Application for Authorisation
(Converted to HTML by Robin Whittle 17 August 1999)
File No: CA 98/25
Australian Direct Marketing Association
Direct Marketing Code of Practice
Date: 16 August 1999
Authorisation No: Commissioners:
The Commission has considered an application for authorisation lodged
by the Australian Direct Marketing Association (‘ADMA’). Application A40077
was made under sub-section 88(1) of the Trade Practices Act (‘the
Act’) for an authorisation to make a contract or arrangement, or arrive
at an understanding, a provision of which would have the purpose, or would
or might have the effect, of substantially lessening competition within
the meaning of section 45 of the Act, and to give effect to such a contract
arrangement or understanding. The application concerned ADMA’s arrangements
to adopt a Direct Marketing Code of Practice (‘the Code of Practice’) and
enforce the provisions contained in that Code.
The provisions contained in the Code of Practice are drawn from a range
of sources. Parts B and C are based on the Model Code of Practice for the
Direct Marketing Industry that was approved by the Ministerial Council
on Consumer Affairs in 1997. Part D is based on the Draft Recommendation
of the Council Concerning Guidelines for Consumer Protection in the context
of Electronic Commerce that was released by the OECD in 1998, while Part
E is based on the National Principles for the Fair Handling of Personal
Information released by the Commonwealth Privacy Commissioner in February
Many provisions contained in the Code of Practice drew criticism from
a range of interested parties. Attachment B to this determination lists
the interested parties that made submissions.
The Commission found that the application of the provisions of the Code
was often limited by the Code’s narrow definition of direct marketer. Consequently,
many of the provisions may only apply where an ADMA member had entered
into a contract with a customer for the sale of goods or services that
was negotiated at a distance, and a record of that transaction was captured
and maintained on a list or database for further marketing purposes. The
Commission considered that little or no public benefit arose from such
limited application and has required ADMA to make a number of amendments
in order to broaden the scope of the Code. Incorporation of these amendments
means that at its narrowest provisions contained in the Code will apply
to ADMA members who contact potential customers via a means of distance
communication and invite consumers to respond using a means of communication
at a distance with the intention of supplying goods and services under
a contract negotiated at a distance. At its broadest, the Code will apply
to all ADMA members.
The Code contains a number of rules outlining standards of fair conduct
generally, standards relevant to telemarketing, standards relevant to electronic
commerce, and standards relevant to consumer data protection. The Commission
is of the view that these rules, once the subject of appropriate scope
and a number of other amendments (see paragraph 9.3 of this determination),
have the potential to give rise to a number of public benefits in so far
provide consumers with rights additional to those that are granted at law,
for example, the right to a seven day cooling off period and to a refund
in appropriate circumstances;
protect consumers from unreasonably intrusive forms of direct marketing,
and protect consumers’ right to privacy; and
However, the Commission considered that the extent to which the Code would
in practice be likely to benefit the public depends upon the level of compliance
with the Code’s rules. The Commission had a number of concerns with the
structure and operation of the Code’s enforcement provisions including,
the independence and accountability of decision-making bodies, the remedies
available, and the complaints handling process. The Commission thus required
a number of amendments (see paragraph 9.3 of the determination) to the
enforcement provisions of the Code.
provide consumers with recourse to a resolution mechanism where they have
complaints about products or services they have purchased, or the conduct
of an ADMA member.
The Commission has granted authorisation in respect of the Code of Practice
until 16 August 2003. However, the authorisation will not come into force
until the Commission notifies ADMA that it is satisfied that the Code has
been amended in accordance with the conditions set out in paragraph 9.3
of the determination.
The authorisation is subject to additional conditions requiring ADMA
to keep its Code up to date with regulatory developments as reflected in
amendments to the Model Code of Practice for the Direct Marketing Industry,
the OECD Guidelines for Consumer Protection in the context of Electronic
Commerce, and the National Principles for the Fair Handling of Personal
Information, on which ADMA’s Code is based.
ACA Australian Consumers’ Association
ACS Australian Computer Society
ADMA Australian Direct Marketing Association
A-G’s Information and Security Law Division – Attorney – General’s
APAC Austel Privacy Advisory Committee
APCC Australian Privacy Charter Council
APF Australian Privacy Foundation
ATCCA Australian Telemarketing and Call Centre Association
ATUG Australian Telecommunications Users Group
the Act Trade Practices Act
the Authority Code Authority
the Board ADMA’s Board of Directors
CAD Consumer Affairs Division of the Treasury
CCLS Consumer Credit Legal Service
CEO ADMA’s Chief Executive Officer
CFA Consumer’s Federation of Australia
CIRS Community Information and Referral Service of the ACT
Code of Practice Direct Marketing Code of Practice
Compliance Officer Code Compliance Officer
the Commission Australian Competition and Consumer Commission
EFA Electronic Frontiers Australia
FSCPC Financial Services and Consumer Policy Centre
IIA Internet Industry Association
MCCA Ministerial Council on Consumer Affairs
Model Code Model Code of Practice for the Direct Marketing Industry
NPPs National Principles for the Fair Handling of Personal Information
NSWPC New South Wales Privacy Committee
PC Privacy Commissioner
PN Policy Network
the Tribunal Australian Competition Tribunal
XC Xamax Consultancy
Table of Contents
Attachment A – Australian Direct Marketing Association Direct Marketing
Code of Practice……………………………………………………………………………………..61
Direct Marketing ………………………………………………………………………....2
The Australian Direct Marketing Association …………………………………………………………..2
The Model Direct Marketing Code of Practice ………………………………………………………….3
Overview of the Code ……………………………………………………………………….………….4
Part A – Introduction …………………………………………………………………………………...4
Part B – Standards of Fair Conduct ………………………………………………………………..…5
Part C – Fair Conduct Relevant to Telemarketing ……………………………………………….…6
Part D – Fair Conduct Relevant to Electronic Commerce
Part E – Fair Conduct Relevant to Consumer Data Protection
Part F – Enforcement ……………………………………………………………………………………8
Part G – Code Review and Amendment……………………………………………………………….9
Submissions of Applicant …………………………………………………………..11
Public Benefits ………………………………………………………………………………………….12
Draft Determination ………………………………………………………………..14
Pre-decision conference and submissions received following the draft
Lack of Consultation …………………………………………………………………………………...15
Lack of Coverage ……………………………………………………………………………………....16
Scope of the Code ………………………………………………………………………………………16
Electronic Commerce …………………………………………………………………………………..19
Outbound Telemarketing ……………………………………………………………………………….22
Interested Parties’ Responses to ADMA’s Amendments …………………………………………...…23
Anti-Competitive Detriment ……………………………………………………………………………24
ADMA’s Response to Comments made by Interested Parties
Further Consultation ……………………………………………………………………………………27
Scope and Coverage …………………………………………………………………………………...30
The Rules ……………………………………………………………………………………………….36
Part B – Standards of Fair Conduct ………………………………………………………….36
Part C – Telemarketing ……………………………………………………………………….38
Part D – Fair conduct relevant to Electronic Commerce………………………………….....41
Part E – Fair conduct relevant to Consumer Data Protection……………………………….44
Complaint Handling at the Business Level …………………………………………………...50
Enforcement of the Code of Practice …………………………………………………………51
Attachment B – Index of Submissions ……………………………………………………92
1.1 On 2 September 1998 the Australian Direct Marketing Association
(‘ADMA’) lodged an application with the Australian Competition and Consumer
Commission (‘the Commission’) regarding its Direct Marketing Code of Practice
(‘Code of Practice’).
1.2 Application A40077 was made under subsection 88(1) of the Trade
Practices Act (‘the Act’) for authorisation:
to make a contract or arrangement, or arrive at an understanding, a provision
of which would have the purpose, or would have or might have the effect
of, substantially lessening competition within the meaning of section 45
of the Act, and
1.3 The application concerned ADMA’s proposed arrangements to adopt
a Direct Marketing Code of Practice and to enforce the provisions contained
in that Code.
to give effect to such a contract, arrangement or understanding.
1.4 On 7 October 1998, the Commission issued a draft determination in
which it proposed to grant authorisation to application A40077 subject
to the outcome of any pre-decision conference and subject to the applicant
satisfying a number of conditions.
1.5 On 5 November 1998, ADMA forwarded to the Commission, an amended
version of its Code, which it submitted, would address the Commission’s
concerns as raised in its draft determination.
1.6 On 9 November 1998, ADMA launched its amended Code of Practice and
it is the amended Code that is the subject of this determination.
2.1 Marketing is a form of communication between a marketer of goods
or services and a prospective customer. It is usually intended to induce
a prospective customer to purchase the relevant good or service and may
include the provision of information pertaining to features, conditions
of purchase, availability etc.
2.2 Direct marketing is one form of marketing and generally involves
marketers communicating with a prospective customer, without the use of
an intermediary, via a medium that supports some degree of interaction.
It is a broad ranging practice that may involve the receipt of marketing
information through the following mediums:
mail, for example, unaddressed printed matter, letter, catalogues;
2.3 Participants in direct marketing can be divided into two broad
electronic channels, for example, e-mail.
users of direct marketing techniques ; and
2.4 Users of direct marketing techniques comprise a large group, including
companies involved in business and industrial services, charities and fundraisers,
consumer product manufacturers and distributors, financial services, health
care, industrial product manufacturers and distributors, telecommunications
companies, travel services, airlines, hotels and retailers.
suppliers of direct marketing services.
2.5 Suppliers of direct marketing services include companies involved
in computer services and software database management, delivery and distribution,
direct marketing and advertising agencies, electronic media and interactive
services, lists, mailhouses and fulfilment services, and telemarketing
The Australian Direct Marketing Association
2.6 ADMA was established in 1966 as a non-profit body to represent
the collective interests of its members. Its members comprise sole traders,
bodies corporate, partnerships, unincorporated associations, employees
and other persons who carry on a business, practice or engage in the direct
marketing industry in Australia.
2.7 ADMA currently represents over 400 organisations involved in direct
marketing including financial institutions, publishers, catalogue and mail-order
traders, airlines and travel service providers, charities and fundraisers,
call centres and telecommunication service providers, printers and advertising
agencies, list and data base specialists, mail houses and fulfilment services.
ADMA estimates that its members are responsible for approximately 80% of
annual sales derived from the use of direct marketing techniques.
2.8 ADMA conducts advocacy, education and networking activities for
the benefit of its members and administers a Code of Practice, compliance
with which is compulsory for all of its members.
The Model Direct Marketing Code of Practice
2.9 In November 1997, the Ministerial Council on Consumer Affairs
(‘MCCA’) approved the release of a Model Code of Practice for the Direct
Marketing Industry (‘the Model Code’). The Model Code was drafted by a
Direct Marketing Working Group which was chaired by a Commission staff
member and comprised representatives from state and federal government
consumer departments, privacy bodies, consumer groups and ADMA. After significant
consultation with stakeholders in the direct marketing industry the Model
Code was endorsed by the MCCA who encouraged industry associations whose
members were involved in direct marketing to establish their own codes,
based upon the provisions contained in the Model Code.
2.10 A short time after finalisation of the Model Code, ADMA’s Executive
began the process of modelling its own Code based on the provisions contained
in the Model Code. ADMA’s Code of Practice, which is the subject of this
application, is the result of that process. Except with respect to the
area of dispute handling, it is based largely on the Model Code, with the
addition of Parts D and E concerning fair conduct relevant to electronic
commerce and consumer data protection respectively.
3.1 The application which has been lodged on ADMA’s behalf and its
supporting submissions are on the public register that is maintained by
the Commission. A copy of the amended Code of Practice is Attachment A
to this determination.
Overview of the Code
3.2 The Code of Practice sets out specific standards of conduct for
participants in the direct marketing industry in relation to their customers
and the public and serves as a benchmark in settling disputes between direct
marketing industry participants and their customers. All members of ADMA
and their employees, agents or sub-contractors are bound by the Code of
Practice. However, various provisions of the Code, including the data protection
provisions of Part E, apply only to direct marketers as defined in the
Code and therefore do not apply to all ADMA members.
The Code of Practice is divided into seven parts:
Part B - Standards of fair conduct;
Part C - Fair conduct relevant to telemarketing;
Part D - Fair conduct relevant to electronic commerce;
Part E - Fair trading relevant to consumer data protection;
Part F - Enforcement; and
A brief outline of the key provisions contained in each Part is provided
Part G - Code Review and Amendment.
Part A - Introduction
3.4 Part A outlines the purpose of the Code of Practice, why it is
necessary, its scope and its objectives. Clause 5 provides that the objectives
of the Code of Practice are to:
ensure customers have access to the product and service information they
need to make informed choices;
minimise the risk of direct marketers breaching the Trade Practices Act
1974 or state fair trading legislation;
promote a culture among direct marketers of conducting their businesses
fairly, honestly, ethically and in accordance with best practices; and
Part B - Standards of fair conduct
3.5 Part B outlines standards of fair conduct that will apply to the
general business of direct marketing. It covers a number of issues including
misleading and deceptive conduct, false claims, the information which should
be given to a potential customer at the time an offer is made and the information
which should be given at the time the relevant product is delivered.
increase consumer confidence in doing business with ADMA members.
3.6 Clauses 10 - 13 outline rules that must be followed where direct
marketers offer incentives. Clause 10 provides that the terms and conditions
under which incentives, including prizes, gifts or other rewards are offered
must be clearly stated. This includes disclosure of the manner in which
a gift, prize or reward will be drawn or awarded and whether or not its
provision is conditional on the customer purchasing goods or services from
the direct marketer. Clause 11 provides that such gifts etc must be made
available to the customer in the period of time which is stated in the
offer, or if no period of time is stated, within 30 days of the customer
purchasing goods or services from the direct marketer. Clause 13 outlines
the rules that will govern the conduct of lotteries and contests. It provides
that a direct marketer who intends to conduct a lottery or contest must
make available at the point of entry, the rules which govern the contest,
ensure that judging takes place promptly and fairly and is certified by
an independent auditor and make the results of the contest or lottery available
to participating customers who request them.
3.7 Clauses 15 to 18 deal with delivery. Clause 15 provides that where
a direct marketer has not specified a date for delivery then the goods
or services must be delivered within thirty days. Clause 16 provides that
where an order cannot be delivered within the specified time, or within
30 days, the direct marketer must send the customer an initial notice acknowledging
the order. The notice must state the date on which the order is expected
to be delivered, the reason for the delay and offer the customer the opportunity
to cancel the order and receive a full refund of any money paid. Clause
17 provides that where a direct marketer is not able to deliver the goods
or services by the date stated in the initial notice the direct marketer
must either advise the customer that it is unable to fulfil the order and
refund the customer any money paid, or notify the customer of the new expected
delivery date providing a reply-paid or other cost-free response mechanism
and including an option to refund any money paid. Clause 18 states that
if the direct marketer is unable to deliver the goods or services within
the time specified in the second notice, the procedure outlined in clause
17 must be repeated until the goods or services are delivered or the transaction
has been cancelled and any moneys paid refunded.
3.8 Under clause 19 a direct marketer must not request or accept payment
for goods or services if it intends to supply goods or services which are
materially different from those which have been paid for, or if there are
reasonable grounds for believing that the direct marketer will not be able
to supply the goods or services within the period in which it has specified,
or if no time has been specified, within 30 days.
3.9 Clauses 20 - 30 set down procedures which must be followed with
respect to cancellation of orders and refunds. Clause 20 provides that
each contract which a direct marketer makes with a customer must contain
a provision stating that the customer has the right to cancel the contract
within a period of time that is not less than seven days and at any time
before the goods or services are dispatched to the customer. Clauses 31
and 32 set down rules with respect to minors, while clauses 33- 39 deal
with unordered or substituted goods or services.
3.10 Clause 40 provides that direct marketers must have a procedure
in place to deal with complaints from consumers, the procedures must comply
with the Australian Standard for Complaints Handling, AS 4269.
Part C - Fair conduct relevant to telemarketing
3.11 Part C sets down standards of fair conduct that relate specifically
to telemarketing. Clauses 1 - 3 outline procedures that a telemarketer
must follow with respect to the provision of identification information.
Clause 1 provides that a direct marketer must ensure, at the earliest opportunity
in an outbound telemarketing call, that the following information is provided
to the customer, and repeated if the customer at any time requests:
the name of the person making the telephone call;
where a service bureau is making the call, the name of the organisation
on whose behalf the call is being made; and
3.12 Clause 4 outlines the information that the telemarketer must
provide to customers who request it. The information includes the telemarketer’s
name and contact details, the name of the person who is responsible for
handling customer inquiries which the telemarketer receives, further details
concerning the goods or services being offered and details of the source
from which the telemarketer obtained the customer’s personal details.
the purpose of the telephone call.
