Sizing up the new rules of electronic marketing

The Electronic Commerce Regulations 2002 apply to all businesses that market or sell goods or services over the Internet, by mobile phone or by e-mail.

The regulations have real commercial bite: if an online service provider fails to comply with any mandatory requirements to provide information to customers, sales transactions will be unenforceable and may be cancelled by the consumer.

But UK marketers don’t just have to get used to this piece of legislation. The EU has also adopted a directive on the protection and use of customer information, which must become UK law by October 31, 2003. This Privacy Directive will introduce extra regulation on the use of personal data when marketing to customers both onand offline.

Under the E-Commerce Regulations, all spam must be clearly marked as such in the subject heading and must also identify on whose behalf it is being sent. The Privacy Directive will be even more stringent and will permit customer information to be used only for the direct marketing of similar products and services to those already bought by the customer. Crucially, however, the legislation fails to define what is meant by “similar products or services”.

In addition, customers must be given a real opportunity – at no charge – to object to receiving spam. All other use of SMS alerts, automated calling machines, telephone and e-mail for the provision of direct marketing must be on an opt-in basis – that is, with a customer’s prior explicit consent.

Similarly, the use of cookies will be permitted only if recipients are given clear and precise information that a device is being downloaded and there is an opportunity to refuse it.

When using third-party mailing lists for marketing, the necessary consents or restrictions on the customer database will have to be thoroughly investigated to avoid contravening the new rules. It is important that businesses obtain the relevant warranties and indemnities from the database owner prior to using any licensed customer databases.

Companies will also need to take a long, hard look at the content of their privacy policies and notices. These should not only be legally sound, but should also ensure sufficient flexibility to conduct a successful marketing strategy. Being transparent is perhaps the key. Where an opt-in is required, it should be clear to customers that, if they don’t consent, they could miss out on valuable offers and promotions.

The EU legislation takes the rules of marketing out of an exclusively legal sphere and places the issue of compliance directly with marketing strategists. To avoid costly mistakes it is essential that those involved get to grips with the impending rules sooner rather than later.

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