Culture, Media and Sport CommitteeWritten evidence submitted by Which?

1. Introduction to Which?

1.1 Which? is an independent, not-for-profit consumer organisation with around one million members and is the largest consumer organisation in Europe. Which? is independent of Government and industry, and is funded through our own activities, such as the sale of Which? consumer magazines, online services and books. Which?’s mission is to make individuals as powerful as the organisations they have to deal with in their daily lives by empowering them to make informed decisions and by campaigning to make people’s lives fairer, simpler and safer.

1.2 Which? has a long history of working on PPI and consumer detriment arising from the claims management sector. As a result in the last 18 months, we have increasingly focused on issues around nuisance calls and texts rising from these and other sectors. In March 2013, we launched the Calling Time on Nuisance Calls and Texts campaign, having published an article in Which? magazine in April 2013 highlighting the trading of data by insurance companies. The problem of nuisance calls and texts is one that consumers feel passionately about with our campaign receiving 82,000 pledges of support since its launch.

1.3 In recent months, there has been an increase in activity from the regulators and the Government. In March 2013, the ICO issued its first fine for live marketing calls. Since then the Information Commissioner’s Office (ICO) has fined three more companies for making live marketing calls in breach of the Privacy and Electronic Communications Regulations (PECR). Ofcom has issued a fine against Talk Talk for silent calls and the Claims Management Regulator (CMR) has increased its enforcement activities of CMCs.

1.4 The Government has recently set out its intentions to take action on this issue in its strategy paper, Connectivity, Content and Consumers: Britain’s digital platform for growth. Parliamentarians have also increasingly been raising this issue with Mike Crockart MP bringing forward a Private Members’ Bill to tackle many of the issues addressed in this response.

1.5 The progress that has been made to date is very welcome and has helped to focus attention onto this issue. However, there is still a long way to go before the amount of nuisance calls and texts that consumers are receiving are reduced. As well as legislative changes and increased enforcement action, the telecoms industries also has a key role to play in identifying callers, providing technological fixes and ensuring that consumers feel protected when using their phones

1.6 This evidence sets out the key issues affecting consumers with nuisance calls and texts and a set of recommendations that the Government, the relevant regulators and industry should introduce to tackle this issue.

2. Key Recommendations:

2.1 Placing an expiry date on third party consent, where a person consents to be contacted by “selected third parties” for marketing purposes, so it can only last for a set amount of time.

2.2 Requiring businesses that are engaged in direct marketing to demonstrate that consent has been obtained rather than the ICO having to “prove a negative” by showing that the business does not have consent.

2.3 Extending the Privacy and Electronic Communications Regulations (PECR) to include firms collecting and selling on personal data, not just those that conduct direct marketing.

2.4 Lowering the threshold for the ICO to take enforcement action under PECR.

2.5 Strengthening enforcement action against companies who call people registered with the TPS, and making it clear that companies cannot call those people if they gave consent via a third party.

2.6 Requiring all businesses making marketing calls to send their Caller Line ID so people can see a company’s telephone number and therefore report nuisance calls to regulators.

2.7 Providing spam filtering technology on mobiles to stop unwanted texts.

2.8 Developing a short-code on landlines that consumers can dial after receiving an unwanted call that would send information to the regulators and network operators. This would allow Ofcom and the network operators to gather increased intelligence on nuisance callers and identify those who are persistently misusing the networks.

2.9 Improving ICO guidance regarding the collection and processing of consent. Specifically, much stronger guidance on 3rd party marketing consent: there continues to be confusion as to whether 3rd party consent is sufficient for a company to call a consumer who is registered with the TPS.

2.10 Amending section 393 of Communications Act to designate the ICO as a recipient of information from Ofcom.

2.11 Increased and joined up publishing of enforcement activity from all regulators.

3. The Consumer Perspective

3.1 Nuisance calls and text messages are a problem for many people. Our recent research revealed that 85% of people with a landline had received an unsolicited call on it in the previous month. The most common type of calls related to Payment Protection Insurance (PPI) (62%). The average number of calls received was seven in the previous month. These figures go some way to illustrating just how widespread this problem is. The threat of enforcement action is clearly not a sufficient deterrent to companies who choose to ignore the rules.

3.2 The detriment to consumers tends to be a result of the incessant nature of the calls. Although a single call in itself may not cause harm to the majority of consumers, receiving multiple calls and feeling powerless to stop them creates a much broader picture of detriment. An online survey conducted in April1 found that the average number of calls received was seven in a month; however 8% of people who receive calls reported receiving more than 50 unwanted calls in the previous month. In a face to face survey in February,2 85% of people who had received unsolicited calls told us that they were an annoying interruption to their daily lives. 58% of people who have received unwanted calls on their landline now feel discouraged from picking up their phone when it rings. 29% of people have felt intimidated by calls. It is entirely unreasonable that consumers should feel annoyed, distressed or threatened by constant unwanted telephone calls.

