POSITION ON THE COMMUNICATION FROM THE EUROPEAN COMMISSION. A comprehensive strategy on data protection in the European Union

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1 JANUARY 14 th, 2011 POSITION ON THE COMMUNICATION FROM THE EUROPEAN COMMISSION A comprehensive strategy on data protection in the European Union This Position Paper has been entered on the European Commission's register of interest representatives on January 13 th, Belgian Direct Marketing Association 's ID number is BDMA Noordkustlaan Groot-Bijgaarden Belgium Preliminary note This document intends to clarify the position of the Belgian Direct Marketing Association (BDMA) on the EU communication aimed at revising the legal framework for data protection. Our position starts at a principal level (general market impact). This document is written to the attention of the Belgian and European Political Authorities. When the European Commission establishes more concrete proposals, the BDMA will, in accordance with the FEDMA (Federation of European Direct and Interactive Marketing), further investigate all implications on citizens and economy (by industry segment).

2 Table of content PRELIMINARY NOTE 1 TABLE OF CONTENT 2 1 INTRODUCTION THE BDMA TODAY AND HOW IT COULD HELP THE EUROPEAN COMMISSION SELF-REGULATION IN A FAST CHANGING ENVIRONMENT STRUCTURE AND CONTENT OF THIS POSITION PAPER THE CONTEXT IS KNOWN: THE WAY FORWARD REGULATION AND SELF-REGULATION IN BELGIUM 4 2 SOLUTIONS ON : INCREASING TRANSPARENCY CONSUMER PROTECTION TODAY: CURRENT REGULATION CONSUMER PROTECTION TODAY: SELF-REGULATION REQUIREMENTS THE WAY FORWARD: OUR PROPOSAL ON THE RIGHT BALANCE 5 3 SOLUTIONS ON : ENSURING INFORMED CONSENT CONSUMER PROTECTION TODAY: CURRENT REGULATION CONSUMER PROTECTION TODAY: SELF-REGULATION REQUIREMENTS THE WAY FORWARD: OUR PROPOSAL ON THE RIGHT BALANCE 6 4 SOLUTIONS ON : CONSENT IN THE ON-LINE ENVIRONMENT CONSUMER PROTECTION TODAY: CURRENT REGULATION CONSUMER PROTECTION TODAY: SELF-REGULATION REQUIREMENTS THE WAY FORWARD: OUR PROPOSAL ON THE RIGHT BALANCE 7 5 SOLUTIONS ON : PROTECTING SENSITIVE DATA CONSUMER PROTECTION TODAY: CURRENT REGULATION CONSUMER PROTECTION TODAY: SELF-REGULATION REQUIREMENTS THE WAY FORWARD: OUR PROPOSAL ON THE RIGHT BALANCE 8 6 SOLUTIONS ON : ENHANCING CONTROL OVER ONE S OWN DATA CONSUMER PROTECTION TODAY: CURRENT REGULATION CONSUMER PROTECTION TODAY: SELF-REGULATION REQUIREMENTS THE WAY FORWARD: OUR PROPOSAL ON THE RIGHT BALANCE 9 7 SOLUTIONS ON : APPLICABLE LAW CONSUMER PROTECTION TODAY: CURRENT REGULATION CONSUMER PROTECTION TODAY: SELF-REGULATION REQUIREMENTS THE WAY FORWARD: OUR PROPOSAL ON THE RIGHT BALANCE 10 8 APPENDIXES THE DIRECT MARKETING MARKET IN BELGIUM ENSURING INFORMED CONSENT: DETAILS ON SELF-REGULATION CONTACT DETAILS 13 BDMA Belgian Direct Marketing Association Position Paper on Data Protection 2

