Rewritten WASPA Code better regulates mobile services in SA

The new WASPA Code of Conduct is a complete rewrite of the Wireless Applications Service Providers’ Association’s rules which regulate the mobile content and services industry in South Africa. One of the biggest changes to the Code is a consolidation of the old Advertising Rules and the Code of Conduct itself along with a dramatically scaled down body of rules governing advertising copy. The changes go further than restructuring the old framework. As WASPA’s advisory note presenting an overview of the new version of the Code points out –

The revised Code of Conduct incorporates the most important portions of the Advertising Rules, but without many of the unnecessarily restrictive details in those Rules. The new Code is organized more clearly and logically than previous versions, aims to be less open to interpretation, and intends to function as an effective set of principles for the WASP industry, as it exists a decade after WASPA’s formation.

Of course this version of the Code doesn’t exist in a vacuum. WASPA’s adjudicators and appeals panelists (which includes me) have documented their interpretations of various provisions of older versions of the Code in a substantial library of rulings over the years and one of the challenges in the near term will be harmonising those rulings with the new Code and preserving guidance on a range of topics including subscription service marketing, service “bundling” and spam and applying that guidance to the new Code’s clauses.

The WASPA Code has been better aligned with legislation such as the Consumer Protection Act, the Protection of Personal Information Act and the Electronic Communications and Transactions Act which should translate into improved consistency between the law and the Code, as a self-regulatory framework. The new Code also reinforces WASPA’s importance as a regulatory body in the South African mobile content and services industry. This comes at a good time as the trend towards mobile services is only going to strengthen going forward.

Digital marketing law interview on @BallzRadio

Paul was interviewed about aspects of digital marketing law on Ballz Radio today. The interview was part of the business segment and Paul chatted to the team about some consumer protection issues, transparency, terms and conditions and privacy concerns.

Fortunately, Ballz Radio publishes the audio and video of the interviews. You can listen to the audio using the SoundCloud player below:

Advertising restrictions for the veterinary profession

Nastassja and the puppy-1

The veterinary profession is an honourable profession based on standing and dignity. In section 4(1)(c) of the Para-Veterinary Professions Act 19 of 1982 (“The Vets’ Act”) it is stated that a veterinary professional (“a person practising a veterinary profession as a veterinarian or veterinary specialist”) has a moral obligation to serve the public to the best of his ability.  The Vets’ Act goes on further to state that veterinary professionals are all working for the same good cause and this sometimes requires members of the profession to co-operate with each other and the authorities to promote that cause. The profession is highly regulated by legislation, rules and codes, leaving very little room for freedom of advertising as the rules portraying to advertising are clearly set out and extremely restrictive.

The Rules

In terms of the Vets’ Act an advertisement means:

“any form of communication in the media or any other visual of verbal announcement by a veterinary professional or veterinary group, whether paid for or not, which is intended to be read, heard or seen by members of the public with a view to direct attention to the services provided by such veterinary professional or veterinary group;”

A couple other, relevant definitions are as follows:

“computer-accessed communication” means any communication made by or on behalf of a veterinary professional or veterinary group that is disseminated through the use of a computer or related electronic device, including, but not limited to, web sites, weblogs, search engines, electronic mail, banner advertisements, pop-up and pop-under advertisements, chat rooms, list servers, instant messaging, or other internet presences, and any attachments or links related thereto.

“veterinary group” for the purposes of advertising means any representative group recognised by the Council. The Council shall on application recognise any group of veterinary professionals formed in terms of a memorandum of association and regulated by a constitution, representing at least 50% (fifty) plus 1 (one) of all registered veterinary professionals within a clearly defined geographical area or within a special veterinary field.

The Veterinary Rules, which govern the profession, create clear and restrictive rules for veterinary professionals with regards to advertising. These rules flow from the principles that this is an honourable profession and the members of the profession should work together to uphold the honour of the profession. Rule 4(1)(c) places a restriction on a veterinary professional in that a veterinary professional is forbidden to seek any personal advantage at the expense of any member of the veterinary profession and must promote the interests of the veterinary profession and its members.

