News
In the light of a recent penalty imposed by the Information Commissioner’s Office for calls about PPI claims made to registrants on the Telephone Preference Service, the Direct Marketing Association asked the Commission to consider the circumstances surrounding this ruling and, in so doing, to advise DMA on EMCAS and their continuing membership of the Association.
The Commission itself had not received complaints against EMCAS from individuals but it was clear from the ICO ruling and discussions with EMCAS that the company had been the subject of TPS complaints on a worrying scale for some time. It seemed clear, and this was reinforced by EMCAS’s own admissions and actions, that they had not been carrying out effective due diligence on their suppliers and introducers and had not taken responsibility for those providers. This behaviour had contributed to a high volume of TPS complaints over a lengthy period of time. It had also contributed to an industry-wide problem where there is low public confidence in claims companies and high anxieties about nuisance calls.
In considering its advice to the DMA board and expressing its views on issues with claims management activity the Commission took account of a number of factors:
- The extent to which tolerance or actual endorsement of models that stretched or breached TPS rules was an issue across the sector and that the reputation of one to one marketing and claims management businesses had been damaged by their collective actions.
- EMCAS had clearly been party to this and that activity had been addressed by the ICO and the financial penalty imposed. EMCAS belatedly accepted their responsibility for the marketing calls made by “introducers” acting under contract for the company.
- The Commission considered the relevance of its previous adjudications on member companies that had or had not been the subject of action by the ICO. The Commission considered the scale and nature of the alleged wrongdoing in these cases and whether the companies took appropriate mitigating action when challenged.
- The changes EMCAS had made to its management structure, to its organisational arrangements and to how it selects and audits data suppliers and sub-contractors. EMCAS briefed the Commission on planned changes to its model of business and marketing activities.
On this basis and subject to receiving agreement from EMCAS to action on compliance and information-sharing, the Commission has told the DMA there does not seem a reason to terminate the company’s membership.
The Commission has made clear to EMCAS and to DMA that it is vital that EMCAS sees these changes through, achieving a further decline in complaint levels. To this end the Commission asked that EMCAS meet with the DMA compliance team, allowing them full access to information about their data marketing activities and those of their suppliers and introducers. The Commission has asked for a report back in six months with a full review of the remedial actions together with a report of any TPS complaints, and any future plans.
The head of the one-to-one marketing industry’s watchdog, the DM Commission (DMC), has said that marketers must now look beyond “complying with the law” to following principles that “put their customer first” to win trust, create effective marketing and prevent consumer complaints.
The comments, made by the DMC’s chief commissioner George Kidd, follow the publication of the watchdog’s annual report this month (January 2015). The report recorded 103 investigations into companies alleged to be in breach of the DMA Code, the one-to-one marketing industry’s self-regulatory code of best practice.
The majority of complaints received were from consumers about invasions of privacy and so-called ‘sharp practices’, and were backed by thousands more complaints to bodies including the Telephone Preference Service and the Information Commissioner’s Office. Two companies were expelled from DMA membership following investigations by the DMC.
The DMC is the independent watchdog responsible for enforcing the DMA Code. In August 2014, the DMA launched a new principles-based code of practice. The new DMA Code comprises five principles that make putting the customer first the priority, rather than just complying with the law.
According to Kidd, the majority of complaints logged and investigated would have been avoided if marketers followed these principles and complied with the interests of their customers:
“The overwhelming majority of marketers understand the law and know what they can and can’t do when it comes to using people’s data. However, there are many who play fast and loose with the rules. As the nature of the complaints show, consumers don’t focus on whether or not marketers are or are not breaking a law or regulation. They are angry when they feel deceived or misled when their requests for privacy are ignored and when they think their personal information is being sold on.
“Marketers therefore must look beyond complying with the law and standards of best practice to complying with their customers’ wishes. Doing so is essential for creating effective marketing, earning consumer trust and preventing complaints. Following the DMA Code is the route to putting their customer first at all times.”
This month (January 2015), the DMC has appointed its new independent commissioner. Dr Simon Davey will succeed The Very Revd. Professor Martyn Percy, Dean of Christ Church, Oxford, who has now completed his term of office. Dr Davey is a former Chair of the Standards Committee for the London Borough of Bromley and is an associate of Cass Business School’s Centre for Charity Effectiveness. He is the founder of Emerging Scholars, a programme to grow ability, belief and character in disadvantaged girls and co-developed Inspire IT to empower marginalised young people.
The DMC’s annual report can be downloaded from: http://www.dmcommission.com/wp-content/uploads/2008/08/DMC-annual-report-2013-141.pdf
There have been growing instances of nuisance callers and criminals deliberately changing the Caller ID, a practice known as ‘spoofing’. See here for OFCOM’s advice on what you can do if you think you have been a victim of Caller ID spoofing.
http://consumers.ofcom.org.uk/phone/tackling-nuisance-calls-and-messages/phone-spoof-scam/
The Direct Marketing Commission had received a complaint against L-EV8 Marketing from a consumer who had unwittingly signed up over two years previously to membership of their Pound Savers club. The club offer retail and other discounts and deals. Membership of this particular club is annual with an annual membership fee. When the complaint was presented to the Commission, it was found that the complainant’s membership fee had risen substantially in the second year seemingly without notification. . The Commissioners were asked to consider whether the company was complying with rules regarding the clarity of the sign up process which was conducted over the telephone, the ongoing renewal process, and their customer service.
The Commission’s decision was based on an analysis of the complaint as well as an investigation into L-EV8’s direct marketing activity overall from the point of sale to the ongoing membership including their auto-renewal process. Previous complaints had been received in relation to L-EV8’s customer service activity but this had been dealt with informally and remedial processes had been put in place.
