INTERNATIONAL LEGAL ISSUES IN DIRECT RESPONSE MARKETING

Electronic Retailing Association Conference & Expo
October 14-17, 2001
Las Vegas, Nevada
USA

Introduction

This report is presented by the Global Advertising Lawyers Alliance ("GALA") to the Electronic Retailing Association ("ERA") in connection with its 2001 Conference held in Las Vegas, Nevada on October 14 - 17, 2001.

The purpose of the report is to present information from GALA members concerning laws and regulations applicable to direct response marketing in their home country which would be relevant to marketers in other countries. By "direct response marketing" we mean all forms of marketing involving a communication to a consumer that is designed to elicit a response from the consumer directly to the seller in the form of an order for that seller's products or services. Common forms of direct selling in the United States, e.g., include infomercials (generally thirty minutes in length), short form television commercials (generally two minutes in length), radio commercials, internet marketing, telemarketing, credit card syndication, direct mail, and product package inserts.

By necessity, this report can only touch on the broadest issues and concerns to the industry in any country. Clearly, this report cannot and is not intended to substitute for legal advice from an expert in the applicable laws and regulations. We believe that its value to marketers will derive from highlighting the issues that marketers should be aware of when considering whether to conduct a particular type of direct selling campaign in a given country. Nor is this report a substitution for local legal advice on specific marketing activities. Before engaging in any marketing campaign, a marketer should consult with legal counsel for advice on their proposed campaign.

Countries covered in this report include:

Australia Belgium Canada France

Germany Italy Singapore Spain

Sweden Switzerland United Kingdom United States

 

INTERNATIONAL LEGAL ISSUES IN DIRECT RESPONSE MARKETING: IRELAND Duncan Grehan & Partners Solicitors Gainsboro House, 24. Suffolk Street, IRL-Dublin 2 Tel: 353.1.677.90.78 Fax: 353.1.677.90.76 Email: mail@duncangrehan.com Website: www.duncangrehan.com