However, veterinary professions are not completely banned from advertising, it just means that when advertising that they need to abide by strict regulations and rules. Rule 15 deals with advertising specifically. There are no limitations on advertising services, products and facilities of a veterinary profession relating to the following aspects:

  • The size
  • Format
  • Artistic or literary style
  • However, the content of an advertisement is limited by Rule 15(3) to the following:
  • The name of the veterinary professional and his logo
  • It may contain a description of the nature of the services offered by the veterinary professional and the products and merchandise that he stocks and sells. The address where he reders such services and sells such products and merchandise.
  • When his practice will be open and these services may be rendered
  • Prices of products, merchandise and foodstuffs sold and services that do not pertain specially to the veterinary profession rendered at the facility may be advertised and it is allowed to use the word “discount” But the advertisement’s subject matter cannot be the services provided by a veterinary professional.

 However, the advertisement, in terms of Rule 15(1), may not compromise or impair:

“(a) the client’s freedom to consult a veterinary professional of his/her choice; and”

“(b) the good reputation of the veterinary profession.” 

And Rule 15(7) forbids an advertisement to be misleading in any way and it is not allowed to compare products and services of a veterinary professional with that of another veterinary profession, nor may it claim to be superior in any respect. Rule 15 (7) (c) goes on to forbid that an advertisement contain a criticism relating to the quality services and products of another veterinary professional.  No advertisement may contain fees which relate to the services provided by the veterinary profession which forms part of the subject of that advertisement.

An interesting further restriction on advertising is contained in Rule 15(12) in that a veterinary professional may not use pop-up advertisements unless it is on their own website. If a veterinary is identified in any way in an article (which is assumed includes an online article) then an advertisement by that vet is not allowed to appear on the same page as the article. What makes this interesting is that what happens in a scenario where a veterinary posts an article which he wrote or in which he feature on his website? It seems that when looking at the strict regulations regarding advertising that it will then be forbidden by the veterinary to advertise on his website on pages where he has posted an article which he wrote or articles in which he is featured.

Rule 16(1) contains a specific restriction in that the name of a veterinary professional may not be used in the following advertisements:

  • An advertisement to promote an article or a product which is or may be used in connection with the practising of a veterinary profession. This basically reaffirms rule 15(12) above.
  • An advertisement in connection with any place at which animals are sold or boarded
  • An advertisement in connection with any business or trade in which he/she has an interest or is employed in a capacity other than as a veterinary professional

Furthermore, it is required that advertisements must be in good taste specifically when it comes to the content, prominence and medium and may not be offensive to any culture, religion or to the veterinary profession.

What About Social Marketing?

These rules present a challenge for vets who would like to make use of the social Web to market their services. Can a veterinary professional create a Facebook Page, tweet about something of interest or even publish a blog with posts about topics her clients would be interested in or should know about?

We’re exploring this and have a few ideas about how these professionals can use the social Web to promote themselves and their work. We hope to run these ideas past the Council and will publish an update once we have some clarity.

Austrian law student’s crusade against Facebook highlights users’ responsibilities

Sir Archibald Weigall (LOC)Austrian law student, Max Schrems, has embarked on a crusade against Facebook aimed at exposing what he considers to be Facebook’s misuse of users’ personal information. Schrems has lodged 22 Reclamacións (I understand these to be a form of complaint) against Facebook with the Irish Data Protection Commissioner (Facebook’s legal presence outside the US is in Ireland) regarding Facebook practices ranging from its Data Use Policy contents and the effectiveness of consent to the Data Use Policy to Facebook’s apparent practice of collecting personal information about or relating to people who are not yet Facebook users.

These complaints raise a number of concerns about the extent to which Facebook has complied with Europe’s Data Protection Directives which establish a legal framework to protect European users’ personal information and privacy rights. The Irish Data Commission is either about to or is in the process of conducting an audit of Facebook’s privacy practices and we should learn whether Schrems’ complaints are valid in due course but what this crusade does highlight is users’ responsibilities when sharing information and content on Facebook.

Facebook’s Data Use Policy is fairly extensive. At one point Schrems mentions that if the Data Use Policy were reproduced with a more readable font it would be close to 20 pages. I reformatted the Data Use Policy with 1.5pt line spacing and size 11 font and it worked out to about 17 A4 pages. It is readable and extensive. The primary reason for the policy’s length and Facebook’s efforts to explain the policy and privacy settings in different ways is that using Facebook has seriously implications for your privacy. The sharing controls have improved drastically over the last few years culminating in a recent update which exposes publicity controls in every post.