L-EV8 told the Commission that they no longer signed up customers through cross-selling on the phone when these people called TV shopping channels to make some other purchase. Their marketing and customer acquisition is all online with subscribers joining and paying on a monthly basis. The customers from the TV sign-up era paid for an annual service and this payment was auto-renewed if the customer did not act to cancel the subscription before the renewal date. The complainant in question was part of a legacy club of such subscribers which continues to be served by L-EV8.
The investigation identified contradictions between the contractual undertakings to inform scheme members in writing of price changes and the procedure followed with price changes posted on the scheme’s websites. This process might be considered logical and adequate for new scheme members who signed-up on-line and have monthly payments and the ability to end a membership with immediate effect. The arrangement did not seem fair for members who had joined by phone, who were renewed annually, who received membership benefits by post as well as via an online option, who were of a different and older demographic and who might not have internet access.
During the course of the investigation, L-EV8 undertook in future to notify annual fee paying members of their forthcoming renewal date giving members the opportunity to cancel if they so wished before an annual payment fell due. L-EV8 also undertook to improve the communications process around price increases. L-EV8 had agreed to roll this new process out from January 2015.
On this basis and in relation to practices that are now to change the Commission concluded the arrangements were not fair and reasonable and upheld a breach of Clause 3.21 of the fourth edition of the DMA Code of Practice. The Commissioners were most grateful for L-EV8’s willingness to work with the Commission during this investigation, and their agreement to remedial actions to ensure they fall into compliance in future. There was a concern, however, over the time L-EV8 said it would take to put new arrangements in place. Given a ruling on Clause 3.21 in relation to existing arrangements the Commission look to L-EV8 to exercise sense and discretion in relation to any scheme member who contacts them in the interim period about an annual renewal payment that has been taken and where the individual did not want or intend for this to happen.
As Chair of the Direct Marketing Commission (DMC) I am pleased to announce some revolutionary work in self-regulation in direct marketing.
The Commission enforces the DMA Code of Practice, which applies to over 1000 DMA members and helps to protect consumers and create a climate for innovation and investment. Complaints to the DMC are relatively few in number but they are often an indicator of a problem with wider impact that needs to be addressed. In recent cases our intervention based on one or two direct complaints ended practices that had actually generated over 1,000 complaints to the Telephone Preference Service, the ICO and others.
The DMA Code we inherited was over 170 pages long. It contained extracts from legislation, industry-specific rules and packets of best practice. And it was structured based on a series of sub-sectors of marketing like mobile marketing, direct mail, data collection and telephone centre operations. It proved “more is not better”. It was hard to read, let alone follow. It made little sense for consumers and chunks of it were of little relevance to us as the enforcement arm.
You can view the new DMA Code of Practice here. It is wholly outcomes-based and anchored in the principle that businesses must put customers first. It focuses on four core themes:
Respect for privacy
Being honest and fair
Treating data with care
Taking responsibility to deliver what you promise
The Code rules run to only five pages. The whole document including annexes and glossaries is just twelve. It is simple, clear and strategic in nature. It gives enforcers scope to apply good judgement. It is a framework that is inclusive: spurring businesses to commit, not scaring them off. It is also a framework that should have meaning and relevance across the marketing spectrum for member and non- member companies alike, raising standards to the benefit of consumers.
The Code is not a stand-alone. As part of this exercise the DMA has updated the guidance it gives members on laws, compliance and responsible and effective marketing right across the board. The DMA Guides detail how members can achieve the outcomes set out in the DMA Code.
No Code or piece of legislation is a “cure-all”. There are challenges to address the collection and use of data, with the permissions people give to sharing of information and with preference service schemes that allow us to manage what we receive. We want self-regulation to be a valuable and effective part of the mosaic of consumer empowerment and protection alongside the ICO, Trading Standards, Citizen’s Advice and others who work to educate, inform and protect.
I think it is hugely to the credit of the direct marketing industry that they have invested in this Code, in the legal and other compliance advice they give and in the Commission as an investigative and adjudicatory body. I think the importance of industry setting and giving meaning to standards will matter more and more in a digital world in which state agencies may not have the remit or capacity or processes to deal with every risk and challenge.
I hope you find the Code stimulating. Just having the confidence to use those seven words shows how very different it is!
Adopting the DMA’s new code of practice will be central to the industry’s efforts to address customer concerns about one-to-one marketing such as data sharing, according to the trade body’s executive director Chris Combemale.
Speaking at the launch of the new DMA Code, which covers all data-driven marketing activity, Combemale said that it will change the industry’s mindset:
“We’ve taken a new approach to self-regulation that recognises the need to focus on principles that go above and beyond compliance with the law. It’s perfectly easy to follow all of the details of regulation and yet fail to meet the expectations of the customer, such as how you use their data.Gonflables Noël
“Our Code centres on five principles to inspire the industry to serve each customer with fairness and respect. Marketing with customers not at them is imperative to fostering trust and achieving commercial success.”
The DMA is now encouraging other businesses to adopt the code, which comes into force in two weeks on Monday 18 August.
According to Combemale failure to do so will come at a cost to UK plc:
“The hero principle of ‘putting your customer first’ demonstrates the evolution of our industry. Each marketer and organisation should see one-to-one marketing as an exchange of value between its business looking to prosper and its customer looking to benefit.
“Data fuels the digital economy, so earning customer trust is a commercial imperative. Brands must make every effort to ensure that they always collect and use consumers’ data in ways that they expect and benefit from.”
The DMA developed the Code after an 18-month consultation process with industry stakeholders, including practitioners as well as government regulators Ofcom and the Information Commissioner’s Office. The Ministry of Justice and Department of Culture, Media and Sport also provided input.
The DMA Code will be enforced by the industry’s independent watchdog, the DM Commission.
The DMA Code is backed by a series of channel-specific ‘guides’, which cover recommended best practice and compliance with regulations.