3 1 Introduction 1.1 The BDMA today and how it could help the European Commission The BDMA is the single voice of the Belgian direct marketing industry with more than 450 members representing advertisers, service providers and media/carriers of direct marketing (an overview of the key figures of the industry is presented in appendix 8.1.). Its mission is to promote, defend and teach the knowledge and ethical use of Direct Marketing to strengthen the trust of the Consumer in Direct Marketing (for both B-2-C & B-2-B) on the long term. Through this mission, consumer protection and possible sanctions are key. To do so, the BDMA focused on: - 2 key pillars that are at the heart of industry s self-regulatory initiatives: - Respect Marketing in order to secure interest-based advertising (IBA) and interest-based relationships with the consumer; - with regards to enhanced consumer information: a high level of effective and user-friendly consumer controlled mechanism. - 3 core conditions for self-regulatory solutions meeting these pillars are: - Transparency: consumers should be provided with clear notice about any Direct Marketing activity that is taking place; - Effective enforcement: it is essential that any self-regulation system includes clear and simple complaint handling, reliable third-party compliance auditing and effective sanctioning mechanisms; - Sanctions when violations occur: the BDMA Committee of Surveillance can exclude members and impose fines towards its members. We strongly believe in the combination of these 3 conditions and furthermore we consider that transparency should be accompanied by effective enforcement through a system of reliable third party compliance auditing. The BDMA volunteers to play an active role with the purpose of setting the example in Belgium in order to roll out in a second stage at European level. This advocacy by the industry is essential to facilitate and enhance its acceptance. With respect to the sanctions, the BDMA is open towards discussing a mutual point of view with the national and European involved parties. 1.2 Self-regulation in a fast changing environment The rapid growth of Digital Marketing communications and techniques, while offering tremendous opportunities for consumers and marketers, has raised new issues regarding to the consumers reaction on privacy issues. As such, it involves the effectiveness of all (360 ) marketing activities. Both industry and consumers are concerned with data protection, consumer privacy and fairness of commercial practices among others. These concerns have always been well-managed through the self-regulation of the highly established (mature) profession of traditional Direct Marketing. Therefore, we consider that self-regulation will always be the best way forward to update and anticipate the pace of change. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 3

4 1.3 Structure and content of this position paper The context is known: the way forward The BDMA considers that the challenges for the protection of personal data are sufficiently described in the EU communication. This position paper will therefore offer the views from its Direct Marketing stakeholders, focusing on the concerns and the solutions of immediate relevance to Marketing. The BDMA identified 6 (Direct) Marketing related critical concerns on which we urge the European Commission to balance in a sensible manner the protection of individual rights with the advantages data usage offers towards individuals and the functioning of the Single Market. Herewith the list of these concerns (and their reference on the EU Paper): Increasing transparency (ref ) Consumer consent (ref ) Consumer consent in the on-line environment (ref ) Protecting sensitive data (ref ) Enhancing control over one s data (ref ) Applicable law (ref ) For each concern, we constrained ourselves to a one page with the key findings: (1) Today: how regulation and self-regulation achieve together a workable protection; (2) Tomorrow: define where to stick to the current level of consumer protection or where to further strengthen self-regulation in order to assure the balance between customer benefits based on the usage of data and the customers privacy Regulation and self-regulation in Belgium In Belgium, we refer to the following regulations: Directive 95/46/EC of the European Parliament on the protection of individuals with regard to the processing of personal data and the free movement of such data Belgium: Act of 8 December 1992 on the protection of privacy in relation to the processing of personal data (Privacy Act or Data Protection Act) Belgium: Act of 11 March 2003, the information society, art. 13,14 & 15 Self-regulation: The BDMA Code of Conduct On December 2010, a guidance for national implementation of the e-privacy Directive (WFA (World Federation of Advertisers), the FEDMA (Federation of European Direct & Interactive Marketing), the EACA (European Association of Communication Agencies), the EPC (European Publishers Council), the ICC (International Chamber of Commerce)) BDMA Belgian Direct Marketing Association Position Paper on Data Protection 4

