Spam law heads to junk folder

South Africa's wrestle with overflowing inboxes could go back to square one, as pending legislation meant to curb spam is under threat of being watered down.

This is a result of direct marketing companies and law-makers having opposing views on how end-users can be contacted under the law.

In its current form, the Protection of Personal Information (PPI) Bill works on an opt-in basis, unless companies already have a working relationship, or people's consent to receive communication.

However, the Direct Marketing Association of SA (DMASA) wants the Bill to shift to opt-out, and is engaging legislators to change the law. The association wants to find a way to balance its growth imperatives with consumers' rights.

The DMASA warns an opt-in regime will have the unintended consequences of companies closing doors, job losses, and stifled job creation in an economy still in recovery mode after a recent recession.

However, changing the PPI Bill to opt-out will negate its effectiveness as a spam-fighting tool, because an opt-out regime is simply impossible to properly enforce, market commentators argue.

Globally, spam accounts for between 70% and 95% of all mail received by ISPs. The cost to filter it is a significant expense for service providers, as well as consumers, who pay for downloading spam if it gets through filters. Opting out of unwanted SMSes also costs consumers, as there is a network charge.

The PPI Bill should cut down on spam as it sets down strict parameters around how information can be collected, and used. The law specifically refers to direct marketing through fax, SMS, automatic calling machines and electronic mail.

If companies do not comply with the law, and have been issued with an enforcement notice, they can be fined or face a year behind bars. In addition, end-users can institute a civil claim for damages.

The PPI Bill is expected to be enacted towards the end of this year, although the date is not yet certain. It is currently making its way through Parliament.

BulkSMS.com MD Pieter Streicher says an opt-in system is only enforceable when businesses are dealing with an existing customer base. The problem comes in when companies purchase lists of people's contact details, he comments.

When databases full of people's personal information are sold to several entities, “it is almost impossible for a member of the public to remove their name from the master list once and for all”, Streicher says. It also costs the end-user to reply 'stop' to unsolicited SMSes because of network charges, he notes.

The PPI Bill must work on an opt-in basis for companies that do not already have a direct relationship with the end-user, and opt-out where there is already a communication channel and consumers can hold companies accountable for unwanted messages, says Streicher.

Paul Jacobson, of Jacobson's Attorneys, says shifting the law to opt-out will make the framework dealing with spam much less effective. Opt-out will open the door for spammers to inundate consumers with messages in the hope that people do not opt-out, making it a viable business model, he argues.

Opt-in provides stronger protection for consumers because they can choose which companies they want to interact with, says Jacobson.

However, opt-in will also hurt the direct marketing industry, because it will require a “radical” reinvention and companies that battle to comply will go out of business, he adds.

Businesses in the sector will have to throw away their current databases and build new ones from scratch, Jacobson explains. This is a costly exercise that not all marketers can afford, he says.

It is “very” possible PPI will be amended to opt-out, because the direct marketing industry will lobby for the current working draft to be changed, says Jacobson. “I wouldn't be surprised.”

The DMASA warns the opt-in regime could have unintended consequences for the sector, potentially wiping out current and future job opportunities in a sector that employs more than 150 000 South Africans.

The DMASA has asked the Justice Portfolio Committee to consider an opt-out regime, which is the current requirement in both the Consumer Protection Act and the Electronic Communications Transactions Act, says CEO Brian Mdluli.

If the legislation is passed in its current form, jobs in the sector will be lost, says Mdluli. In addition, companies that “do not accept the spirit of the Bill will quickly close down”, he notes.

The DMASA has informed the committee about its concerns over job losses, says Mdluli. He questions the motives of those who argue against an opt-out regime: “Dare I say there is an underlying financial reason for calling for an opt-in, rather than consumer protection?”

Several sectors outside the direct marketing association will also be affected if the law becomes strictly opt-in, says Mdluli. These include: mobile content providers, agents in call centres, administrative staff, and courier and postal workers who deliver documents after a sale is complete.

“For every job we create in direct marketing, five other jobs are created in the value chain and that's why my detractors are so short-sighted. Jobs lost can never be created again.”

Mdluli says consumers' rights must be balanced with industry growth. “Opt-in will have adverse effects on job creation, but we need to look at the spirit of the proposed legislation and see how we can balance the unintended consequences with consumer protection. The damage will be done, but I do not think that's the intention of the legislation.”

In addition, says Mdluli, people with a lack of access to information, such as the Internet, will not have the opportunity to opt-in because they will not know what they are missing out on.