More than 1,050 corporate members of the DMA, which includes the industry’s top agencies, adhere to the DMA Code as a condition of membership.
The DMA Code and guides are available via the DMA’s website: www.dma.org.uk
The Information Commissioner’s Office has served digital marketing company Reactiv Media Limited with a £50,000 fine after an investigation discovered they had made unsolicited marketing calls to people registered with the Telephone Preference Service. Reactiv Media was a member of the DMA until April this year and was subject to the industry’s self-regulatory Code of Practice. The DMC had previously found Reactiv Media in breach of key rules in relation to privacy and telemarketing. The company, unlike other members of the Association, seemed disinterested in working with us to improve their practice. In March 2014 we recommended to the DMA that they were removed from membership and we reported our findings on this and other cases to the ICO early June. The case shows why self and statutory regulation needs to work hand in hand, with the DMC stepping in on this and other cases to push for change and compliance, and with the ICO present to deal strategically with those who sadly seem intent on not playing by the rules – or the law.
Full details of the adjudication can be found at http://www.dmcommission.com/adjudications/2014/04/complaints-against-direct-marketing-reactiv-media-consumer-helpline/ and http://www.dmcommission.com/adjudications/2013/10/reactiv-media-complaints-about-direct-marketing-2/.
Please also see our Consumer Alerts page at http://www.dmcommission.com/consumer-alerts/ for further information should you have a complaint.
The Direct Marketing Commission had received two complaints against Consumer Lifestyles, a trading name of Data Locator Group (DLG) from consumers who were registered on the Telephone Preference Service. The Commission was asked to consider whether the company was complying with rules regarding calls to those registered with the TPS, whether there were issues in relation to customer service and whether the purpose of the calls was clear.
The Commission’s decisions were based on an analysis of those complaints and a considerable number of other complaints made to the Telephone Preference Service over the period of a year. The Commissioners welcomed DLG’s willingness to share this and other data and their views were informed by the actions taken by DLG to make changes to their marketing practices and processes. It was clear from information from TPS and DLG that these actions had led to a big fall in complaint levels.
This case was important in terms of the volume of complaints recorded by TPS and highlighted issues around consumer consent, the importance of clear and transparent permission methods and the transparency of ongoing contact with consumers. The Commission concluded DLG had made calls based on consents received from online surveys and previous telephone marketing. They saw grounds for mitigation because DLG had made a number of changes in order to reduce TPS complaints. The Commission did, however, conclude there had been two breaches of the Direct Marketing Code. These were in relation to the clarity of their communication when consent is secured on-line and the importance of ensuring that the purpose of a telephone call, as a form of lead generation, is made clear when contact is then made subsequent to the initial consent. These breaches related to clauses 6.17 and 21.9 of the Code. The Commission welcomed the relevant changes now taken by DLG to ensure these issues are addressed.
The Commissioners were grateful for DLG’s willingness to work with the Commission during this investigation, and to undertake a full review of their data journey and how this impacts the consumer. On this basis and in light of the assurances given by DLG the Commission reprimanded DLG and reminded the company of its obligations under the Code of Practice.
The DMA has expelled Reactiv Media from its membership after the industry’s watchdog upheld complaints made about the company for making PPI nuisance calls.
The Direct Marketing Commission (DMC) received complaints from consumers registered with the Telephone Preference Service (TPS) about West Yorkshire-based Reactiv Media for unsolicited live calls on PPI mis-selling between April and September 2013. The DMC found failures over consumer consent, the requirement for named third-party permissions and identifying themselves when making calls and concluded that DMA rules banning calls to people registered with the TPS had been broken.
Reactiv Media, whose callers presented themselves as representatives of a ‘consumer helpline’, were warned by the DMC of their obligations as a DMA member, but failed to respond to requests to review and change their processes and continued to generate complaints about their activities.
Julia Porter, chair of the DMA board, commented:
“Putting the customer at the heart of your one-to-one communications is essential to building trust in your brand and trust in the channels you use. Reactiv Media refused our help to ensure they adhere to the law and our code of practice, which is there to protect the consumer and the reputation of the industry. It is for this reason we had to strip the company of its DMA membership.”
George Kidd, chief commissioner of the DMC, added:
“This is an unfortunate outcome. Other telemarketing companies have worked with us and turned past problems around. Those who use companies like Reactiv Media to generate leads share a responsibility. They should not be encouraging firms to bend or break rules that are there to make sure the public’s wishes are respected when it comes to telemarketing.”
An adjudication against Reactiv Media in October 2013, described concerns which had been raised by TPS registered consumers in relation to calls about PPI received from Reactiv Media, who were describing themselves as ‘a Consumer Helpline’. The Commission formally reprimanded the company and reminded it of its obligations under the Direct Marketing Code, and asked Reactive Media to review arrangements and provide a full report of actions taken to achieve compliance as a result of the investigation together with information on the handling of any future TPS complaints. This report was expected in January 2013. The Commissioners also asked that Reactiv Media meet with the DMA compliance team to ensure future compliance.
Despite repeated reminders and further letters, Reactiv Media did not confirm that they would comply with the Commission’s sanction and the company has not submitted any report or statement of actions to secure compliance. The Commission has continued to receive complaints and had limited responses from the company. In a final letter to the company, the Commission stated that if no response was received, it would recommend to the DMA that their membership of the Association is terminated. No response was received and no appeal has been lodged. Accordingly, and in light of the serious Code breaches found and the many complaints identified the Commission have issued a recommendation to the DMA that Reactiv Media’s membership of the Association is terminated.
Industry watchdog calls for reforms to marketing data sector
The direct marketing industry’s watchdog, the DM Commission (DMC), has called for “root and branch” reforms of the data sector to tackle practices that are playing a role in causing consumer complaints about the direct marketing industry, particularly about nuisance calls and text messages.
