20 November 2019 by Corporate & Commercial Alert

Direct marketing – the way forward

Direct marketing is big business. It is frequently used by businesses as a marketing tool. Many businesses undertake research about prospective customers by accessing information already in the public domain. This includes gleaning information from publicly accessible websites (such as LinkedIn, Facebook and the like), and obtaining information via company switchboards. The personal information is then captured and stored. The business then reaches out to these prospective customers (in person, via post, via personalised or mass-generated emails and/or via telephone calls) to market goods or services. The communication via person, mail or electronic communication for the purpose of promoting any goods or services, or requesting a donation constitutes direct marketing.

CPA vs POPI

There are two pieces of legislation which regulate direct marketing activities, namely the Consumer Protection Act, No 68 of 2008 (CPA) and the Protection of Personal Information Act, No 4 of 2013 (POPI). The former deals with direct unsolicited marketing while the latter deals with the collection, storage and dissemination of personal information (including for purposes of direct marketing).

The CPA is premised on an “opt-out” approach in terms of which consumers are deemed to have opted in to receive communication via direct marketing until such time as they have formally opted out. POPI, however, is premised on an “opt-in” approach in terms of which consumers are deemed to have opted out of receiving communication via direct marketing unless they have expressly opted-in. Although certain provisions of POPI are already in force (such as those mandating the establishment of the regulator), the primary provisions dealing with direct marketing have not yet been enacted.

The Future of the Direct Marketing Landscape

There is currently a great deal of confusion about the rules of direct marketing. For example, it is unclear if “cold-calling” prospective customers will still be allowed, if and how consent must be requested, and what will generally be required when the remaining provisions of POPI (in particular those in respect of direct marketing) come into force. At the moment (while only the provisions of the CPA and not POPI which regulate direct marketing are in force), provided that marketing campaigns clearly allow for consumers to “opt-out” or “unsubscribe” from any direct marketing, such communication is seemingly lawful. However, POPI will change this. It will impact how the initial contact with a prospective consumer can take place, and will impose a significant administrative burden as regards the collection, storage and distribution of personal information.

POPI regulates direct marketing by means of any form of electronic communication including automated calling machines, faxes, SMSes and email. The CPA still regulates direct marketing via telephone and the post. So, what will this mean in practice?

Direct marketing via any form of electronic communication including automated calling machines, faxes, SMSes and email will no longer be permitted, unless the person has either given his/her consent to receive such electronic communication, or is an existing customer. Otherwise, the person’s consent will be required. For this purpose, the responsible party may approach a person whose consent is required, and who has not previously withheld such consent, only once in order to request the consent of such person. If the person is an existing customer, the responsible party may only send direct marketing to such person if (1) the customer’s contact details were obtained in the context of a sale of a product or service; (2) for the purpose of direct marketing of similar products or services; and (3) the customer has been given a reasonable opportunity to object to the direct marketing (i) at the time the personal information was collected; and (ii) on every communication.

All direct marketing communications must contain the sender’s details and an “unsubscribe” option. Any communication sent for the purpose of direct marketing must contain the details of the identity of the sender or the person on whose behalf the communication has been sent; and an address or other contact details to which the recipient may send a request that such communications cease.

POPI’s direct marketing provisions are going to make using contact details obtained from lead generation businesses for direct marketing a great deal trickier. Companies are also going to need to manage their customer databases a lot more effectively, and keep records of where, how and when was the personal information initially obtained; whether the person is an existing customer and, if so, in respect of what products or services; whether the person has consented to receiving direct marketing; and whether the person has unsubscribed from receiving direct marketing.

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