Many South Africans have experienced the frustration of receiving countless spam calls or unsolicited e-mails and text messages urging them to buy products or take up credit offers. To address these unwanted marketing intrusions, the department of trade, industry and competition has published proposed amendments to the regulations under the Consumer Protection Act of 2008, and calls for public comments by January 15.
In this edition of Business Law Focus, host Evan Pickworth is joined by Ashlin Perumall, partner in the mergers and acquisitions department at Baker McKenzie SA, to discuss how these proposed amendments aim to enhance consumer privacy and provide stronger protection against unsolicited direct marketing practices, especially direct marketing by means of unsolicited electronic communications.
Listen to the conversation:
The context
A key feature of the proposed amendments is the establishment of an opt-out registry, managed by the National Consumer Commission (NCC). This registry will enable consumers to pre-emptively block unsolicited electronic communications from direct marketers. Once the proposed amendments are finalised and in force, consumers will be able to register (in a prescribed form) a pre-emptive block in the opt-out registry against unwanted marketing messages via electronic communication. It is the consumer’s responsibility to keep their information in the registry up to date.
Direct marketers, broadly defined in the proposed amendments as persons who engage in direct marketing, will be required to register in the opt-out registry before contacting any consumer for direct marketing via electronic communication. This registration must be renewed annually and is subject to payment of a prescribed fee. Direct marketers will have to check their contact lists against the opt-out registry before sending any marketing messages and must refrain from contacting consumers who have registered a pre-emptive block for purposes of direct marketing via electronic communication. Additionally, direct marketers, will be obligated to cleanse their databases monthly with the NCC to remove the information of persons who have registered a pre-emptive block in the optout registry.
Enforcement mechanisms include allowing consumers who have registered a pre-emptive block to file a complaint with the NCC using the updated complaint form provided in the proposed amendments. The NCC may issue compliance notices to offending direct marketers, outlining the required steps that must be taken and potential penalties if those steps are not taken. Failure to comply can result in substantial fines — up to 10% of the direct marketer's annual turnover during the preceding financial year or R1m — or prosecution that could lead to liability to a fine or imprisonment for up to 12 months, or both a fine and imprisonment.
These proposed amendments will also need to be read with the Protection of Personal Information Act (Popia), particularly section 69, which prohibits processing of personal information for direct marketing via electronic communication unless there is consent or an existing customer relationship. Given the broad definition of a direct marketer in the proposed amendments, the responsible party and the operator will be deemed a direct marketer when engaging in direct marketing practices via electronic communication. This means that once the proposed amendments are finalised and are in force, they will also have to comply with the obligations imposed on direct marketers in terms of the proposed amendments, including registering in the opt-out registry as direct marketers before contacting any consumer for purposes of direct marketing via electronic communication.
It is important to note that even if a person who is not a customer of the responsible party has not registered a pre-emptive block in the opt-out registry, the responsible party will still need to obtain consent (as required in Popia) for purposes of direct marketing to that person via electronic communications.
It would also seem that it will not suffice that the data subject is a customer of the responsible party and that all the requirements of Popia in this regard have been complied with. The responsible party will, in addition, have to check their customer contact list against the opt-out registry and refrain from sending marketing messages via electronic communication to customers who have registered a pre-emptive block. In addition, the responsible party must remove from its database all data of persons (including customers) who have registered a pre-emptive block, by cleansing such data monthly with the NCC.
These amendments represent a significant step forward in protecting consumer privacy in SA, a welcome development in the face of aggressive telemarketing strategies adopted by various businesses in SA. By empowering consumers to control who can contact them electronically, the proposed amendments reinforce the protection of privacy principles outlined in Popia. In the light of the proposed amendments, businesses engaging in direct marketing practices by way of electronic communications will need to review their practices in this regard and ensure compliance in order to avoid liability. Such measures will, accordingly, come at increased compliance costs and may be a severe threat to many businesses who engage in the practices these amendments aim to curb.
While the proposed amendments may introduce additional compliance requirements for businesses, they ultimately foster a more respectful and responsible marketing environment in SA. Companies that adapt promptly will not only comply with the law but also build greater trust with consumers.
As mentioned, the department encourages all stakeholders to submit their comments on the proposed amendments by the January 15 deadline.
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