Investigations made by the DMC over the past 12 months into consumer complaints about unwanted direct marketing contact have identified common underlying problems regarding the source and use of data as being responsible for the majority of cases.
Some of the worst cases highlighted in the DMC’s annual report published 3rd February 2014 reveal a lack of understanding or, more seriously, a lack of concern, by some about whether they had the necessary arrangements in place to ensure their activities complied with regulations and industry best practice. In particular, the cases reveal common failures in companies to be able to cite the provenance of consumer data, whether the data has been ‘cleansed’, or if it’s been tested for accuracy and the necessary permissions.
According to George Kidd, the DMC’s chief commissioner, the industry must move quickly to address the fundamental problems in the data sector:
“The volume and nature of complaints we investigate show that we need to take a root and branch look at how companies collect, source, sell and test consumer data. Some business make fantastic creative use of data, delivering offers and services that are tuned to our personal needs and preferences. But there are times when other preferences and rights – not to be sent messages and calls which we have not agreed to or have said we do not want – are being ignored as companies pursue short-term gain, most obviously in the personal injury and Payment Protection Insurance fields. It’s not acceptable for businesses in the data business not to be able to explain where their data and the permissions on its use came from or for firms to dupe those they mail and call with mock surveys and ‘research’ that open the door to sales and marketing calls, texts and emails from total strangers.
“There is no magic solution to these problems of privacy and the misuse of data, and it will require a concerted effort in the industry to find solutions to the problems. It’s essential that this is guided by the principle of ‘putting the customer first’. Failure to do so will ensure that complaints about our industry will continue to rise and consumer confidence in direct marketing will decline.”
In September of last year, the DMC’s chief commissioner George Kidd gave evidence at the Culture, Media and Sport Select Committee’s inquiry into nuisance telephone calls and text messages, where he argued for the need for creating a co-regulatory body to tackle the issue of unwanted contact. Currently, responsibility for telemarketing and mobile marketing is spread between Ofcom and the Information Commissioner’s Office. The DMC supports these regulators but worries that neither body arguably has the resources, singular focus or the organisational build for dealing with thousands of complaints and engaging with industry to make sure these problems do not recur.
Rosaleen Hubbard, an independent commissioner of the DMC, commented in the annual report that:
“Unacceptable practices, such as nuisance calls, should not be allowed simply because the plethora of regulators and complaints bodies across the sectors results in consumer confusion. Given the multitude of regulatory frameworks within which direct marketing companies work, formal cooperation with statutory and regulatory bodies from other bodies should be further developed to enable the DMC to most effectively handle consumer complaints.”
The DMC’s annual report can be downloaded from:
This complaint from a business related to a data order for 1000 records which had not met the criteria requested. The data provided did not include essential address or telephone details and replacement data offered in compensation appeared similarly incomplete, inaccurate or out of date.
Maximum Impact did not provide the Commission with a response to the issues raised or any assurances over future compliance with the DMA Code of Practice. The Commission did, however, have sufficient information from the complainant including mail exchanges with Maximum Impact to reach a set of decisions.
There was a clear unwillingness on the part of Maximum Impact to liaise with the Secretariat, seeming disinterest in the Code and little evidence of any concern over their client’s circumstances. In the absence of any information from the member, and based on the Commission’s assessment of the other information available, the Commissioners came to an unanimous conclusion to uphold breaches of the following clauses in the Direct Marketing Code of Practice: fair behaviour (3.21); information on data and data controllers (5.74); provision of accurate and up to date data (5.37); responsibility for suppliers (3.15) and responding to the Commission (4.20).
In reaching a decision as to sanction the Commissioners noted that there had been a number of previous complaints including a case with many similarities which had resolved informally following assurances from Maximum Impact that it was a ‘one off’ incident attributable to a single member of staff.
In light of serious, repeated Code breaches and a seeming indifference to the needs of their consumer, and their responsibilities to their industry and trade association, this led Commissioners to conclude that there should be a recommendation to the DMA that membership of the Association is terminated.
All Party Parliamentary Group report backs DMC call for a co-regulatory strive to deal with nuisance calls
The APPG report on nuisance calls was published on 31 October. In it the Group takes a holistic approach, looking at the standards and controls around lead generation, the operation of the Telephone Preference Service, the role phone providers can play in supporting their users and ways in which regulators can do a better job. The call for an accreditation scheme for lead generation firms and the call on Ministers to create a co-regulatory body to support the work of ICO and others are of obvious interest to the industry.
The DMC had argued strongly for a co-regulatory arrangement that would allow industry, probably though an enhanced TPS with investigative and adjudicatory powers of the kind delivered by DMC, to take responsibility itself for dealing with non-compliance.
This was not a call to replace the ICO bot for a complementary set-up that dealt with complaints fast and on the necessary scale. Sorting the accidental, reckless and sometimes wilful behaviour and dealing with it in a proportionate way would give the public the assurance action is in hand and send a message to businesses that braking the rules is not a consequence-free option.
Few DMA members appear on the list of firms who are much complained about, but some have. The action taken in some cases to come into full compliance seems to have dramatically reduced complaint levels. The All Party Group shares our belief that effective regulation by the industry and ICO in partnership could drive complaint levels down.
The APPG report has gone to the Culture Department Minister and the DMC has already met his officials to explain our work and our thinking on how co-regulation meets the consumer’s expectation that their wishes will be respected when it comes to marketing calls and gives those who collect and process data and make service and marketing calls a climate in which this valuable work is not stigmatised. This requires a sense of urgency and creativity from our politicians and their agencies and officials.
