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 Ireland Italy Singapore

Sweden Switzerland United Kingdom United States

 

INTERNATIONAL LEGAL ISSUES IN DIRECT RESPONSE MARKETING: SPAIN

1. Lobbying 1.1 How can an association like ERA successfully lobby in your country to maintain a friendly regulatory environment? By getting members of existing associations specialised in e-commerce and direct marketing and by submitting materials to the media. 2. Laws and Regulations 2.1 Are any forms of direct response marketing prohibited in your country? Those forms of direct marketing which could damage certain fundamental values, like public order, public health or the protection of minors, as well as those included in the Directive 97/7/EC regarding distance selling and the Spanish retail commerce law which has partially implemented the Directive. 2.2 What are the major restrictions in your country on direct response marketing, which sellers should be aware of? Those included in the Directive and the retail commerce law regarding distance selling, e.g., information which the consumer must have before a contract becomes binding, the need for written confirmation of such information and a period during which the contract may be cancelled by the consumer or the non-enforceability of a distance contract without the consumer's consent. These rights are inalienable and therefore any renunciation of them would be void. 2.3 Are there any laws or regulations pending in your country that could have an impact on direct response marketing? The Law of services of the information society and e-commerce. This law is actually being discussed in Parliament and will implement the Directive 2000/31/CE regarding different aspects of the services of the information society, in particular, e-commerce in the internal market. It will also implement partially the Directive 98/27/CE. 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 Data Protection Agency (Agencia de Protecci--n de Datos), a government agency which ensures compliance with the legislation on data protection and ensures its application, in particular as regards the rights of information, access, rectification, objection and cancellation data. The Advertising Selfcontrol Association (Asociaci--n de Autocontrol de la Publicidad), a voluntary, self-regulatory private association subscribed to by media, advertisers, agencies and other associations. But there are other private associations at hit sector like Asociaci--n de Centrales de Medios, Asociaci--n Espa-ola de Agencias de Publicidad, Asociaci--n Espa-ola de Anunciantes, etc. 2.5 What are the current hot issues among regulators and enforcement agencies in your country that could have an impact on direct response marketers? Different services related to Internet. 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? According to the Data Protection Law the infringements are classified as minor, serious or very serious. Minor infringements are punishable by a fine of 100.000 to 10.000.000 Ptas. (601,01E to 60.101,21E). Serious infringements are punishable by a fine of between 10.000.000 to 50.000.000 Ptas. (60.101.21E to 300.506,05E). Very serious infringements are punishable by a fine of between 50.000.000 to 100.000.000 Ptas. (300.506,05E to 601.012,10E). 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? If so, what are the penalties if such a suit is successful? According to the new Spanish procedural law, entered into force on the 08.01.2001, a "class action" could be filed on behalf of a consumer association which represents the interests of their associates and those of the rest of the consumers. Observing certain circumstances the new Spanish procedural law permits that a law firm represents an infinite number of consumers within a particular class, but the result of this law suit will benefit only those consumers which actively took part in the law suit and not the other consumers which are of the same class, but which did not participate in the law suit. According to Advertising Law, a company or a consumer can sue a competitor for false or deceptive advertising. Judgement could include any of the following penalties: a) The defendant could be given a period of time to remove those parts of its advertising which are illegal. b) The suspension of the illegal advertising. c) The publishing of the judgement or part of it, the costs of the same would be borne by the defendant. d) The ordering of the diffusion of some form of corrective advertising in order to remove the negative consequences of the illegal advertising. Further legal action in civil, penal or administrative law is possible. 3. Consumer Privacy Issues 3.1 What is the current law in your country relating to privacy of personal information? In Spain, the current law relating to privacy of personal information is the Organic Law 15/1999 of 13 December - the Protection of Personal Data. 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 Protection of Personal Data Law does not distinguish between the different sources through which information could be collected. 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? In principle, the law does not distinguish between different types of personal information. The law refers to personal data in general. Nevertheless there are some articles which refer specifically to data with special protection and information services on creditworthiness and credit. 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? In principle, the "opt in" method is required. Processing of personal data shall require the explicit consent of any person, subject of such data, unless otherwise laid down by law. Nevertheless, consent is not required where personal data is contained in sources accessible to the public and their processing is necessary to satisfy legitimate interests pursued by the controller or that of a third party to whom the data has been communicated, unless the fundamental rights and freedom of an individual the subject of such data has been jeopardized. In the case where the consent of individuals is not required for processing personal data, or is otherwise provided by law, an individual may object to such processing (opt out) where there is compelling and legitimate grounds relating to a particular personal situation. In such an event, the controller must exclude all data relating to the said individual. 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. If the consumer has agreed to this marketing plan, and he has been informed clearly that at the end of the trial period he will be charged for the product or service unless he expressly cancels, this plan does not infringe Spanish law. 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 plan appears valid and conforms to Spanish law, as long as the consumer has the possibility to cancel his participation in the plan at any time. We do not know whether this type of marketing method is under scrutiny in Spain. 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. This automatic renewal is commonplace and appears valid as long as it does not infringe the common legal provisions. 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 type of thing is not very common, but as long as it follows the legal provisions (e.g., not only the provisions conforming the advertisement, but also the ones referring to the data protection as the telemarketer provides the credit card number to another marketer), it appears valid. 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 Real Decreto 2685/1976 de 16 de octubre Real Decreto 1091/2000 de 9 de junio (aimed at doctors) 5.1.2 Diet/Weight Loss products Decreto 2685/1976 d 16 de octubre above mentioned 5.1.3 Drugs Because of the importance of the product, its heavily regulated. The most important specific regulations are: Orden de 10/22/1985, Orden de 17/09/1982 and the Real Decreto 2730/1981 de 19 de octubre 5.1.4 Electro-muscle stimulators The common regulations relating to health and fitness products are applicable. We are not aware that there are specific regulations relating to the marketing of these products. 5.1.5 Health and fitness products Also heavily regulated. The regulations mentioned in 5.1.3. apply to these products 5.1.6 Beauty products Real Decreto 1599/1997 de 17 de octubre 5.1.7 Travel offers Decreto 231/1965 de 14 de enero Orden de 14 de abril 1988 5.1.8 Magazine subscriptions We are not aware of any specific regulation relating to marketing of Magazine subscriptions. 6. Extended Liability 6.1 If direct response advertising is found to be false or misleading, what parties, in addition to the marketer making the offer, are liable? Any person who has initiated, ordered to be initiated or who has cooperated in the initiation of any such advertising could be held liable. 7. Advice to Foreign Marketers 7.1 What is the most important advice you would give to a marketer that wishes to market a product through direct selling in your country? Before planning and starting an advertising campaign, advertisers must ensure that such campaign fits within the boundaries of Spanish law. Failure to do so means that advertisers run the risk the censuring or prohibiting of advertisements and perhaps a fine being levied against them.