when excessively aggressive marketing practices are adopted.

17. As to recent cases see decisions nos. 1424068 of June 14th, 1433896 of June 28th, 1433939 of July 11th , 2007, referring to unsolicited commercial communication delivered by e-mail and via fax.

18. In November 2004.

19. Apparently for security reasons, after some unpleasant facts had occurred.

20. Issued and published – in the Authority's News Bulletin – on June 1st, 2005.

21. Reference is to the Schengen Agreement and its national implementing provisions.

22. In its opinion the Commissioner explained that phenomena like data phishing were an issue of serious concern.

23. In December 2006 for the first time, then in June 2007, again, as the initial warning hadn’t produced the expected effects.

24. On May 30th, 2007.

25. Since the beginning of year 2007 a total of 44 proceedings have been started against companies active in this particular industry sector, 22 of them had already been concluded by June 2007, having the interested companies accepted to pay fines.

26. Decision dated December 7th, 2006.

27. Issued on March 5th, 2007.

28. On both sides of the Atlantic Ocean.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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