The Direct Marketing Commission had received several complaints against this company over the period from April to September. Concerns had been raised in relation to calls received from Reactiv Media to TPS registrants. The calls were in relation to the possible mis-selling of PPI. The Commission concluded there had been breaches of DMA Code of Practice rules on TPS regulations (clause 21.20); supplier responsibility (clause 3.15); and the requirement not to mislead consumers (21.46).
Reactiv Media agreed that the Commission could access data recorded with the Telephone Preference Service (TPS) and the Commission welcomed this decision. It was found that around 100 complaints had been logged by TPS against Reactiv Media over the period of a year, and over 200 complaints had additionally been logged against one of their other trading names. The investigation highlighted issues around consumer consent and the ways in which failure to comply with the Code and related PECR regulations can result in complaints over unwanted calls from consumers registered with the TPS.
Based on information provided by Reactiv in relation to the call script used by the firm providing them with names to call and on the answers given by Reactiv, the Commissioners concluded, on a balance of probability, that Reactiv was not named by its data supplier in its call script and should not be calling TPS registrants as they did not have express permission to make these calls.
There were similar issues with the calls made by the firm supplying the data used by Reactiv. The company made “lifestyle survey”calls but the Commissioners were not shown any evidence to explain what permission the company had from the people called for making “lead generation” calls of this nature. Under the DMA Code of Practice Reactiv were under a duty not to breach TPS rules and a parallel duty to ensure their suppliers were doing the same. Finally, there were additionally concerns over Reactiv’s own telephone script with the company identifying itself on calls as a “consumer helpline”. The Commission decided this was misleading as to the identity of the people and the intent of the call.
This decision highlighted permission issues over extended value-chains over the supply of data, and failures to understand the regulations that apply. The Commission thought this particularly unfortunate given that data processing and tele-marketing are core elements of the company’s business.
The Commission formally reprimanded Reactiv Media and reminded them of their obligations under the DMA Code of Practice. The Commission sought agreement that Reactiv would provide a full Report and Review of Actions taken as a result of the investigation, together with information on their handling of any future TPS complaints. This report is expected in three months. The Commission asked that the DMA’s compliance and legal team meet with the company to help ensure future compliance.
There were 106 complaints against DMA members and non-members for the four month period of January to April 2014. Issues raised by consumers and businesses included the following areas of concern: unwanted emails, mailings and telephone calls, privacy & data protection concerns, contractual disputes and claims of unclean data.
There were 25 consumer complaints against DMA members. 2 cases were formally adjudicated upon and 23 were resolved through informal action with the member companies involved.
There were 70 consumer complaints against non-DMA members many of which referred to other trade bodies, such as the Advertising Standards Authority (ASA), Information Commissioners’ Office (ICO) and Trading Standards offices.
There were 11 business to business complaints, of which 9 were made against non-DMA member companies and 2 against members.
Those complaints which are resolved informally without the need for any formal action may or may not concern minor breaches of the DM Code of Practice. They will generally concern issues that are do not affect large numbers of consumers, where the possible harm is negligible and where the companies involved demonstrate their willingness to put things right.
However, on occasions we formally remind a company of its obligations to adhere to the Code. This may occur where there are minor breaches, where this fact is accepted by the member company, but where a formal investigation would be disproportionate and where the Secretariat thinks it is right but enough to make sure the company is fully aware of its obligations for the future. The Secretariat must be satisfied that appropriate remedial action has been taken, and that the matter is not serious enough for a formal investigation. These decisions by the Secretariat are based on criteria set by the Commission and are reported to Commissioners to ensure the right balance is being struck.
In one case which was informally resolved, a consumer who had entered a competition complained that she had been notified that she had won a retail voucher, and she had a screenshot which showed that this was seemingly the case. The wording in the initial notification was swiftly followed by the correct notification. However, the wording in the initial notification was unclear and she was in fact the recipient of a runner up prize. The company explained that they rarely offer runner up prizes and the required change to the template wording had been overlooked. They did, however, offer the consumer the winner’s prize and agreed and assured the Commission that future copy would be adjusted and that they would fully test any future changes when offering runner up prizes.
One of the formal adjudications undertaken related to a previous adjudication upheld by the Commission in October 2013 which had described concerns raised by TPS registered consumers in relation to calls about PPI. The Commission had formally reprimanded the company and reminded it of its obligations under the Code, and asked the company to review arrangements and provide a full report of actions taken to achieve compliance together with information on the handling of any future TPS complaints. Despite repeated reminders, this was not forthcoming and the Commission recommended to the DMA that their membership was terminated; this was undertaken.
A second case related to a DMA member where two complaints had been received from TPS registered consumers. The Commission considered whether the company was complying with rules regarding calls to those registered with TPS, whether there were issues in relation to customer service and whether the purpose of the calls were clear. The decisions were based on an analysis of the complaints and a considerable number of complaints to the TPS over the period of a year. Two breaches were upheld in relation to the clarity of their communication when consent is secured on-line, and the importance of ensuring that the purpose of a telephone call, as a form of lead generation, is made clear when contact is then made subsequent to the initial consent. The member worked closely with the Commission during the investigation and undertook a full review of its data journey and how this impacts the consumer. In the light of the assurances given the Commission reprimanded the member and reminded them of its obligations under the Code of Practice.
The DMC welcomed the opportunity to give evidence on 9th October at an inquiry to the All-Party Parliamentary Group on Nuisance Calls. This group was recently set up as a cross party group to increase awareness in Parliament of nuisance calls and other forms of unsolicited contact. The group also aims to promote policies to strengthen the powers of a single regulator whilst also promoting the idea of a single, simple point of contact for individuals wishing to register to protect their privacy.