3.13 Clause 6 provides that a telemarketer must not represent that they
are undertaking market research where the purpose of the call is to sell
a good or service. Clauses 7 and 8 outline acceptable calling conduct,
while clauses 9 - 12 contain provisions which deal with permitted calling
times, line disconnection times and calling frequency.
Part D - Fair conduct relevant to electronic commerce
3.14 Part D contains provisions outlining appropriate conduct that
is specific to electronic commerce. Clause 1 provides that this form of
commerce will have the same level of protection as that provided by the
practices which apply to other forms of commerce. Clause 2 states that
clear, complete and current information about the identity of the business
engaged in electronic commerce and about the goods or services that they
offer should be provided to customers. Clause 3 provides that acceptance
of an offer online should be informed and unambiguously expressed by the
customer in a format that allows the parties to maintain a complete and
accurate record of the contracts.
Part E - Fair conduct relevant to consumer data protection
3.15 Part E outlines procedures that direct marketers must follow
with respect to the information they compile from customers. Clauses 1
- 8 deal with the collection of personal information. Clause 1 provides
that a direct marketer can only collect personal information that is necessary
for one or more of its legitimate functions or activities. Clause 2 provides
that such information should be collected by lawful and fair means and
not in an unreasonably intrusive way. Clause 3 outlines a number of facts
of which a person who is having personal information collected about them
should be aware of at the time that the information is being collected.
It includes matters such as the identity of the organisation and how to
contact it, the fact that the customer is able to gain access to the information
and the purposes for which the information is collected.
3.16 Clause 9 deals with the circumstances in which direct marketers
can use and disclose a customer’s personal information. A direct marketer
can only use or disclose personal information for a purpose other than
a primary purpose of collection in certain circumstances. These circumstances
include circumstances where the secondary purpose is related to the primary
purpose of collection and the subject of the information would reasonably
expect the organisation to use or disclose the information for the secondary
purpose or the individual has consented to the disclosure.
3.17 Clauses 10 -11 set out the procedure for determining the primary
purpose of collection while clauses 12 - 13 outline the reasonable expectation
test. Clauses 14 -18 discuss data quality, data security and a direct marketer’s
openness with respect to its data.
3.18 Clauses 19 - 26 set out procedures with respect to access and correction
of data. Clause 19 provides that where a direct marketer holds personal
information about an individual it should provide the individual with access
to the information on request except in certain circumstances. These circumstances
include instances where providing access would pose a serious and imminent
threat to the life and health of any individual, providing access would
have an unreasonable impact on the privacy of other individuals, providing
access would be unduly onerous to the organisation or where the information
relates to existing legal dispute resolution proceedings between the organisation
and the individual and the information would not be accessible by the process
of discovery in those proceedings. Clause 24 provides that where a direct
marketer holds personal information about an individual and the individual
is able to establish that the information is not accurate, complete and
up to date, the organisation should take reasonable steps to correct the
information so that it is complete, accurate and up to date.
3.19 Clauses 27 - 30 deal with the use of identifiers, anonymity and
trans- border flows while clauses 31 -32 set down procedures which must
be followed with respect to sensitive information.
3.20 Clause 33 and 34 are headed ‘Respecting Consumer Preference’. Clause
33 requires direct marketers to use the Do Not Mail/Do Not Call services
of ADMA when conducting a direct marketing campaign. Clause 34 requires
a direct marketer to remove a customer’s name from all internal marketing
lists or lists for transfer to a third party at the request of a customer.
Part F - Enforcement
3.21 Part F deals with enforcement. Clause 1 provides that the scope
of ADMA’s enforcement procedures will be limited to alleged breaches of
the Code of Practice and does not include mediation of consumer complaints
which would normally be dealt with by a member’s internal complaints handling
process. Where customer complaints do involve an alleged breach of the
Code, and are not resolved under a member’s internal complaints handling
process, clause 1 states that they must be referred by the member to ADMA
as a customer complaint under Part F. Clauses 2 and 3 outline the manner
in which a complaint can be made to ADMA, while clauses 4 - 16 outline
the manner in which ADMA will respond to complaints.
3.22 Clauses 4, 5 and 6 deal with the process that will be undertaken
where ADMA’s Code Compliance Officer (‘Compliance Officer’) does not believe
that there has been a breach of the Code of Practice, or where there has
been a potential breach of the Code of Practice by a non-member. Where
the Compliance Officer considers that an ADMA member may have breached
the Code of Practice, the Compliance Officer will write to the member outlining
the particulars of the alleged misconduct and requesting a written response
within 14 days. If the member is not able to demonstrate compliance within
a reasonable period of time the compliance officer must refer the complaint
to the Code Authority (‘the Authority’) for its consideration. The Authority
is defined in the Code of Practice as being an Authority established by
ADMA that consists of an independent Chairperson, two consumer representatives,
being persons with special competence in consumer or industry matters;
and three industry representatives, being persons of good character and
repute in the direct marketing industry. Upon reviewing the complaint,
the Authority may direct the Compliance Officer to investigate the complaint
further and report the results of the investigation to the Authority, or
cause the Compliance Officer to send a notice to the member inviting them
to attend a hearing regarding the alleged breach or resolve not to further
pursue the alleged breach. Clauses 11 - 16 outline the procedure that will
take place at a hearing before the Authority. The direct marketer will
receive a written notice of the Authority’s decision within 14 days, and
is then given 14 days to comply with the decision. If the member is not
able to demonstrate compliance, ADMA’s Chief Executive Officer (‘CEO’)
will call a special meeting of the Board of Directors (‘the Board’) to
consider removing the member from ADMA, subject to the recommendation of
3.23 Clause 17 outlines the sanctions that the Authority may impose
where it finds that a member has been in breach of the Code. These include:
requiring the member to take specified remedial action to correct the breach
and avoid re-occurrence;
seeking a written undertaking from the member that the breach will not
seeking the approval of the ADMA Board to issue a formal written admonition
to the member;
seeking the approval of the ADMA Board to publish the written admonition;
3.24 Clause 18 provides that the Authority may only recommend issuance
of a formal admonition where the breach is of a serious nature and has
occurred more than twice in the preceding 12 months. Clause 19 provides
that the Authority may only recommend publication of a formal written admonition,
or revocation of membership, where the member has committed multiple breaches
of the Code over an extended period of time and demonstrated an ongoing
disregard for the Code.
recommend to the CEO that membership is revoked.
3.25 Clause 20 provides that no fees or charges will be levied by ADMA
with respect to the enforcement procedures under Part F, and that complainants
bear their own costs.
3.26 Clause 21 provides that ADMA will publish in its Annual Report:
the number of complaints received by the Compliance Officer during that
the number of breaches established by the Compliance Officer and the Authority
during that year;
an analysis of the enforcement action taken during that year; and
Part G - Code Review and Amendment
3.27 Part G outlines the procedures for reviewing and amending the
Code of Practice. Clause 1 provides that the Code of Practice will be reviewed
one year after it has been adopted, and every three years thereafter. Clause
2 provides that the Authority, who must consult with groups affected by
the Code of Practice where appropriate, will conduct the review. Clause
4 provides that the Board may at any time resolve to amend the Code, after
receiving such recommendations from the Authority.
a statistical analysis of complaints by company.
4. Statutory Test
4.1 This application has been made under sub-section 88(1) of the Act.
4.2 In the case of an authorisation relating to a contract, arrangement
or understanding which may substantially lessen competition in terms of
section 45 of the Act, the relevant test that must be satisfied in order
for the Commission to grant authorisation is contained in sub-section 90(7)
of the Act.
4.3 Sub-section 90(7) provides that the Commission may only grant authorisation
if it is satisfied in all the circumstances that:
the provisions of the subject arrangements or conduct have resulted, or
are likely to result in a benefit to the public, and;
4.4 In deciding whether it should grant authorisation, the Commission
must examine the anti-competitive aspects of the arrangements, the public
benefits arising from the arrangements, and then weigh the two to determine
which is the greater. Should the public benefits or expected public benefits
outweigh the anti-competitive aspects, the Commission may grant authorisation
outright or grant authorisation subject to conditions.
the benefit outweighs or would outweigh the detriment to the public constituted
by any lessening of competition that has resulted or is likely to result
from giving effect to the provisions.
4.5 If there are no public benefits arising from the conduct, the Commission
may refuse authorisation. Alternatively, in refusing authorisation, the
Commission may indicate to the applicant how the application could be constructed
to change the balance of detriment and public benefit so that the authorisation
may be granted.
5. Submissions of Applicant
5.1 The applicant submits that the proposed arrangements in the Code
of Practice, which have the potential for anti-competitive detriment, are:
the conduct of ADMA members is restricted beyond that required by the relevant
State, Territory, and Commonwealth legislation;
the imposition of sanctions (including the revocation of membership of
ADMA) where a member is found to be in breach of the Code of Practice;
5.2 The applicant submits that the Code of Practice’s requirements
with respect to the information to be provided when an offer is made to
a potential customer and at the time of delivery, the procedures to be
adhered to when delivery is delayed, the requirement to provide in most
cases a cooling off period of 7 days or more within which the customer
may cancel the purchase contract, the requirement that telemarketer’s identify
themselves to potential customers, limiting the times when telemarketers
may telephone potential customers and limiting the methods of collection
of personal information and the use and disclosure of such information
are relatively prescriptive. The applicant further submits that given the
ADMA member profile, these restrictions have the potential to standardise
the way in which participants in the direct marketing industry conduct
their business and that such standardisation may limit the opportunities
for ADMA members to differentiate their businesses from one another.
the imposition of sanctions against the member where an agent, or subcontractor
of the member is found to be in breach of the Code of Practice.
5.3 The applicant contends, however, that the standards do not go beyond
what is widely accepted as prudent and fair business practices. It is submitted
that the restrictions have no impact on the scope that direct marketing
participants have to differentiate themselves via their products and the
type of technology used to contact potential members to transact a sale.
The applicant further submits that the restrictions on the conduct of ADMA
members are directed towards promoting the interests of consumers rather
than the prevention of competition between members.
5.4 With respect to the imposition of sanctions, the applicant submits
that their availability is directed at encouraging compliance with the
Code of Practice without unduly burdening ADMA members. The applicant acknowledges
that a significant number of participants in the direct marketing industry
are members of ADMA and that therefore the imposition of a sanction where
membership of ADMA is revoked has the potential to be anti-competitive.
The applicant submits that the inability of a direct marketing participant
to be an ADMA member may mean that the participant suffers detriment as
a result of the following:
potential customers, whose policy is to deal only with an ADMA member,
may refuse to deal with the participant;
the participant will be denied access to the advocacy, education and networking
activities conducted by ADMA; and
5.5 The applicant submits that a number of public benefits will result
from giving effect to the arrangements contained in the Code of Practice.
These claimed public benefits include:
members whose policy is to deal only with the other ADMA members may refuse
to deal with a supplier.
Significant promotion and enhancement of consumer protection. It is submitted
that the restrictions on the conduct of ADMA members will protect consumers
by ensuring they have access to the product and service information they
need to make informed choices; respecting privacy; promoting a culture
among direct marketers of conducting their business fairly, honestly, ethically
and in accordance with best practices; and protecting consumers from false,
misleading or unsafe claims.
Ensuring members put in place appropriate consumer complaint handling procedures;
Providing consumers with a flexible complaint handling procedure in relation
to alleged breaches of the Code of Practice by ADMA members.
Responsible development of the direct marketing industry which will increase
supply, provide consumers with more purchasing options, promote competition
and market efficiency, thereby exerting downward pressure on prices and
increase access to, and demand from, off-shore markets which will boost
the volume of exports.
Promotion of consumer confidence to make purchasing decisions by a direct
marketing method which will enable consumers to take advantage of more
convenient methods of purchase and is likely to enable consumers to benefit
from lower prices made possible by the lower cost structures required for
direct marketing sales compared to shop front retail sales.
Consumer views being taken into account by the presence of an independent
chair and consumer representatives on the Code Authority. Member sanctions
recommended to the Board of Directors of ADMA by the Code Authority will
therefore be a product of public input.
The promotion of equitable dealings in the direct marketing industry.
5.6 The applicant submits that most members of the public at some
stage in the last year will have been contacted by, or viewed advertisements
of, a direct marketer. At times, the applicant submits, the person contacted
may have been a minor, intellectually impaired or have poor language skills.
The person may not have chosen to be contacted and may not have had sufficient
opportunity to research the goods or services offered so as to minimise
his or her risk of making an ill-informed decision. The applicant further
contends that there is an inherent risk associated with distance selling
given that there is no opportunity to inspect the goods prior to entering
into a purchase contract. It is submitted by the applicant that these restrictions
distinguish the direct marketing industry from the shop-front retail industry
and necessitate greater restriction on the conduct of direct marketing
industry participants so that the disreputable acts of a few do not jeopardise
the reputation of the majority.
Improvement in the quality and consistency of the service received by consumers
from direct marketers.
5.7 The applicant submits that by developing a Code of Practice, ADMA
is responding to a need to provide customers and potential customers with
further, but not onerous, safeguards to protect their interests. ADMA also
submits that in the absence of a Code of Practice, its members will lack
guidance as to responsible and appropriate conduct with the probable result
that the direct marketing industry will be harmed.
5.8 The use of sanctions, such as revocation of ADMA membership is viewed
by the applicant as necessary to deter irresponsible conduct and encourage
compliance with the Code of Practice. The applicant contends that administration
of the sanctions by the Authority and the Board will be undertaken with
a high level of propriety, and will involve fairness and impartiality.
5.9 ADMA proposes to publicise its Code of Practice widely throughout
the community and among business. ADMA hopes to raise the public awareness
of the Code of Practice and instil an expectation about how industry participants
will conduct themselves.
5.10 On the basis of the above, the applicant submits that the Code
of Practice would result, or be likely to result, in a benefit to the public
which would outweigh the detriment to the public constituted by any lessening
of competition that would result, or be likely to result, if the arrangements
were given effect to.
6. Draft Determination
6.1 On 7 October 1998 the Commission released its draft determination
with respect to application A40077. It proposed to grant authorisation
in respect of the application for a four-year period subject to the outcome
of any pre-decision conference and subject to the applicant satisfying
the following conditions:
1. The Code of Practice is amended to provide that where a complaint
which may involve an alleged breach of the Code is not resolved at the
business level, members are required to refer the complaint to ADMA to
be dealt with via the procedures that are laid down in the Code of Practice
2. The Code of Practice is amended to guarantee independence of the
Chair of the Code Authority.
3. The Code of Practice is amended to define the composition of the
Authority and provide for equal representation. For example, the Authority
should be comprised of an independent chair, one consumer representative
and one industry representative.
4. The Code of Practice is amended to provide all parties to a complaint
with equal opportunity to participate fully in the enforcement process
and ensure that all parties are provided with reasons for any decisions
that are made which affect their case. The Code is amended so that complainants
have the right to request the Code Authority to review any decision by
the Compliance Officer that the Code has been breached.
5. The Code of Practice is amended to specify the breadth of the remedial
orders and sanctions which the Authority is empowered to recommend. Guidelines
outlining the instances when particular types of remedies or sanctions
will be recommended should also be included.
6. The Code of Practice is amended to provide that there are no fees
for lodging a complaint or defending an allegation under the Code.
7. The Code of Practice is amended to provide for a system which records
and reports all of the complaints which have been received by the Compliance
Officer in relation to alleged breaches of the Code and outlines the action
which has been taken in regard to the complaints. The Commission considers
that inclusion of such information in the ADMA Annual Report would be satisfactory.
Conference and Submissions received following the Draft Determination
7.1 After issuing its draft determination (a copy of which is on the
Commission’s public register), the Commission invited submissions from
a range of interested parties who were asked to comment on both ADMA’s
application and the Commission’s draft determination. The names of those
parties who made written submissions are listed at Attachment B. Copies
of their submissions have been placed on the public register that is maintained
by the Commission.
7.2 A pre-decision conference was requested by the Financial Services
Consumer Policy Centre (‘FSCPC’), Australian Privacy Charter Council (‘APCC’),
Consumers’ Federation of Australia (‘CFA’), Australian Privacy Foundation
(‘APF’), Graham Greenleaf, and Robin Whittle of First Principles. The conference
was formally opened on 29 October 1998 and was immediately adjourned, the
substantive conference was held on 26 November 1998. A record of the conference
has been placed on the Commission’s public register.