One of the issues Schrems raised concerns about was how much information he found in his downloadable archive of his Facebook profile. Schrems’ archive apparently ran to about 1 222 pages of data. I picked up concerns about how much information is contained in the archive (and, therefore, how much personal information Facebook receives and stores) and how much information he felt was not included.

Facebook archive download page

Social media users are slowly coming to the realization that these free services we flock to in the tens and hundreds of millions have a lot of information about us and which we supply to them. Facebook is a great example because of its sheer size. The upcoming Timeline feature will heighten that awareness as it exposes users’ profile information and interaction going about as far back as they have been members, possibly even further back if users populate their profiles with historical biographical data. The point we are heading to is that privacy as secrecy is largely a myth on the social Web. If you are active on the social Web, emphasis shifts to the extent to which you have meaningful control over your personal information and this is where Facebook has historically been pretty bad. That said, Facebook’s privacy controls and its Data Use Policy have improved dramatically in the last 4 to 5 years. Facebook’s anticipated deal with the FTC should firmly place control over users’ profile information more in their hands than they have experienced in the past and that is a win for users.

Facebook is clearly improving its policy language and practices by being more transparent about what personal information it collects from users and what it does with that personal information as well as giving users more meaningful control over what they can do with their personal information and content in the Facebook ecosystem. Users must remember that how well their privacy is protected largely comes down to the choices they make. Failing to familiarize themselves with privacy policies and make proper use of privacy settings made available to them is no longer an option for users concerned about their privacy. If services like Facebook require more than users are comfortable sharing then they should refrain from using those services.

Facebook may have violated Europe’s privacy laws as Schrems contends. We will have to wait for the results of the Commissioner’s audit to make that determination. We may also discover that Schrems’ much publicized campaign amounts to little more than tilting at windmills. Facebook insists that it complies with these laws and will make whatever adjustments are required should the Irish Data Protection Commissioner find it to be acting unlawfully. Hopefully this crusade will remind users just how much they share on services like Facebook and take a little more responsibility for that.

Google+ Pages off to a good start for consumers

Google released Google+ Pages for brands publicly last night (South African time) to much excitement on the Web. Google+ has, until now, been reserved for humans posting as themselves and Google has been criticized for not allowing brands to create pages and for insisting that users use their real names and not pseudonyms (Google seems to have reversed course on this and is expected to announce support for pseudonyms soon). The elephant in the room has been brands’ inability to create a presence on the growing platform.

Google+ Pages have a number of similarities to personal profiles including their basic design and functionality. Businesses can publish posts, photos, videos, run Hangouts (a very appealing and engaging video conferencing solution) and participate in comment threads as the brand. I enjoy using Google+ and have seen some pretty high engagement levels there. It is a product designed for engagement.

web.tech.law - Google+

That said, there are some very interesting differences between Pages and profiles which are pretty good for consumers weary of the constant flow of direct marketing material. Susan Beebe, a Dell Corporate PR and Social Business Strategist listed a number of differences in a post on Google+:

  • Pages can’t add people to circles until the page is added first or mentioned.
  • Pages can be made for a variety of different entities whereas profiles can only be made for people.
  • The default privacy setting for elements on your page profile is public.
  • Pages have the +1 button.
  • Pages can’t +1 other pages, nor can they +1 stuff on the Web.
  • Pages can’t play games.
  • Pages don’t have the option to share to ‘Extended circles’.
  • Pages don’t receive notifications via email, text, or in the Google bar.
  • Pages can’t hangout on a mobile device.
  • Local pages have special fields that help people find the business’ physical location.

Of these differences, the most significant difference for consumers is the first in that list: Pages can’t add people to circles until the page is added first or mentioned.

Explicit opt in on Google Plus for Pages

The reason this is so significant is that consumers must explicitly and specifically add brands to their circles (or, to use Twitter terminology, follow the brands) before those brands can publish posts targeted at those consumers. Until that point brands’ Pages remain publicly visible but their posts don’t enter consumers’ streams until they are followed. This model is similar to Twitter in that Twitter users won’t see brands’ tweets in their Twitter stream unless they follow the brand’s Twitter profile. Like Twitter is also appears that a brand could publish a post which tags a consumer not following the brand on Google+ and get their attention that way.

