ADVERTISING AND MARKETING

1. ADVERTISING AND MARKETING Electronic Transactions Law Department of Commercial Law University of Cape Town

2. Unsolicited commercial communications (ucc) • s 45(1) ECTA & s1 CPA • Not directed at unsolicited non-commercial or bulk communication S45(1) ECTA • 45. (1) Any person who sends unsolicited commercial communications* to consumers, must provide the consumer… *broader than just email (see slide 15: forms) Electronic Transactions Law

3. S1 CPA ‘‘direct marketing’’ means to approach a person, either in person or by mail or electronic communication*, for the direct or indirect purpose of— (a) promoting or offering to supply, in the ordinary course of business, any goods or services to the person; or (b) requesting the person to make a donation of any kind for any reason * s1: ‘‘electronic communication’’ means communication by means of electronic transmission, including by telephone, fax, sms, wireless computer access, email or any similar technology or device Electronic Transactions Law

4. Forms of UCC • Via email (spam) • Via telephone • SMS or text message • Spim: spam based on MS instant Messenger • Spit: VoIP spam • Social networking: Facebook, Twitter, • Mobile phone messaging services: Whatsapp, BBM Electronic Transactions Law

5. Issues raised by spam *Invasion of privacy • Harvesting email addresses and data can amount to an invasion of privacy • Overloading mailboxes with unwanted material can be a nuisance and an invasion of privacy *Cost of managing spam • ISPs that have to cope with traffic • Businesses whose information systems and employees waste resources and time • Individuals who waste time deleting *Security risk • Spam can be used to spread computer viruses *Loss of reputation to individuals and businesses • If email address is spoofed • If email is identified as spam and blocked by ISP or businesses *Danger to internet • Spamming campaigns can act as a form of denial of service and slow internet • My Doom virus acts in this way • Offensive content • Promoting illegal products Electronic Transactions Law

6. Regulation of spam • Legislation, various models - • Opt-out • Recipient can ask not to receive email • Any further email is illegal • Opt-in • Recipient must have agreed to receive email or sending email is illegal • Other ways to regulate spam • Prohibiting sale and distribution of spam ware • Enforcing ISPs’ anti-spam policies • Blacklisting (legal status of blacklisting organisations, defamation claims by blacklisted persons) • Common law – nuisance, privacy Electronic Transactions Law

7. S45 ECTA: SENDER DUTIES (1) Any person who sends unsolicited commercial communications to consumers, must provide the consumer- (a) with the option to cancel his or her subscription to the mailing list of that person; and (b) with the identifying particulars of the source from which that person obtained the consumer's personal information, on request of the consumer. Electronic Transactions Law

8. Problems with section 45(1) • Opt-out scheme • s 1: 'consumer' means any natural person who enters or intends entering into an electronic transaction with a supplier as the end user of the goods or services offered by that supplier’ NB excludes those who do not enter, or intend to enter, into an electronic transaction with the sender • what constitutes a proper opt-out? • Important concepts not clearly defined – what is meant by ‘sender’, ‘unsolicited’ and ‘commercial’? See Lance Michalson ‘The Law vs the Scourge of Spam’ September 2008 <http://www.michalsons.co.za/the-law-vs-the-scourge-of-spam/1019> Electronic Transactions Law

9. S 45 & 89 ECTA • s45 (2) No agreement is concluded where a consumer has failed to respond to an unsolicited communication. • s45(3) Any person who fails to comply with or contravenes subsection (1) is guilty of an offence and liable, on conviction, to the penalties prescribed in section 89 (1). • s45(4) Any person who sends unsolicited commercial communications to a person who has advised the sender that such communications are unwelcome, is guilty of an offence and liable, on conviction, to the penalties prescribed in section 89 (1). • s89(1) A person convicted of an offence … is liable to a fine or imprisonment for a period not exceeding 12 months. Electronic Transactions Law

10. Cpa – s11 • S11(1) The right of every person to privacy includes the right to— (a) refuse to accept; (b) require another person to discontinue; or (c) in the case of an approach other than in person, to pre-emptively block, any approach or communication to that person, if the approach or communication is primarily for the purpose of direct marketing • S11(2) a person who has been approached for direct marketing purposes may demand the cessation of any further approaches (opt-out) • S11(3) Establishment of registry for pre-emptive blocks by the National Consumer Commission • S11(4) A person authorising, directing or conducting any direct marketing must implement appropriate procedures to facilitate the receipt of opt-out instructions and ensure the discontinuation of communication after the receipt of opt-out instructions or where a person has registered a pre-emptive block • S11(5) no fees may be charged by senders in relation to pot-out instructions or registered pre-emptive blocks Electronic Transactions Law

11. CPA –s12 • No contact at home during prescribed periods s12 • Consumer Protection Regulations GNR.293 of 1 April 2011:  Regulations (Government Gazette No. 34180), Notice Prohibited time for contacting consumers Electronic Transactions Law