7.3 The main issues raised at the conference, and in written submissions,
are outlined below.
Lack of Consultation
7.4 The FSCPC, Xamax Consultancy (‘XC’), Australian Computer Society
(‘ACS’), Communications Law Centre (‘CLC’), Australian Privacy Foundation
(‘APF’) and the APCC submitted that the Code of Practice had not been the
subject of sufficient public consultation and urged that such consultation
7.6 The Consumer Affairs Division of the Treasury (‘CAD’) stated that
the ADMA Code draws heavily on the Model Direct Marketing Code that was
developed in consultation with consumer groups, industry and other government
agencies, and is consistent with the Commonwealth government policy of
supporting industry self-regulation. It was submitted that both the ADMA
Code and the Model Code contain extensive review provisions and any operational
issues that arise can be addressed through those processes.
The FSCPC submitted that ADMA’s claim that its Code was the result of three
years of consultation with consumer bodies was untrue. It alleged that
six consumer bodies, who ADMA listed in its press release as having been
consulted, deny that this is the case. These bodies are the APCC, CFA,
Australian Consumers Association (‘ACA’), Australian Telecommunications
Users Group (‘ATUG’), Policy Network (‘PN’) and the CLC. Those bodies claim
that while they did have some opportunity to participate in the drafting
of the Model Code, the National Principles for the Fair Handling of Personal
Information (‘NPPs’) and involvement in the Austel Privacy Advisory Committee
(‘APAC’), they were never consulted directly regarding ADMA’s Code of Practice.
The FSCPC and the Australian Telemarketing and Call Centre Association
(‘ATCCA’) also requested that the Commission delay its determination of
A40077 on the basis that authorisation of the ADMA Code of Practice would
end the opportunity for competition amongst the ATCCA, ADMA and the Internet
Industry Association (‘IIA’) in code development that may possibly result
in higher consumer standards.
Lack of Coverage
7.7 It was submitted by the FSCPC that the extent of ADMA’s coverage
should be the subject of further research and assessment before the Code
of Practice is authorised. The FSCPC submitted that the test in this case
should be an investigation of the volume of direct marketing contacts that
will be covered by ADMA’s members, including unsolicited mail, unsolicited
e-mail and telemarketing. It submitted that the extent of coverage is one
of the most important factors in assessing any likely public benefit from
authorising the Code, and that in ADMA’s case coverage would be insufficient.
The FSCPC argued that an authorised Code providing inadequate or fractional
coverage worsens the position for consumers who may believe that their
privacy is protected when, in fact, it is not.
Scope of the Code
7.8 The APCC, the federal Privacy Commissioner (‘PC’), FSCPC, ACA
and the Consumer Credit Legal Service (‘CCLS’) submitted that the scope
of the Code of Practice was too narrow for a number of reasons:
Situations where marketing material is sent with the intention of inducing
a recipient to visit a retail outlet to buy goods or services are not covered
by the Code. It was submitted that while some areas of the Code such as
quality guarantees and cooling off periods appropriately apply only to
situations where goods are purchased at a distance, issues of privacy arise
with respect to the targeting of all direct marketing material. It was
argued that public benefit would be increased if Part E applied to all
forms of personalised, unsolicited advertising or other forms of solicitation
engaged in by ADMA members.
Most of the conditions in the Code of Practice apply specifically to direct
marketers which is defined narrowly in clause 3.5 of Appendix 1 of the
Code of Practice. It was argued that this definition excluded many ADMA
members, including fundraisers. The CCLS submitted those provisions in
the Code attempting to bind employees, agents or subcontractors would not
adequately address this limited scope.
7.9 The consumer data protection provisions contained in Part E of
ADMA’s Code of Practice were the subject of much comment. While acknowledging
that these provisions were largely based on the NPPs that were released
by the PC in 1998, a number of interested parties expressed concern about
their application in the Code of Practice.
The Information and Security Law Division of the Commonwealth Attorney-General’s
Department (A-G’s) expressed concern that the Code gives the impression
that it will apply to all ADMA members, and that the definition of ‘direct
marketer’ contained in the Code is narrower than that which is commonly
accepted by consumers. In these circumstances, A-G’s was concerned that
the potential existed for consumers to misinterpret the actual scope and
application of the Code.
Interpretation of Clauses 9.1 and 9.3 – ‘the use exception’
7.10 The APCC submitted that it is unclear whether the ‘use’ exception
contained in clause 9.3 of the Code of Practice amounts to an additional
ground for use, or whether it is a supplementary condition on use when
information is intended to be used for the purposes of direct marketing.
It expressed concern that ADMA had interpreted the provision as an additional
ground for use in the Code of Practice. In a submission tabled at the pre-decision
conference, the PC stated that it was her preliminary view that cl.9.1
and 9.3 (and their equivalent NPPs 2.1(a) and 2.1(c ) were independent
alternatives; in order to use personal information, a direct marketer need
only meet the requirements in one of those clauses. The PC noted, however,
that principle 2.1(c ) is limited to uses of personal information within
the collecting organisation; it does not permit disclosures to other organisations.
If an organisation wanted to disclose personal information for direct marketing
purposes, it would have to meet one of the other exceptions within NPP
2.1, most probably the ‘consent’ exception at 2.1(b).
ADMA’s Do Not Call/Do Not Mail Facilities
7.11 The opt out system that ADMA members are required to use by clause
33 of the Code of Practice was also criticised. The APCC expressed the
view that the exception for current customers was unacceptable, it argued
that a customer’s expressed preference not to receive unsolicited approaches,
should not be overridden because the customer chooses to purchase goods
and services. The APCC also argued that ADMA should be required to show
cause for ceasing to respect preferences after a particular period.
7.12 Mr Robin Whittle of First Principles submitted that ADMA’s Do Not
Call and Do Not Mail services have serious privacy problems. He said that
to prevent phone calls, individuals must give their name, address and phone
number; all of this information would then be distributed to ADMA’s members.
He said that ADMA had no way of controlling what its members or their employees
did with these lists. Mr Whittle argued that the best way to protect consumers
was to adopt an opt-in approach but alternatively, there existed a better
opt-out approach. Mr Whittle’s preferred approach involves the existence
of a single, independent body to maintain a list of opted-out telephone
numbers of business and residential customers. Under this approach direct
marketers forward a list of numbers, or names, addresses and numbers, to
the independent body, and for a fee, the body filters the list; returning
it with a character or database field to flag those numbers that should
not be called because they are on the opted out list. A filtering service
of this type is currently being run by the American Computer Group and
is called the Telephone Preference Scheme "SAFEtps". Mr Whittle said that
the same company operates similar filtering services for direct mail and
7.13 The FSCPC also submitted that the Do Not Call / Do Not Mail services
should be administered by a trusted third party to ensure consumer confidence.
Public Benefit of the NPPs and their Application to Specific Industries
7.14 Professor Graham Greenleaf and the FSCPC submitted that the Commission,
in its draft determination had not examined whether or not the substance
of Part E of the Code is in the public interest. Professor Greenleaf said
that in developing the NPPs the PC did not consider public benefit issues,
her concern was principally to find a consensus between business and privacy
7.15 The APF, APCC and FSCPC stated that it was their understanding
that the NPPs would be developed at a general level and would then be adapted
to apply to specific industry sectors. The FSCPC suggested the following
the removal of personal information from lists held by list brokers;
the provision of information on whether personal information will be used
for list rental; and
Trans Border Data Flows
7.16 With respect to trans border flows, the New South Wales Privacy
Committee (‘NSWPC’) was concerned that Cl.30.1 allows for the avoidance
of consent from data subjects if the transferor of the data and the transferee
make a contract containing information-handling provisions. Due to privity
of contract the NSWPC argued that data subjects would have no remedy if
the recipient organisation ignores the information handling provisions.
With respect to cl.30.5, the NSWPC expressed concern that the Code of Practice
allowed trans border data flows where such flows would benefit the individual
concerned. It argued that this provision was very subjective and open to
abuse, given that ADMA sees direct marketing itself as a benefit to customers.
the provision, where asked, of information about where a direct marketer
has obtained a person’s details.
Implementation of Private Sector Privacy Legislation
7.17 Professor Greenleaf made the following submissions with respect
to the government’s announcement that privacy legislation will be extended
to cover the private sector:
there will soon be a parliamentary process under way which will determine
by legislation, the standard of privacy protection that parliament considers
to be in the public interest.
7.18 In these circumstances, Professor Greenleaf submitted that if
the Commission is minded to give authorisation to ADMA’s Code, it should
only do so as an interim authorisation under s.91 (2)(d) of the Act. Professor
Greenleaf stated that this course of action would recognise:
there will be a statutory procedure whereby proposed codes of conduct such
as ADMA’s Code, can be tested in terms of their compliance with the statutory
standard and authorised if satisfactory.
the incomplete status of the NPPs as a guide to public benefit in privacy
the likelihood of the need for variations to any authorisation once these
legislative developments unfold; and
7.19 The APCC submitted that in light of the government’s announcement
any authorisation of the Code of Practice should be strictly time limited
until such time as the Code is reviewed under the arrangements that will
be put in place under privacy legislation.
the current level of uncertainty in Australian public policy on what constitutes
an appropriate level of privacy protection in the private sector.
7.20 A-G’s submitted that the provisions contained in the Code of
Practice relating to data protection are appropriate and reflect international
and national standards for personal data protection. While congratulating
ADMA on implementing the NPPs, A-G’s also stated that amendments to the
enforcement provisions of the Code are needed to ensure that the privacy
protection that is provided by the Code of Practice is effectively implemented
by complaint handling and enforcement mechanisms.
7.21 While most interested parties showed in principle support for
regulation of electronic commerce, the electronic commerce provisions contained
in Part D of the Code of Practice were criticised on a number of grounds.
Mr Robin Whittle and the APCC argued that the provisions were weak and
7.22 Electronic Frontiers Australia (‘EFA’), the Australian Computer
Society (‘ACS’) and Doctor Roger Clarke of XC were very critical of clause
1 of Section D. Clause 1 states that the same level of protection provided
by the practices that apply to other methods of commerce should be afforded
to customers who participate in electronic commerce. EFA, ACS and XC argued
that special problems arose with respect to electronic commerce that required
special attention. The problems outlined included the following:
Unsolicited commercial e-mail has a more serious impact on the consumer
due to the intrusive use of e-mail incorporating substantial data attachments
and the use of ‘push’ technology where selected data can be automatically
delivered into a user’s computer at prescribed intervals or based on some
event that occurs. It was argued that this was not only intrusive, but
also costly in terms of the time taken to read and delete the mail and
the capacity to clog up e-mail systems.
Because an e-mail address may be controlled by more than one person it
is difficult to verify the identity of the people on either side of the
Internet traders are not required to have a business premise address or
contact details by phone or facsimile. This makes it difficult for e-commerce
consumers to seek redress in the event of a dispute. Further, disputes
over matters such as the currency in which transactions and refunds are
made are also potentially more difficult for consumers in the event that
there is no physical location of the business, or it is too distant from
the consumer to enable easy return of goods. It was argued by EFA that
dispute resolution processes for electronic commerce should therefore be
Consumers are unable to make anonymous purchases when they buy on the Internet,
they usually have to display an e-mail address and often have to provide
their credit card details. This means that purchases on-line provide opportunities
for data-mining that are not available for other forms of commerce. Dr
Clarke stated that various programs have been designed to assist with this
process, for example, software programs that can handle data supplied to
search engines, customised news bulletins and cookies that are capable
of providing considerable insight into a person’s interests. Cookies are
a record that can be stored on a consumer’s local hard disk, they record
data about web-sites that have been visited by the user.
Whereas the cost of using post and telephone are generally borne by the
sender, receivers often bear the cost of communications over the Internet,
direct marketing may therefore impose financial costs on receivers. The
ACS submitted that while present tariffs used by ISPs are a mixture of
connection time, transmission volume and subscription, this may change
towards volume based charging as the dominant way of collecting money from
consumers. Because e-mails are no longer just text-based but are able to
transmit voice and video, this substantially increases the costs that may
be borne by receivers of direct marketing mail. For these reasons ACS argued
that opt-out provisions were not sufficient to protect Internet users and
that opt-in provisions would be more appropriate for this form of commerce.
7.23 The FSCPC and the EFA submitted that electronic commerce issues
should be removed from the Code of Practice. XC submitted that the Code
of Practice should be the subject of further consultation and should advocate
an opt-in approach with respect to unsolicited e-mail.
There is a clash in ethos on the Internet. Dr Clarke submitted that the
Internet was originally developed on a community minded basis but is now
becoming increasingly commercially oriented.
7.24 Most of the parties that provided submissions agreed with the
conditions contained in the Commission’s draft determination. Many, however,
believed that these conditions did not go far enough.
7.25 Professor Greenleaf, FSCPC, NSWPC and the PC stated that the Commission
must ensure that the sanctions and remedies that ADMA is empowered to recommend
are adequate and sufficient to protect consumer’s interests. It was also
submitted that the substance of these sanctions must be sufficient to meet
international privacy standards otherwise Australian direct marketers would
face prohibition on the import of any personal information for use in direct
marketing from Europe, Hong Kong and other jurisdictions with personal
data export prohibitions.
7.26 With respect to compliance mechanisms for an effective information
privacy scheme the PC submitted a preliminary view that:
Any framework must provide a mechanism by which organisations can commit
themselves to complying with the principles. This would include: effective
incentives such as sanctions of one kind or another for organisations to
comply with the Principles; a reliable and independent mechanism for monitoring
compliance with, and reporting on the effectiveness of the scheme, and
providing individuals with access to an accessible, affordable, timely
and independent mechanism for complaint handling and dispute resolution.
Action taken as a result of investigations should aim to provide redress
to individuals who have been adversely affected by a breach of the principles,
and to prevent breaches from recurring.
Redress should involve providing a formal apology for the breach; taking
remedial action such as correction or deletion of relevant records; and
where appropriate, paying compensation for harm or damage directly resulting
from a breach. These should be part of what is meant by specified remedial
action in the first dot point of paragraph 17 of Part F.
The absence of any reference to compensation for individuals affected by
a breach is a serious deficiency. More serious privacy breaches can sometimes
inflict significant financial disadvantage, and serious social and psychological
consequences, on the affected individuals. In such cases; financial compensation
is the only means of effective redress. The CLCV, Graham Greenleaf, and
the FSCPC supported this point.
7.27 Professor Greenleaf submitted that the Commission’s suggested
amendment that ADMA provide for the reporting of complaints in ADMA’s annual
report was inadequate given that most consumers and their representatives
do not have access to such reports. Professor Greenleaf suggested that
ADMA’s complaint handling should also be reported via its Internet site.
In order to prevent recurring breaches of the Code the administrator could
require the organisation to take positive steps to prevent recurrence of
the breach, eg, providing undertakings, implementing better security arrangements;
improving public notification of information handling practices etc. The
PC presumes that this is what the Code means at paragraph 17 of Part F.
7.28 The CLCV suggested that further amendments are required if public
benefit is to be derived from the Code. These suggested amendments included:
independence of consumer representatives must be guaranteed;
the Authority should have an odd number of members so that hung decisions
are avoided and there should be a majority of non-industry representatives;
the precise role of the Compliance Officer and the terms and conditions
of their employment should be defined;
evidence referred to in Cl.F.8 should be provided to the complainant as
well as the ADMA member;
the Authority should be empowered to make binding determinations without
reference to the Board; and,
the Code should state that the Authority would apply rules of procedural
fairness to reviews of decisions of the Compliance Office.
7.29 The allowed ‘cold – calling’ times were criticised as too generous
by the CLCV, FSCPC, NSWPC, APCC and Mr Robin Whittle of First Principles.
A number of suggestions were put forward for limiting these hours. These
making Sunday a call-free day;
providing a free silent line service; or
7.30 Alternative spans of hours that parties suggested might be appropriate,
included from 9am to 8pm on week days, 9am to 5pm on Saturdays and the
prohibition of calls on Sundays and public holidays. These are the hours
incorporated in the Door to Door Trading Act 1986 (Tas) and were
viewed by some consumer representatives as more acceptable because they
had been agreed to by parliament.
developing a Code with much wider coverage and then consulting with consumers
about acceptable hours.
