Text-bombs of Unsolicited Promotional Messages: Do Consumers have Control Over their Personal Information?

Recently the consumer rights day was celebrated around the world and in Sri Lanka under the theme healthy diets, where consumer rights in terms of dietary information in food was the central focus. An unrelated, yet growing concern in terms of consumer rights is the privacy of consumers. Many of the fast food restaurants and other restaurants in Sri Lanka that accept online and/or phone orders are now in the habit of saving contact details for speedy processing of future orders. This can be considered a benefit to the consumer. However, it is becoming common practice that these restaurants are using such contact information for their promotional activities. For instance, the leading international fast food chains operating in Sri Lanka specializing in pizza and burgers bombard their patrons with promotional material via mobile text messages. The receipt of scores of such unsolicited messages makes one wonder if the restaurants are on a mission to punish patrons for deviating from home cooked meals!

 

“Receipt of promotional material from third parties raises the question whether personal information provided by consumers are being shared or sold to third parties”

 

At the time of placing a food order and the related exchange of information, no explicit consent is sought from consumers to use their contact information for future communication of promotional information. Similarly, many of the loyalty cards provided by restaurants and other retail establishments in Sri Lanka often do not explicitly seek the consumer’s consent to contact them with promotional material. Nonetheless, most of them do contact consumers for direct marketing. The absence of explicit consent does not mean implicit consent. Additionally, consumers of such food and retail establishments also receive promotional material from unrelated commercial establishments, such as realtor, housing developers and financial institutions. The receipt of promotional material from third parties raises the question whether the personal information provided by consumers are being shared or sold to third parties.

 

The compilation and sale of individuals’ personal information is termed “list brokerage”. Information sourced from list brokering is often used to contact individuals for marketing and promotional activities. Common sources where personal information is gathered for list brokerage includes business transactions and information provided in warranty cards and loyalty cards. Often, companies that are involved in list brokerage do not inform individuals of their information sales activities.

 

In other countries, there are strict laws against such violations in the use of contact information. For instance, in the UK individuals need to be informed that their personal data will be used for marketing and given the option to opt out. In some cases, they must opt in. Similarly, customers should be provided with an easy way to opt out.

 

As per the US Fair Communications Commission (FCC) text messages sent to a mobile phone using an auto-dialer is banned unless the user has previously consented to receive the message or the message is sent for emergency purposes. Additionally, in the US there is a “Do not call list” in which consumers who do not want such messages can place their numbers, to stop being further disturbed.

 

Along with direct marketing laws, most developed countries also have data protection laws to prohibit sharing/disclosure of contact information. For example, the state of California (in the US) has the SB 27 – commonly known as the “Shine the Light Law”, which allows any Californian to make a request to almost any business for a disclosure of how individuals’ information is used for secondary marketing purposes. The Sri Lankan institutional framework seems to lack such protection to consumers. The Consumer Affairs Authority (CAA) established under the Consumer Affair Authority Act of 2003 focuses mainly on the promotion of effective competition and the protection of consumers and for the regulation of internal trade. In essence, the CAA mainly protects consumers in terms of price and quality of products, and does not specify about the rights of consumers in protecting their personal information. As such, it is high time that Sri Lanka gears up in this area and develops rules and regulations to protect consumer rights in terms of their privacy and information.


  • Malathy Knight

    Interesting article Bilesha – and very timely. This needs to be shared with CAA. Just a minor comment – CAA does not really focus on the promotion of effective competition. Unfortunately its powers under the Act on that front are restricted to just a sub-set pertaining to consumer protection. Relatedly we might also want to question the genre of ad hoc price controls (take the recent milk tea and hoppers examples) that is being practiced under the consumer protection mandate. The same concern applies to quality issues: take the example of the response to the Maggi Noodles lead content case by the Indian regulatory authorities and by CAA. There is a fundamental capacity constraint here. Also, competition policy and law as practiced in jurisdictions such as the U.S., India and South Africa are no longer a part of the entity’s mandate. High time we institutionalized this as well! After all we did have all of this until 2003!!

