Nuisance calls

Written evidence submitted by The Direct Marketing Association (UK) Limited
[NTC 035]

1. We are pleased to have this opportunity to contribute to the Committee’s Inquiry into Nuisance Calls and Texts.

2. About the DMA

2.1 The Direct Marketing Association (UK) Limited, (DMA), is Europe's largest trade association in the marketing and communications sector, with approximately 1000 corporate members, and positioned in the top 5% of UK trade associations by income. The total value of direct marketing to the UK economy was estimated to be £9.1 billion in 2011/12. This comprises three separate figures; £4.3 billion on expenditure on direct marketing media and activities, £1.1 billion on goods and services brought in by companies to enable the undertaking of direct marketing activity and £3.7 billion on the spending of people employed in the industry as consumers (Putting a Price on Direct Marketing The DMA July 2012). The DMA represents both advertisers, who market their products using direct marketing techniques, and specialist suppliers of direct marketing services to those advertisers - for example, mobile marketing agencies, outsourced contact centres etc. The DMA also administers the Mailing Preference Service (MPS), the Telephone Preference Service (TPS)and the Fax Preference Service. On behalf of its membership, the DMA promotes best practice, through its Direct Marketing Code of Practice, in order to maintain and enhance consumers' trust and confidence in the direct marketing industry. The Direct Marketing Commission is an independent body that monitors industry compliance.

3. DMA Code of Practice

3.1 The DMA has a Code of Practice on Direct Marketing that is policed by the Direct Marketing Commission (DMC) – see link below.

http://dma.org.uk/sites/default/files/tookit_files/code-of-practice-feb2012.pdf

3.2 The DMA’s Code goes further than the law in many areas and in the past has been used by the regulators and government as a basis when forming legislation. An example of this is the display of Calling Line Identification (CLI) which formed part of the DMA Code of Practice before it was taken up and used as part of Ofcom’s Statement of Policy on the persistent misuse of an electronic communications network or service, to reduce the consumer harm caused by silent calls. CLI allows the public to identify a number that is calling them either through a telephone which has a caller display or by dialling 1471 if the organisation making that call choses to allow that to happen. Under the DMA Code, DMA members are required to display CLIs for all calls whether using automated diallers or not. Ofcom’s rules only specify this obligation if automated dialling equip ment is used.

3.3 The DMA takes its corporate responsibility very seriously and in 2010 suspended, and subsequently removed from its membership, one organisation, Phruit, which was found by the DMC to have breached the DMA Code of Practice by not complying with the legal requirements relating to TPS. This information was passed on to the ICO.

Background to TPS

4.1 The DMA created the TPS in 1996 to enable the telemarketing industry to offer consumers the choice to opt out of receiving live unsolicited sales and marketing voice calls from organisations. In 1988 the DMA had introduced the MPS which allowed consumers to opt out of receiving unwanted sales and marketing messages by post. MPS was, and is, considered to be a very successful service to both consumers and the industry.

4.2 As many companies who were doing outbound sales telemarketing were not DMA members, this new TPS scheme was not as successful as MPS as non-DMA member companies were under no obligation to adhere to the DMA Code of Practice. The European ISDN Directive was passed in 1997 which required Member States to implement a telephone preference service by 1999. The Telecommunications (Data Protection & Privacy) Regulations 1999 made this obligatory for organisations that made outbound sales and marketing calls. The 1999 legislation was replaced by the Privacy & Electronic Communications (EC Directive) Regulations in 2003, which were further amended in 2004 and 2011 ( the Regulations) The DMA were successful in tendering to run this service, under licence to Ofcom, formerly Oftel, as they have been twice in subsequent tendering exercises.

Level of complaints

5.1 The service has run well on a day to day operational basis, although complaints were running at 2,000 to 3,000 a month from 2006 to 2011 with little or no enforcement of the Regulations by the Information Commissioner’s Office (ICO). An increase in complaints has seen this rise to 10,000 a month in early 2013. This has been due to the huge number of calls being made, firstly by accident claims firms and secondly, by the many organisations offering PPI claims services. The ICO was given increased enforcement powers including the ability to issue civil monetary penalty notices up to a maximum of £500,000, which came into effect in January 2012, and the ICO has recently issued some monetary penalty notices for breaches of the Regulations in respect of TPS.