DMC argued that Government should remove barriers and create incentives for effective self-regulation. We pointed to the fast responsive nature of non-statutory consumer protection bodies like the DMC, ASA and PhonepayPlus. The point was not made as a criticism of statutory bodies like Ofcom and the ICO. These are strategic national regulators with a multitude of duties and powers and responsibilities that are hard-wired in the Acts that created them. They are not suited to managing high volumes of complaints and investigations that require formal and informal outcomes.chong qi gong men We argued that the TPS and DMC or an equivalent working together could achieve a dramatic reduction in complaints through early active interventions. We argued this would address complainant frustrations and end any business sense that non-compliance with rules and regulations is a consequence-free “norm”.
The DMC welcomed the opportunity to give evidence on 3rd September at a Committee Inquiry into nuisance calls and text messages to the Culture, Media and Sport Select Committee. In our submission we said:
the Government should continue to remove barriers and build incentives to statutory bodies working together;
that action should be taken to establish a self-regulatory industry based body to deal properly and proportionately with all TPS complaints;
that thought should be given to new ways of educating the public on sharing data and giving authority for data to be passed on;
and that the Government should consider whether a more enlightened interpretation of the Communications Act Section 393 (1) would allow data to be shared with DMC.
We argued that national state regulators were often unable to deal with a market problem in a holistic way: Ofcom powers are limited to silent calls while the ICO can address a privacy PRS issue but not the nature of marketing or, perhaps, the source and adequacy of the data used. The DMA Code addresses fair marketing and contractual performance as well as issues of data sourcing and the privacy agenda. We argued strongly that Government should not just remove barriers to effective self-regulation – most obviously the way in which TPS data can be shared but that it should go further and recognise some enhanced TPS/DMC activity as the established means of dealing with public complaints about these nuisance calls. This was to complement, not replace the unique powers ICO, Ofcom and other public bodies have. We believe this sort of robust response would show complainants that they were listened to and give legitimate businesses the confidence that bad practice was no longer going unanswered.
The Direct Marketing Commission had received six complaints against this company over the last few months. Concerns had been raised in relation to calls received from National Money Savers to TPS registrants and in two cases those consumers were passed to other third parties against their wishes. The complaints were upheld in relation to TPS regulations (clauses 21.18 and 21.20); responsibility for suppliers (clause 3.15); and the requirement to comply with relevant legislation (clause 3.14).
McDowall Media provided full co-operation to the investigation and agreed that the Commission could access data recorded with the Telephone Preference Service (TPS). It was found that around 1,000 complaints had been logged by TPS in the period from July 2012 to June 2013. The investigation highlighted issues around consumer consent and the ways in which failure to comply with the Code and related PECR regulations can result on complaints over unwanted calls that people register with TPS precisely to avoid.
The Commissioners concluded that the company was in breach of Code rules that prohibit calls to TPS registrants unless the company has express permission to make that call. This was not happening with data purchased from third party suppliers and there seemed to be similar questions over the degree of “opt-in” by people on McDowall Media’s own database.
Given the fact that this activity was at the very heart of McDowall Media’s business and, therefore, the high volume of calls made, the Commissioners were particularly concerned over the lack of documentation, safeguards and record-keeping of data and the call-permissions associated with it.
There were, however, strong grounds for mitigation in information sent by McDowall Media to the Commission prior to adjudication. The Commissioners believe that the actions taken or promised should bring them into Code compliance and dramatically reduce the level of complaints received.
The Commission has reprimanded McDowall Media and reminded them in the strongest terms of their obligations under the DMA Code of Practice. The Commission has made clear that it expects to see a significant reduction in the number of complaints received to the TPS. If this does not happen the Commission is likely to revert to a further investigation, possibly culminating in a more serious action. McDowall Media has been asked to review their arrangements and provide the DMC with a full report of actions taken as a result of the investigation, together with details of their handling of any outstanding or additional TPS complaints. The Commission have asked for the report on actions taken within one month and for a further review of the TPS complaint levels and handling of TPS complaints on 1st November or as soon as possible thereafter.
Concerns had been raised by three businesses which related to email marketing. One complaint related to an unwanted email and the difficulty of finding out the source of the data; a second complaint related to claims that email addresses had not been suppressed adequately; and a third claim from a business related to the sale of email data for an email campaign which resulted in a very high hard bounce rate – a large number of wrong or closed e mail addresses.
The investigation highlighted a number of uncertainties over the source of data, the access to and management of data, and an admission that in one case data had knowingly been used when it had been held for over two years. Based on this admission and on the absence of reliable information about data sources the DMC came to the conclusion that the data in question in two of the cases was not up to date and could not be shown to be accurate. This conclusion was reached on a balance of probability basis. The DMC upheld clause 5.37 of the Code which asks that data is accurate and where necessary, kept up to date.
The level of uncertainties as to the data in terms of its origin and accuracy, and the lack of assurances to the DMC as to its quality and verification, led the DMC to conclude that the company did not have the arrangements in place to demonstrate it was acting fairly and reasonably and able to fulfil its contractual obligations. The DMC upheld clause 3.21 which asks that companies act decently, fairly and reasonably and fulfil their contractual obligations. Code clauses which applied to a third complaint were not upheld as the DMC did not have sufficient written evidence.
The business concerned was not a member of the DMA but listed on the List Warranty Register and therefore bound by the regulations of the DMA’s Direct Marketing Code of Practice. The DMC has explained its findings and concerns to the List Warranty Register.
This complaint from a business related to a data order for approximately 25,000 records of email addresses and telephone numbers for residential landlords. The Marketing Data Consultancy had bought the data from a supplier and provided it in good faith to the complainant.
It was clear that there had been a breakdown in communication between the two parties and responses to the complainant’s concerns had been slow (9.32). However, by the company’s own admission, some of the data involved was not accurate and up-to-date (5.37), and statements made as to the verification of the data were misleading because some of the data had not been sufficiently checked (6.6).