7.31 The NSWPC submitted that the calling frequency provision contained
in clause 12 needs to be clearly subject to the proviso that if an individual
requests that they receive no further calls that request will be honoured
Interested Parties’ Responses to ADMA’s Amendments
7.32 Interested parties made a number of comments on ADMA’s response
to the conditions that the Commission had set down in its draft determination.
The CLCV submitted that the amended Code fails to address the Commission’s
concerns in so far as:
equality of representation on the Authority is not provided for;
the opportunity for all parties to participate fully in the enforcement
process is not provided for;
the Code does not address the provision of reasons for decision either
by the Compliance Officer or the Code Authority;
7.34 The Community Information and Referral Service of the ACT (CIRS)
also expressed concern about the composition of the Code Authority as amended.
and guidelines for the imposition of sanctions have not been sufficiently
addressed. For example, it asked what does ‘a breach of a serious nature
It is particularly important that industry and consumer representatives
are of an equal number in order to maintain an equitable balance in both
the decision making and philosophy of the Committee.
There is already a strong possibility that a perceptual problem is arising
with the establishment of the Code Authority as the two proposed consumer
representatives were recruited by the industry body rather than by a more
transparent and public form of recruitment and appointment. (This was a
concern also expressed by the ACA.)
7.35 In addition to the anti-competitive detriment cited by ADMA,
Mr Robin Whittle submitted that there are unique anti-competitive aspects
to the business practice of direct marketing that concern the cost burdens
placed on businesses by being targeted, against their will, by direct marketers.
He submitted that these costs include tying up telecommunications services,
the cost of receiving e-mails and faxes, staff time wasted, and the disruption
to work and concentration, caused by direct marketing approaches by telephone,
e-mail and door to door sales people. Mr Whittle submitted that ACCC approval
of the ADMA Code would constitute government approval for ADMA members
to systematically engage in intrusive marketing practices that cost almost
all Australian businesses significantly in terms of lost productivity.
It is difficult to see how an independent chair can substitute for a consumer
representative. While the independent chair is not a participant in the
industry, it would compromise the Chair’s necessary independence if that
position was seen to be a de facto consumer representative or expected
to support the official consumer representatives in a voting situation.
7.36 Professor Greenleaf submitted that ADMA members compete (using
methods of direct marketing) in a number of markets to supply goods or
services that are or could be, in close competition. In each case the market
is comprised of the competing direct marketers and the recipients of direct
marketing approaches. He argued that ADMA members compete in those markets
by virtue of differences in the nature and quality of the direct marketing
techniques that they use. Professor Greenleaf submitted that one of the
differentiating factors is the extent of privacy protection provided by
the direct marketing techniques that are used. He argued that consumers
might choose to buy products or services in part because of the direct
marketing techniques that are used to sell them. This includes the way
in which the direct marketer deals with aspects of the consumer’s privacy,
such as the intrusiveness of the communication and the way in which personal
information is used or misused.
7.37 Professor Greenleaf submitted that one effect of ADMA’s code is
that it will discourage competition in the provision of different standards
of privacy protection as part of direct marketing. In particular, he argued,
it will have the effect of discouraging the provision of standards of privacy
protection that is higher than those contained in the ADMA Code. He argued
that other effects would also result, including the following:
The content of any Code that receives ACCC authorisation, as being in the
public interest will be legitimated as ‘all that the public has the right
Direct marketers will therefore think of this as ‘the industry standard’,
and as all that needs to be offered. They will be indirectly encouraged
not to provide any higher standard of privacy protection.
Consumer demand for higher standards of protection from businesses will
be blunted. There will be a tendency for consumer complaints to companies
or regulators about the standard of privacy protection provided by ADMA
members to be dismissed by references to ACCC approval. In the absence
of a Code, there is likely to be more persistent consumer demand for higher
standards, resulting in less competition to provide such standards.
7.38 Mr Hamish Gilmore, the South Australian Commissioner for Consumer
Affairs, submitted that the availability of sanctions against a member,
such as expulsion from ADMA is not anti-competitive in that the sanction
does not extend to exclusion from the industry as a whole, or a prohibition
on a person becoming a member some time in the future. He stated that membership
of ADMA is not a benchmark for the industry; the various competition and
fair trading laws fulfil that role. The Commissioner submitted that the
following clauses were somewhat anti-competitive:
If uniform standards are set for privacy protection in all forms of direct
marketing, this will discourage different levels and forms of protection
being provided for direct mail, telemarketing and e-commerce, even though
these three different contexts may justify different forms of protection.
Such uniform standards will therefore lessen protection and competition
between actual or potential providers of similar goods and services in
these different contexts. He submitted that the ADMA Code proposes such
those requiring members to ensure that their suppliers will comply with
the Code; and
ADMA’s Response to Comments made by Interested Parties
those empowering ADMA itself to request non-members to comply with the
Definition of Direct Marketing
7.39 ADMA made the following submissions with respect to its definition
of direct marketing:
It is based on the definition contained in the Direct Marketing Model Code
of Practice. That definition, it submitted, singles out one segment of
direct marketing, that is, the charitable and fundraising segment and infers,
through reference to a contract, that the direct marketer keeps a record
of the transaction. ADMA stated that it dropped the specific reference
to fundraisers because if it listed all of the different activities that
came under the definition of direct marketing, the definition would be
unwieldy. ADMA argues that its definition of fundraiser contained in Cl.3.6
of Appendix 1 tie fundraisers to the definition of direct marketer.
It has presented a classic definition of direct marketing, albeit one that
may not be comprehensive. It argues that it is direct marketers who have
to see themselves and what they do reflected in the Code; the definition
that has been put forward is one that any direct marketer should be able
to identify with.
Part E – Data Protection
7.40 ADMA stated that the PC’s November 20, 1998 Revision Draft of
the NPPs has upheld the original drafting of NPP 2, with the addition of
a specific requirement that "if the individual declines to receive further
direct marketing communications, the organisation does not send any." ADMA
claim that this addition has been accommodated under clause 34 of section
E of the Code of Practice which requires a direct marketer to remove a
consumer’s name from all internal marketing lists or lists for transfer
to a third party at the request of the consumer.
If the definition of direct marketing included sending an offer to customers
to get them to come to a retail store, they would not be able to satisfy
some key requirements in the NPPs. For example, if the flier has no direct
response component to it, the retailer would be unable to satisfy the compulsory
requirement under the ADMA Code to provide an opportunity to opt out of
receiving further direct marketing offers.
7.41 With respect to consultation, ADMA submits that the fair trading
elements of the Code of Practice embody those contained in the Model Code
of Practice that was endorsed by MCCA. Further, it stated that:
the telemarketing provisions are lifted from the government’s APAC report
entitled "Telemarketing and the Protection of the Privacy of Individuals".
the e-commerce component contains the latest draft OECD Guidelines for
Electronic Commerce"; and,
ADMA submits that all of these published standards have been the subject
of extensive consultation over a period of three to five years.
the data protection section is taken from the NPPs.
E-Commerce Standards of Practice
7.42 ADMA submits that its e-commerce standards of practice are drawn
from the latest OECD Guidelines for electronic commerce and are consistent
with the Consumer Protection in Electronic Commerce Principles that were
prepared by the Australian National Advisory Council on Consumer Affairs.
ADMA also acknowledged that these standards are still being reviewed.
Monetary Compensation for Consumers
7.43 With respect to monetary compensation for consumers, ADMA submits
that it has no statutory right to affect rights, other than those of members
to belong to the association, nor does the Authority have the power to
measure damages suffered by individuals or adjudicate upon the rights that
might give rise to such damages.
7.45 After taking into account the views of interested parties outlined
above, and engaging in further discussions with the applicant, Commission
staff drafted a proposed final determination in relation to the application
for authorisation. Chapters 8 and 9 of the proposed determination outlined
a number of conditions of authorisation that staff intended to recommend
that the Commission include in its determination. These chapters were circulated
to selected consumer and privacy advocates, as well as a number of relevant
government departments, for comment.
It also expressed concern that the establishment of a compensation fund
would attract "every kind of charlatan with a real or imagined complaint
against direct marketers". ADMA considers that it would be appropriate
to raise this matter in the context of the one year review of the Code
so that reference could be made to other compensation schemes in other
business sectors to ensure complementarity.
7.46 The Commission received a number of submissions during this third
round of consultation and while most submissions were supportive of the
proposed conditions contained in draft Chapters 8 and 9, a number of criticisms
continued to be made in relation to certain aspects of ADMA’s Code. For
instance, consumer and privacy advocates continued to criticise:
the lack of coverage of ADMA’s Code in terms of the number of direct marketing
contacts that will be regulated. Particular concern was expressed in relation
to the Code’s coverage of electronic commerce and telemarketing contacts.
ADMA’s failure to adopt an opt-in approach with respect to both telemarketing
and email direct marketing approaches.
the failure of the Code of Practice to provide for monetary compensation
where an ADMA member is found to be in breach of one of its provisions.
The Privacy Commissioner re-stated his view that the award of monetary
compensation in appropriate cases should be explicitly included in the
the fact that the Code Authority, which is responsible for enforcing the
substantive provisions of the Code of Practice, is also charged with the
responsibility of reviewing the performance of the Code. Advocates were
strongly of the view that the Code of Practice should provide for independent
8. Commission Evaluation
Part D of the Code of Practice concerning electronic commerce. Advocates
criticised Part D on the basis that it contained no net public benefit
and had the potential to damage the development of effective consumer protection
standards in electronic commerce that are being developed in other arenas.
8.2 In general terms, the Commission is required to determine whether
the provisions of the Code of Practice for which the applicant has sought
authorisation are likely to result in a benefit to the public that is sufficient
to outweigh any likely anti-competitive detriment resulting from the provisions.
The Commission’s evaluation of Application A40077 is made in accordance
with the relevant statutory test that is outlined in chapter 4 of this
8.3 It should be noted that the Commission’s role in the authorisation
process is not to design, or insist upon, the development of an ideal Code
of Practice, it is constrained in this respect by its statutory duty. In
Media Council of Australia (No. 3) the Australian Trade Practices Tribunal
(now the Australian Competition Tribunal) made the following observation
with respect to its own role:
"... an important matter to have in mind when approaching
our analysis of the Codes is that the Tribunal’s function is not to require
the design of an ideal system of code administration within the advertising
industry, but to determine whether the proposed Codes within the Media
Council system fulfil the statutory tests prescribed by sec. 90 of the
Further, in Re: 7 – Eleven Stores Pty Ltd, Independent Newsagents Association,
Australasian Association of Convenience Stores Inc the Australian Competition
Tribunal (‘the Tribunal’) stated the following:
" … the Commission’s role is not to design for others
business arrangements that can be authorised, nor insist on optimum arrangements
before granting authorisation, but rather to assess formally whether some
proposed conduct that might breach the provisions of the Act yields a net
public benefit, and therefore can be authorised."
8.6 Detailed provisions of ADMA’s Code are, however, often limited
by the definition of direct marketer that is contained in clause 3.5 of
Appendix 1 of the Code. ‘Direct marketer’ is defined as:
" … an individual, corporation, partnership or organisation
contracting or intending to contract for the sale of goods or services
to a customer where:
The Commission accepts that direct marketing, and distance selling in particular,
has many specific characteristics which cause it to differ from shop front
retailing. For the purposes of consumer protection and consideration of
ADMA’s Code, the consumer’s lack of opportunity to inspect goods prior
to entering into the purchase contract, the fact that transactions are
often initiated by the direct seller without the consumer’s consent and
that consumers may not have sufficient opportunity to research the goods
and services that have been offered are most relevant. The Commission also
accepts the statement by the applicant, and contained in the Model Code,
that these distinctions mean that it is appropriate that specific rules
are developed to govern those who are engaged in direct marketing and distance
Scope and Coverage
The extent of public benefit that arises from ADMA’s Code depends upon
the variety of situations that its provisions cover. Clause 6 of Part A
of the Code states that it binds all ADMA members and all employees, agents
or subcontractors of ADMA members. Clause 9 states that the Code requires
members to ensure that their suppliers comply with the Code, by requiring
that it is a condition of contracts between members and their suppliers.
8.7 Interested parties claim that this definition limits the application
of the Code of Practice in the following ways:
the customer is contacted through a means of distance communication;
customers are invited to respond using a means of distance
it is intended that the goods or services be supplied under
a contract negotiated through a means of communicating at a distance; and,
a record of the transaction is captured and maintained on
a list or database for further marketing purposes."
telemarketing, mail or e-mail that is aimed at promoting goods or services
available through retail stores or separate phone or mail response is not
fundraisers are excluded because there is no contract; and
situations where an ADMA member sells through distance communication are
not covered unless a record of the transaction is captured and maintained
for further marketing purposes.
ADMA made the following submissions with respect to its definition of direct
It is based on the definition contained in the Direct Marketing Model Code
of Practice. The specific reference to fundraisers was dropped because
listing all of the different activities that fall within the definition
of direct marketing would make the definition unwieldy. Cl.3.6 of Appendix
1 ties fundraisers to the definition of direct marketer.
It has presented a classic definition of direct marketing. It is one that
any direct marketer should be able to identify with.
8.9 As noted by interested parties, ADMA’s definition of direct marketer
is particularly important as key provisions contained in the Code apply
only to direct marketers (as well as their employees, agents, sub-contractors
Part B – Standards of Fair Conduct
8.10 Most of the provisions contained in Part B of ADMA’s Code, with
the exception of clauses 4, 5, 8, 10, 11, 27, 28, 33 and 34 refer specifically
to direct marketers, and are accordingly limited in their application to
direct marketers. The provisions of Part B are summarised in chapter 3
above and deal largely with the information that should be provided when
direct marketers are making an offer or delivering goods or services, the
offering of incentives, delivery, payment and cancellation and refunds.
If the definition of direct marketing included sending an offer to customers
to get them to come to a retail store, ADMA would not be able to satisfy
some key requirements in the NPPs. For example, if the flier has no direct
response component to it, the retailer would be unable to satisfy the compulsory
requirement under the ADMA Code to provide an opportunity to opt out of
receiving further direct marketing offers.
8.11 The Commission notes ADMA’s claim that Part B of its Code is based
on the provisions contained in the Model Code. Clause 6 of the Model Code
provides that its Part 2, the fair trading requirements which are reflected
in Part B of ADMA’s Code, are designed to apply to distance sellers rather
than charities and fundraisers. The Model Code defines a distance seller
‘ … an individual or organisation contracting or intending
to contract for the sale of goods or services to a consumer where the consumer
is contacted through direct marketing. A distance seller may engage in
direct marketing itself or employ a direct marketer to do so.’
‘Direct marketing’ in turn is defined as:
‘ ... the marketing of goods or services or the seeking
of donations through a means of communication at a distance where:
8.12 As the provisions of Part B of ADMA’s Code set standards of fair
conduct in respect of pre and post sale behaviour as well as in respect
of contracts of sale, it is appropriate that these provisions apply to
those ADMA members who seek to contract with customers for the supply goods
or services. Thus, Part B of ADMA’s Code would not apply to charities and
fundraisers (as is also the case with Part 2 of the Model Code). However,
the provisions of Part B are further limited in their application to direct
marketers as defined by ADMA and, as noted, this definition requires that
a record of the sales ‘transaction is captured and maintained on a list
or database for further marketing purposes’. Consequently, the provisions
of Part B may, as suggested by interested parties, apply only when a sale
actually occurs. Therefore, the pre-sale standards of conduct in relation
to the promotion of goods or services may only be enforceable against an
ADMA member where such conduct results in a sale. Further, the provisions
of Part B may not be enforceable against an ADMA member if the member does
not maintain a record of the sales transaction or if the member does not
intend to use the record for further marketing purposes.
consumers are invited to respond using a means of communication
at a distance; and
it is intended that the goods or services be supplied under
a contract negotiated through a means of communication at a distance.
Part C – Fair Conduct Relevant to Telemarketing
8.15 Clauses 1, 2, 3, 9, and 10 of Part C of ADMA’s Code apply to
‘direct marketers’, while clauses 4, 5, 6, 7, 8, 11 and 12 apply to ‘telemarketers’.
The Commission notes that ‘telemarketer’ is not defined in ADMA’s Code.
Clause 3.7 of Appendix 1, however, defines a ‘telemarketing telephone call’,
a term that is otherwise not used in the Code, as:
‘ … a telephone call initiated by a direct marketer
or by an automatic dialler mechanism of a direct marketer that is designed
to induce customers to purchase goods or services.’
