Direct marketing: Opt-in or Opt-out??

The introduction of the Protection of Personal Information Act (POPI) will provide direct marketers with more hurdles to clear.
The introduction of the CPA gave direct marketers much food for thought. The most important implications are that consumers must always have the option to opt-out (free of charge) and that a cooling-off right of five days has been introduced for any transaction concluded as a result of direct marketing (unless the 7 day period in terms of the Electronic Communications and Translations Act 25 of 2002 applies). The wide definition of ‘direct marketing’ means that any communication, regardless of form or format, directed at the consumer personally, is subject to the provisions of the CPA.
The CPA also provides for a registry which was to be established by the NCC. This registry would afford consumers the opportunity to opt out of direct marketing in general or in respect of a particular supplier. All direct marketers must check their database against the registry before engaging in direct marketing and must assume that a consumer has opted out until it has been confirmed that this is not the case. The only exception to this rule is where the direct marketer obtained the express consent of an existing customer after 1 April 2011. This registry has not been established yet due to budgetary constraints and it seems unlikely that it will happen post-POPI, but who knows?

The current position is therefore clearly an opt-out system. In other words, direct marketers can contact consumers unless they have opted out. They do not need the prior consent of a consumer.

In comes POPI. It will apply to electronic direct marketing (the CPA does not distinguish between electronic and non-electronic marketing and therefore applies to both). Section 69 of POPI provides that a consumer must consent before electronic direct marketing can take place, unless that consumer is an existing customer who gave their personal information to the supplier in the context of a sale for the purpose of direct marketing, and ‘has been given a reasonable opportunity to object, free of charge and in a manner free of unnecessary formality’. However, the direct marketer may contact any consumer ‘only once in order to obtain the consent’ of the consumer. So this looks like an opt-in system on the face of it. Or, in the case of existing customers, it is what is referred to as a soft opt-in (i.e. the direct marketer can accept that the consumer opted-in, because the consumer chose not to accept the opportunity to opt-out).  The opt-in system is watered down somewhat because the direct marketer can contact the consumer once to get their consent.
It is immediately apparent that these two acts could apply to the same situation, at least in respect of ‘electronic’ direct marketing. The CPA provides that where both acts can apply without conflict there will be concurrent application. Where there is a conflict between it and another act the act which provides ‘the greater protection to a consumer prevails over the alternative provision’ (see s 2(9) CPA). If one assumes that it is in the consumer’s best interest not to be contacted it seems to me that the position would be this:

  • Where the consumer isn’t an existing customer POPI will apply, because it is stricter. In other words, the supplier cannot market to that consumer unless the consumer’s consent was obtained, but the marketer may contact the consumer to get their consent. However, the CPA will apply to the contact aimed at obtaining the consumer’s consent. That is, if the consumer has opted-out already, either with the supplier directly, or with the registry, the direct marketer cannot even contact that consumer to obtain consent to market to them.
  • Where the consumer is an existing customer who has not expressly consented already, POPI and the CPA will apply as both acts provide that the direct marketer can market to a consumer unless that consumer has opted-out (free of charge).

This will be the position until the registry is established in terms of the CPA. Then the position of existing customers will change slightly as the direct marketer will then have to assume that the consumer has opted-out until it is confirmed that this is not the case, instead of assuming that they have opted-in. It is also unclear what the effect of the registry would be on the direct marketer’s right in terms of POPI to contact the consumer to get their consent.
The concurrent application is problematic in itself as POPI will establish a new regulator. Agreement will have to be reached between the two regulators on the way in which claims and investigations relating to direct marketing will be handled. Thus far, the NCC has been reluctant to broker such agreements.
Confusing? Most certainly and unnecessarily so. One would have hoped that either the reference to direct marketing in POPI is removed or that POPI will repeal those provisions in the CPA which deal with direct marketing and consumer consent, but that did not happen. Which is best from a consumer perspective? On the one hand POPI is stricter, as it requires consent, albeit that a direct marketer can still contact consumers to obtain that consent. POPI also does away with the notion of a registry, which will be difficult and costly to establish. On the other hand, the CPA provides for a cooling off right for products or services acquired as a result of the direct marketing effort. That right should be retained.
(This article appeared in the August 2012 edition of the Consumer Law Review (Juta Law Publishing), but it has been updated since then. Go to www.jutalaw.co.za to subscribe.)
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About the Author:

Elizabeth de Stadler
Elizabeth is the quirky one in the company. She specialises in all things Consumer Law, plain language drafting and designing and delivering training. She prides herself on being slightly out there and bringing a fresh perspective to compliance issues. She has a Masters (cum laude – the nerd) in Consumer Law. Elizabeth met Paul in 2011 and joined Esselaar Attorneys (she is still a senior associate at the firm). In 2013 they founded Novation Consulting together. Elizabeth is a bit of a nerd. She is the editor of the Consumer Law Review (you can get it here for free!) and wrote A Guide to the Protection of Personal Information Act with Paul. She is also the author of Consumer Law Unlocked, a co-author of the hefty Commentary to the Consumer Protection Act and wrote chapters on the Consumer Protection Act in The Law of Contract in South Africa and The Law of Commerce in South Africa. She is currently working with Liezl van Zyl from the Stellenbosch University Language Centre on Plain language legal drafting, which will be published in 2017. Elizabeth loves Lego, sneakers, zombies and white wine. She hates comic sans font, sweet potato and most other attorneys. She is allergic to suits and ‘office shoes’ because of the years she worked at Webber Wentzel. She is very scared of moths. It is a thing – read about it. Want to find out more about Elizabeth? Check her out on LinkedIn. Better yet, contact her on elizabeth@novcon.co.za or (021) 481 8004.