5 2 Solutions on : increasing transparency 2.1 Consumer protection today: current regulation Article 10 of the 95/46/EC Directive, information in cases of collection of data from the data subject. The Belgian law: Articles 9, 10 of the Privacy Law. 2.2 Consumer protection today: self-regulation requirements Self-regulation (the BDMA Code of Conduct) gives emphasis to the transparency principle. It underlines the statements of the 95/46/EC Directive but it also insists on basic elements that ease to identify and access to the advertiser. Besides, by respecting the Code of Conduct of the BDMA, the advertiser is allowed to use the BDMA transparency label on his communication. 2.3 The way forward: our proposal on the right balance Foremost, we need effective transparency. This means that consumers should be given clear notice about any Direct Marketing activity that is taking place. The current 95/46/EC Directive sets clear and efficient rules on information to be provided by the controller when collecting and processing personal data. Clear and efficient privacy notices are already provided by the different industry sectors that could be gathered and standardized within the Self-regulatory sphere. Enclosed, the key elements of the self-regulatory framework on transparency: Identity: each interaction should enable the consumer to clearly and easily identify the sender (official company name, , address, phone); Privacy clause: always offer the possibility to refer to a code on the data protection offered (type of data collected, Personally Identifiable Information, the use of the data, third-party transfer, information on the data use, description of the categories of third party data transfer); Up-front notice: each privacy item on arm s length (not hidden) and easy to understand; Privacy Guardian : a single C-2-B point of contact in each company who should also be the single advocate of the consumer protection within the company (+ service levels such as 30 days delay for feedback). This framework should become operational across the EU. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 5

6 3 Solutions on : ensuring informed consent 3.1 Consumer protection today: current regulation The Direct Marketing industry majorly leans on the Article 7f of the 95/46/EC Directive: Personal data shall only be processed ( ) if processing is necessary for the purposes of the legitimate interests pursued by the controller or by the third party ( ). Besides, (1) other Directives will require consumer consent (opt-in) for , sms or fax (in particular 2000/31/EC Directive) and (2) the Article 14 of the 95/46/EC Directive grants adequate rights to object to the processing of his personal data. The current opt-in regulation for , sms and fax is well organised by the market as it appropriately prevents the consumer from intrusive communications (non interest-based). 3.2 Consumer protection today: self-regulation requirements Self-regulation ( consumer is in control ) increased the consumer protection to a large extent: The Robinson List : a free opt-out list for the consumer on traditional media (direct mails and phone calls) that sets the right requirements to keep away from opt-in restrictions; Transparency requirements on the purpose of the consumers consent (see prior chapter); In addition to the opt-in regulation ( , sms and fax), requirements to systematically offer and ease consumers opt-out. For Direct Marketing companies and data publishers, opt-out processes have proven to be very effective and easy to apply. Further details on the self-regulation requirements, see appendix The way forward: our proposal on the right balance Both consumers and the industry require interaction regarding product and service information. Consumers control can be different between media types. Today, the Direct Marketing industry considers that current self-regulation supports transparency by setting the adequate lifts to clarify and strengthen the rules on consent: Consumer: a lot of progress was made in order to guaranty to the consumer relevant and non-intrusive Direct Marketing activities based on his implicit and unambiguous consent (the consumer is in control) Industry: o Its self-regulation program intends to move forward to the the consumer is in control principle. The industry will facilitate this in order to assure their products and services demand on the European market. This will ensure the free choice of goods and services by European consumers. o Explicit consent requirements would seriously damage the consumers free choice and right on information, one of the basic characteristics of the Information Society. This would harm the Direct Marketing industry and the global European economy. An uncompromising opt-in approach across the EU would hit many sectors (mainly SME s): postal and distribution services, data and mailing factories, contact/service centres, advertising, e-commerce, etc. o In addition to a severe decline of the economic activity (first estimates expect a decrease of more than 20%), this will generate an additional complexity and uncertainty within the industry. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 6