It certainly appears that Google is thinking about building a product for brands that doesn’t overpower consumers’ streams with marketing messaging although an option requiring that consumers add brands to their circles before they can be contacted by brands would protect consumers better.

Tension in the direct marketing industry over opt-in requirements

Tug of War

The Consumer Protection Act sparked quite a bit of interest in direct marketing and consumers’ rights to opt-out of receiving direct marketing communications. It has also highlighted a tension between direct marketers and consumer orientated initiatives to protect and enhance consumer rights. Some of these initiatives have been undertaken by two industry bodies, the Internet Service Providers’ Association and the Wireless Applications Service Provider Association which are self-regulatory bodies focused on ISPs and mobile service providers, respectively. The ISPA and WASPA Codes of Conduct contain provisions which are somewhat more stringent than the Consumer Protection Act, although more in line with the draft Protection of Personal Information Bill when it comes to regulating direct marketing.

I took a closer look at the relevant provisions in the Code as well as related provisions in the Consumer Protection Act and the current Protection of Personal Information Bill which is expected to be enacted in late 2011 in order to how these regulatory frameworks deal with direct marketing and what effect they seem to have on the industry. This post is an overview of these regulatory frameworks.

The ISPA Code

The ISPA Code binds Internet Service Providers directly, and direct marketers that use ISPs to host their services, indirectly. Section E of the ISPA Code states the following:

E. Unsolicited communications

  1. ISPA members must not send or promote the sending of unsolicited bulk email and must take reasonable measures to ensure that their networks are not used by others for this purpose. ISPA members must also comply with the provisions of section 45(1) of the ECT Act, and must not send or promote the sending of unsolicited commercial communications that do not comply with the provisions of section 45(1) of the ECT Act.
  2. ISPA members must provide a facility for dealing with complaints regarding unsolicited bulk email and unsolicited commercial communications that do not comply with the provisions of section 45(1) of the ECT Act originating from their networks and must react expeditiously to complaints received.

ISPA’s members generally adopt a fairly firm approach to unsolicited bulk email for a variety of reasons, and for good reason in many instances. We are all familiar with the deluge of spam that clogs our mailboxes on an ongoing basis. Unfortunately well meaning direct marketers are often caught in the cross-fire largely because they are reliant on ISPs to operate their businesses.

The WASPA Code

WASPA is a self-regulating industry association that watches over mobile service providers. Its members include most mobile service providers and marketers in South Africa as well as a number of foreign mobile content providers. If you market to customers by SMS, the odds are you are using a WASPA member to distribute your messages.

The current version of the WASPA Code is 11.0.  The section in the Code dealing with spam is section 5 which is titled “Commercial communications”.  Section 5.1 deals with “Sending of commercial messages” and specifies certain minimum requirements such as the requirement that WASPs terminate commercial messaging services when a recipient responds to a commercial message with the “STOP” instruction or similar words such as “END”, “CANCEL”, “UNSUBSCRIBE” or “QUIT”.

The definition of “commercial message” is also relevant and it is the following:

A “commercial message” is a message sent by SMS or MMS or similar protocol that is designed to promote the sale or demand of goods or services whether or not it invites or solicits a response from a recipient.

Sections 5.2 and 5.3 deal with spam identification and prevention and are directly relevant.  These provisions state the following:

5.2. Identification of spam

5.2.1. Any commercial message is considered unsolicited (and hence spam) unless:

(a) the recipient has requested the message;

(b) the message recipient has a prior commercial relationship with the message originator and has been given a reasonable opportunity to object to direct marketing communications

(i) at the time when the information was collected; and

(ii) on the occasion of each communication with the recipient; or

(c) the organisation supplying the originator with the recipient’s contact information has the recipient’s explicit consent to do so.

5.2.2. Any commercial message is considered unsolicited after a valid opt-out request.

5.2.3. WASPA, in conjunction with the network operators, will provide a mechanism for consumers to determine which message originator or wireless application service provider sent any unsolicited commercial message.

5.3. Prevention of spam

5.3.1. Members will not send or promote the sending of spam and will take reasonable measures to ensure that their facilities are not used by others for this purpose.

