UK: The United Kingdom Privacy and Electronic Communications (EC Directive) Regulations 2003

The United Kingdom Privacy and Electronic Communications (EC Directive) Regulations 2003

On 11 December 2003, laws implementing the EC Directive on Privacy and Electronic Communications 2002 (the "Directive") were brought into force in the UK under the Privacy and Electronic Communications (EC Directive) Regulations 2003 (the "Regulations").

The Directive primarily required the EU Member States to introduce new laws regulating the use of:

  • unsolicited commercial communications (spam);
  • cookies;
  • location and traffic data; and
  • publicly available directories.

The Regulations generally apply to providers of public communications networks and services, including "traditional" businesses operating their own websites and pure e-commerce players, although they have still broader application in certain circumstances. Ignoring the Regulations may lead to regulatory investigation and fines, civil damages actions through the courts and, in some cases, criminal liability. In certain circumstances, criminal sanctions may be imposed not only on a company that breaches the Regulations, but also on its directors.

We provide below guidance relating to particular areas of concern for companies and other entities that are active in the UK market.

Unsolicited Commercial Communications to Individuals

The "opt-in" Requirement

The Regulations generally prohibit the sending of unsolicited electronic commercial communications (for example, email, SMS or MMS communications) if the recipient has not previously specifically "opted-in" to receive such communications. Typically, "opt-in" consent is obtained by the "ticking" of a box, clicking on an icon or following, for example, a specific email request for information from the recipient.

The Regulations provide for only one exception to the requirement for specific "opt-in" -- a pre-existing customer relationship. A business may send unsolicited electronic commercial communications without "opt-in" consent if all of the following three criteria are fulfilled:

  1. The sender has obtained the contact details of the recipient in the course of a sale or negotiations for the sale of a product or service to the individual;
  2. The communication is made regarding the sender’s similar products and services only; and
  3. The recipient is given a simple means of refusing (free of charge) the use of his or her contact details for the purposes of sending such communications, both at the time of the initial collection of the details, and at the time of each subsequent communication.

The exception criteria merit a closer look: first, unlike the implementing laws of other Member States, the Regulations only require negotiations (that would normally lead to a sale) to have taken place for the first criterion to be fulfilled. Second, the communication must concern "the company’s similar products or services only." The Information Commissioner’s guidance to the Regulations limits further marketing under this section to the sort of marketing for products or services that an individual would reasonably expect to receive. Hence, a link must exist between the product or service that was the subject of the first sale or negotiation and the unsolicited email. Further, the sending of unsolicited commercial communications by subsidiaries and affiliated companies based on a prior sale or negotiations entered into by another group company does not appear permissible under the Regulations.

The "opt-out" Criterion

Under the Regulations, individuals have a permanent right to "opt out" of receiving further unsolicited commercial communications at any time. In theory at least, because senders of unsolicited commercial communications are required not to disguise their identity and must provide a valid contact address, recipients should be able to exercise this right without difficulty.

Corporate Subscribers Under the Regulations

The Directive primarily seeks to protect individuals from direct marketing, although it does oblige the Member States to ensure that the legitimate interests of non-individuals, i.e., corporate subscribers, are "sufficiently protected."

Under the Regulations, an opt-out right has been provided for corporate subscribers where the recipient’s address contains personal data, i.e., other than where the address starts with "info@" or "the company’s name@," for example. Sole traders or non-limited liability partnerships in England, Wales and Northern Ireland are not considered as "corporate subscribers" under the Regulations.

Use of Cookies

Cookies are small data files deposited on a user’s computer when he or she visits a website, and allow websites to recognize a visitor and track that visitor’s actions over time. Website operators use this data to assess the effectiveness of the content and design of the site and to monitor purchasing behaviour and traffic flows through their website, and may also use it to eliminate the need for a visitor to re-enter personal details every time he or she visits that site.

The Regulations prohibit the use of cookies or similar devices unless the person to whom the cookie is served (or when any similar tracking device is being used):

  1. is provided with clear and comprehensive information about the purposes of the storage of, or access to, the information being collected; and
  2. is given the opportunity to refuse the storage of, or access to, that information.

The Regulations do not define how the information regarding cookies has to be provided. The Information Commissioner’s guidance stipulates, however, that any such text should be "sufficiently full and intelligible to enable individuals to gain a clear appreciation of the potential consequences of allowing storage and access to the information collected by the device should they wish to do so."