In light of this clause it appears that the term ‘telemarketer’ refers
to a ‘direct marketer’ who uses a telephone or automatic dialling mechanism
to contact prospective customers. The application of the provisions of
Part C is therefore limited to direct marketers as defined by ADMA.
As noted, the application of equivalent provisions in Part 2 of the Model
Code is clearly not so restricted, with clause 6 of the Model Code providing
that such provisions are designed to apply to ‘distant sellers’ (but not
to charities or fundraisers). However, it is also noted that clause 7 of
the Model Code states that Part 2 is not intended to apply in circumstances
where a contract is initiated from a contract solicitation made using a
means of communication at a distance but is finalised in the presence of
both parties to a contract. The footnote to clause 7 states that the other
Parts of the Model Code apply to the components of the transaction conducted
at a distance, but to apply the requirements of Part 2 would place businesses
using this part distance/part traditional approach at a competitive disadvantage
to other retailers.
The Commission concludes that ADMA’s definition of direct marketer is not
likely to result in benefit to the public in view of the limits it places
on the scope of ADMA’s Code. ADMA’s definition of direct marketer should
be amended so that it is equivalent to the Model Code’s definition of ‘direct
marketer’ which includes by reference the Model Code’s definitions of ‘direct
marketing’ ‘telemarketer’ and ‘telemarketing’. The Commission also concludes
that it would be appropriate for ADMA to limit the scope of Part B through
provisions equivalent to clauses 6 and 7 of the Model Code.
8.16 As discussed in chapter 3 of this determination, the provisions
contained in Part C set standards relating to the identification information
that must be provided by direct marketers, information that must be provided
at the customer’s request, acceptable calling conduct, permitted calling
times, line disconnection times and calling frequency. These provisions
are primarily concerned with regulating the times when direct marketers
can contact prospective customers, and the manner in which they conduct
themselves while communicating with these prospective customers, that is,
conduct that takes place whether or not a sale results from the contact.
8.17 The Commission is concerned that the application of Part C may
be considerably restricted by ADMA’s definition of direct marketer (as
it is in respect of Part B, see paragraph 8.12 above). It is also noted
that the provisions of Part 3 of the Model Code (which are reflected in
Part C of ADMA’s Code) are specified to apply to ‘distance sellers, charities
and fundraisers engaging in telemarketing’ (see clause 50 of the Model
Code). Telemarketing, is defined in the Model Code as meaning:
‘… all activities that relate directly or indirectly
to direct marketing and which involve the use of a telephone, facsimile
machine, or other customer equipment connected to a telecommunications
network to contact a consumer.’
Part D – Fair Conduct Relevant to Electronic Commerce
8.19 An equivalent of Part D of ADMA’s Code is not contained in the
Model Code. ADMA claims that Part D is based on the Draft OECD Electronic
Commerce Guidelines. The Commission notes that Part D of the Code does
not use the term ‘direct marketer’ or any similar term to limit its application
to particular ADMA members only. The Commission concludes that Part D potentially
applies to all ADMA members.
Part E – Fair Conduct Relevant to Consumer Data Protection
8.20 The provisions contained in Part E of the Code are clearly limited
to direct marketers as defined by ADMA. Interested parties were highly
critical of this limitation. The Privacy Commissioner, for instance, stated
‘… the public benefit of the Code could be greater if
the application of Part E, the data provisions, were less restrictive.
The definition in Appendix 1 limits the scope of ‘direct marketing’ and
hence the scope of the code by excluding the sending of material where:
Given the type of conduct that Part C of ADMA’s Code is designed to regulate,
the Commission concludes that in order to give rise to adequate public
benefit, the Part should apply to all ADMA members who contact prospective
customers via telecommunications equipment such as telephones, facsimiles
etc, whether or not they are seeking to contract with customers for the
supply of goods or services. As the conduct that Part C regulates applies
equally to those trying to sell goods or services or those trying to generate
donations, the scope of the Part should cover not only direct marketers
(see paragraph 8.14 above) but also fundraisers and charities, as is the
case in the Model Code.
the intention is to induce the recipient to visit a retail
outlet to buy goods or services, or
the contract itself is not negotiated remotely; or
… much of the public benefit that could arise from Part
E springs from the requirements to handle responsibly the personal information
used to target marketing material – in a broad sense – to particular individuals.
These requirements apply just as much to personal information used to encourage
visits to retail outlets or to solicit donations as they do to approaches
that offer a remote means of purchasing goods or services.
the transaction entered into is not for the provision of
goods or services.
… So far as consumers are concerned, any personalised
approaches based on information about their tastes and demographic characteristics
have information privacy implications. Questions such as ‘where did they
get my details’ and ‘what else do they know about me’ are just as applicable
to promotions for physical retail outlets as they are to catalogue or Internet
sales, and to charities as much as for-profit business. … [T]he protections
of Part E should apply to all forms of personalised, unsolicited advertising
or solicitation engaged in by ADMA members.’
8.21 The Commission is concerned that the application of Part E may be
considerably restricted by ADMA’s definition of direct marketer (as it
is in respect of Parts B and C, see paragraphs 8.12 and 8.17 above). In
view of this restriction the Commission is not satisfied that the provisions
of Part E would be likely to give rise to sufficient public benefit so
that authorisation may be granted. As with Part C of ADMA’s Code, Part
E is concerned with conduct that is not dependent on the selling of goods
or services. It regulates the types of personal information that an organisation
is able to collect, and what the organisation can do with that information.
The Commission concludes that, like Part C, Part E of ADMA’s Code should
cover not only direct marketers (see paragraph 8.14 above) but also fundraisers
8.22 In addition, the Commission sees no public benefit in limiting
Part E of ADMA’s Code by excluding from its scope the conduct of direct
marketers’ sending an offer to customers to get them to come to retail
stores. The Commission shares the Privacy Commissioner’s view that the
need to handle responsibly the personal information used to target marketing
material applies just as much to personal information used to encourage
visits to retail outlets as to approaches that offer a remote means of
purchasing goods or services.
8.23 The Commission notes ADMA’s submission that direct marketers would
not be able to satisfy some key requirements of Part E (and the NPPs) if
the application of Part E is widened to include the sending of an offer
to customers to get them to come to a retail store. ADMA submitted, for
example, that if the flier has no direct response component to it, the
retailer would be unable to satisfy the compulsory requirement under ADMA’s
Code to provide an opportunity to opt out of receiving further direct marketing
offers. It is also noted that APCC considered this argument entirely spurious,
and submitted that a phone number or address can and should be provided
for the purposes of opting-put and other complaints in all cases. The Commission
considers that any compliance problems caused by extending the application
of Part E in this way should be able to be resolved through discussions
between ADMA and the Privacy Commissioner, who has welcomed the Commission’s
suggestion of such discussions.
Part F – Enforcement
8.25 Part F of ADMA’s Code sets out the manner in which it will be
enforced. Most clauses apply to ADMA members. Clauses 2 and 13 however,
refer specifically to a ‘direct marketer’. Clause 2 states that any person
who has a complaint against a direct marketer may refer it to ADMA, while
clause 13 provides that the CEO must send the direct marketer a notice
containing the decision of the Code Authority within 14 days of the conclusion
of the Authority’s hearing.
The Commission is of the view that ADMA should be granted interim authorisation
for a period of six months in respect of a provision excluding from the
scope of Part E the conduct of direct marketers sending offers to consumers
to get them to come into retail stores. This period will provide ADMA with
the opportunity for discussions with the Privacy Commissioner to overcome
the compliance problem raised by ADMA.
8.26 For the provisions of Part F to be effective and result in net
benefit to the public, complaints should be able to be lodged, and enforcement
action should be able to be taken, against all ADMA members who may breach
the provisions of the Code. Part F of the Code should therefore refer to
ADMA members rather than direct marketers.
Clause 1 of Part F refers to ‘customer complaints’ when discussing the
referral of unresolved member complaints to ADMA. This may potentially
imply that a member complaint can only be referred to ADMA where a contract
of sale has been entered into, and the complaint has been generated by
an actual customer of the member. As most of the provisions in the Code
regulate conduct that takes place whether or not a contract of sale, or
relationship between the consumer and the ADMA member, actually exists,
the Commission is of the view that Part F should apply to ‘consumer’ rather
than customer complaints.
8.28 A number of interested parties submitted that the extent of a code’s
coverage is one of the most important factors in assessing any likely public
benefit that arises from the provisions contained in a code. It was recognised
that ADMA may have adequate coverage regarding direct mail, but it was
submitted that ADMA’s coverage with respect to new direct marketing techniques
such as e-mail and telemarketing is insignificant. The FSCPC submitted
that the test in this case should be an investigation of the volume of
direct marketing contacts that will be covered by ADMA’s members, including
unsolicited mail, unsolicited e-mail and telemarketing. It submitted that
the Commission should undertake or commission some independent research
on coverage. FSCPC argued that an authorised code that provides inadequate
or fractional coverage worsens the position for consumers who may believe
that their privacy is protected when, in fact, it is not.
8.29 ADMA stated that it is responsible for approximately 80% of annual
sales derived from direct marketing techniques and represents over 400
organisations. It submitted that the coverage of its Code extends beyond
its actual membership given the fact that its supplier members are involved
in most direct marketing campaigns that are undertaken in Australia. It
submitted that suppliers have an enormous commercial stake in ensuring
that their customers adhere to best practices. ADMA also provided figures
demonstrating that of the 40 organisations, who did the greatest number
of direct mail campaigns in 1997/98, 30 were ADMA members. It stated that
it was safe to assume that virtually all the rest would intersect with
ADMA through their use of a member agency, mail house or list broker.
Part B – Standards of Fair Conduct
8.33 Part B of ADMA’s Code outlines standards of fair conduct relevant
to those who engage in the use of direct marketing techniques. It is based
on the provisions contained in Part 2 of the Model Code and covers a number
of issues including misleading and deceptive conduct, false claims, the
information that should be provided to a potential customer at the time
an offer is made and the information that should be given at the time the
relevant product is delivered. Clauses outlining the rules regarding the
offering of incentives, delivery, cancellation of orders and refunds and
complaint handling procedures are also included.
The Commission accepts that, while ADMA members undertake a significant
proportion of all direct mail campaigns, they may initiate only a limited
number of telemarketing and e-mail direct marketing contacts. It is noted
that for a code of conduct to be an effective form of industry regulation,
the code needs to have a good coverage of the industry concerned. Some
interested parties (ACA and FSCPC) were in fact opposed to ADMA’s Code
on the basis that it was either a form of industry self-regulation or was
not mandatory. The mechanisms by which ADMA’s Code can be made mandatory
are limited; it needs to be either embodied in legislation, or prescribed
under the Trade Practices Act or similar state legislation. Whether
either of these options is desirable is a matter of government policy.
(It is noted specifically in respect of the protection of privacy raised
by FSCPC, that the federal Government has announced that private sector
privacy legislation is to be introduced which will apply to those industries
that have not implemented their own approved privacy regulation. This proposed
legislation is further discussed later in this determination.)
The Commission also notes that, in terms of the authorisation test, the
wider the coverage within an industry of a code that prescribes satisfactory
standards of conduct, the larger the public benefit likely to result from
the code. However, a code that prescribes satisfactory standards can still
result in public benefit even though it has limited coverage of an industry.
Not only will persons dealing with industry participants that are covered
by such a code benefit from the code’s standards of conduct, but other
industry participants may also be encouraged, through competition or in
order to avoid government regulation, to adopt standards that are equal
to or higher than those prescribed in the code. The Commission concludes
that the limited coverage of ADMA’s Code with respect to direct marketing
contacts by e-mail and telemarketing is not of itself sufficient to satisfy
the Commission that the relevant provisions of ADMA’s Code may not be granted
authorisation. The issue of whether the standards set by ADMA’s Code are
satisfactory, is discussed later in this determination.
The following paragraphs comprise the Commission’s consideration of the
substance of the rules contained in ADMA’s Code. The conclusions that are
expressed are based on an assessment of the rules as they would apply once
the scope of each of the Parts of the Code has been expanded in accordance
with the Commission’s requirements as outlined above.
8.34 Many of the clauses contained in Part B reflect legislative provisions
that are enforceable in court. For example, clauses 1, 2 and 9 prohibit
direct marketers from engaging in misleading and deceptive, or unconscionable,
conduct. These are mandatory standards that are prohibited by the Trade
Practices Act or State and Territory fair trading legislation, and for
which anyone can be taken to court if they are thought to be in breach.
Given that direct marketers are required by law to comply with such standards
in the absence of ADMA’s Code, agreement by ADMA members to comply with
such standards reflected in the Code (ie, comply with the law) is not anti-competitive.
Other clauses contained in Part B set minimum standards that go beyond
what is required by law, for example, clauses requiring delivery of goods
and services within 30 days and providing for a cooling off period of seven
days or more. Through their imposition of minimum standards, these clauses
have the potential to standardise the way in which participants in the
direct marketing industry conduct their business and therefore may result
in anti-competitive detriment, if the subject of adequate enforcement.
8.35 Direct marketing and distance selling methods have many specific
characteristics that cause them to differ from shop-front retailing. The
nature of sales using such methods mean that consumers will often not have
the opportunity to inspect the relevant goods prior to entering into the
purchase contract, or may not have sufficient opportunity to research the
goods and services that are being offered by the seller. Those clauses
that expand on the law by, for example, providing for information disclosure
requirements and the introduction of a seven-day cooling off period, have
the potential to ensure that consumers of goods and services are provided
with adequate information about both their rights and purchases. Where
appropriate, they also provide consumers with the additional protection
of being entitled to a refund within seven days of the direct marketer
receiving the returned goods or notice of the cancellation of the contract
from the customer. Potential public benefits therefore result from the
prescription of such minimum standards. While the Commission acknowledges
the concerns expressed by some interested parties with respect to the breadth
of exemptions to the cooling off period, it is noted that these exemptions
are no broader than those contained in the Model Code.
The Commission considers, however, that clause 17 of Part B of ADMA’s Code,
which deals with delayed delivery of ordered goods or services, requires
clarification. The Commission requires the last sentence of the clause
to be amended to provide as follows – ‘This notification must be accompanied
by a reply-paid or other cost free response mechanism and include an option
for the customer to cancel the order and receive a full refund of any money
Part C – Telemarketing
8.38 Part C of ADMA’s Code sets down standards of fair conduct that
relate specifically to the technique of telemarketing. Clauses 1 –3 outline
procedures that a telemarketer must follow with respect to the provision
of identification information. Clause 4 outlines the information that the
telemarketer must provide to customers who request it. Clause 6 provides
that a telemarketer must not represent that they are undertaking market
research where the purpose of the call is to sell a good or service, while
clauses 7 and 8 outline acceptable calling conduct. The provisions contained
in Part C are largely based on those contained in Part 3 of the Model Code
8.39 Interested parties criticised Part C on the following grounds:
While those provisions that reflect the law do not add to the level of
protection that consumers are already entitled to, they will result in
public benefit if they encourage compliance with the law and are the subject
of efficient complaint or dispute resolution procedures. The promulgation
of effective complaint handling procedures contributes significantly to
a scheme’s ability to deliver public benefit. Quick and inexpensive dispute
resolution procedures benefit the public through resolving consumer concerns
and taking pressure off the courts. They also provide a mechanism through
which industry is able to identify problem areas and take steps to rectify
them, in addition to facilitating better business practices and the provision
of higher quality goods and services. The effectiveness of the ADMA complaint
handling mechanisms is discussed later at paragraphs 8.88 to 8.91.
where a service bureau makes a call on behalf of a direct marketing organisation,
it should be required to identify itself as well as the organisation on
whose behalf it is making the call;
the term ‘telemarketer’ should be defined;
the permitted calling times are too generous; and,
8.40 ADMA did not address these concerns in its submissions to the Commission.
8.41 On the issue of definition of the term ‘telemarketer’, the Commission
has concluded (see paragraph 8.14 above) that ADMA should adopt the equivalent
of the Model Code’s definition of ‘direct marketer’, which includes by
reference the Model Code’s definitions of ‘direct marketing’, ‘telemarketer’
and ‘telemarketing’. The Commission has also concluded (see paragraph 8.18
above) that the provisions of Part C should extend not only to direct marketers
(so defined) but also to fundraisers and charities.
if an individual requests that they receive no further calls in relation
to a campaign, that request should be honoured indefinitely.
