Although the new Consumer Protection Act (CPA) will strengthen the rights of consumers considerably, it could initially impact negatively on the marketing research industry. The new legislation came into effect at the beginning of April.
Stefan Vos, marketing regulation consultant and former ASA legal officer, shared this opinion recently when he addressed marketing researchers, marketers and other stakeholders at a breakfast presentation of the Southern African Marketing Research Association (SAMRA) on the impact of the new CPA, the Electronic Communications and Transactions Act (ECT) and the Protection of Personal Information Bill (POPI).
“One the one hand, there is the consumer’s expectation of having this huge amount of protection by the CPA. Since 1994, the rights of South Africans have been protected by the Bill of Human Rights entrenched in the Constitution. Now, on top of that, consumers effectively also have their own “Bill of Rights’ which creates higher expectations than what, in certain instances, are actually provided for by the CPA. Like any pendulum, it’s likely to create havoc the one way before swinging back and settling in the middle where it should be,’ he explained.
Researchers should therefore expect that, at least for the next few years, consumers will, to a large extent, rely on their perceived rights as provided for in the CPA. “But then there’s conflict in terms of what the Act actually says, as well as the intention behind the drafting of the legislation, which often is not always in line with the wording of the Act. This, again, will lead to situations that will have to be managed and clarified through jurisprudence.’
With regard to the above legislation, aspects such as the protection of individuals’ privacy, including that of children, the use of data bases, misleading data results, “fit for purpose’ endorsements by market research entities, the joint liability of all stakeholders in the research chain and industry codes of conduct are pivotal, Vos pointed out.
Consumers may increasingly wish to safeguard their privacy and be unwilling to be approached to take part in marketing research. In terms of the ECT and the CPA, the data controller must have the express written permission of the data subject/respondent for the collection, collation, processing or disclosure of any personal information, as well as disclose in writing the specific purpose for which any personal information is being requested, collected, collated, processed or stored. The personal information may not be for any other purpose than the disclosed purpose, says Vos.
However, personal information may be used to compile profiles for statistical purposes and the ECT provides that data controllers may freely trade with such profiles and statistical data as long as the profiles or statistical data cannot be linked to any specific data subject by a third party.
The authoritative international research organisation Esomar reiterates that marketing research relates to the gathering of information without revealing the identity of the respondents to the user of the information without express consent, stressed Vos. As SAMRA subscribes to the ESOMAR codes this is standard practice for marketing researchers in South Africa that are members of SAMRA.
Unfortunately, recent developments in the area of customer satisfaction or customer relationship management research have blurred the lines between marketing research and direct marketing, Vos noted, as it’s increasingly common for these projects to have two purposes, namely the collection of representative sample survey data and provision to the client of details about individual respondents to allow follow-up, or product offers.
“Whilst marketing researchers have to respect the privacy of consumers at all times, one has to be very careful not to dilute marketing research into direct marketing. When part of the intention in conducting a survey is to pass on identified data to the client to be used for marketing purposes, it must not be introduced to respondents as marketing research, but it must follow the legal framework for direct marketing,’ he advised.
Given that the CPA allows the consumer the right to restrict unwanted direct marketing by pre-emptively blocking any approach or communication to him / her, a direct marketer must, without exception, assume that a comprehensive pre-emptive block has been registered by a consumer unless the administrator of the register has in writing confirmed to the contrary.
Every direct marketer must also register with the administrator of the registry, and must annually on the date of registration in writing confirm the correctness of the registration details. For purposes of consumers under the age of 18 years, only his/her parent or legal guardian may act on his or her behalf, despite that consumer’s requests or approvals given to a direct marketer.
Customer satisfaction or customer relationship management research, as direct marketing, would be subject to these direct marketing limitations. “Marketing research, whilst not constituting direct marketing, should nevertheless follow the principles relating to consumer privacy as enunciated in these statutes,’ Vos suggested.
In addition, POPI proposes that unless specifically permitted, a responsible party may neither process personal information concerning a child who is subject to parental control in terms of the law, nor a data subject’s religious or philosophical beliefs, race or ethnic origin, trade union membership, political opinions, health, sexual life or criminal behaviour.
Fit for purpose
The advertising code of the Advertising Standards Authority of South Africa (ASA) stipulates that research surveys shall emanate from an entity approved by, or acceptable to SAMRA. Also, that the accuracy of the claims based on the survey shall be confirmed by the said entity. Where the survey does not meet the above requirements, such survey shall be evaluated by SAMRA to confirm the accuracy of the claims based on the survey.
“Researchers shall not allow their name to be associated with the dissemination of conclusions from a market research project unless they are adequately supported by the data,’ Vos stressed. Where marketing researchers endorse “fit for purpose’ claims that are not correct, they would be jointly liable in terms of the CPA.
Also, in relation to the marketing of any goods or services, the supplier must not, by words or conduct directly or indirectly express or imply a false, misleading or deceptive representation concerning a material fact to a consumer; use exaggeration, innuendo or ambiguity as to a material fact, or fail to disclose a material fact if that failure amounts to a deception; or permit or require any other person to do so on behalf of the supplier.
Both the client and the researcher have a responsibility to ensure that published results are not misleading, Vos added. “The researcher must endeavour to prevent any misinterpretation or misuse of research findings. Should the client not consult and agree in advance the form of publication with the researcher, the researcher is entitled to refuse permission for their name to be used in connection with the dissemination of conclusions and publish the appropriate technical details of the project.’
The Consumer Commission may, in terms of the CPA, seek to enforce any consumer rights by referring consumer complaints to the applicable and accredited industry ombud, if the supplier is subject to any such ombud.
The Commission may develop, and promote the voluntary use of, codes of practice in respect of alternative dispute resolution. Codes developed by the Commission must be published for public comment before finalisation. Also, the Commission, acting on its own initiative, or in response to a proposal from persons conducting business within a particular industry, may recommend a proposed industry code to the Minister.
The Minister, by regulation, may then prescribe an industry code on the recommendation of the Consumer Commission; or withdraw all or part of a previously prescribed industry code, on the recommendation of the Commission.
In this regard Vos proposed that SAMRA consult with the Department of Trade and Industry (the custodians of the CPA) with regard to accrediting the SAMRA Code of Conduct as a “first port of call’ for dispute resolution. Should the SAMRA Code of Conduct be accredited, it would be applicable to all stakeholders and role-players in the marketing research industry, irrespective whether they are SAMRA members or not, he pointed out.