Direct Marketing Association of SA
Implications of the Consumer Protection Bill
on the Direct Marketing Industry
Prepared by Mark Heaton (firstname.lastname@example.org)
Confidential Information – the definition as to what is considered to be
confidential information has wide implication. It will completely nullify what
the DMA is trying to achieve by having the Protection of Personal Information
Bill (PPI) changed to be in line with the Argentinean model.
(i) a person’s identity, including the person’s name, date of birth,
identity number, marital status and family relationships, past
and current addresses and other contact details, and related
The Bill seeks to prevent any usage of this information (not just distribution
to 3rd parties, but ANY marketing usage) for marketing purposes whatsoever
unless with the express consent of the consumer (see s13(1) & s13(2)).
(a) a person to whom goods or services are advertised, offered,
supplied, leased, sold or delivered in the course of business;
There are additional definitions, but (a) has the effect (per s13(1)) of making
any potential recipient of DM activities already a “consumer” and therefore
prohibits contact without consent.
• includes communication by telephone, email, fax, sms, Bluetooth,
wireless computer access and any similar technology or device.
I thought that this would exclude direct mail from many prohibited activities,
but the definitions then go on to define
Solicit in Person:
• to solicit other than by electronic communication.
Contact by direct mail is not mentioned that often in the Bill, but soliciting in
person is – and it would seem that this definition would be able to include
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direct mail. However this is likely to be unintentional, and should be
corrected or better defined within the act.
Section 2 – Interpretation
(2) A person, court or Tribunal interpreting or applying this Act may consider
(a) foreign and international law
(b) international conventions, declarations or protocols relating to
To my mind, this section specifically indicates that the drafters would have
our CPA interpreted in line with international law. Therefore it opens up the
avenue to find accepted international examples where the prohibition on non-
consent driven DM activities would still be permitted. It may be beneficial to
establish which countries’ CP Acts were used to assist in the drafting of this
PART B – Purpose, Policy and Application of the Act
(3) Purpose and policy of the Act (p29)
While the Act is by definition to protect consumers, it is apparent that it
attempts to make certain rights in favour of consumers in a free trade
situation prevail over rights of sellers. Surely the concept of free trade
enshrined in our constitution and by SA Common Law would place rights of
buyers and sellers on an equal footing? Also it seeks to take various second
generation rights and supersede these over first generation rights – such as
the right to freedom of action (trade) – enshrined in the constitution. The
only place where the Act specifically allows supplier’s rights to prevail is in s
8 (2) (p39) where right to refuse to transact are afforded to the supplier.
(5) Application of the Act (p33)
This section (1) (a) particularly excludes the following from being covered by
(i) a transaction concerning services to be supplied under an
(ii) a credit agreement, as defined in the National Credit Act,
irrespective whether that Act applies to that credit agreement.
This would exclude all “credit agreement” transactions covered by the NCA. I
am unsure whether this would exempt DM activities using information
covered by the NCA for the purposes of offering products covered by the NCA
– but it is an avenue worth exploring.
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S(2) makes some telling exceptions to who is defined as a “consumer” and is
therefore not covered or by this Bill:
(a) the state, or an organ of the state; or
(b) a juristic person, other than a juristic person which is a franchisee
or potential franchisee of the supplier in respect of that transaction,
i. the asset value or annual turnover of that juristic person,
combined with the asset value or turnover of any related
person, at the time of the transaction equaled or
exceeded the threshold value determined by the Minister
in terms of section 6(1)(a); or
ii. the value of the particular transaction equaled or
exceeded the threshold value determined by the Minister
in terms of s 6(1)(b).
My interpretation of this is that any company, association or government
agency is not included under the definition of a consumer. Also any
transactions over a certain value (not yet defined – but less than R1m) are
also excluded. A cynical interpretation would be that this makes it OK to rip
off the state, companies and high net worth individuals! It also means that
the Act discriminates on the grounds of wealth. However, Part A of Chapter 2
and s70 still apply – which include the Privacy provisions of s13.