5.3.2. Members will provide a mechanism for dealing expeditiously with complaints about spam originating from their networks.

When it comes to classifying a commercial message as not “spam”, the Code sets out a two part test.  A commercial message is regarded as spam if it is unsolicited except where –

  1. The recipient has either requested the message or has a prior commercial relationship with the message originator and “has been given a reasonable opportunity” to opt-out of further marketing communications from the originator (this is implicit opt-in with an opt-out requirement); or
  2. The recipient has given his or her “explicit consent” to receive the commercial message concerned.

The focus of this test is on unsolicited commercial messages and the default position is that such messages are spam and prohibited unless the originator can prove one of two scenarios (mentioned above), both of which are consent-based.  The first scenario is a combination of explicit opt-in and the second scenario involves a more implicit opt-in.  This is a departure from the current legislative position, although not necessarily of the anticipated legislative framework detailed in draft legislation.

The Consumer Protection Act

The Consumer Protection Act deals with “unwanted direct marketing” in section 11 of the Act.  Consumers’ right to pre-emptively block, refuse to accept or to require a person to discontinue direct marketing communications or approaches is specifically included in consumers’ broader right to privacy which is entrenched in the Bill of Rights.  While the Consumer Protection Act does not explicitly state that it operates on the basis of an opt-out paradigm, section 11(2) supports this conclusion:

To facilitate the realisation of each consumer’s right to privacy, and to enable consumers to efficiently protect themselves against the activities contemplated in subsection (1), a person who has been approached for the purpose of direct marketing may demand during or within a reasonable time after that communication that the person responsible for initiating the communication desist from initiating any further communication.

The direct marketing framework contemplated by the Consumer Protection Act is similar to the framework established for electronic direct marketing in the Electronic Communications and Transactions Act.  Both frameworks enable marketers to send unsolicited commercial messages (to use the basic term in the Code) directly to consumer provided they facilitate and honour requests from consumers to opt-out of receiving further commercial messages from those marketers.  The press release mentioned a Do Not Call Registry which section 11(3) of the Consumer Protection Act provides for.  This registry doesn’t exist yet, at least not in the form contemplated by the Consumer Protection Act, but such registries do exist in varying degrees.

The Direct Marketing Association of South Africa (“DMASA”) operates a National Opt Out Register which its members are bound to comply with.  This Register presently represents the closest registry of its kind to the registry contemplated in the Consumer Protection Act.  Unfortunately this Register is limited in its scope.  It binds DMASA members and its distribution is limited to those members.  It is also subject to exploitation (such an exploit was publicised in ITWeb on 30 May 2011) for illegitimate purposes in its current form although its distribution method is due to shift from email to an authenticated file transfer protocol.

Protection of Personal Information Bill

The Protection of Personal Information Bill deals with “unsolicited electronic communications” in section 66 of the current draft Bill.  This section begins with the premise than unsolicited electronic communications (including SMS and email) for direct marketing purposes are prohibited unless certain conditions are met (the Bill speaks of “processing” which has broader implications than simply sending marketing SMSes or emails but I will confine my discussion to direct marketing messages).  These conditions are, essentially, that the person whose personal information is being used (the “data subject”) has consented to receiving these commercial messages or where the data subject is a customer of the party sending the commercial messages.

This latter condition is a complex one.  In order for a business to market its products and services to a consumer under the Protection of Personal Information Bill, it must have obtained the consumer’s contact details in the context of a sale of a product or service for the purpose of directly marketing the business’s “own similar products or services” and the consumer must have been afforded opportunities to opt-out of receiving those marketing messages both at the time the contact details were collected and “on the occasion of each communication with the data subject for the purpose of marketing if the data subject has not initially refused such use”.

Going further, the Protection of Personal Information Bill requires that “any communication for the purpose of direct marketing” must contain the following information:

  1. details of the identity of the sender or the person on whose behalf the communication has been sent; and
  2. an address or other contact details to which the recipient may send a request that such communications cease.