The company had informed the Commission that it would normally verify and check all of its records in-house. In this case the company had relied on assurances from a data supplier it had not previously dealt with. It now recognised and assured the Commission that further due diligence on its data suppliers would be undertaken in future, in order to ensure that any data supplied is accurate and verifiable.
The business concerned was not a member of the DMA but listed on the List Warranty Register and therefore bound by the regulations of the DMA’s Direct Marketing Code of Practice.
SMS marketing regulations became tougher this week as the UK government’s Information Commissioner shows its teeth, writes Danny Meadows-Klue, Industry Commissioner at the DMC. The ICO unleashed the first of the heavy fines for spammers using text messaging, and across Europe eyes are on the UK as the focus of digital marketing regulation broadens to include texts. Here’s why industry and consumers should all be welcoming the move…
Spam is the scourge of digital channels. It emails, floods social networks and has started to extend into text messaging across Europe. It’s not just consumers who should be smiling after the industry watchdog the Information Commissioner’s Office (ICO) used its powers to levy fines for the first time – industry too should celebrate.
The ICO says it is determined to end the growing trend of unsolicited text messages and these record fines will send a clear signal that the business model of rogue traders who’ve switched from email spams to mobile is not one that will be tolerated.
The action now being taken is welcome, but overdue. Over the last 18 months there has been growing criticism that SMS marketing regulations have not been matched by court action, letting those who sell information without permission prosper, and regulators appearing out of touch with consumer needs.
This week, two men who allegedly sent millions of spam texts have been fined £440k, in a clear warning shot to any opportunist planning to join the current feeding frenzy of PPI claims. Christopher Niebel and Gary McNeish have been cited by the regulator as typical of the types of businesses that send SMS to solicit sales leads. Today it’s compensation claims for personal injury and mis-selling of payment protection, but the approach is one that simply migrates to the topic of current consumer interest.
Information Commissioner Christopher Graham has made a decisive judgement call, saying: “The public have told us that they are distressed and annoyed by the constant bombardment of illegal texts and calls, and we are currently cracking down on the companies responsible, using the full force of the law.”
The fines were made through failures to adhere to the UK’s Privacy and Electronic Communications Regulations (2003), for which similar regulations exist in many markets.
Graham added that: “the two individuals we have served penalties on today made a substantial profit from the sale of personal information. They knew they were breaking the law and the trail of evidence uncovered by my office highlights the scale of their operations.”
This particular case is about a Manchester based firm called Tetrus Telecoms, which sent SMS messages on behalf of clients – close to one million texts a day. Their clients were claims management companies looking for compensation cases that would typically be passed to ‘no-win-no-fee’ legal firms.
If you’re in the UK and look through your SMS history, the chances are you’ll recognise the type of content as millions of consumers across the UK seem to have received these: “You may be entitled to…” “To claim reply CLAIM to this message.”
It’s a good example of how a small group can use technology in ways that can have a huge impact on both consumers and the reputation of an industry as a whole. Reportedly the ICO found handwritten notes in their offices suggesting Tetrus had churned through more than 60 sim cards a day to fuel their machines – each card is used until its text message capacity is reached before moving on to the next; a sort of scorched earth approach to mobile channels.
In a statement, one defendant said he intended to challenge the fines and had not been provided with evidence from the ICO to support the allegations, so no doubt this case will deepen as the challenge continues. Similarly the ICO has stated that it is investigating several similar cases, suggesting that this is far from a one-off warning shot. That promise matters. The vast majority of those working in direct marketing respect the law and the DMA Code of Practice. They and the public at large are entitled to expect that action is taken against those that do not.
Whatever the result, the focus of attention on the trade in mobile phone numbers and the ICO’s decision to act decisively should be warmly welcomed. In a digital society, the rights to and control of personal data are among the most precious of all.
Danny Meadows-Klue is President of the Digital Training Academy www.DigitalTrainingAcademy.com, and a Commissioner for the Direct Marketing Commission. As a policy advisor he worked on the Regulation of Investigatory Powers legislation (RIPA), and he has helped create and run digital marketing trade associations including the IAB for ten years.
Last month, a UK consumer registered on the Telephone Preference Service invoiced a company for nuisance cold calls. While most people won’t go to those lengths, this case underlines the importance of good data.
The Direct Marketing Commission (DMC) Annual Report 2011/12, which has just been published, highlights the public’s frustration if their wishes are not respected and stresses the need for good data.
As Chief Commissioner, George Kidd, says: “Good data is key to effective direct marketing. Those who sell, buy, and use data need to be sure that it’s up to date, accurate and protects people’s privacy.“
“The growth of digital marketing, where consumers are less aware of how data can be collected, makes this more important than ever.”
“The DMC is an effective self-regulator, says Mr Kidd and could do more to help the industry and the Information Commissioner’s Office stem the tide of complaints over breaches of telemarketing privacy.”
The DMA and the DMC will be working together over the coming year to ensure they help industry members better understand the benefits of complying with the DM Code of Practice and ensure it is applied in a fair and reasonable manner.
Complaints not upheld.
The Claims Advisory Group is a claims company which aims to provide a complete solution to clients who wish to instigate claims against financial companies for the mis-selling of Payment Protection Insurance policies.
The two direct complainants to the DMC related to the failure of call centre staff to put a ’Do Not Call’ marker on a customer’s number after being asked to do so, and to a call made to a person registered with the Telephone Preference Service.
As part of its investigation the DMC was briefed on the staff training and call management arrangements at The Claims Advisory Group (CAG). The DMC was informed of disciplinary action taken in relation to an agent responsible for calling the complainant, and follow up action that had led to further calls and, thus, to the complaint. All agents were re-trained accordingly. The DMC saw nothing to suggest the complaint reflected a broader issue over customer service and call-handling.
