CDMS says one third of top British companies still breaking e-mail privacy laws

Thirty-one percent of top British companies are not complying with the EU Directive on Privacy and Electronic Communications, more than two years after it became law in Britain in December 2003.

This was a finding from a study recently published by data and marketing specialists CDMS based in Mersesyside, Britain.

“Companies who have not complied are putting their carefully built brands at risk, by putting out the message to consumers that they apparently don’t care about legislation designed to protect their prospective customers’ privacy,” said Ian Hubbard, director of data services for CDMS.

“This effectively puts them in the category of junk e-mailers, and associates them with a rising tide of spam, and growing consumer concerns over the security of their personal records,” he said.

The EU Directive is Europe-wide legislation that governs e-mail communications with private individuals. It demands that companies only send unsolicited sales messages via e-mail to non-customers if they have actively opted-in to receiving them.

In practice, this means that whenever someone’s details are recorded – for instance as part of a promotion or a competition – they must be asked whether they want to receive subsequent marketing e-messages from that company or any other third party.

The legislation makes it clear that simply offering someone the opportunity to opt-out of receiving unsolicited e-mails – or pre-checking an opt-in box – does not comply with the directive.

For the study, the top 200 companies across twelve main consumer business sectors –

banking, general insurance, credit card, building societies, publishing, broadcasting, retail, fixed and mobile telecoms, consumer goods, utilities and travel – were tested late last year.

This was to see whether they consistently offered non-customers the opportunity to opt-in to further marketing e-mails when their details were recorded as the result of a promotion or inquiry. These promotions appeared either on the company’s own Web site, through a partner company’s site, in a third party online newsletter, or as part of an advertising or direct mail campaign.

CDMS conducted a similar exercise in 2005. On average, 69 percent of companies studied in 2006 are now compliant with the legislation, an improvement of three percentage points since 2005.

“The experienced marketing directors represented by this 69 percent have recognized and accommodated this restriction on e-marketing in Europe,” Mr. Hubbard said.

“Many of them put preparations in place that not only ensured immediate compliance from the legislative enforcement day [Dec. 11, 2003], but also developed intelligent offline marketing initiatives, usually direct mail, to fill the gap that was left by the removal of this prospecting channel,” he said.

Mr. Hubbard said that since enforcement day, forward-thinking companies have come to view e-mail marketing as almost exclusively a customer management and marketing channel, unless active permission has been obtained.

These companies now tend to focus their new customer acquisition activity on a combination of traditional media as the first approach, and then e-mail and Web as one response mechanism.

Mr. Hubbard urged non-compliant companies to put processes in place to limit their current risk, before finding themselves the subject of a highly public complaint, or a test case prosecution.

“We would exhort those who have not yet paid full attention to this issue to do so with all speed, before enforcement test cases start to be launched, either by individuals or by the regulatory authorities, and before consumer lobby groups, and consumers themselves, blacklist them,” Mr. Hubbard said.

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