7 4 Solutions on : consent in the on-line environment 4.1 Consumer protection today: current regulation In addition to the regulatory environment described in the prior chapter (ensuring informed consent), in December 2009 the EU adopted the revised e-privacy Directive amending among other things, the rules for obtaining consumers consent when dropping cookies on their computer. 4.2 Consumer protection today: self-regulation requirements On December 2010, the World Federation of Advertisers ( WFA ), the Federation of European Direct & Interactive Marketing (FEDMA), the European Association of Communication Agencies ( EACA ) and the European Publishers Council (EPC ) published a guidance for national implementation of the e-privacy Directive i.e. a self-regulatory response complying with the requirements of the e-privacy Directive. We propose that the on-line advertising techniques, using cookies and similar tools to target advertising messages better towards consumers interests, would be called: interest-based advertising (IBA). 4.3 The way forward: our proposal on the right balance Because the consumer expects interest-based information and personal convenience on the net, opt-in consent for cookies would negatively affect consumers online experience and would undermine the potential of IBA and the growth of the EU s digital economy. Effective self-regulatory provides user-friendly and tailor-made solutions. It ensures that consumers receive information and stay in control. Effective self-regulation on consumer protection is based on the following key elements: A solution in line with the Directive s intention: empower consumers to make choices based on clear information with respect to IBA; Cooperation with industry partners: the provisions of the new Directive will impact all stakeholders of the advertising industry: advertisers, online publishers, ad networks, agencies and self-regulatory organizations. Cross-industry buy-in to assure an effective self-regulatory framework and close cooperation for its implementation and national advocacy efforts, is essential; Use an appropriate terminology: o Interest-based advertising not online behavioural advertising or online profiling o Consumer control not opt-in or opt-out o Informed consent and transparency not prior consent or explicit consent Further details in the WFA/FEDMA/EACA/EPC publication. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 7

8 5 Solutions on : protecting sensitive data 5.1 Consumer protection today: current regulation The processing of sensitive data is currently already largely prohibited (with limited exceptions) by the 95/46/EC Directive. The Belgian law (articles 6,7,8 of the Privacy Law) is fully aligned on it. 5.2 Consumer protection today: self-regulation requirements Self-regulation (the BDMA Code of Conduct) added ethical restrictions covering marketing activities on minors (product & communication limitations). 5.3 The way forward: our proposal on the right balance Customers want to obtain relevant information and be helped as fast as possible. The adequate balance and trade off between intrusive- and loss of information can not be solved by broadening the list of sensitive data applicable to industries. This should be addressed by transparency and effective enforcement. Anyway, it is fundamental to state that the data used and needed in all-day situations (e.g. address, contact, basic socio-demographics, basic consumer behaviour) can never be part of this debate. All data used by the Direct Marketing industry is handled with care in order to ensure and improve the adequacy of the contact with the consumer. The industry has the experience to handle all data according to its relevance both towards their effective use and the privacy of the individual. We believe that before any extension of the set of sensitive data can be considered, a representative impact assessment study should be carried out. The aim of the study should be to investigate potential loss of information and user friendliness on the one hand and the potential damage on the competitiveness of the Direct Marketing sector on the other. At this stage, we can already highlight the following: - Genetic data is covered in most cases by Article 8 of the Directive via health data; - Financial data s sensitivity is covered by sufficient sector regulations; - Minor s data already benefits from a high level protection for the fundamental rights and freedoms of individuals. It s on the side of parental control that the awareness should be developed (efficient warnings and selective communication campaigns); - Data minimization is enclosed in the Article 6,1 c of the 95/46/EC Directive. There is no need to explicitly introduce data minimization in the regulation framework. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 8

9 6 Solutions on : enhancing control over one s own data 6.1 Consumer protection today: current regulation Article 12 of the 95/46/EC Directive, Rights of access. Article 8(2) in the EU Charter of Fundamental Rights states that Everyone has the right of access to data which has been collecting concerning him or her, and the right to have it rectified. The Belgian law (articles 9,10,12 of the Privacy Law) explains the rights to be informed, to get access to one s data and to modify or block the data. 6.2 Consumer protection today: self-regulation requirements Self-regulation (the BDMA Code of Conduct) emphasises the access rights of the individual and defines modalities and deadlines to respond to individuals requests. 6.3 The way forward: our proposal on the right balance Existing (self)-regulation framework is well functioning as (1) the data controller legitimately uses the data rightfully acquired or collected and (2) the individual gets a high level of protection of his rights and freedoms. Current Directive can be enforced through modalities defined in self-regulation. Introducing a property right would go far beyond the objective of controlling personal data and the individual interest of the consumer. Data minimization Data minimization is enclosed in the Article 6,1 c of the 95/46/EC Directive. There is no need to explicitly introduce data minimization in the regulation framework. Right to be forgotten This right is already explicit and clarified regarding traditional Media (Transparency principle). With regards to the new media and social media in particular, the BDMA highlights that these media are young, in an early stage of development, fast moving and fast changing. New ways of self-regulation will be designed in order to ensure a similar individual privacy protection as other media offer today. Whilst there is no need for strengthening this right there is one regarding the self-regulatory extension to all new media (i.e. social media). In any case, the technical and economical aspects should be thoroughly examined. The BDMA is willing to participate in this process. Data portability The BDMA believes that any drastic change in data portability will be at the disadvantage of both individuals and industry. In any case, the technical and economical consequences should be thoroughly examined. The BDMA is willing to participate in this process. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 9

