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EU Email Law

By: Nick Ray - nick.ray@intellegentia.co.uk (July 11, 2003)

Summary: From October 2003, Businesses operating websites or sending electronic communications must comply with the new EU Directive, which means opting-in will be compulsory for marketing emails and the use of website cookies will be regulated.

This 'opt-in' approach when adopted means that businesses will only be permitted to send marketing emails and SMS messages to individuals who have previously consented to the use of their details in this way.

The rules change for existing customers where by they may be targeted, provided certain conditions are met, even now there is a lack of clarity on how this will be implemented.

The DTI consultation paper on the subject states:

The requirements in the Directive

Article 13
Recitals 40 - 45

The Directive retains existing controls on unsolicited direct marketing by means of automated calling systems without human intervention, fax, and phone. It also introduces new controls on unsolicited e-mail and SMS marketing. In the case of automatic calling systems and faxes, Member States are required to ensure that individual subscribers have prior consent or opt-in rights. The opt-in rule also applies to e-mails, which the Directive defines as including SMS, except where the conditions set out in Article 13.2 apply. This part of the Article (the "soft opt-in" exemption) specifies that e-mails may be sent on an opt-out basis in the context of an existing customer relationship, where:

the sender obtains the addressee's contact details in the context of the sale of a product or service and in accordance with the data processing rules in the Data Protection Directive; and
the sender is marketing its own similar products or services; and
the addressee is always able to opt out of future marketing, in an easy way and free of charge

Recital 41 makes it clear that the "free of charge" condition does not include any basic transmission costs (e.g. the addressee would be expected to cover the cost of e-mailing the sender, but they must not be charged any kind of fee for opting out).

Article 13 also specifies that e-mailers must not conceal their identity.As with subscriber irectories, the rights in Article 13 apply to subscribers who are natural persons (e.g. individuals) although Member States may extend them to legal persons (e.g. corporate subscribers).

So what are the issues to companies engaged in sending email to prospective and existing customers?

The DTI consultation paper raised a number of issues.

What is a customer relationship for e-mail marketing purposes?

Implementation of the new rules on unsolicited commercial e-mail and SMS raises a number of questions. Firstly, should customer relationship for these purposes be confined to situations only where the e-mail addressee has previously bought something or should it apply to prospective customers as well (e.g. where someone has registered an interest in a product and allowed their e-mail address to be recorded for future marketing use but under an opt-out rather than opt-in process)? The text of the Directive does not make it wholly clear what is intended but this is an issue that is clearly going to be of concern for businesses who may have legitimately obtained an e-mail address (through a promotional campaign, for instance, or by providing a quote to a prospective customer) without actually selling its products or services.

Our view is that the most important safeguards here are that contact details are fairly collected and subscribers are clearly informed of, and given a chance to object to, use of their data for direct marketing by that same business. As long as these conditions are met, and there is a direct relationship of some kind between the two parties, it does not seem necessary to insist that there must have been an actual purchase for this exemption to apply. Regulation 21 has been drafted on this basis.

How should the "similar products" rule be interpreted?

The Directive's condition that opt-out e-mail marketing must be of similar products was intended to reinforce the principle that opt-out consent should only apply to targeted marketing where the products and services concerned will be of interest to the addressee and they already have a relationship with the sender. The exact interpretation of "similar" in this context is not clear, however. Could a supermarket, for example, only e-mail its online customers about special offers on baked beans if that is what they have bought before or should it be able to direct market its whole range of food and other products or services?

We think the way forward on this should be based on existing rules and guidelines under the Data Protection Act 1998. These would restrict a business to direct marketing the kind of products the addressee would have reasonably expected it to market at the time they gave or agreed to use of their contact details i.e. a business could market the products available at the time, but not necessarily those of a business that it took over, or a substantively new product range. The key safeguard here is that addressees' contact details are fairly obtained in the first place - given that if in doubt, they have the right to opt out in any case (and businesses will have an incentive to monitor their own marketing practices in order to avoid this happening) it seems sensible to give a broader, rather than a narrower, interpretation to the "similar products" restriction. Regulation 21 (3) (b) specifies that for the purposes of this provision, the marketer must take reasonable steps at the time the addressee's contact details were collected to ensure that the addressee is aware of the kind of products they deal in.

What other solutions are there to unwanted e-mail marketing?

E-mail marketing can be a powerful tool when used in a targeted and responsible way; when used without respect for addressees' privacy rights or preferences it can cause serious offence and nuisance. Bulk untargeted e-mails or spam also generate problems for internet service providers (ISPs) whose networks can be blocked or slowed down. The new rules on unsolicited commercial e-mail will bolster the rights available to individuals and will reinforce good practice in e-mail marketing. Industry bodies like the Direct Marketing Association and the Advertising Standards Authority already promote their own rules on e-mail marketing through their codes of practice - further information about this is available from their websites (http://www.dma.org and http://www.asa.org.uk) Regulation is only part of the answer, however, particularly given the volume of spam that comes from outside the EU. Internet Service Providers (ISPs) will cut off senders who breach their acceptable use policies by sending spam; they can also offer advice to their customers on how to avoid spam, and the spam prevention and filtering systems available. Further information is available from the Internet Service Providers Association.

Conclusion

Clearly the new directive means that businesses need to make sure they are compliant with the regulations. This will mean looking at channels and also the customer database.

How can Intellegentia Help? Contact us and we can work with you to understand you marketing processes and data?

Also the SpinnakerPro Email Marketing Solution has been extended to provide Opt-in facilities as well as the standard Opt-out .