UK: Direct Marketing Restrictions in the E.U.

Last Updated: 1 December 2003
Article by Jonathan Nugent

New rules regarding privacy and the use of information for marketing purposes are creating difficulties for marketers in the E.U. as well as the U.S. (See article Direct Marketing Restrictions in the U.S., for a detailed description of recent developments in U.S. marketing law). This article provides an overview of recent changes in this area in the E.U., focusing on the position in the U.K.

The European legislation which addresses direct marketing is confusing, as there is no single Directive which sets out the whole position. Rather, there is a layering of various Directives, each of which is then implemented in different ways by the Member States.

Whilst the terms "opt-in" and "opt-out" are not used by the legislation, a big part of the debate around direct marketing has been around whether marketers should be required to obtain the consent of individuals before marketing directly to them (opt-in), or whether they should only be required to give the individuals the right to object to receiving direct marketing communications (opt-out).

Data Protection Directive

The first recent U.K. statute to address direct marketing was the Data Protection Act 1998, which implemented the European Data Protection Directive 95/46. The Data Protection Act applies to the processing of all personal data, which broadly means data relating to living individuals. It is therefore very wide in its effect, but it gives individuals a specific right to require a company not to process their personal data (e.g., name, address, telephone number, e-mail address) for the purposes of direct marketing. The effect of this is to give individuals (including individuals who are employees, but not corporations) a right to opt-out of all types of direct marketing.

This specific obligation on data controllers in relation to direct marketing is in addition to the general obligation a data controller is under to obtain and process personal data fairly and lawfully and to comply with the other data protection principles.

Non-compliance may result in potentially unlimited fines for the data controller with enforcement notices and compensation for data subjects. To date, the Information Commissioner (who is responsible for enforcement of data protection legislation in the U.K.) has never taken action against a spammer, and the maximum fines imposed by the Information Commissioner tend to be relatively low—in 2002, the maximum fine imposed was £5,000.

Directive On Privacy And Electronic Communications

E.U. Member States have recently implemented or are in the final stages of implementing Directive 2002/58/EC concerning the processing of personal data and the protection of privacy in the electronic communications sector. This Directive enhances individual’s rights in relation to direct marketing by various types of communications services, and replaces an earlier Directive (97/66/EC) concerning data protection and privacy in the telecommunications sector. It has been implemented in the U.K. by the Privacy and Electronic Communications (EC Directive) Regulations 2003, which will come into force on 11 December 2003. The U.K. is slightly late in implementing this Directive, as the deadline for all E.U. Member States was October 2003.

The new Directive covers direct marketing by personal calling, automated calling, fax, e-mail, and other means of electronic communication. It does not cover direct marketing by post. The restrictions on marketing in the Directive are primarily aimed at protecting "sub-scribers," i.e., the customers of communications service providers, and some restrictions apply only to subscribers who are individuals, rather than corporations. However, Member States have a degree of discretion over how they implement the Directive, which sets mini-mum levels of protection, and hence rights in some Member States (for example, in relation to corporate subscribers) may be stronger than in others. The rules in the Directive are additional to individuals’ rights under the Data Protection Directive.

The basic position regarding various forms of direct marketing under the new U.K. Regulations is as follows:

  • Person calling (i.e., telephone marketing by non-automated means). Subscribers can opt out either by notifying the caller that they do not wish to receive unsolicited calls or, alternatively, individuals may register their number on an opt-out database operated on behalf of OFCOM (the telecommunications industry regulator). Marketers should check numbers they are calling against the "opt-out" list at least every 28 days, as there is a grace period for numbers which have been put on the list within the preceding 28-day period. The U.K. government has indicated an intention to extend the opt-out database to include corporate subscribers at a later date.
  • Automated calling (i.e., marketing using automated equipment to transmit pre-recorded marketing messages) requires the subscriber’s prior opt-in consent.
  • Fax. Marketing by fax requires the prior opt-in consent of subscribers who are individuals. Corporate subscribers can opt-out by notifying the caller that communications should not be sent to that line. Both corporate and individual subscribers may also register with OFCOM that they do not wish to receive unsolicited faxes.
  • E-mail and text messaging. The prior opt-in consent of subscribers who are individuals is generally required in order to send marketing by electronic mail (and similar services such as text messages). Under the U.K. Regulations, the restrictions on sending of electronic mail only apply to subscribers who are individuals (i.e., not corporate subscribers). There is an exception for marketing of similar goods or services to existing customers. This provides that existing customers can be sent electronic mail for the purpose of marketing good or services similar to those they have previously purchased unless they have opted out to use of their details for this purpose. However, the individual must be given a simple means of refusing the use of their contact details for this purpose, free of charge, both at the time their details are first collected and at the time of each subsequent communication.
  • Cookies. Marketers must not store information on a subscriber’s computer, or gain access to information on a subscriber’s computer, for example by using "cookies" to track web sites visited by a subscriber or to recognise the subscriber on a subsequent visit, unless the subscriber has been provided with clear information about the purposes for which the information will be used, and is given the opportunity to opt out of such use. This might be done, for example, by explaining to users how to set their browsers to reject cookies. The most significant change brought in by the new Regulations is that, so far as marketing to individuals is concerned, opt-in consent must be obtained before a company may market to them by fax, text, or e-mail, unless the carve-out for existing customers applies.