10 7 Solutions on : applicable law 7.1 Consumer protection today: current regulation Article 4 of the 95/46/EC Directive. The Belgian law (article 3bis of the Privacy Law) is fully aligned on it. 7.2 Consumer protection today: self-regulation requirements Not applicable. 7.3 The way forward: our proposal on the right balance We are convinced that the current rules on applicable law are effective and should provide the same degree of protection of EU data subjects, regardless of their geographic location and the location of the data controller. Current data protection directive ensures a high, adequate level of protection of personal data, irrespective of where in the EU data are physically stored or where the data controller (or data processor) is established. The revision of current provisions on applicable law would not increase the level of protection of personal data but would hamper the development of cross-border businesses. More specifically, changes to the current country-of-origin principle, whereby the law of the Member State where the controller is established is applicable, would create significant compliance costs for companies who own and operate (international) databases. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 10

11 8 APPENDIXES 8.1 The Direct Marketing market in Belgium The BDMA is the single voice of the Belgian direct marketing industry with more than 450 members representing consumers, service providers and media/carriers of direct marketing. The BDMA identified more than 700 companies directly related to the Direct Marketing activities. In 2007, a national survey (based on 480 of the 700 DM companies) evaluated a gross turnover of Mio. See details in the table below. The net turnover, based on the percentage of pure Direct Marketing activity (42%), is evaluated around the Mio. The survey also identified a gross employment rate of FTE s; a net employment rate of FTE s. BDMA Belgian Direct Marketing Association Position Paper on Data Protection 11

12 8.2 Ensuring informed consent: details on self-regulation The Robinson List The Robinson List is a free opt-out list for the consumer on traditional media (Mail and Phone Preferences Service) that sets the right obligations to keep away from opt-in restrictions. In 2009, the Robinson List counted up Mail and Phone registrations. The list exists for more than 35 years and is yearly growing thanks to regular notoriousness initiatives on Consumer protection matters (radio, TV, press). The Consumer can easily register through mail, phone or even a dedicated website (www.robinson.be). Every BDMA member must use the list and update it on a quarterly frequency. Online privacy In addition to the opt-in regulation ( , sms and fax), obligations are defined to systematically offer and ease consumers opt-out. For Direct Marketing companies and data publishers, opt-out processes have proven to be very effective and easy to use. June 2010, FEDMA (Federation for European and Direct Marketing) has launched a self regulatory Code on online data collection for marketing purposes. The Code contains clear and unambiguous rules covering transparency, opt-in requirements and usage of marketing tools. The content of the Code results from a fruitful discussion between FEDMA and the Article 29 Working Party. FEDMA aims to implement the Code in European Member States in The FEDMA Online Annex states what is and isn t allowed in a clear and practical manner. For example by explaining what information should be given to a consumer at the time of the data collection by organisations, rather than limiting themselves to a hyperlink in their privacy policies. The Online Annex completes the existing FEDMA Code of Practice for the Use of Personal Data in Direct Marketing. The combination of the two documents provides a comprehensive self-regulatory framework for the marketing industry. Both documents elaborate on the general principles in the Data Protection and E-Privacy Directive and apply them to marketing specific situations BDMA Belgian Direct Marketing Association Position Paper on Data Protection 12

13 8.3 Contact details Ivan Vandermeersch Secretary General bdma Mobile : Noordkustlaan Groot-Bijgaarden Belgium BDMA Belgian Direct Marketing Association Position Paper on Data Protection 13

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