This section of the Protection of Personal Information Bill appears to shift the current opt-out paradigm to something closer to an opt-in paradigm in that a consumer’s consent is required before a business may market products and services to the consumer or the consumer must be the business’s customer and the consumer’s personal information was collected for that purpose.  The first scenario entails an express opt-in and the second an implicit opt-in with the comfort of a subsequent opt-out option.  These provisions are similar to the provisions of the Code dealt with above and represent a departure from the current paradigm the Consumer Protection Act operates under.  While the Protection of Personal Information Bill is not a final Bill yet and there is still scope for these provisions to change before its finalization and adoption by Parliament, it is worth bearing its current provisions in mind.

Where does this leave direct marketers

Direct marketers are largely dependent on either ISPs or WASPs to conduct their businesses and this presents a number of challenges. The current business model relies on an opt-out paradigm to exist and the ISPA and WASPA Codes are precursors to the Protection of Personal Information Act which shift the paradigm to an opt-in paradigm which most direct marketers probably can’t easily transition to. If the ultimate Protection of Personal Information Act will have the current opt-in provisions for direct marketers then the industry will have to change the fundamental basis on which it operates starting with its database development strategy.

Some marketers have already begun exploring more innovative models based on social media. One of my recent clients, Virtuosa, sent out an email in April informing its newsletter subscribers that it was discontinuing its newsletter and invited its subscribers to follow it on Twitter, Facebook and LinkedIn:

Newsletters are old-fashioned. Research and feedback from you has shown that overall the preferred means to receive updates and engage with us is via our social profiles. We will no longer be sending regular newsletters but rather communicate with you on Social Media. Please connect and engage with us via our social media profiles.

One of the advantages of social media as a broad marketing platform is that services like Twitter, Facebook and LinkedIn are built to be opt-in and have easy opt-out mechanisms built into the platforms. In a way, this model is an ideal direct marketing model because of its higher engagement levels and opt-in basis but shifting to this model basically means discarding existing email and SMS databases in favour of a relatively young channel. Even if marketers ignore social media, they need to seriously start thinking about how they will transition to an opt-in paradigm if the current Protection of Personal Information Bill is passed in more or less the same form it is currently in. As it is, they operate in an environment that is, at least partly, fundamentally opposed to their existing business model.


Image credit: Tug of War by joshwept, licensed CC BY 2.0

Consumer Protection Act Regulations are available

The Consumer Protection Act’s Regulations have been published. These Regulations give much of the Consumer Protection Act much needed substance. These regulations deal with a number of topics including:

  • Record-keeping requirements;
  • Promotional competitions;
  • Rules pertaining to auctions;
  • Contractual terms deemed not to be fair a reasonable.

You can read the Regulations below or download a copy here or here:

Competition rules and the Consumer Protection Act

Update: This post was prepared on the basis of the draft Regulations. The final Regulations were issued on 1 April 2011 and differ from the draft Regulations in some important respects including the requirement to report on various issues which are highlighted in this post. I’ll work on an update to this post in light of the final Regulations as soon as possible.

Competition terms and conditions must be carefully prepared under the Consumer Protection Act. They govern consumer’s relationship with competition promoters and form a contractual basis for that relationship. They can also be fairly tricky to develop given the myriad factors promoters must take into account. Section 36 of the Consumer Protection Act and the proposed Consumer Protection Act Regulations address how competitions should be conducted and, indirectly, what the relevant terms and conditions should contain. The Consumer Protection Act mentions two sets of documents used in connection with “promotional competitions” which it defines as follows:

any competition, game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance if—
(i) it is conducted in the ordinary course of business for the purpose of promoting a producer, distributor, supplier, or association of any such persons, or the sale of any goods or services; and
(ii) any prize offered exceeds the threshold prescribed in terms of subsection (11), irrespective of whether a participant is required to demonstrate any skill or ability before being awarded a prize.

Curling Trip To Nelson British Columbia

In the first place the Consumer Protection Act prescribes what needs to be set out in an “offer to participate in a promotional competition”:

(5) An offer to participate in a promotional competition must clearly state—

(a) the benefit or competition to which the offer relates;
(b) the steps required by a person to accept the offer or to participate in the competition;
(c) the basis on which the results of the competition will be determined;
(d) the closing date for the competition;
(e) the medium through or by which the results of the competition will be made known; and
(f) any person from whom, any place where, and any date and time on or at which—

(i) a person may obtain a copy of the competition rules; and
(ii) a successful participant may receive any prize.