However, the "existing customer" carve-out is quite narrow:

  • It only applies to e-mails and text messages, not faxes;
  • It can only be used by the company that obtained the subscriber’s details, and not by, for example, other members of the group, or third-party marketing partners;
  • It only applies when details are obtained in the course of a transaction. The U.K. Regulations have sought to make this more flexible by including details obtained in the course of negotiations for a sale, but the carve-out would not apply, for example, if an individual’s details are obtained as a result of the individual’s participation in a sales promotion (in which case opt-in consent must be obtained); and
  • The subscriber’s details can only be used to market similar products or services. The concept of similarity is not defined and so in some cases it may be unclear whether the carve-out applies.

This means that the Regulations are likely to increase the use of opt-ins being used on a blanket basis. For example, in order to take advantage of the opt-out carve-out, a database of customer details might have to include reference to the type of product/service purchased by a customer. To achieve compliance, in many cases it may be easier to seek opt-ins from all customers.

Marketing e-mails which disguise the sender’s identity or do not include an address to which recipients may send requests that communications cease, are also prohibited. Telephone communications and faxes for marketing purposes should also provide details of the name of the person calling and the address or telephone number on which they can be reached free of charge. These requirements are in addition to a set of complex requirements requiring the pro-vision of information to customers in the context of e-commerce transactions and other forms of distance selling set out in the E-Commerce Directive and the Distance Selling Directive.

The Directive requires Member States to provide for judicial remedies and to impose appropriate sanctions. The U.K. Regulations do this by providing that when any contravention of the Regulations is alleged, either OFCOM or any person aggrieved may request the Information Commissioner to exercise his enforcement functions in respect of the contravention. The Information Commissioner may also take action unilaterally. A person suffering damage as a result of contravention of the Regulations is also entitled to bring legal proceedings for compensation.

The new rules are also reflected in a number of industry codes of practice and self-regulatory schemes. For example, in the U.K., the Advertising Standards Authority, which is the self-regulatory body for the advertising industry, has introduced rules which require the explicit consent of consumers for marketing by fax, e-mail, or SMS, and has recently published an adjudication in which it reprimanded an advertiser for sending unsolicited e-mail marketing to addresses on a list which it had bought, even though the advertiser believed the individuals on the list had consented to such marketing.

The U.K.’s enforcement provisions have been criticised by an all-party group of Members of Parliament who believe that the Information Commissioner is not equipped with adequate powers or resources to follow-up and catch spammers. The group recommended that the legislation should be extended to prevent spam being sent to businesses, and called for coordinated international action to be taken against spam. They also recommended that the Department of Trade and Industry should encourage a "super complaints" system allowing organisations to represent people with complaints about spam. The group plans to send recommendations to both the U.K. and U.S. governments.

It remains to be seen whether changes in legislation will have the desired effect of increasing consumer protection and privacy. In the meantime, as in the U.S., companies engaged in direct marketing in the E.U. should be reviewing their data collection and marketing procedures to ensure compliance with the new rules.

Copyright © 2007, Mayer, Brown, Rowe & Maw LLP. and/or Mayer Brown International LLP. This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

Mayer Brown is a combination of two limited liability partnerships: one named Mayer Brown LLP, established in Illinois, USA; and one named Mayer Brown International LLP, incorporated in England.

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