8.43 The Commission recognises that telemarketing, as a technique,
gives rise to special problems. Issues of intrusion upon an individual’s
private space, as well as concerns regarding the quality of information
that consumers receive about the product that is being marketed, and their
recourse to a resolution mechanism for complaints about either the product
or the telemarketing activity itself are relevant. The Commission is satisfied
that the provisions contained in Part C of ADMA’s Code dealing with the
provision of information, acceptable calling conduct, line disconnection
times and calling frequency have the potential to address these problems.
The PC in particular has expressed concern that where a service bureau
makes a call on behalf of a direct marketer, it should be required to identify
itself as well as the direct marketer on whose behalf it is making the
call. (The PC has raised this same concern in respect of clause 5 of Part
E of ADMA’s Code, see paragraph 8.69 below.) ADMA has advised that there
would be compliance problems with such a requirement. The Commission notes
that the relevant provision of the Model Code requires telemarketers to
identify themselves, the direct marketer they represent, and advise the
purpose of the call. However, clause 1 of Part C of ADMA’s Code requires
a direct marketer to ensure the following information is provided to the
customer – the name of the person making the telephone call; where a service
bureau is making the call, the name of the organisation on whose behalf
the call is being made; and the purpose of the telephone call. ADMA has
advised that for practical reasons such as clarity and brevity of the introduction,
when the call is made by a service bureau, the individual making the call
would identify him/herself, but not the service bureau, and the organisation
on whose behalf the call is being made. Clause 1 of Part C thus reflects
industry practice. The Commission considers that the issue of appropriate
disclosure of identification information in telemarketing calls where make
by a service bureau, and the compliance problem raised by ADMA, should
be the subject of further discussion between ADMA and the PC. The requirements
of clause 1 of Part C of ADMA’s Code should be reconsidered, in the light
of such discussions between ADMA and the PC, as part of the first review
of ADMA’s Code.
8.44 The clauses of Part C concerning the provision of identification
information and information to be provided on request potentially ensure
that a consumer is given adequate information so that they have some recourse
in the event of a complaint concerning the conduct of a telemarketer. The
Commission is also satisfied that those clauses of Part C that require
direct marketers, fundraisers and charities to consider the convenience
of the customer, limit the times when they contact customers and release
a customer’s telephone line within 5 seconds of the customer hanging up,
will contribute to the protection of the customer’s right to privacy and
to not be intruded upon in their home or workplace.
8.45 The Commission notes, however, the concerns of a number of interested
parties regarding the span of permitted calling times contained in clause
9 of Part C. This span is drawn from the span of hours included in the
Austel Privacy Advisory Committee (APAC) Report ‘Telemarketing and the
Protection of the Privacy of Individuals’ which states that:
Without an individual’s consent an organisation should
not use the telephone or ACE [automatic calling equipment] to contact the
individual before 8am or after 9pm local time at the individual’s location
or on Christmas Day, Good Friday or Easter Sunday.’
The same span of hours was included in clause 56 of the Model Code.
8.46 The Commission notes that the more restrictive are the permitted
calling times of ADMA’s Code, the greater is their anti-competitive effect
through the resulting standardisation of ADMA members’ behaviour. On the
other hand, the Commission recognises that there is public benefit in establishing
an industry minimum standard with respect to permitted calling times. Such
a standard contributes to the protection of consumers’ privacy and minimises
intrusion upon their personal space. The Commission agrees with interested
parties that the permitted calling times of ADMA’s Code are generous. Consequently,
this provision of the Code is likely to have minimal anti-competitive effect,
but is also likely to result in relatively little benefit to the public.
On balance the Commission considers that the provision is likely to result
in net public benefit. It is noted that the permitted calling times adopted
by ADMA have been endorsed through the Model Code process by the MCCA.
The Commission would expect that interested parties will again raise the
issue of permitted calling times when the Model Code is being reviewed.
8.53 Most of the concerns raised by consumer and privacy advocates
with respect to Part D related to the principle of equivalent protection
that is endorsed by clause 1. The ACS, Dr Clarke of XC and EFA argued that
there were a number of special considerations that needed to be made with
respect to electronic commerce, as distinct from other forms of commerce.
These considerations included the following.
The NSWPC submitted that if an individual requests that they receive no
further calls in relation to a campaign, that request should be honoured
indefinitely. Mr Robin Whittle of First Principles further submitted that
direct marketing approaches, where they are not wanted, impose costs on
consumers and businesses. These costs include tying up telecommunications
services, the cost of receiving e-mails and faxes, staff time wasted, and
the disruption to work and concentration. These submissions raise issues
relating to the adoption of adequate procedures whereby consumers can communicate
their desire not to receive direct marketing approaches, which are discussed
later at paragraphs 8.72 to 8.82.
In January 1999 the Commission received a joint submission from FSCPC and
the Australian Telemarketing and Call Centre Association (ATCCA), which
has 1100 members including most banks, non-bank financial institutions,
telemarketing bureaus, commercial and charitable organisations. They advised
that ATCCA is developing, in close consultation with consumer representative
organisations, a new code of conduct that will cover all aspects of telecommunications
based communications between its members and consumers. They expressed
concern at the damage that could potentially be caused by the premature
authorisation of ADMA’s Code, which purports to cover activities like telemarketing
and e-mail marketing, but which sets relatively low standards of consumer
protection, and only provides limited industry coverage.
As noted above, the Commission considers that Part C of ADMA’s Code sets
standards of conduct for telemarketing that are likely to result in net
public benefit. As also noted, the provisions of Part C are based on Part
3 of the Model Code, which has been endorsed by the MCCA. It can thus be
concluded that the MCCA also does not consider that Part C of ADMA’s Code
sets inappropriate standards of conduct for telemarketing. On the issue
of industry coverage, the Commission has concluded (see paragraph 8.31
above) that the limited coverage of ADMA’s Code with respect to direct
marketing contacts by telemarketing is not of itself sufficient to satisfy
the Commission that the relevant provisions of ADMA’s Code may not be granted
authorisation. Further, the Commission does not consider that its authorisation
of ADMA’s Code will prevent other industry associations from developing
their own codes of conduct, including codes that prescribe higher standards
of conduct where an association assesses that this is desirable to better
address industry problems or consumer concerns.
Amendments to the Model Code
Throughout the authorisation process ADMA has referred to the fact that
provisions contained in Parts B and C of its Code are drawn from the Model
Code. As discussed above, the Model Code was the subject of a lengthy consultation
process and received the endorsement of the MCCA. Clause 66 of the Model
Code states that a working party established by the MCCA will review that
Code three years after it is released and at periodic intervals thereafter.
The MCCA has thus recognised that independent reviews are important to
ensure, that the regulatory standards of the Model Code remain appropriate
in light of current market practices and community expectations, and that
the Model Code continues to receive MCCA endorsement.
As noted in paragraph 2.9 above, when the Model Code was released the MCCA
encouraged industry associations whose members were involved in direct
marketing to establish their own codes based upon the provisions contained
in the Model Code. The Commission concludes that for ADMA’s Code to continue
to result in benefit to the public its provisions should be kept up-to-date
with regulatory developments as reflected in the Model Code. The Commission
therefore requires as a condition of authorisation that, within four months
of changes being made to the Model Code, ADMA demonstrate to the satisfaction
of the Commission, either that its Code has been amend to adequately reflect
such changes or why it would not be appropriate for such changes to be
reflected in its Code.
Part D – Fair conduct relevant to electronic commerce
Part D of ADMA’s Code contains provisions outlining conduct with respect
to electronic commerce. The Commission notes that Part D of the Code has
been subject to more critical comment from interested parties than any
other Part of the Code. ADMA states that Part D is based on the Draft Recommendation
of the Council Concerning Guidelines for Consumer Protection in the context
of Electronic Commerce that was released by the OECD in 1998. The Model
Code does not include provisions on electronic commerce.
The receipt of unsolicited commercial e-mail (‘spam’) can be more costly
for consumers and business due to the ability of senders to incorporate
substantial data and video attachments that increase the time taken to
read and delete e-mail and has the capacity to clog up e-mail systems.
This means that in circumstances where a person is only able to receive
a limited amount of e-mail, solicited mail may be blocked due to the fact
that the user has received unsolicited mail. The receipt of such e-mail
may also impose financial costs upon receivers where they are charged on
the basis of the volume of information that they receive.
Determining the identity of the people who are communicating via e-mail
is made more difficult given that e-mail accounts may be controlled by
more than one person. Resolution of disputes may also be difficult where
there is no physical location of the business, or it is too distant from
the consumer to enable the easy return of goods.
There is increased potential for the misuse of information due to the fact
that consumers are usually required to display their e-mail address or
provide their credit card details.
8.56 FSCPC further submitted that the current version of the OECD
draft guidelines contained some 40 specific provisions, none of which are
contained in ADMA’s Code. FSCPC noted, that clause 2 of Part D only repeats
the preamble to a much longer and more detailed section of the OECD draft
guidelines setting out the information that businesses engaged in electronic
commerce must provide. In addition, three of the most important sections
of the OECD draft guidelines, dealing with requirements for online advertising,
marketing and contracts and the definition of electronic commerce, are
not in ADMA’s Code. FSCPC also noted that;
In its submission dated 22 June 1999 FSCPC advised that clause 1 of Part
D, which provides customers with ‘the same level of protection’ for electronic
commerce as for other forms of commerce, mirrors an early draft of the
OECD guidelines and is now out of date. It noted that Australia argued
in its August 1998 submission to the OECD that the words ‘at least the
same level of protection’ be included. FSCPC advised that the December
1998 version of the OECD guideline was altered and the words ‘at least’
included in the relevant clause.
However, the Commission notes that the latest draft of the OECD guidelines
distributed by CAD on 8 July 1999 provides that consumers should be afforded
an ‘equivalent’ level of protection (or alternatively, ‘comparable protection’)
to that afforded through other forms of commerce. The current OECD draft
guideline thus provides for ‘equivalent’ protection for consumers involved
in electronic commerce. However, the Commission notes that Australia has
in the past argued that the OECD guideline should not prevent the implementation
of a level of protection to consumers who participate in electronic commerce
that exceeds that applicable to other forms of commerce.
Clause 3 of Part D is a four line summary of about four pages of detailed
provisions regarding the requirements for online contracts, and makes no
sense as a stand alone sentence.
Clause 4 is merely an ‘aspirational’ statement, suggesting that at some
time in the future online complaints systems might be developed.
Clause 5 is merely a link to Part E of ADMA’s Code.
8.57 FSCPC disputes that public benefit could possibly result from
the six clauses of Part D. It submits that all Part D does in its current
form is entrench opt-out as the standard for avoiding spam.
Clause 6 is a meaningless motherhood statement that is completely out of
place in the Code.
8.58 ADMA submitted that as well as being based on the OECD draft guidelines,
the standards contained in Part D were consistent with the Consumer Protection
in Electronic Commerce Principles prepared by the (Australian) National
Advisory Council on Consumer Affairs that were released in April 1998.
Given the cross-border nature of e-commerce, ADMA submitted that it was
particularly important that ADMA members adhere to international best practice.
ADMA acknowledged, however, that the OECD draft guidelines are a work in
8.60 It is clear that effective ways of regulating this relatively
new area of commerce are still being developed, including by other Australian
On the issue of the current status of the OECD draft guidelines and whether
ADMA should be required as a condition of authorisation to amend its Code
to reflect changes to these guidelines, Treasury’s Consumer Affairs Division
(CAD) noted that the guidelines have been through a number of drafts and
are not due to be finalised before the end of 1999. While CAD supported
the need for ADMA to keep in step with the OECD guidelines it considered
that to require ADMA to amended its Code to reflect each draft of the OECD
guidelines, as well as inform its membership, would impose a significant
compliance burden on ADMA. CAD also advised that it is developing a Model
Code on Electronic Commerce that will draw, amongst other things, on ADMA’s
Code and the OECD guidelines. CAD submitted that it would be more appropriate
for ADMA’s Code to be expected to reflect the Model Electronic Commerce
Code, when developed, than to reflect the OECD guidelines which may not
be accepted by the Australian government in their entirety.
8.61 In January 1999 the Commission received a submission from FSCPC
advising that the IIA had agreed to consult with consumer and privacy advocates
regarding the Internet Industry Code of Conduct. FSCPC again expressed
concern at the damage potentially caused by the premature authorisation
of ADMA’s Code which had been so heavily criticised and which falls short
of acceptable consumer standards. In a further submission received in March
1999, FSCPC advised that IIA had suspended those parts of its Code dealing
with spam. IIA had consulted with its members and a majority favoured an
opt-in, rather than an opt-out or hybrid, approach to spam. Accordingly,
IIA was amending its Code to introduce an opt-in regime. FSCPC noted that
consumer and privacy advocates had argued strongly that the ADMA approach
to spam and electronic commerce should not be supported as this would damage
the momentum towards more consumer-friendly proposals such as opt-in systems.
It urged the Commission to reconsider those aspects of the ADMA Code.
8.62 The CAD in its submission dated 24 June 1999 noted that given the
IIA’s members are largely comprised of internet service providers, it is
hardly surprising that they have favoured an opt-in approach. Given that
most internet service providers’ corporate clients are charged a flat rate
for unlimited access, profit margins for these service providers are greatest
at lower levels of internet traffic. This position directly contrasts such
service providers with ADMA’s members who need a large pool of customers
in order to obtain the necessary economies of scale to make direct marketing
Part E – Fair conduct relevant to consumer data protection
8.65 Part E of ADMA’s Code outlines the procedures that direct marketers
must follow with respect to the information that they compile from customers,
and is based on the NPPs. The NPPs are based on OECD standards, and were
developed by the PC in consultation with business, government, community,
consumer and privacy groups. Part E is not reflected in the Model Code.
At the time the Model Code was released the government was considering
the implementation of private sector privacy legislation, and the NPPs
had not been finalised.
The Commission accepts that electronic commerce does give rise to specific
problems that need to be the subject of special regulation. Earlier this
year the Commission’s Chairman called for the development of an electronic
code of commerce but noted that the first step was to finalise an international
code. The Commission notes that the OECD guidelines are still in draft
form, have undergone relatively frequent amendment, and are not due to
be finalised until late 1999 at the earliest. Although ADMA claims that
Part D of its Code is based on the OECD draft guidelines, the Commission
notes that the current provisions of Part D do not adequately reflect the
current provisions of these guidelines. This is perhaps not surprising
in view of the draft status of the guidelines and the relatively frequent
changes made to them.
The Commission considers it is important that Part D of ADMA’s Code continues
to reflect international regulatory standards, particularly those supported
by the Australian government, for the public to benefit from the provisions
of Part D. ADMA could no doubt update the provisions of Part D so that
they adequately reflect the current provisions of the OECD draft guidelines,
however, further updates may well be necessary until such time as the OECD
guidelines are finalised. The Commission concludes that the provisions
of Part D of ADMA’s Code are likely to result in public benefit provided
these provisions are amended to reflect the OECD guidelines. The Commission
therefore requires as a condition of authorisation that, within four months
of the OECD guidelines (including new editions of the guidelines) being
finalised, ADMA demonstrate to the satisfaction of the Commission either
that its Code has been amended to adequately reflect the guidelines or
why it would not be appropriate for the guidelines to be reflected in its
8.66 Both the PC and Attorney-General’s department supported ADMA’s
adoption of the NPPs, although the PC also made some suggestions as to
how the public benefits flowing from the implementation of the NPPs could
be improved. However, some interested parties expressed concerns about
the provisions contained in Part E. Many of the concerns related to the
scope of the Part which was discussed above at paragraphs 8.20 – 8.24,
other concerns related to the detailed content of the provisions. The primary
concern with respect to the latter appeared to be ADMA’s alleged failure
to adapt the NPPs to deal with some of the specific problems arising from
the use of direct marketing techniques. The following are some of the main
criticisms received from interested parties.
Clauses should be included in the Code requiring direct marketers to provide
consumers with information, if requested, on whether personal information
will be used for list rental and about where a direct marketer has obtained
In the context of telemarketing, the PC considered that clause 5 of Part
E should be amended so that the identity of the organisation making the
call, whether that is a service bureau or the principal marketer itself,
should always be disclosed.
The number of circumstances in which a direct marketer can deny consumers
access to their personal information should be narrowed.
The Code should be amended to require the removal of personal information
8.71 The provisions contained in Part E place limitations on the ability
of direct marketers, fundraisers and charities to collect, use and disclose
personal information and the types of information that can be collected.