3.3 As well as being a daily frustration, some calls and texts can present serious harm to certain consumers. We have received comments from consumers who are elderly or ill and find it incredibly difficult to answer the phone. Receiving constant nuisance calls can be especially detrimental to these consumers. Further, some calls and texts are the result of actual scams which can cause financial loss or trauma to victims. The focus of our work in this area has been on nuisance calls and texts generated by companies who are disobeying the laws around direct marketing, rather than fraudsters. The issue of scams is very serious and one that is much bigger than the current inquiry.

4. Major Issues

4.1.1 Consent

Consent is the process by which a consumer gives permission for their details to be used or sold on to be used for direct marketing purposes. Once given, it can be very difficult for a consumer to retract consent. At present, consent does not have an expiry date and there are no limits regarding the number of times data can be re-sold. This can mean that consumers lose control over who has their data and how it is being used. We are concerned that the issue of consent underpins many of the problems related to nuisance calls and texts. However, more evidence is needed to quantify the problem of trading data and it would therefore be beneficial if the Select Committee was to seek out this evidence throughout the process of its inquiry.

4.1.2 The statutory framework is such that live marketing calls are legal unless a consumer signs up to the TPS or specifically tells a caller that they no longer wish to be contacted. Other forms of electronic marketing, such as text messages, emails and recorded sales calls are not allowed without consent. However, Ofcom’s recent research3 found that 38% of UK adults with a landline received a recorded sales call during the previous month. Assuming all of these calls were made in compliance with the law, it would appear that consent is being traded and used very freely. We have called for businesses engaged in direct marketing to be required to demonstrate that consent has been obtained rather than the current scenario in which the ICO has to “prove a negative” by showing that the business did not have consent.

4.1.3 It is often confusing for a consumer to know what they have consented to due to the nature of opt-in versus opt-out consent. Many consent boxes use complicated language, such as double negatives, meaning that consumers may inadvertently agree to receive marketing that they do not want. Which? wants to see the rules on consent strengthened to put consumers back in control of their data. Consent boxes should be prominent, in plain English and with a clear and consistent format so that consumers know what they are consenting to. Further, we want there to be an expiry date on third party consent to stop the continuous cycle of data re-selling and to reduce the overall amount of marketing consumers receive.

4.1.4 We have found that some companies do not even provide a consent box at all, rather burying their marketing practices in their T&Cs. This normally occurs because the company is not engaging in direct marketing themselves, rather they are collecting data to sell on. We want the Privacy and Electronic Communications Regulations (PECR) to be extended to include any company that collects or sells on data; currently it only applies to those companies who use the data for direct marketing purposes.

4.2 Regulatory Framework and Enforcement

The regulatory framework that underpins direct marketing is incredibly complicated. As well as numerous regulators having a role in regulating activities in this sector, the legislation that underpins the activities of the various parts of industry is spread across several pieces of legislation.4 Although these inefficiencies may not be insurmountable, the various regulators and industry stakeholders have been slow to respond to the rise in nuisance calls and texts in a joined up and effective manner. We welcome the recent increase in regulatory and enforcement activity, however there is still much more that needs to be done in order to tackle this problem.

4.2.1 Despite a more joined up effort from regulators and industry stakeholders emerging recently, there are still gaps in the existing legislation which mean that it is slow and difficult for regulators to take effective enforcement action. It still seems to be too easy for companies engaging in unlawful marketing practices to get away with this behaviour. We have called for the ICO’s evidentiary threshold to be lowered from “substantial damage or substantial distress” to “annoyance, inconvenience or anxiety” and welcome DCMS’s recent announcement to address this issue.

4.2.2 The suggestion of a single regulator has been floated in various contexts, including most recently in the DCMS strategy paper, Connectivity, Content and Consumers.5Although this may be an option to consider in the future, it feels as though there are opportunities to reduce the incidence of nuisance calls and texts that can be taken now. Which? wants to see clear leadership in this area with someone given responsibility for finding and driving solutions to the problem of nuisance calls and texts.

4.3 Identifying and reporting calls

Intelligence gathering is crucial for regulators to take enforcement action. However, many callers withhold or disguise their number, making it impossible for consumers to report the call. Ofcom’s recent panel research found that in only 34% of calls was the phone number recorded.6 This suggests that the majority of nuisance calls are unidentifiable by consumers. The TPS’s own data reveals that 40% of complaints they received in the first 3 months of this year had insufficient information for them to be able to pursue the offending company. Bearing in mind that a consumer must provide a phone number to even be able to register their complaint with the TPS, it appears that a significant portion of the small number of callers who even transmit a phone number do not send a legitimate number. We want to see all companies required to send their valid phone number when they make calls for the purpose of direct marketing.