The substance of the DMC investigation lay in questions around the sourcing of data (ie names and telephone numbers) and the action taken to cleanse data against the Telephone Preference Service file as is required in the DMA Code and in legislation for which the Information Commissioner’s Office has lead responsibility.
The investigation found that CAG sourced the vast majority of its data from third party suppliers. CAG makes over 12 million calls a year seeking new clients. Over half of the calls made by CAG are now to mobile numbers. For the most recent three-month period CAG told the DMC how many names it had added to their ’Do Not Call’ master-list. These were people who had told the company they were not interested in the product and did not want to receive further marketing calls.
While CAG provided the DMC with extensive material relating to the due diligence they carry out, it became clear from the investigation that the company had historically relied on their suppliers’ compliance with contract conditions for a critical aspect of data-supply. This was whether the contact number was TPS registered and, as such, a number that should not be called, except in narrowly defined circumstances. It seemed CAG assumed data suppliers were cleansing data against TPS with the required frequency.
This was the core issue raised by one complainant; a TPS registrant who said he had not given any specific agreement to receive calls that would override his TPS registration. It seemed there was genuine uncertainty over whether this was the case in this particular situation.
The DMC investigation did, however, result in CAG acknowledging that they had had over 400 complaints from the Telephone Preference Service over calls made in breach of registered preferences not to be contacted.
CAG argued that this was an insignificant number of complaints in percentage terms relative to its volume of outbound calls. CAG also provided data on customer numbers and on the number of customers added to their ‘Do Not Call’ list. CAG also expressed concerns about the DMA and ICO guidance on the circumstances in which the public can give permission to calls from named parties to override TPS registration.
The DMC was unable to validate the CAG defence that most of the 400 complaints related to very new TPS registrants, and that calls to them were not in breach of rules that allow marketers up to 28 days before the registration should apply in full. Nor was the DMC able to test whether any of the consumers asking to be put on the CAG ’Do Not Call’ list were existing TPS registrants.
The DMC had advice from the TPS that no complaints are relayed to firms until after new registrants making a complaint have been on the register for a 28 day period. The DMC welcomed the acceptance by CAG that this seemed to imply that there were issues with data-cleansing by CAG suppliers. The DMC welcomed CAG’s decision to obtain their own TPS licence and to cleanse all data themselves against the TPS file on a weekly basis.
The DMC did not feel able to reach a decision based on the TPS numbers without a more detailed breakdown, the information from CAG regarding its changes in operational practice, and the uncertainty over complaints. The DMC regretted that it was unable to evaluate CAG’s defence because CAG refused to share the relevant data as a result of legal advice it had received.
The DMC therefore concluded that it was unable to uphold a breach of Code provisions related to compliance with TPS requirements or the Code provision relating to a member company’s responsibility for the conduct of its suppliers.
The issues around data-sourcing, compliance and best practice were thought to be particularly important in a situation in which a company is making around 12 million marketing calls, and a number of those called in a year are asking to go on a ‘Do Not Call’ list.
The DMC welcomed the action taken by CAG to deal with any issues over the quality of call handling and the action to secure a TPS licence and cleanse day themselves before its use. These actions and the management of data-suppliers were seen to be particularly important given the volume of calls being made to home phone numbers and to mobile handsets.
The DMC also noted suggestions from CAG on the future operation of TPS and the clarity of DMA guidance related to the TPS and circumstances in which a consumer can give an overriding opt-in to receive calls from named suppliers.
The DMC investigates any complaints against DMA members. They give effect to the DMA Code – which exists to set standards across the sector and drive up compliance by member and non-member firms.
A DMC ruling, particularly a ruling that a firm should be removed from DMA membership can have a huge effect on that company’s ability to win and keep business. This can be far more dramatic than any fine. But the DMC sees itself as a part of the compliance world, not the only solution. The DMC brings all of its serious self-regulatory decisions to the attention of the ICO and other statutory regulators offering them every assistance if further action seems necessary.
We believe the DMC could support the TPS in taking a more active role, working with those who may be in breach of TPS rules and bring them up to standard. This happens with self-regulation in advertising, and is seen as a valuable supplement to the rules and laws that exist in statute, but where statutory bodies struggle to take preventative action on any real scale. This requires planning, funding and will-power; but is eminently achievable and would drive down the huge amounts of public frustration seen today.
It would be inappropriate for DMC to comment on cases currently under investigation. Previous adjudications, including two relating to termination and suspension of DMA membership can be found at http://www.dmcommission.com/adjudications/list-of-adjudications/.
The issue of the supplier/client relationship is a recurring theme in the Commission’s caseload. We regularly receive complaints from businesses who have ordered data from a supplier and found, having undertaken their direct marketing campaign, that the data sold was inaccurate, out of date, or did not match their criteria for a specific target market.
We also see complaints from people unhappy at being contacted by companies for marketing purposes. The contact may have been made ‘in good faith’ by companies who did not make the necessary checks on their suppliers to ensure that the people targeted had either opted in or opted out to receive that marketing contact.
We think it is important everyone involved in supplying and using data should do their homework – ensuring the information they are using is current, accurate, in line with what was ordered and that the data takes proper account of the preferences of the public – in terms of opting into or out of marketing.
George Kidd, Chief Commissioner says: “Companies should have sufficient mechanisms in place to test the data provided and validate the source and freshness of the data offered by their suppliers before they then use that data or sell it on to others. If companies do this, they can be confident of the data they trade and of complying with the DMA Code and regulations.
We welcome the attention this issue gets from the DMA and the valuable guidance the DMA makes available to members.
We believe there is “value in virtue”: marketing that reflects people’s preferences, matches people’s expectations and interests and is up to date and accurate is going to achieve higher response and conversation rates.”
Compliance is good for business as well as the soul!!
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