Chapter 2 – Fundamental Consumer Rights
PART A – Right to Equal Access to the Consumer Market
S10 – Management of pricing and risk must not be discriminatory
Companies should assess the impact of this clause as it prohibits scoring of
candidates or any exclusions which would be discriminatory in terms of s9(3)
of the Constitution. This would prohibit exclusion for race, age, location, and
possibly HIV status. This is of particular relevance to insurance and medical
PART B – Right to Confidentiality and Privacy
This section is of the most relevance and concern to the DM industry.
s12 Right to Confidential Treatment (p43)
(1) Any person who, in terms of this Act, receives, compiles, retains or
reports any confidential information pertaining to a consumer or
prospective consumer must protect the confidentiality of that
information, and in particular, must-
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a. Use that information only for a purpose permitted or required in
terms of this Act, other national legislation, or applicable
provincial consumer legislation; and
b. Report or release that information only to the consumer or
prospective consumer, or to another person –
i. To the extent required by or in terms of this Act, other
national legislation, or applicable provincial consumer
ii. As permitted or directed by –
1. (aa) the written consent or instructions of the
consumer or prospective consumer; or
2. (bb) an order of a court or the Tribunal
Important in this section is that it makes provision to adhere to rules of
“other national legislation” which would allow an argument for utilizing PPI
here instead of CPA for conducting of DM activities.
Important for Telesales is 12(1)(b)(ii)(aa) in that it may not allow for verbal
instructions as proof – so voice logging needs to be included in this definition.
s13 Use of consumer information for marketing or related purposes
(1) A supplier must not use, direct or permit any other person to use,
or supply to another person to use, any confidential information
pertaining to a consumer or prospective consumer for, or in relation
to, any promotional purpose, or direct mass distribution of
messages, whether printed or by electronic communication, unless
the consumer has consented to such use in the manner
contemplated in subsection (2).
(2) When entering into any transaction or agreement for the supply of
any goods or services, the supplier may present to the consumer a
written statement in the prescribed form –
a. Setting out the consumer’s rights in terms of this section; and
b. Inviting the consumer to permit the supplier to use the
consumer’s information contemplated in subsection (1) in any
i. Direct promotional activity that may be conducted by or
on behalf of the supplier;
ii. Direct mass distribution of messages by print, or
electronic communication; or
iii. Marketing or consumer list that may be sold or distributed
by the supplier to another person.
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This section appears to override what is stated in s12, and does not open
activities for interpretation in terms of other legislation. It requires absolute
consent for any use of confidential information for marketing activities.
It says the supplier “may” present to the consumer. It does not say that the
supplier “must” present to the consumer in order to allow further marketing.
Additional clarity is required on exactly how this should be interpreted.
“Prescribed Form” is not defined in the Bill – unless it is assumed that this is
what subsection (2) is detailing.
(3) A supplier who requests and receives any consents from consumers
in terms of subsection (2) must maintain a register in the
prescribed manner and form of all such consents granted by
“Prescribed manner and form” is not defined in the Bill. It is questionable
whether s106(e) (p146) is applicable to this. This is very impracticable for
companies with large numbers of customers. What about keeping voice-
logged consents, or electronic format? What is envisaged as being
acceptable? It is vital that this is determined.
(4) A person must not initiate, sponsor, promote or knowingly
participate in any activity, scheme or communication that is
primarily designed for the purpose of accumulating confidential
information or other identifying information concerning consumers,
either surreptitiously or without their express consent.
While it would seem that this stifles many data or list accumulation activities,
it should be noted that the DMA envisages including such disclosure in its
Code of Conduct for compliance with PPI. Important here is the use of the
word “primarily”. Many activities give rise to contact data as a by-product of
the primary marketing activity – which may be a promotion or competition.
In terms of the precise wording, this would still be acceptable.
A key submission or issue to be taken with s13 of CPA is that the realm of
the regulation of data privacy should be contained in one Act, and regulated
by one Minister. There needs to be harmonization across all legislation for the
goal of simplicity and ease of compliance. To have privacy legislated now by
the Justice Department (PPI and PAIA), Trade and Industry Department (CPA
and NCA), Communications Department (ECT) creates confusion and
hampers ease of compliance. It is recommended that all privacy should be
covered by PPI and all other legislation should be subordinate to that Act.
s13 Right to restrict unwanted telecommunication access to
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(1) The right of every person to privacy includes the right to refuse to
accept, or preemptively block, any electronic communication to that
person if the electronic communication is primarily for the purpose
of fundraising or marketing any goods or services.
Here the use of a 2nd generation right is clearly given preference over the 1st
generation or fundamental right of the supplier to free speech. This aspect
should be strongly challenged. In terms of this section, this is extended to
electronic communication only, but would exclude direct mail.
Subsection (2) says that the National Consumer Commission “may” (not
“must”) establish a registry for the purposes of consumers registering their
pre-emptive blocks. It would be preferential to have this privately operated,
even if statutorily mandated. The DMA is considering its own MPS and
extending this to all electronic communication and direct mail. The Bill makes
no mention of how such a register would be maintained or distributed to
s15 Regulation of time for contacting consumers (p45)
(1) A supplier must not initiate any direct personal contact with a
consumer for any promotional purpose during a prohibited period
prescribed in terms of this section, except to the extent that the
consumer has expressly or implicitly requested or agreed
It is uncertain whether this would include telephone contact. I would imagine
it does not as this is included under “electronic communication” which is not
mentioned in this section.