4.3.1 Another difficulty in identifying nuisance callers is caused by international call centres. Consumers have told us that they’re very concerned about the threat of international callers and how they can be tackled by UK enforcers. There is currently very little information as to the portion of calls coming from abroad, and we feel it would be beneficial if the Select Committee sought out this evidence. Although call centres making calls on behalf of UK companies fall within the jurisdiction of UK law, it is understandable that consumers are questioning how easy this would be to prove and enforce in practice. However, we do not currently know how big this problem actually is.

4.3.2 The process of identifying and complaining about nuisance callers is a challenging task for consumers. The current regulatory structure means that companies who do choose to send their number are more easily identifiable and susceptible to enforcement action. As well as changes to the regulations as outlined above, more must be done by telephone networks and Ofcom to identify callers using the networks. In addition to the challenge of identifying callers, there has been consumer confusion over where to complain. Which? has recently launched a complaints portal which allows consumers to complain about any call or text. The portal lets consumers to select the type of call they received, as well as the amount of information that they have about the caller, and then redirects them to the appropriate regulatory complaints form.

4.4 The TPS

The TPS is an opt-out service for consumers who do not wish to receive live marketing calls from companies that they have not given their explicit consent. Consent is not required to make live marketing calls, which means that the TPS is essential for any consumer who does not want to receive these calls. Companies must screen the numbers they intend to call for marketing purposes against the TPS register. A company cannot call a consumer who is registered with the TPS if the company only has third-party consent.7 If a company has a direct relationship with a consumer then they are allowed to call that specific consumer, even if they are registered with the TPS. However, the consumer has the right at any stage to withdraw their consent to be contacted by that specific caller.

4.4.1 There are over 19 million numbers signed up to the TPS. Recent Which? research found that, although people registered with the TPS reported a decrease in nuisance calls after they signed up, 57% said they were not satisfied with the service.8 Our research revealed that people registered with the TPS had still received, on average, 10 unsolicited calls in the previous month. This is double the average number of unsolicited calls received by those not signed up. It is unclear as to why this is the case, although 78% of people who were signed up to the TPS said they signed up because they were already receiving a high number of calls and wanted to reduce them. It seems that there is a group of people who are receiving a disproportionate number of nuisance calls and are unable to stop the trading of their data. Our research found that, of those who receive unsolicited calls, 8% of people reported receiving 50+ unwanted calls in the previous month.

4.4.2 There currently appears to be confusion amongst businesses as to when they are allowed to call consumers who are registered with the TPS. Although third party consent is not sufficient to allow a company to call someone registered with the TPS, the high prevalence of nuisance calls suggests that many companies are not adequately screening their lists against the TPS. Further, we have heard anecdotally that consumers have received unsolicited calls and when they tell the caller that they are registered with the TPS, the caller says that the third party consent they have overrides the TPS. The legislation is not explicit as to whether third-party consent is sufficient to override the TPS, and although the ICO has said that it is not, their own guidance is not very clear. We are calling for it to be made explicit in legislation that third-party consent is not sufficient to override the TPS, and for the ICO’s guidance to be strengthened. This will help make the TPS work better for consumers who do not wish to receive unsolicited marketing calls.

4.5 Text Messaging

Unsolicited text messages are already illegal; however the prevalence of spam texts messages would suggest that this legislation is being grossly ignored. Our research found that 40% of mobile phone users have received an unsolicited text message in the previous three months.9 The median number of spam texts received during that period was 22. According to research done by Cloudmark,10 nearly three quarters of UK adults have ever received an unsolicited text message, with 64% reporting having received one in the past 12 months.

4.5.1 It is incredibly difficult to identify who is sending spam texts due to the ease with which people can buy and dispose of sim cards. Purchasers do not need to provide identification when buying sim cards and there is no obligation to register the sim. The difficulty in identify and tracing senders means that improved regulation and enforcement action is unlikely to solve this problem, although it still places an important role. We want to see spam filtering technology provided by the mobile phone industry, in much the same way that exists with email spam. Although consumers can currently forward spam texts to their mobile phone provider, spam filtering technology would prevent the texts even reaching the phone in the first place.

5. Claims Management Companies (CMCs)

The CMC industry is a major culprit in the nuisance calls landscape. As our recent research showed, 62% of people have received a call regarding PPI, and 48% received a call from an accident claims company. It would be reasonable to assume that most of these companies were CMCs (or collecting leads on behalf of CMCs). Although broader than the issue of nuisance calls, we are concerned that the Claims Management Regulator (CMR) does not have suitably robust enforcement capabilities. We want the CMR to be given the power to issue monetary penalties. Currently, the biggest penalty the CMR can issue against a non-compliant CMC is to cancel, suspend or put conditions on the CMC’s authorisation. Cancelling an authorisation is problematic as it means that existing customers of the CMC lose any fees they have paid and have to start their claim from scratch. Having the power to fine would give the CMR more flexibility and would serve as a bigger deterrent to CMCs who might breach the rules.

August 2013