If the subject of adequate compliance, they will also ensure that the information
collected is accurate, complete and up to date. Security of information
and access for consumers is also provided for. To the extent that these
provisions are the subject of adequate compliance, it is the Commission’s
view that they contribute to the protection of consumer privacy and are
therefore likely to deliver public benefit.
ADMA’s Do Not Call/Do Not Mail services
8.72 Clause 33 requires relevant ADMA members to use the Do Not Mail
/ Do Not Call services of ADMA when conducting a direct marketing campaign,
in order to remove the name of any consumer, other than a current customer,
who has requested that they not receive direct marketing approaches. A
current customer is defined as any customer who has made a purchase within
the last six months or during a normal selling cycle.
On the issue of removal of personal information from lists, the Commission
notes that clause 34 of Part E requires a direct marketer to remove a consumer’s
name from all internal marketing lists or lists for transfer to a third
party at the request of the consumer. In addition, the Commission is to
require as a condition of authorisation that ADMA empower the Code Authority
to order correction or deletion of relevant records and personal information
as a remedy for breach of ADMA’s Code (see paragraph 8.106 below).
It is noted that clause 3.4 of Part E requires a direct marketer, when
collecting personal information from the subject of the information, to
take reasonable steps to ensure that the subject of the information is
aware of to whom (or the types of individuals or organisations to which)
it usually discloses information of this kind. Clause 18 of Part E requires
a direct marketer, on request, to take reasonable steps to inform individuals,
generally, what sort of personal information it holds, for what purposes,
and how it collects, holds, uses and discloses that information. The Commission
considers that these clauses will ensure that a direct marketer would be
required to inform an individual, on request, whether or not the individual’s
personal information will be used for list rental. The direct marketer
will also be required to inform an individual how it collects such information.
In addition, ADMA advised the Commission, in consultations following the
pre-decision conference, that Part E is to be amended to require members,
on request, to disclose the source of an individual’s personal information.
The Commission also notes that under clause 4.4 of Part C a telemarketer
must, if requested, provide details of the source from which the telemarketer
obtained a customer’s personal information.
The Commission notes the PC’s view that a direct marketer collecting personal
information over the telephone from the subject of the information should
always be required to disclose the identity of the organisation making
the call, whether that is a service bureau or the principal marketer itself.
ADMA’s view that requiring a service bureau to identify both itself and
the direct marketer on whose behalf a call is being made will cause compliance
problems in practice has been noted at paragraph 8.42 above. As noted in
that paragraph, the Commission considers the issue of appropriate disclosure
of identification information in telemarketing calls when made by a service
bureau, and the compliance problem raised by ADMA, should be the subject
of further discussion between ADMA and the PC. The requirements of clause
5 of Part E of ADMA’s Code should be reconsidered, in the light of such
discussions between ADMA and the PC, as part of the first review of ADMA’s
The Commission notes that the number of circumstances under clause 19 of
Part E in which a direct marketer can deny consumers access to their personal
information are based on the NPPs. The Commission does not consider these
exemptions will have any significant detrimental effect on the public benefit
likely to result from the implementation of Part E.
8.73 ADMA advised that the following procedures are available to consumers
who wish to opt-out of receiving further direct marketing communications
from its members. ADMA members who are sending unsolicited direct marketing
material to a consumer for the first time are required to include a direct
response component that allows consumers to opt out of receiving further
marketing communications from that member. If consumers advise the member
that they do not wish to receive marketing communications from the member,
the member must remove the customers’ details from its lists. In addition,
consumers are able to opt-out of receiving marketing communications either
from specific ADMA members or from all members generally by calling a 1800
number provided by ADMA or by accessing ADMA’s web site. The consumers’
details are then entered on to a database that is circulated on computer
disk to all ADMA members. Members must run the consumers’ names against
all of their marketing lists and the names included on the opt-out list
will be flagged and ‘suppressed’ if the consumer is not a current customer.
Names are suppressed for a period of two years.
8.76 The Commission notes that while clause 33 of Part E of ADMA’s
Code requires direct marketers to utilise ADMA’s opt-out system, none of
the details of the system or the manner in which it should be used by direct
marketers or consumers are included in the Code. The Commission considers
that the opt-out procedures outlined in paragraph 8.73 above, including
the obligations of ADMA and its members and the rights of consumers under
the opt-out system should be included in ADMA’s Code.
Interested parties criticised clause 33 on the grounds that a customer’s
expressed preference not to receive unsolicited marketing approaches should
not be overridden because the customer chooses to purchase goods and services.
It was argued that ADMA should be required to show cause for ceasing to
respect preferences after a particular period and that the opt-out lists
should be maintained by a third party. ADMA did not comment on these criticisms.
The Commission is of the view that public benefit is likely to result from
a cost-free system that ensures consumers who do not wish to receive unsolicited
direct marketing approaches are not targeted by direct marketers, fundraisers
or charities. Such a system would require a high level of industry compliance
achieved through effective administration and enforcement, and a high level
of consumer awareness achieved through appropriate industry promotion of
8.77 Some interested parties have expressed concern over the ‘current
customer’ exception from ADMA’s Do Not Mail/Do Not Call service, ie, a
direct marketer need not remove the name of a person registered on the
service if that person has made a purchase from the marketer within the
last six months or during the normal selling cycle. However as noted above,
the Code (clause 34) does provide a separate means by which a ‘current
customer’ of a direct marketer’s may have his/her name removed from the
8.78 Some interested parties also argued that ADMA should be required
to show cause for ceasing after a period of time to respect consumers’
requests not to receive marketing communications from ADMA members. It
is noted that under ADMA’s Do Not Mail/Do Not Call service a person’s opt-out
preference is required to be suppressed by ADMA members for a minimum of
two years. ADMA has advised that when a person registers under this service,
his/her name, address and telephone number (as advised by the person) is
recorded in ADMA’s opt-out data base and that information remains on the
opt-out data base for a period of two years. Thus a person who wishes to
remain registered on ADMA’s Do Not Mail/Do Not Call service will need to
re-register every two years.
8.79 ADMA advises that a person’s name, address and telephone number
remain on the opt-out data base for two years only, in order to ensure
that the data base details are accurate and that the data base continues
to reflect consumers’ preferences. ADMA advises that on average, persons
change their address and/or telephone number relatively frequently, around
every two years. If a person on ADMA’s opt-out data base changes his/her
address or telephone number and does not advise ADMA, then the data base
is no longer accurate and that person may begin receiving marketing material
from ADMA members via his/her new address or telephone number. Hence a
person’s name, address and telephone number as advised by the person remain
on ADMA’s opt-out data base for two years only. ADMA noted that consumers
are advised when they register under the Do Not Mail/Do Not Call service
via ADMA’s 1-800 telephone number that the registration is for a two year
period. ADMA also advises that such information is to be included on the
Do Not Mail/Do Not Call registration forms which ADMA distributes through
fair trading offices and by other means.
8.80 The Commission considers that the accuracy of ADMA’s opt-out data
base is important to the public benefit likely to result from its Do Not
Mail/Do Not Call provisions of ADMA’s Code. Retaining a person’s name,
address and telephone number on ADMA’s opt-out data base for two years
only, should help to ensure the accuracy of the data base. Provided consumers
who use the Do Not Mail/Do Not Call service are aware that they will need
to re-register every two years, and provided such registration is simple
and cost-free, this requirement would not appear to detract from the public
benefit likely to result from the Code’s Do Not Mail/Do Not Call provisions.
8.81 As noted, the onus rests with consumers who do not want to receive
unsolicited marketing material to take advantage of the opt-out services
offered by ADMA and its members. In order for these services to deliver
public benefits through use it is essential that they are easily accessible
and that consumers are aware of these services. The Code does not provide
for, or require, any promotion of the opt-out system. The Commission considers
that ADMA should be required to promote consumer awareness of its opt-out
system through its publications, its promotions of the Code, its web site
and when responding to consumer inquiries or complaints. ADMA should also
report annually to the Commission of its initiatives to promote awareness
of its opt-out service. These arrangements should address concerns expressed
by interested parties that consumers are made aware of their ability to
opt out of receiving further marketing communications.
8.82 The Commission notes the concerns expressed by interested parties
regarding the independence of the body responsible for maintaining ADMA’s
opt-out lists. While ideally it may be desirable that such lists are maintained
by an independent third party, no evidence or other information was provided
indicating that the maintenance of opt-out lists by ADMA and its members
has resulted in an abuse of the opt-out system by ADMA members, or has
resulted in consumers being unwilling to use the system.
Implementation of private sector privacy legislation
8.86 APCC also expressed concern that ADMA’s Code should deal with
the application of NPPs 1 and 2 (covering collection, and use and disclosure)
to direct marketing in a more detailed way than either the NPPs do or the
legislated version is likely to do. APCC considered it an evasion of responsibility
for the Commission to deal with criticisms of the way the NPPs are to be
interpreted simply by deferring to the privacy law reform process. The
Commission notes that its role in considering ADMA’s Code under the authorisation
process is to assess whether the relevant provisions of the Code are likely
to result in net public benefit. The Commission is of the view that provisions
of ADMA’s Code that comply with the proposed privacy legislation (as will
be required under the Commission’s condition of authorisation) are likely
to result in net public benefit, particularly since a requirement by ADMA
that its members comply with the law would not be anti-competitive.
In December 1998 the federal government announced its intention to introduce
‘light touch’ privacy legislation. It is the Commission’s understanding
that the government proposes that the legislation will act as a support
to industry self-regulation of privacy, and will be based on the NPPs.
It is proposed that the legislation will apply to those industries that
have not implemented their own approved privacy regulation and will set
down a process by which industry self-regulation can be assessed and approved
The Commission notes that the NPPs will therefore be the subject of parliamentary
review, and that Part E of ADMA’s Code will be assessed in accordance with
statutory procedures laid down by legislation. For a code of practice to
deliver public benefit the Commission is of the view that it must, at an
absolute minimum, reflect legislative standards. In these circumstances
the Commission requires that ADMA, as a condition of authorisation, amend
its Code to reflect any legislative privacy standards, or such standards
that are endorsed by the Commonwealth parliament or government body responsible
for private sector privacy regulation, within four months of the legislation
being passed or the regulation being adopted.
The PC has expressed support for this condition and advised that once the
privacy legislation is in place existing codes may need to be reviewed
so as to ensure that they properly embody the ideals underlying the legislative
scheme. APCC considered that the condition appeared desirable, but it had
doubts about whether the Commission’s requirements could override the longer
statutory timeframe for compliance, and for code approval, which is likely
to be included in the privacy legislation. The Commission notes that failure
by ADMA to comply with the condition of authorisation under the Trade Practices
Act would give the Commission grounds to revoke the authorisation, but
would not, of course, be relevant as to whether or not there was a breach
of the privacy legislation. In the absence of any submission that the timetable
for compliance specified in the condition of authorisation is inappropriate,
the Commission sees no reason to change the condition.
8.87 As discussed above, it is the Commission’s view that compliance
with the provisions of ADMA’s Code is essential in order for the realisation
of public benefits to take place. However, the provisions also restrict
the conduct in which ADMA members can engage. Increased compliance will
have the potential to standardise the way in which participants in direct
marketing conduct their business. The Commission is of the opinion that
any anti-competitive detriment arising from increased compliance with the
rules contained in ADMA’s Code is likely to be more than outweighed by
the public benefits resulting from such compliance.
Complaint handling at the business level
8.88 Clause 1 of Part F of ADMA’s Code provides that the scope of
ADMA’s enforcement procedures will be limited to alleged breaches of the
Code. It will not include mediation of consumer complaints that would normally
be dealt with by a member’s internal complaints handling process. Clause
40 of Part B of ADMA’s Code requires direct marketers to adopt a customer
complaint resolution procedure which complies with the Australian Standard
for Complaints Handling AS 4269.
8.89 Standard AS 4269 was prepared by the Standards Australia Committee
on Complaints Handling in response to a request for assistance from the
business community. Its objectives include the provision of a complaint
handling process for those making and receiving complaints and to serve
as a reference document on current best practices for handling complaints.
Section 2 of the Standard sets out the essential elements of effective
complaints handling. These include commitment, fairness, resources, visibility,
access, assistance, responsiveness, charges, remedies, data collection,
systemic and recurring problems, accountability and reviews. Section 3
of the Standard provides guidance on the ways in which business can implement
a complaint handling scheme so that it complies with the essential elements,
while section 4 contains complaint handling guidelines.
8.90 Section 5 of AS4269 deals with disputes in recognition that many
complaints are not resolved at the business level, with Clause 5.2 providing
that where a solution to a complaint cannot be found after more than one
attempt further procedures and remedies are available. ADMA’s Code requires
that customer complaints involving an alleged breach of the Code which
are not resolved under a member’s internal complaints handling process
must be referred by the member to ADMA as a customer complaint under Part
8.91 The Commission considers that the public is likely to benefit from
the implementation, by direct marketers, of internal complaint handling
procedures that comply with the principles of AS4269. The Commission also
considers that the resolution of complaints by individual direct marketers
in accordance with the core provisions of ADMA’s Code will enhance compliance
with the Code and therefore result in additional benefit to the public.
Enforcement of ADMA’s Code
8.92 Part F of ADMA’s Code sets out the procedures for enforcement
of the Code. Its provisions can be divided into two categories, those outlining
the structure of the enforcement scheme and those detailing the manner
in which it operates.
Structure of the scheme
8.93 In its draft determination the Commission observed that in order
to give rise to public benefits, a code of practice must be supported by
a strong enforcement structure. The Commission noted that the enforcement
structure contained in ADMA’s Code largely relies upon the roles of the
Compliance Officer and the Code Authority. The Compliance Officer is the
first port of call for complainants and is vested with the power to dismiss
a complaint outright if he/she considers there has not been a breach of
the Code, or refer it to the Code Authority for further consideration.
The Code Authority is the body that bears primary responsibility for enforcing
the Code. It has the power to determine whether the investigation of an
alleged breach referred by the Compliance Officer should be continued,
to conduct a hearing to determine whether a breach has taken place and
to require remedial action and recommend some sanctions to the ADMA Board.
8.94 If a code of practice does not enjoy public or industry confidence,
compliance with its provisions is likely to be low. For such confidence
to exist it is essential that the decisions of the bodies responsible for
enforcement of a Code are, and are seen to be, objective and unbiased.
Objectivity and non-bias is best ensured by provision for an independent
decision-maker. The Commission has a number of concerns with respect to
the independence of the decision-makers that are responsible for enforcing
8.95 The manner in which the Compliance Officer is appointed is not
outlined in the Code. This officer’s independence, or otherwise, is therefore
unclear and it is essential that his/her decisions are the subject of appropriate
review. Clause 4 of Part F provides that where the Compliance Officer advises
the complainant that there does not appear to be a breach of the Code,
the complainant may request that the Code Authority review the Compliance
Officer’s decision. Where the Compliance Officer considers that an ADMA
member may have breached the Code, the Officer is required to put particulars
of the matter to the member for response (clause 7). Where an ADMA member
provides (in response to such a request by the Compliance Officer) clear
evidence of acting in compliance with the Code or independently resolves
the complaint, the Compliance Officer will take no further action (clause
8). It is noted that under clause 8 the Compliance Officer is not required
to establish whether the consumer is satisfied that the complaint has been
resolved, or if the consumer agrees that there has been no breach of the
Code. In addition, there is no provision of appeal for the consumer, or
even the right to be informed of the grounds on which the decision of no
further action was made. The Commission considers that where an ADMA member
does provide exonerating evidence or the complaint is independently resolved,
the Compliance Officer should be required to write to the complainant explaining
why the complaint will not be further considered by ADMA. The complainant
should also be given the right to request that the Code Authority review
8.96 In its draft determination the Commission expressed a view that
in order for the Code Authority to constitute an independent body it must
be comprised of equal numbers of industry and consumer representatives,
in addition to the presence of an independent chair. The Commission continues
to hold this view. Clause 3.4 of Appendix 1 of the amended Code states
that the Authority will consist of:
an independent chairperson;
two consumer representatives, being persons with special competence in
consumer or industry matters; and,
three industry representatives, being persons of good character and repute
in the direct marketing industry.
8.99 The Commission is also concerned with the definition of ‘consumer
representatives’ contained in clause 3.4.2 of Appendix 1 of the Code, which
requires such representatives to be ‘persons with special competence in
consumer or industry matters’. The interests of consumers are unlikely
to be served by a person who has competence in industry matters only. The
Commission is of the view that this definition should be changed to require
competence in ‘consumer and industry matters’.
