Home : Newsletters : 2003 : June
Businesses, including recruitment consultancies and job boards, have had to become accustomed to data protection laws and their impact on customer acquisition and relationship management plans. The laws have generally allowed businesses to direct market to their customer base on the basis of an "opt out" regime (i.e. we will market to you unless you tell us you don't want us to either now or in the future). However, in relation to electronic direct marking (including by e-mail and SMS) the position is about to change. That change, coupled with the rising awareness of privacy and data protection rights amongst consumers (and therefore job board and consultancy candidates), means it is very important to ensure direct marketing campaigns comply with the forthcoming laws.
Currently, use of personal data (such as e-mail addresses) for direct marketing purposes is governed by the Data Protection Act 1998. Current laws provide specific rules for marketing by telephone and fax but do not include specific provisions about e-mail or SMS. A new European Directive introduces specific rules to cover direct marketing by electronic means. The Directive must be implemented in the UK through Regulations to be introduced by the DTI by 31 October 2003. The DTI has recently issued draft Regulations that contain the measures they intend to introduce, which have recently been subjct to public consultation.
The new Regulations
Under the draft Regulations, unsolicited commercial direct marketing by e-mail or SMS will be subject to a requirement that the recipient has previously notified the sender that they consent to the e-mail or SMS being sent. This means that, in contrast to the current position whereby most companies have used an “opt out” regime; all recipients must "opt in" (i.e. we will only market to you if you tell us you want us to either now or in the future).
Exception for existing customers
There is an exception to the "opt in" requirement where there is an existing customer relationship with recipients, in which case businesses may continue to market their products and services to them on more of an "opt out" basis. This exception requires (1) a direct relationship with the recipient (in the context of a sale or negotiation), (2) the marketing of only those products or services about which the recipient would reasonably expect to receive information, and (3) the recipient being given an opportunity to "opt out" at the point of collection of their details and at the time of each subsequent marketing communication.
Problems for recruitment consultancies and job boards?
1. Can existing databases still be used?
Many existing customer databases have at least to some extent been generated on an "opt out" basis. Therefore, customers that have not opted out can only be directly marketed to (by email or SMS) in the future to the extent they subsequently "opt in" or qualify under the existing customer relationship exception. In order for that exception to apply the current draft of the Regulations requires that the relationship with the customer must have arisen in the context of a sale or negotiation. There is widespread concern amongst web site operators that this will not catch registered users of web sites that have not paid a fee. As it is illegal under employment agencies law for consultancies or job boards to charge for job seeking services this seems to leave consultancies and job boards with a potential problem as it could mean that the value of existing databases for promotional purposes is seriously diminished. It is hoped that this position will be addressed in the final form of the Regulations in order to allow web sites, such as job boards, to continue to use their "opt out" databases but this will only be clear when the final Regulations are released later this year.
2. Third party lists
As the 'opt in' consent must be provided to the sender of the email, use of lists purchased or rented from third parties will become problematic unless the list provider is also responsible for sending the email. Again, it is hoped that this position will be watered down in the final form of the Regulations.
3. Promotions
Businesses that acquire customer details through means other than sales, such as registrations for competitions or prize draws, will have to be very careful to ensure the details are collected in such a way as to establish an existing customer relationship in order to be able to use those details for client acquisition / direct marketing by e-mail or SMS.
4. Corporate subscribers / business to business communications
The Regulations fall short of extending the "opt-in" rights of individual recipients to corporate subscribers. The public consultation process may result in the restrictions being extended to cover corporate subscribers in full, which could have an impact on recruitment businesses ability to market to employers.
What if you don't comply?
Whilst non-compliance with the Regulations may result in damages claims or enforcement action by the UK Information Commissioner, it can also lead to an embarrassing investigation and resulting damage to brand and reputation, something that competitors will not be slow to capitalise on.
What should you do now?
Although the Regulations are still in draft form it is important that online recruitment businesses, to the extent they have not already done so, take practical steps to ensure that their direct marketing practices will be compliant when the Regulations come into force. You should seek advice from your legal department or external lawyers on the final form of the Regulations.
If, as is hoped, the public consultation results in the problematic elements outlined above being watered down, many job boards and consultancies may need only to review their database generation processes going forward. However, to the extent any of those elements survive, more severe action will need to be taken. In any case, in order to preserve the value of customer databases as much as possible for when the Regulations come into force, it would be prudent to begin collecting details on an opt in basis to the extent you do not already do so.
Graham Hann
Taylor Wessing 020 7300 4839 or g.hann@taylorwessing.com.