Section 36 alludes to three further sets of provisions which are meant to be set out in the Consumer Protection Act Regulations (currently draft Regulations being edited following a comment period):

  • A monetary threshold for the purpose of excluding so-called “low value” prizes from the “promotional competition” definition;
  • Minimum standards for promotional competition record keeping; and
  • Audit and reporting requirements in respect of promotional competitions.

The draft Regulations, published in October 2010, set the monetary threshold at R1. They also require the promoter (“a person who directly or indirectly promotes, sponsors, organises or conducts a promotional competition, or for whose benefit such a competition is promoted, sponsored, organised or conducted”) to ensure that a –

“chartered accountant, registered auditor, admitted attorney or commissioner of oaths conducts the competition and must be reported on through the promoter’s internal audit reporting procedures”.

Promoters must retain the following information for “at least five years”:

(a) full details of the promoter, including identity or registration numbers, as the case may be, addresses and contact numbers;
(b) the rules of the promotional competition;
(c) a copy of the offer to participate in a promotional competition contemplated in section 36(5);
(d) the names and identity numbers of the persons responsible for conducting the promotional competition;
(e) a full list of all the prizes offered in the promotional competition;
(f) a representative selection of materials marketing the promotional competition;
(g) a list of all instances when the promotional competition was marketed, including details on the dates, the medium used and places where the marketing took place;
(h) the names and identity numbers of the persons responsible for conducting the selection of prize winners in the promotional competition;
(i) in the case of a prize exceeding R 1.00 (One Rand) in value, determined by reference to what a consumer would in the ordinary course of business pay to purchase the prize, an acknowledgment of receipt of the prize signed by the prize winner, and his or her identity number, and the date of receipt of the prize;
(j) declarations by the persons contemplated in paragraph (d) made under oath or affirmation that the prize winners were to their best knowledge not employees, agents or consultants of the promoter or marketing service providers in respect of the promotional competition, or the spouses, life partners, business partners or immediate family members;
(k) a copy of the report contemplated in subregulation (6).

The promoter is further required to prepare a submit a full report referred to in (k) in the document retention list on –

… the conduct and outcome of a promotional competition, detailing as a minimum-
(a) the basis on which the prize winners were determined;
(b) the summary describing the proceedings to determine the winners, including the names of the persons participating in determining the prize winners, the date and place where that determination took place and whether those proceedings were open to the general public;
(c) whether an independent person oversaw the determination of the prize winners, and his or her name and identity number;
(d) the means by which the prize winners were announced and the frequency thereof;
(e) a list of the names and identity numbers of the prize winners;
(f) a list of the dates when the prizes were handed over or paid to the prize winners;
(g) in the event that a prize winner could not be contacted, the steps taken by the promoter to contact the winner or otherwise inform the winner of his or her winning a prize; and
(h) in the event that a prize winner did not receive or accept his or her prize, the reason for his or her not so receiving or accepting the prize, and the steps taken by the promoter to hand over or pay the prize to that prize winner, and must record the name, identity number and contact details of the person compiling the report and the date thereof.

Many of these provisions and section 36 itself inform what should be contained in competition rules. These provisions should deal with a variety of issues including relevant dates, competition mechanics, prize details, communication channels and how and on what basis competition participants’ personal information may be collected and used in the competition and for marketing purposes which may follow the competition’s conclusion.

Its important to bear in mind that competition terms and conditions are contractual provisions and the document is an agreement between the promoter and the participant. These terms and conditions must be carefully prepared to ensure they are complete and comply with applicable law and legal requirements including the Consumer Protection Act’s plain language requirement. Another important consideration is that consumers acquire a right, protected by the Consumer Protection Act, to participate in a promotional competition when they –

  • Comply with any conditions which must be satisfied to earn the right; or
  • “[acquire] possession or control of the medium, if any, through which a person may participate in that promotional competition”

This right, like other consumer rights, is protected by the Consumer Protection Act which imposes certain restrictions on promoter’s actions in relation to the competition itself and elsewhere in the Consumer Protection Act where consumers acquire rights. The fact that consumers acquire and may exercise rights, alone, is likely to have a profound impact on how the Consumer Protection Act is applied. These rights are explicit and are protected. Their explicit introduction has the potential to change our consumer oriented paradigms, which was probably the idea.