5.2 Overall, however, lack of enforcement of the Regulations has, in our view, been the major contributing factor to the rise in illegal outbound telemarketing calls. Some organisations have in the past taken the view that the risk of the ICO taking enforcement action was so low that the benefits of calling people whose numbers were registered on the TPS (in particular the higher response rate because such people received fewer unsolicited sales and marketing calls) outweighed the risk of enforcement action.

5.3 Currently, the level of civil monetary penalties on persistent and wilful offending companies for transgressing the rules does not seem to be proportionate to the level of consumer harm caused.

Future plans

6.1 TPS in conjunction with the DMA is launching an accreditation scheme in October 2013 that will audit companies that make outbound sales and marketing calls to ensure that they are compliant with the Regulations and the DMA’s Code where outbound telemarketing is conducted. More information on this can be provided if required.

Problem with definition of nuisance calls

7.1 Some of the research recently undertaken by Which? and Ofcom refers to ‘nuisance calls’. No distinction has been made between the calls that people would rather not get e.g. a call from an organisation that the individual owes money to, which is perfectly legal, or a call where a company or individual are breaching regulations, e.g. a sales and marketing call made to someone who is registered on TPS and who has not given their permission for such a call to be made. A solicited sales and marketing call may be unwanted simply because of the time of day the call is received. We need to agree a common definition of a ‘nuisance call’ which consumer bodies, industry and the regulators are all agreed upon.

8.Possible solutions

a) Nuisance calls

8.1 The DMA supports the Information Commissioner’s request for a reduction in the level of harm or distress they have to prove before bringing a case against the rogue companies that are making these illegal calls. At the moment the requirement is to prove ‘substantial’ harm or distress.

8.2 Investigations by the Direct Marketing Commission are currently hampered by the fact that TPS complaints data – even relating to DMA members – cannot be passed to the Commission for its investigation. We would recommend a change to Ofcom’s statutory powers under Section 393(1) of the Communications Act 2003 to make this possible.

8.3 Companies that use outsourced call centres based overseas are still covered by the Regulations although they can be technologically difficult to track down. We would encourage the regulators to work with network operators to improve upon the tracing of these calls.

b) Unsolicited SMS

8.4 SMS message are treated as electronic mail under the Regulations. The DMA estimates that around 4% of UK SMS messages received from businesses are unsolicited. Estimates for email suggest that the spam figure is between 75% and 95% of all emails sent. The difference for consumers, though, is that most spam emails fail to reach their inbox through effective filtering.

8.5 In addition to the ICO taking enforcement action against rogue businesses for breaches of the Regulations relating to unsolicited SMS messages, we believe that a significant reduction in unsolicited SMS could be made via an improved spam reporting service. Currently, the mobile network operators have implemented SMS spam reporting numbers. However, these are not widely published and can often involve a laborious process for the consumer to report spam texts.

8.6 We would propose that the mobile network operators should implement a more robust system of reporting, by ensuring that either software (such as an app) or a spam reporting number is automatically inserted into the address book of mobile handsets. The GSM Association, of which all UK mobile network operators are members, has set up a system known as the Spam Reporting Service (SRS), which allows for easy and rapid reporting of unsolicited messages from consumers. The system also allows for easier management by the network operators, who can use the reporting quickly to identify and block network access in the case of rogue organisations sending out spam texts.

c) Better enforcement

8.7 Apart from the above, we believe the legislation is broadly sufficient to allow the ICO to take effective enforcement action against these rogue organisations and that further legislation is not required. What is needed is for the ICO to continue to regard this as a priority area for action and focus enforcement activity against those organisations that are persistently and wilfully breaching the legislation relating to TPS.

8.8 Effective enforcement action is the key to solve this problem.

9. The economic value of telemarketing

9.1 Finally, we would like to highlight the economic importance of the call centre industry which employs around 1,000,000 people in the UK (Putting a Price on Direct Marketing 2012, DMA/Future Foundation).

9.2 Call centres handle both outbound and inbound calls: many consumers prefer to access and service their accounts via the telephone, rather than online. A good number of consumers find telemarketing a useful way of finding out about new products and services particularly the many consumers (over 5 million) that do not have access to the internet.

9.3 Many call centres are based in areas where unemployment is higher than average e.g. the North East, Wales and Scotland. This industry makes a significant and positive contribution to the economy.

August 2013