In submitting this amendment ADMA stated as follows:
" … the Code Authority will have equal representation
as there will be three parties representing the industry and three persons
(including the Chairperson), who are not participants in the direct marketing
industry. I also note that the independent chairperson will have a casting
vote, which effectively gives the independent members of the Code Authority
the greater voice in decision making."
Despite this submission, the Commission supports the concerns expressed
by CIRS and paraphrased in paragraph 7.34 above. An independent chair cannot
substitute for, and should not be viewed as, a de facto consumer representative.
In order to guarantee the independence of the Code Authority, it is essential
that the interests of both ADMA members and consumers be represented equally,
and that there be an independent chair. This is particularly the case given
that consumers and members are not provided with an avenue of appeal from
decisions of the Authority.
8.100 FSCPC supported the rejection of the words ‘or industry matters’
(which issue, as pointed out by FSCPC, was initially raised by consumer
and privacy organisations). However, it queries why such a representative
should be required to have special competence in industry matters, and
notes that other alternative dispute resolution schemes do not specify
such a requirement for consumer representatives. The Commission considers
that this requirement should be interpreted broadly, and certainly not
as a requirement that the Code Authority’s consumer representatives must
have worked in industry. Persons from a range of backgrounds including
consumer advocates, lawyers, academics, etc gain detailed knowledge of
industry matters through their work and, in the Commission’s view, none
should be excluded from the Code Authority by the Code’s definition of
consumer representative. Interpreted in this way the Commission considers
that the definition should ensure that appropriately qualified persons,
who can enhance the independence and integrity of the Code Authority, are
selected as the Authority’s consumer representatives.
8.101 As noted, ADMA’s Code envisages that the Code Authority will have
the power to impose remedial action and recommend the expulsion of members,
where a breach of the Code is found to have taken place. While the Commission
accepts that sanctions are necessary to deter irresponsible conduct and
encourage compliance with the Code, where the independence of the decision-making
body is not guaranteed there is greater potential for anti-competitive
detriment arising from the power to impose sanctions. This is another reason,
in addition to those of confidence in and compliance with the Code, to
ensure the independence of the Code Authority.
Operation of scheme
8.104 In its draft determination, the Commission stated that the failure
of ADMA’s Code to outline the types of remedial action or sanctions that
the Authority could recommend, or provide guidelines as to when particular
kinds of remedies or sanctions would be recommended, gave rise to the potential
for arbitrariness in its enforcement. The Commission was concerned that
this arbitrariness may undermine business and consumer confidence in the
Code and give rise to anti-competitive detriment.
The Commission noted in its draft determination that in order for an enforcement
scheme to operate effectively, it is essential that both parties to a dispute
be given the opportunity to put forward their arguments, rebut the arguments
of the other party and be informed of the reasons for any decisions that
are made. While ADMA’s Code allows consumers and members of the public
to lodge a complaint with ADMA, their participation ends once the Compliance
Officer receives their complaint. Complainants are provided with no opportunity
to put their case to the Code Authority, have access to documents that
the Authority will have regard to in reaching its decision, rebut the arguments
of the ADMA member or be told the reasons for any decision which is handed
down. ADMA has argued that the Code was never intended to provide for a
mediation process, stating that members will provide this through their
complaint handling procedures. It says that a complaint from a consumer
or any other source alleging a breach becomes, in effect, ADMA’s complaint
with its own member. ADMA anticipates that the Code Authority will be able
to effectively deal with many complaints without the need for a formal
hearing, and thus argued for flexibility in administration of the Authority’s
complaint handling process.
The Commission considers that in many cases it will be consumers who are
able to best support a complaint alleging a breach of the Code. In order
for the Code to operate effectively, consumers will need to have enough
confidence in the Code’s enforcement to inform ADMA of their complaints.
Is the Commission’s view this is unlikely to happen in circumstances where
consumers have little opportunity to participate in the enforcement process.
Further, the Code Authority may consider it useful or necessary for complainants
to be present at hearings to assist the Authority’s understanding and consideration
of complaints. The Commission considers there is merit in providing the
Code Authority with flexibility in its handling of complaints and for this
reason the Authority should have the discretion to invite complainants
to participate in complaint hearings. The Commission considers, however,
that whether or not the Authority invites a complainant to participate
in a complaint hearing, the complainant should be advised of the reasons
for the decision of the Authority following such a hearing.
8.105 It is noted that clause 17 of Part F of ADMA’s amended Code provides
that the Authority is empowered to:
require the member to take specified remedial action to correct the breach
and avoid recurrence;
seek a written undertaking from the member that the breach will not be
seek the approval of the ADMA Board to issue a formal written admonition
to the member;
seek the approval of the ADMA Board to publish any such formal written
8.106 The Commission notes that this clause does not specify the remedial
action that the Authority can require that the member undertake. The Commission
views this as a serious deficiency. Consumer confidence in the Code is
likely to be low where specific remedies are not provided for. At a minimum,
the Commission believes that ADMA’s Code should provide for remedies including:
recommend to the CEO that membership is revoked.
formal apologies for breach;
corrective advertising or withdrawal of infringing advertisements or statements;
correction or deletion of relevant records and personal information; and
8.107 To ensure independent application of remedies and penalties
the Commission is of the view that the Code Authority should have the power
to order that members carry out the relevant remedies and to impose all
sanctions other than those that concern expulsion from ADMA or admonition
by ADMA without reference to the ADMA’s Board.
recommendation of refunds or replacement of goods or services where appropriate.
8.108 Various interested parties, including the PC, expressed concern
regarding the lack of provision for monetary compensation in the Code.
In its submission dated 8 July 1999, the PC submitted that in many cases
the compensation involved will amount to no more that ‘refund or replacement
of goods and services’, but compensation should also be available for the
actual misuse of the information per se. The PC’s experience is
that compensation would only be paid in a small proportion of complaints
and then only in small amounts, but more serious privacy breaches can sometimes
inflict serious financial and social disadvantage on the affected individual.
The PC submitted that in such cases financial compensation is the only
effective means of redress and it should be provided for in ADMA’s Code.
In its submission dated 22 June 1999, FSCPC noted that numerous other industry
codes provide for monetary compensation, and it will be a requirement of
forthcoming privacy legislation. FSCPC considered the lack of monetary
compensation to be a very large gap in the sanctions and remedies available
under ADMA’s Code. The Attorney-General’s department observed that it is
unlikely the current enforcement provisions of ADMA’s Code could operate
as an approved complaints handling scheme under the proposed privacy legislation.
8.109 The Commission supports these submissions. Consumer confidence
in ADMA’s Code is likely to be adversely affected if it fails to provide
consumers with the opportunity to obtain compensation for any financial
or other loss that they may incur as the result of an ADMA member breaching
the Code. ADMA has advised that it will consult with other industry sectors
and self-regulatory schemes to establish the viability of schemes involving
fines and monetary compensation where a consumer suffers financial or other
loss as a result of an ADMA member breaching the Code. The Commission is
of the view that the issue of providing for monetary compensation in the
Code should be considered as part of ADMA’s first review of the Code. It
is noted that if, as expected, the provision of monetary compensation is
to be a requirement for the approval of codes under the proposed privacy
legislation, then ADMA’s Code will be required to provide for such compensation
under the condition of authorisation discussed at paragraph 8.84 above.
8.110 The Commission’s concerns regarding the deficiency of ADMA’s Code
in respect of remedies are heightened given the approach that ADMA has
taken with respect to the imposition of sanctions. Clause 18 of Part F
of the Code provides that the Authority may only recommend issuance of
a formal written admonition where the breach is of a serious nature and
has occurred more than twice in the preceding 12 months. Clause 19 states
that publication of a formal written admonition, or revocation of membership
can only be recommended where the member has committed multiple breaches
of the Code over an extended period of time and demonstrated an ongoing
disregard for the Code. Sanctions, it appears, will only be recommended
in the most serious of cases, their value as incentives for compliance
by members is therefore diminished substantially. The Commission requires
that clauses 18 and 19 of Part F be deleted as a condition of authorisation
of ADMA’s Code.
8.111 Part G of ADMA’s Code sets out the manner in which the Code
will be reviewed and amended. Clause 1 provides that it will be reviewed
one year after it has been adopted and every three years thereafter. Clause
2 vests the Code Authority with the responsibility of conducting the review.
Clause 4 provides that the Board may resolve to amend the Code after receiving
recommendations from the Authority.
8.113 Interested parties were highly critical of the fact that any
review of the ADMA Code would be conducted by the Code Authority, it was
submitted that the Authority would, in effect, be reviewing itself, therefore
a separate independent body should be established. It was noted that the
Model Code (clause 61) required an independent dispute resolution mechanism
for consumer complaints, that meets the Benchmarks for Industry-Based
Consumer Dispute Resolution Schemes (the Benchmarks) and that
is ‘effective by having appropriate and comprehensive terms of reference
and periodic independent reviews of its performance.’
Part 5 of the Model Code states that a code administration body should
administer the Code. It goes on to provide guidance on the establishment
of an administration plan, how the membership of the administration body
should be structured and how often the body should meet.
8.114 The Commission notes that the Benchmarks provide for a
decision-maker that is responsible for the determination of complaints.
Where the decision-maker consists of a panel of individuals, only the chairperson
is required to be independent of industry or consumer interests. This allows
the industry to be represented on the decision-making entity as long as
the balance between consumers and industry is maintained. In addition to
the decision-maker, the Benchmarks provide for a separate entity
(comprised of consumer, industry and other stakeholder interests) set up
to oversee the independence of the dispute resolution scheme. The Benchmarks
further provide for the scheme to be reviewed by an independent party commissioned
by the overseeing entity. (The preface to the Benchmarks note that they
are meant to act as a guide, but their use by all consumer dispute resolution
schemes was encouraged.)
8.115 In addition to requiring an independent dispute resolution mechanism
for consumer complaints that meet the Benchmarks, the Model Code
also provides for a code administration body based on the guide on codes
of conduct - Fair Trading Codes of Conduct, Why have them and How to
prepare them. The Model Code provides that the code administration
body should include an independent chair, and an equal number of industry
and consumer/community representatives, and that its role should include
conducting periodic reviews of the effectiveness of the code and its procedures
and recommending amendments if necessary.
8.116 The Commission recognises that a code must be subject to review
to ensure that it is achieving its goals, continuing to operate effectively
and keeping up to date with developments occurring within the industry.
This is particularly true in the case of ADMA’s Code given the developments
that are likely to occur in the privacy and electronic commerce areas.
Reviews are important not only to ensure that the industry regulation provided
under the code’s provisions remains appropriate, but also to assess compliance
with the code and the effectiveness of the code’s sanctions, complaint
handling and dispute resolution processes. As noted above, both the Model
Code and the Benchmarks provide that reviews should be undertaken
by an independent body that is not the same independent body that is responsible
for adjudicating on complaints and disputes.
9.1 For the reasons outlined in chapter 8 of this determination, and
subject to the conditions set out in paragraphs 9.3 and 9.4 below, the
Commission is satisfied that the arrangements the subject of this application
The Commission considers that for net public benefit to continue to result
from ADMA’s Code, the Code must be subject to independent review on a regular
basis and that such reviews should not be undertaken by the Code Authority
in view of its responsibility for adjudicating complaints under the Code.
The Commission considers that the review body should consist of an independent
chair and an equal number of industry and consumer/community representatives.
are likely to result in a benefit to the public; and
9.2 The Commission therefore grants authorisation subject to the conditions
set out in paragraphs 9.3 and 9.4 below, to ADMA to give effect to the
provisions of arrangements constituted by its Code of Practice. This authorisation
applies to persons who become party to the arrangements after the authorisation
the benefit outweighs or would outweigh the detriment to the public constituted
by any lessening of competition that has resulted or is likely to result
from giving effect to the provisions.
The authorisation that the Commission grants will not come into force until
the date (provided such date is not earlier than the dates noted in paragraph
9.5 below) on which the Commission notifies ADMA in writing that it is
satisfied that ADMA has amended its Code of Practice in accordance with
the following conditions of authorisation.
(g) Clause 8 of Part F of the Code is amended to provide that where
the Compliance Officer is to take no further action in respect of a complaint
on the basis of information provided by an ADMA member, the Compliance
Officer is to write to the complainant advising why the complaint will
not be further considered by ADMA. The complainant is also be given the
right to request that the Code Authority review the complaint.
ADMA’s definition of ‘direct marketer’ is amended so that it is equivalent
to the Model Code’s definition of ‘direct marketer’, which includes by
reference the Model Code’s definitions of ‘direct marketing’ ‘telemarketer’
The application of Parts C and E of the Code is extended to apply not only
to direct marketers, but also to fundraisers and charities trying to generate
The application of Part E of the Code is extended to the conduct of direct
marketers sending offers to consumers to get them to come into retail stores.
The last sentence of clause 17 of Part B of the Code is amended to state
– ‘This notification must be accompanied by a reply-paid or other cost
free response mechanism and include an option for the customer to cancel
the order and receive a full refund of any money paid.’
Those clauses in Part F of the Code that refer to "direct marketer" are
amended to refer to "ADMA member", and those clauses that refer to "customer"
complaints are amended to refer to "consumer" complaints.
The Code is amended to include provisions on the operation of ADMA’s "Do
Not Mail/Do Not Call" services. The provisions must set out the rights
and obligations of ADMA, its members and consumers in respect of these
services. ADMA is to promote awareness of these services through its publications,
its promotions of the Code, its web site and when responding to consumer
enquiries and complaints. ADMA is also to report annually to the Commission
its initiatives to promote awareness of these services.
(h) Clause 3.4 of Appendix 1 of the Code is amended to provide that
the Code Authority will be composed of an equal number of consumer representatives
and industry representatives, in addition to an independent chairperson.
This clause is also to be amended to provide that the consumer representatives
have competence in "consumer and industry matters".
The Code is amended to provide the Code Authority with the discretion to
invite complainants to participate in the Authority’s complaints hearings
through written and verbal submissions. The Code is also to be amended
to provide that, following a complaints hearing of the Code Authority and
whether or not the complainant was invited to participate in the hearing,
the complainant is to be advised of the reasons for the decision of the
The Code is amended to list the remedies that can be ordered by the Code
Authority. To ensure that this list is not restrictive it should be drafted
as an inclusive list only. At a minimum the Authority is to be vested with
the power to order:
formal apologies for breach;
corrective advertising or the withdrawal of offending advertisements or
correction or deletion of relevant records and personal information; and
recommendation of refund or replacement of goods or services where appropriate.
The Code is amended to provide the Code Authority with the power to order
that members carry out the relevant remedies and to impose all sanctions
other than those concerning expulsion from ADMA or admonition by ADMA,
without reference to the ADMA Board.
Clauses 18 and 19 of Part F are removed from the Code.
The Code is amended to provide that the Code must be subject to independent
review on a regular basis, with the review body (not being the Code Authority)
to consist of an independent chair and an equal number of industry and
The authorisation that the Commission grants shall remain in force until
16 August 2003. The authorisation is, however, subject to the following
(a) Within four months of changes being made to the Model Code, ADMA
demonstrate to the satisfaction of the Commission either that its Code
has been amended to adequately reflect such changes or why it would not
be appropriate for such changes to be reflected in its Code.
(b) Within four months of the OECD Guidelines for Consumer Protection
in the context of Electronic Commerce (including new editions of the Guidelines)
being finalised, ADMA demonstrate to the satisfaction of the Commission
either that its Code has been amended to adequately reflect the Guidelines
or why it would not be appropriate for the Guidelines to be reflected in
(c ) ADMA amends its Code, to the satisfaction of the Commission, to
reflect any legislative privacy standards or such standards that are endorsed
by the Commonwealth parliament or government body responsible for privacy
regulation, within four months of the legislation being passed or the regulation
This determination is made on 16 August 1999. If no application for a review
of the determination is made to the Australian Competition Tribunal, it
will come into effect on 7 September 1999. If an application for review
is made to the Tribunal, the determination will come into force:
where the application is not withdrawn – on the day on which the Tribunal
makes a determination on the review; or
where the application is withdrawn – on the day on which the application
The Commission grants interim authorisation until 16 February 2000 to ADMA
to exclude from the scope of Part E of its Code the conduct of direct marketers
sending offers to consumers to get them to come into retail stores.