  • Kapila Sri Chandrasekera

    Bileesha/ Malathy the Consumer Affairs Authority (CAA) the successor to the Fair Trade Commission (FTC) was intended to regulate certain aspects of public utilities including the telecom sector. This is why section 75 of the Act includes the definition for utilities under the term “services”. The regulation was supposed to be through a MOU between CAA Public Utilities Commission (PUC) and the Telecommunication Regulatory Commission of Sri Lanka (TRCSL), There back ground to this was discussions in 2002/03 when PUC was set up on whether the regulatory aspects pertaining to economic/ consumer affairs of the telecom sector should be included in the PUC in conjunction with CAA and TRCSL . It was felt that this would prevent a situation where two bodies with regulatory powers gave conflicting view points as well as ensuring service providers and or consumers do not engage in” judge shopping” or in this case “Regulatory Commission Shopping”. There was considerable opposition from Sri Lanka Telecom (SLT) to the transfer of any powers to the PUC from the Telecommunication Regulatory Commission of Sri Lanka (TRCSL) let alone allow the CAA to have a say with regard to telecom regulation.
    SLT’s opposition (fortunately or unfortunately led by Mrs Pat Abeysekera the Chief Corporate Officer and myself wearing my temporary hat as GM International of SLT ) was due to the issue of the impending liberalization of the international monopoly as well as the bypass of international revenue by non licensed players facilitated by politicians. It was felt that while the PUC in conjunction with the CAA should eventually have a role in the consumer/ anti competitive aspects of the industry the need to have an orderly transition to a liberalized telecommunication environment needed to take preeminence especially due to the impending IPO of SLT and the need for the IPO to be successful. If you look at the CAA Act of 2003 while anti competitive aspects and quality/price of services with regard to the sector could fall under its purview as per the legislation data protection and privacy of consumers remained under the purview of the TRCSL as per the telecom Act of 1991.
    What is interesting is the TRCSL can act ( in my opinion at least) with regard to SPAM SMS’s sent by third parties which is the subject matter of Bileesha’s article based on section 18 A.1 of the Telecommunication Act of 1991 as amended . The specific section states that ” an operator “shall not permit the use of the telecommunication system in which respect a license has been issued to such operator by any other person for the purpose of sending or receiving such messages by such person by way of a business by payment of a fee or reward without obtaining the prior approval of the commission.” I actually made a complaint to the TRCSL last August in this regard for which was rejected by the TRCSL based on the opinion of their legal department. TRCSL refused to disclose to me the complainant the rational that the legal department used for TRCSL to come to this conclusion. After threatening legal action TRCSL has finally after 6 months deemed it advisable to inform me of its legal stance next week. Subsequent to which I intend to file a public interest litigation to force TRCSL to commence a section 9 inquiry with a view to regulate this area unless TRCSL can prove that they have a strong legal argument not to regulate SPAM SMS’s.
    If you would like to stop SPAM SMS I suggest that filing a complaint with TRCSL may be an initial option though probably not the most effective option !!!!!!!!!

  • Bilesha Weeraratne

    Thanks for your valuable comments Malathy.

  • Malathy Knight

    This is interesting and you are spot on Kapila! I was also a
    part of the team working on setting up the PUCSL – so all of what you say rings
    a HUGE bell!!!

    1. The issue with concurrent jurisdiction is that its workability/not, rests on
    the level of ground level cooperation and engagement that the different
    institutions are willing to go with. It has been hugely successful in South
    African for instance, but not so much in other jurisdictions including our own.
    I have heard of numerous cases when I was working on changes to the
    competition policy regime, where people have had to go from pillar to post with
    both CAA and TRC using the “concurrent” part to pass the buck as it
    were!

    2. So we need to find a workable solution that fits our particular
    institutional and organizational culture I reckon – one thing that was spoken
    about was inserting “competition policy” language into the existing
    sector-specific legislation – i.e. PUSCL Act, TRCSL Act – and embedding that in
    policy. Right now there are a plethora of regulatory organizations in the
    regulatory space: PUC, TRC, ICTA, NTC, CAA and the various financial bodies to name a few-
    and there really is a need to rationalize all of this for several reasons:
    efficiency (end-user), financial constraints, skills constraints (the pool of
    people skilled in regulatory policy and law is small in this country and the
    finances available are not sufficient to get the best and the brightest). We need to question the current structure: for instance, do we need to have separate ex-ante and ex-post regulators; can we slot in ex-post competition rules into ex-ante regulators like PUC; do we need separate sector specific regulators or can they be slotted in under an umbrella body like the PUC as originally envisaged?

    3. Also, as I’ve alluded to earlier even with all these regulatory
    organizations, we still do not have provisions to investigate: monopolies, M
    & As, cartel behavior etc. We did have all of this under the FTC Act of
    1987. We are lagging behind even within our own Region – Pakistan’s CA which
    was a laggard is now demonstrating considerable effectiveness and India’s CCI slapped a Rs. 6300 crore fine on the top 10 cement companies for cartelization (organizing themselves into a cartel, colluding to decide market shares, restrict output and fix prices). Although we have perceptions
    and “informal facts” on these kinds of anti competitive behavior (for
    example certain food staples, transportation/shipping) – and of price-fixing, the
    mandate of CAA is limited just to anti-competitive behavior as it pertains to consumer
    protection. There is a gap in understanding the basic fact: facilitating
    competition and a competitive dynamic using competition laws and policies are important tools
    not just to directly protect consumer welfare (price controls??, quality) but also to
    indirectly get to better consumer welfare through economic efficiency and
    positive growth (producer welfare, consumer choice).