1. Lobbying 1.1 How can an association like ERA successfully lobby in your country to maintain a friendly regulatory environment? By supporting existing lobbies subscribed to by the industry and by submitting materials to the media. 2. Laws and Regulations 2.1 Are any forms of direct response marketing prohibited in your country? Yes. Directive 97/7/EC (the Distance Sales Directive) has been implemented to Irish law by SI No. 207 of 2001 by the competent Minister on 15/05/01. 2.2 What are the major restrictions in your country on direct response marketing, which sellers should be aware of? All of the Distance Sales Directions applicable throughout the EU apply also in Ireland. These regulate information which the consumer must be given before a contract becomes binding, the need for written confirmation of the contract, a cooling-off period during which the contract may be cancelled by the consumer of up to three months, the non-enforceability of Distance Contracts without the consumer's prior consent, and criminal sanctions for non-compliance. This is a charter of consumer rights which are inalienable out of which the consumer cannot contract. A condition in a Distance Contract which purports to apply the law of a State other than an EU Member State is void if the contract has a close connection with the territory of an EU Member State. 2.3 Are there any laws or regulations pending in your country that could have an impact on direct response marketing? Not aware. 2.4 Identify any governmental or regulatory agencies charged with regulating the direct selling industry in your country and the business sector(s) they regulate. The Director of Consumer Affairs is a statutory officer with extensive enforcement powers throughout most business sectors with a consumer dimension. The Advertising Standards Authority for Ireland, a voluntary, self-regulatory association subscribed to by the business community. 2.5(a) What are the current hot issues among regulators and enforcement agencies in your country that could have an impact on direct response marketers? Internet issues, the maintenance of standards, particularly in the financial services sectors. 2.5(b) Explain briefly what types of penalties may be imposed on marketers by these agencies for violating the laws. Non compliance with statutory regulation is an offence which on summary conviction can lead to a fine and/or imprisonment. Interim measures are provided by which evidence, records, data etc. can be taken. Committal and contempt proceedings for breach of Court Orders are provided. Breach of the voluntary codes of standards can result in the withdrawal of services by the media, the imposition of fines and the publication of complaints investigated and upheld. 2.6 Can a company directly sue a competitor for false or deceptive advertising and, if so, what are the penalties if such a suit is successful? There are various remedies in civil law and these include the tort of malicious falsehood, statutory infringement of trade and service marks, a complaint under the Irish Constitution for compensation in consequence of a competitor's unlawful gains, the common law action of passing-off, the taking of private prosecutions for breach of statutory provisions or the making of a complaint to the statutory regulatory authorities. The remedies for successful prosecution of civil actions in tort or statutory infringement proceedings is the payment of damages measured by reference to the consequential loss. Where the competitor has offended then the penalty may also be a fine or imprisonment. 2.7 Does your country recognize the concept of "class actions" whereby a law firm can represent all consumers within a particular "class" and sue a marketer for false or deceptive advertising? Class actions are not admitted under Irish procedural law. Instead, the class can incorporate or can be named individually in one action or can issue separate actions. The civil law remedy in damages is measured in respect of each Plaintiff's loss. The penalties for an offence include fines and imprisonment. 3. Consumer Privacy Issues 3.1 What is the current law in your country relating to privacy of personal information? The right to privacy is found in the common law. This includes the law of confidence, the law of negligence, the law of trespass, the law of nuisance, the law of surveillance and intimidation, the law of defamation and the law of privilege. Privacy is also protected by statute law relating to copyright, broadcasting and confidential information. The Irish Constitution of 1937 does not provide for an express right to privacy but does provide for certain personal rights which requires the State to protect and vindicate a citizen's implied right to constitutional privacy. The interception of electronic communications, for example, infringes the dignity and freedom of an individual which in turn gives rise to a claim in damages, with the exception of the risk of accidental interference and the exigencies of the common good which may justify such intrusion and interference. The principal statutory basis for the privacy of personal information is in the now ageing Data Protection Act, 1988. 3.2 Does the law distinguish between information collected on the Internet and information collected through other marketing methods, e.g., by telephone or by mail? The Data Protection Act, 1988 does not distinguish Internet information and information collected through other marketing methods. Information from public sources obtained on consent can be held and used for direct marketing purposes. 3.3 Does the law distinguish between different types of personal information, e.g., name and address vs. financial information such as consumer credit card numbers? If so, how are they distinguished? What restrictions exist on the transfer of credit card or bank account information for marketing purposes? The 1988 Act defines data controllers as including direct marketing and mailing agencies. Generally, the transfer of personal data should be on consent. 3.4 Does your country require "opt in" or "opt out" as the method for the consumer to grant consent to disclosure of their personal information? The opt in, informed consent route is required 4. Specific Marketing Methods The following marketing methods are currently under scrutiny in some countries, e.g., the United States. The discussion below indicates the extent to which such marketing methods are scrutinized in the reporting country, and if so, what legal restrictions apply: 4.1 Free Trial Offers and Free to Pay Conversion Offers. A marketing plan whereby the consumer accepts an offer to try a product or service free of charge for a specified time period, e.g., 30 days, prior to purchasing. At the end of the trial period, the consumer is automatically charged or billed for the product or service (usually on a credit card), unless he or she takes affirmative action to cancel. These types of offers would be subject to the EU-wide Distances Sales contract regulations by which the validity and enforceability of such contracts is regulated. Assuming a valid distant contract the consumer may not have any cancellation right in respect of the provision of services if performance has begun before the end of the trial period, although there is no such provision in respect of goods sold. The contract terms must be in writing, clear and comprehensible and must contain the minimum terms under the EU Directive. 4.2 Continuity Plan Offers. A marketing plan whereby the consumer agrees to receive periodic shipments of products or services unless and until the consumer affirmatively declines a periodic shipment or cancels his participation in the plan. The consumer is billed for each shipment of product or service. This type of continuity plan appears valid. 4.3 Automatic Renewal Offers. Generally a feature in a subscription or club membership offer whereby the subscription or membership is automatically renewed at the end of the initial term and each subsequent term unless the consumer affirmatively cancels. A consumer contract will not be invalid merely because it is for an open ended term. 4.4 Revenue Enhancement Programs. Also known as an "up-sell" offer, this marketing method presents to a consumer multiple product offers from different marketers on one telemarketing call. Typically, the consumer agrees to the first offer and provides their credit card number. The telemarketer then "up-sell" the consumer with additional offers. If the consumer accepts the additional offers, the consumer's credit card number is provided to the other marketers. This marketing method is not commonplace. 5. Specific Product Categories 5.1 What special laws or regulations apply in your country to the direct marketing of products or services in the following categories: 5.1.1 Dietary supplements Medical Preparations (Advertising) Regulations, 1993. 5.1.2 Diet/Weight Loss products See part 4 of the Code of Advertising Standards dealing with slimming. Claims must be capable of substantiation. 5.1.3 Drugs See 5.1.1 above. 5.1.4 Electro-muscle stimulators Unclear whether there is separate specific regulation. 5.1.5 Health and fitness products Heavily regulated at national, as well as European Community level. 5.1.6 Beauty products Heavily regulated. 5.1.7 Travel offers Heavily regulated at national and European levels. Regime of strict liability on travel organiser. 5.1.8 Magazine subscriptions There is no special regime of regulation for magazine subscriptions. 6. Extended Liability 6.1 A person guilty of an offence under the Distance Contracts Regulations is liable on summary conviction to a fine not exceeding EUR3,000. Any officer of a body corporate which is guilty of an offence committed with the connivance, consent or neglect of such officer shall too be guilty of an offence. There is similar provision for the offence of false and misleading statements, services, false and misleading price indications and for misleading advertisements. The publisher, the party offering to supply any goods or services or the person making the false and misleading statement is the offender. It is a statutory offence to claim that the person charged did not know and could not, with reasonable diligence, have ascertained that the goods do not conform to the description or that the descriptions have not been applied to goods so described misleadingly. So equally, in his defence the publisher can state that the advertisement had been received in the ordinary course of business and he did not know and had no reason to suspect that its publication would amount to an offence in certain circumstances. 7. Advice to Foreign Marketers 7.1 Take local advice.