12. Industry bodies • Direct Marketing Association of SA: National opt-out register (pre-emptive block) • established in 2007 • https://www.nationaloptout.co.za/ • ISPA in favour of opt-in provisions, clauses 14 -15 Code of Conduct http://ispa.org.za/code-of-conduct/, see also http://ispa.org.za/press-release/ispa-urges-opt-in-approach/ • Wireless Application Service Providers’ Association Code of Conduct clause 5; uses an opt-out approach seehttp://www.waspa.org.za/code/waspa_coc_6.1.pdf Electronic Transactions Law

13. Reform: Protection of Personal Information Bill s66: opt in Unsolicited electronic communications • s66. (1) The processing of personal information of a data subject for the purpose of direct marketing by means of automatic calling machines, facsimile machines, SMSs or electronic mail is prohibited unless the data subject— (a) has given his, her or its consent to the processing; or (b) is, subject to subsection (2), a customer of the responsible party • S66 (3) Any communication for the purpose of direct marketing must contain— (a) details of the identity of the sender or the person on whose behalf the communication has been sent; and (b) an address or other contact details to which the recipient may send a request that such communications cease. Electronic Transactions Law

14. Some legislation from other jurisdictions • US: Can-Spam Act of 2003 • Directive on Privacy and Electronic Communications (2002/58/EC); Article 13(1) requires prior consent for direct marketing email-opt-in • E-Privacy Directive:  Directive 2002/58/EC Concerning the Processing of Personal Data and the Protection of Privacy in the Electronic Communications Sector, 2002 O.J. (L 201) 37   • E-Commerce Directive:  Directive 2000/31/EC on Certain Legal Aspects of Information Society Services, in Particular Electronic Commerce, in the Internal Market, 2000 O.J. (L 178) 1   • Distance Contracts Directive:  Directive 97/7/EC on the Protection of Consumers in Respect of Distance Contracts, 1997 O.J. (L 144) 19 • Data Protection Directive:  Directive 95/46/EC on the Protection of Individuals with Regard to the Processing of Personal Data and on the Free Movement of Such Data, 1995 O.J. (L 281) 31 • Australian Spam Act 2003 • For a useful overview see: L-Soft ‘Opt-In Laws in the USA and EU’ available at < http://www.lsoft.com/resources/optinlaws.asp> (accessed 4 August 2012) Electronic Transactions Law

15. Cpa s29: right to fair & responsible marketing A producer, importer, distributor, retailer or service provider must not market any goods or services— (a) in a manner that is reasonably likely to imply a false or misleading representation concerning those goods or services, as contemplated in section 41; or (b) in a manner that is misleading, fraudulent or deceptive in any way, including in respect of— (i) the nature, properties, advantages or uses of the goods or services; (ii) the manner in or conditions on which those goods or services may be supplied; (iii) the price at which the goods may be supplied, or the existence of, or relationship of the price to, any previous price or competitor’s price for comparable or similar goods or services; (iv) the sponsoring of any event; or (v) any other material aspect of the goods or services. Electronic Transactions Law

16. Cpa s30 bait marketing • S30(1) Asupplier must not: advertise goods or services, alleging that they are available at a specified price in a manner that may mislead or conceive about the actual availability at the advertised price • S30(2) If a supplier advertises particular goods or services, states a price and the advert states there is a limitation in respect of availability, the supplier must make those goods or services available at that price, to the extent of the expressed limits. • S30(3) It is a defence to an alleged failure to comply with subsection (1) or (2) if— (a)the supplier offered to supply or procure another person to supply a consumer with the same or equivalent goods or services of the kind advertised within a reasonable time, in a reasonable quantity, and at the advertised price; and (b)the consumer— (i)unreasonably refused that offer; or (ii)accepted the offer, and the supplier has supplied or procured another person to supply the goods or services so offered and accepted Electronic Transactions Law

17. S31 CPA: negative option marketing • (1) A supplier must not— (a) promote any goods or services; (b) offer to enter into or modify an agreement for the supply of any goods or services; or (c) induce a person to accept any goods or services or to enter into or modify such an agreement, on the basis that the goods or services are to be supplied, or the agreement or modification will automatically come into existence, unless the consumer declines such offer or inducement. • (2) An agreement purportedly entered into as a result of an offer or inducement contemplated in subsection (1) is void. • (3) A modification of an agreement purportedly agreed to as a result of an offer or inducement contemplated in subsection (1) is void. Electronic Transactions Law

18. CPA: Other provisions • s 34 Trade coupons and similar promotions • s 35 Customer loyalty programmes • s 36 Promotional competitions • s 38 Referral selling Electronic Transactions Law

19. Electronic Transactions Law compiled byCaroline B Ncube is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 South Africa License. To view this a copy of this license visit http://creativecommons.org/licenses/by-nc-sa/2.5/za/ Electronic Transactions Law