The user must always have the opportunity to refuse cookies. However, website operators can make access to a website conditional on their acceptance. Where cookies are considered as "strictly necessary" for the provision of a service requested by the subscriber or user, the information requirements cease to apply.

Traffic Data

Traffic data include data relating to routing, duration and time of a communication, and are typically used for billing purposes.

The Regulations restrict the use of traffic data, obliging operators to erase any personal details or render them anonymous once they are no longer necessary or needed for communication purposes. For billing purposes, however, personal data can be kept for up to six years.

Prior consent needs to be obtained from both individual and corporate subscribers if the data are destined for marketing or value-added service purposes.

Location Data

Location data essentially permit the tracking of a user’s geographic location. Such data can only be processed where the user cannot be identified or where it is indispensable for the provision of a value-added service, e.g., location-relevant information sent to a mobile phone via SMS.

Before processing can proceed, the data subject must give his or her consent as well as be informed of the type and purpose of the data and the duration for which it will be held. The data subject must also be informed of whether the data will be transmitted to any third party. Consent to process location data can be withdrawn at any time.

The Regulations also require that the processing of location data should remain restricted to what is absolutely necessary. The restrictions on the processing of location data can be overridden in cases of emergency, for example in order to facilitate responses to emergency calls.

Legacy Provisions

The new regime will bring about many uncertainties for businesses that have compiled contact registers in accordance with previous legislation. To lessen initial disruptions, the Information Commissioner suggested in recently published guidance that "legacy" email addresses (i.e., email addresses that were collected prior to December 11, 2003, the implementation date of the new Regulations) would be usable indefinitely by businesses following the implementation date, provided they were collected in accordance with the legislation in force at that time "and have been used recently." The Regulations themselves, however, do not explicitly permit such usage, and the guidance does not bind the UK courts. Thus, under current UK law, businesses that use "legacy" addresses may hope to rely on the Information Commissioner’s guidance (and, as a result of it, may be safe from regulatory intervention by the Commissioner), but they are not necessarily shielded from actions for damages by individuals.

International E-marketing Campaign: Compliance in Multiple Jurisdictions

Within the EU, at least, a company’s ability to use personal data will generally be governed by the laws of the jurisdiction where the company is based. However, as the UK’s Information Commissioner notes, companies should bear in mind that when implementing the EU Directive, each EU Member State was given the option to decide whether the rights given to individual subscribers should extend to corporate subscribers. Some jurisdictions have chosen to do so to a greater extent than the UK has done. The Spanish law is one of several laws that extend the same rights to legal entities that are applicable to individuals.

Businesses located outside the EU that, for example, send unsolicited communications into the EU, or place cookies onto computers and other devices of users based in the EU, should note they may be subject to the laws of the relevant Member States, merely as a result of targeting their citizens. Not only does the marketing legislation vary among the Member States, but so do the sanctions imposed for infringements, varying from hefty fines to imprisonment. Businesses engaging in pan-European direct marketing would thus be well advised to acquaint themselves with the law in the Member State that they are targeting. In addition, as the Information Commissioner himself remarked, a business can create a negative impression about its business if it does not respect the laws of the country in which it is marketing its products.

Further, companies should be aware of specific provisions that may restrict the type of marketing that is allowed from jurisdiction to jurisdiction, even within the EU. For example, countries may prohibit certain forms of marketing to children or prohibit or regulate the sale or marketing of certain goods or services generally -- for instance, gambling services, financial services, and the sale of alcohol, prescription medicines and tobacco are all regulated in the UK. If a company wants to avoid legal exposure, it should take legal advice in relation to the specific goods or services it is marketing.

It is beyond the scope of this note to address cross-border risks in the context of campaigns and the use of electronic communications extending beyond the EU, but it should be noted that with the additional commercial opportunities comes greater jurisdictional complexity and legal exposure. Businesses should carefully consider both the commercial opportunities presented by operating in a particular jurisdiction and the potential compliance costs and risks involved in so doing.

Links to the new Directive, the UK’s implementing Regulations, and other relevant information are set out on the Department of Trade & Industry’s website (at http://www.dti.gov.uk/industries/ecommunications/directive_on_privacy_electronic_communications_200258ec.html).

As a result of the new laws, companies should now be reviewing their direct marketing activities and determining whether they need to revise their operations to bring them into line with the new regime. As a starting point, companies should be considering the question of whether their customer databases can be used in accordance with the legacy provisions. If not, use of such contact details runs a real risk of being in contravention of the new laws.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

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