S24 Consumer’s right to rescind or cancel transaction or agreement
I have no specific recommendations with this section other than to draw
attention to DMA members of the time periods stipulated under which a
consumer may cancel a purchase or an agreement.
s33 Right to information in official language (p66)
Some debate has arisen at the DMA legislation subcom regarding the
requirements that CPA requires documentation in two official languages. On
further analysis it would appear that this is not quite correct.
s33(1) states that the consumer has the right to receive any document
required in terms of this Act (which excludes marketing information) in an
official language – ie in 1 language only. Exactly which language can be
determined by the supplier – not the consumer.
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s33(2) & (3) allow the Minister to prescribe certain documents which would
further have to be in two official languages. None are prescribed at present in
the Act. s33(2)(b) allows the consumer to decide which 2 languages he
would like to receive the document in. Should this ever become applicable, it
could be so unwieldy and expensive as to make it unworkable. This section
needs to be challenged and amended even though it is not certain to ever
s35 General standards for the promotion of goods and services (p68)
A manufacturer, producer, importer, distributor, or supplier of any goods or
services must not promote any goods or services –
(e) in a manner that –
(i) is degrading to the dignity of any person
The Act does not detail in whose opinion this would be. What is degrading to
one person may not be so to many other similar people. This is a question of
subjective morality and needs to be defined further in order to be
S42 Promotional Competitions (p76)
This section is of particular relevance to so-called “sweepstakes” DM
campaigns, but has application to anyone who runs a competition as part of
s42(3) The promoter of a promotional competition –
(b) must file an abstract of the competition rules in the prescribed
manner and form with the Commission no later than the date on which
consumers are first able to participate in the competition.
With the number of competitions run on a daily basis, this regulation is going
to require onerous compliance and extremely onerous monitoring by the
Commission. It should be recommended that a code of practice for
competitions be adopted, but that advance notification of each and every one
S42(5) An offer to participate in a promotional competition must be in writing
and must fully and clearly state –
(d) the maximum number of potential participants in the competition,
and the odds of winning any particular prize in that competition;
This requirement is virtually impossible to comply with and needs amending.
How can you know what the odds are when you may have no idea how many
people may enter your competition?
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S90 Licensing of persons for direct marketing (p130)
(1) The Minister may prescribe –
a. Categories of persons who are required to be licensed to engage
in direct marketing, as contemplated in section 38, if they are
not otherwise required to be licensed or registered in terms of
any public regulation;
The Act does not properly define Direct Marketing – but s38 refers to “door-
to-door” type operations. However, it also refers to telemarketers in s38(3)
so these may be intended to be included. Requiring licensing may be yet
another hurdle the DTI is placing in the way of free and fair trade and should
be opposed. This could give the Minister or Commissioner the ability to
restrict competition by refusing to license certain operations at their
S91 Industry Codes (p132)
This section provides an opening for the DMA to be pro-active and submit a
voluntary industry code which may or may not be accepted by the Minister
and applied to the DM Industry. The Minister is given powers to create an
industry code and make compliance mandatory. It would be preferable that
the DM initiates this first and be pro-active.
S129 Administrative Fines (p164)
(2) An administrative fine imposed in terms of this Act may not exceed
the greater of –
a. 10% of the respondent’s annual turnover during the preceeding
financial year; and
b. R 1 000 000
There are a number of considerations the Tribunal would consider in coming
to determining the level of the fine, but the figures mentioned could cause
undue hardship and are extremely severe.
Schedule 1 – Conflicting Legislation (p179)
This section provides that should it be impossible to comply with the
requirements of this Act and any other piece of legislation concurrently, then
the CPA will prevail. This is an extremely “arrogant” provision of this Act.
ECT and PPI have considered international accepted practice and come up
with workable solutions to allow DM activities to continue. CPA is basically
stomping on the provisions of both of those acts in respect of privacy and use
of consumer information and will have the effect of rendering large sections
of the existing DM industry illegal.
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Most provisions and goals of the CPA would seem to be of a positive nature
and will work to shield consumers from harmful business practices. However,
certain aspects are particularly harsh on suppliers which are currently
operating perfectly legitimate operations. Attention has been drawn to these
above, and any DMA submission should focus on these areas and suggest
alternative wording proposals. Reference to international best practice will
add weight to support such changes.
Larger over-riding concepts such as the protection of first generation rights
of suppliers as enshrined in the constitution and the need for harmonization
of privacy legislation between the various acts which make reference to it are
principled standpoints which can be supported by local case law and
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