TELEMARKETING AND THE PROTECTION

OF THE PRIVACY OF INDIVIDUALS

PREFACE

1. Background

On 15 September 1994 the Minister for Communications and the Arts, the Honourable Michael Lee ("the Minister") requested that AUSTEL establish an advisory committee to consider telemarketing and other telecommunications privacy issues of particular concern. In relation to telemarketing the Minister indicated that the issue continues to be a source of complaints by telephone users and that he would appreciate particular attention being given to the ways in which residential telephone users are able to have the greatest degree of control over the calls they receive. In accordance with the Minister's request AUSTEL established the Privacy Advisory Committee ("the PAC") to assist AUSTEL in providing advice to the Minister on telemarketing and other telecommunications privacy issues.

This Report on Telemarketing and the Protection of the Privacy of Individuals contains the recommendations of the PAC to resolve the privacy concerns of individuals relating to telemarketing activities and is provided by the PAC in response to the Minister's request that AUSTEL provide advice on telemarketing. The PAC has already provided a Report on the Protection of Customer Personal Information - Silent Line Customers in June 1995. The PAC is currently examining the issues relating to the introduction of caller identification technology and the protection of customer personal information in the possession or control of carriers and service providers.

The PAC has restricted its examination of telemarketing to a consideration of those issues which involve telecommunications privacy. Issues relating to the control of personal information by organisations which undertake telemarketing activities are beyond the scope of this Report. Fair trading issues, for example, misrepresentation, breach of contract, etc and other issues which do not involve telecommunications privacy are also beyond the scope of this Report. The PAC considers that it would be appropriate for fair trading issues to be dealt with by Commonwealth and State and Territory consumer affairs agencies. The PAC acknowledges the work currently being undertaken by the Standing Committee of Officials of Consumer Affairs ("SCOCA") to identify the emerging issues in direct marketing including telemarketing and the release of the SCOCA Working Group on Direct Marketing Discussion Paper in March 1995.

2. Privacy Advisory Committee's Consideration

The PAC considers that AUSTEL does not have sufficient functions or powers to resolve the privacy concerns of individuals relating to telemarketing activities for the following reasons. Organisations which undertake telemarketing activities on their own behalf are not considered to be subject to the conditions contained in class licences issued by AUSTEL and AUSTEL would appear to be unable to directly consider privacy issues when determining technical standards relating to customer equipment or to include in permits issued by it conditions relating to the use of customer equipment.

The PAC recommends that a mandatory code of practice should be developed under a co-regulatory scheme by government, consumer groups and organisations which undertake telemarketing activities and implemented under State and Territory Fair Trading legislation to resolve the privacy concerns of individuals relating to these activities. The development of a mandatory code of practice under a co-regulatory scheme would be consistent with the suggestion by the SCOCA Working Group on Direct Marketing that a code of practice for direct marketing may be developed by government, industry and consumer organisations and given legislative backing by State and Territory consumer protection legislation.

The PAC considers that a mandatory code of practice should be implemented under State and Territory Fair Trading legislation for the following reasons. Telemarketing activities are a subgroup of direct marketing activities, all State and Territory Fair Trading legislation, with the exception of the Victorian Fair Trading legislation which would require amendment, currently provides for the development of mandatory codes of practice and a technology neutral solution would result.

The PAC considers that it would not be appropriate to implement a mandatory code of practice under the Telecommunications Act 1991 (Cth) ("the Telecommunications Act") for the reason that a technology specific solution would result with the focus being on the telecommunications network. The PAC notes that if telemarketing activities are not effectively regulated under other legislation then further consideration may be required to be given to the possibility of regulating telemarketing activities under the post-1997 telecommunications legislation to take effect from 1 July 1997.

The PAC also recommends that public awareness in relation to telemarketing activities should be raised through use of AUSTEL's existing procedures for the distribution of general telecommunications information to the public. Raising public awareness would raise awareness of fair and ethical telemarketing practices and clarify the rights and obligations of individuals and the rights and obligations of organisations which undertake telemarketing activities in relation to their dealings with each other.

3. AUSTEL's Consideration

AUSTEL agrees with the PAC's consideration that it would not be appropriate to regulate telemarketing activities by implementing a mandatory code of practice under the Telecommunications Act for the reason that a technology specific solution would result with the focus being on the telecommunications network. Telemarketing activities are a subgroup of direct marketing activities which are undertaken using other means of communication including the postal service and face-to-face communication. AUSTEL recognises that new telecommunications technologies may exacerbate the privacy concerns of individuals relating to direct marketing activities. However, these privacy concerns of individuals are not specific to telecommunications and should be addressed on a more generic basis.

The post-1997 telecommunications legislation to take effect from 1 July 1997 will only regulate the telecommunications industry. Organisations which undertake telemarketing activities are not necessarily members of the telecommunications industry although carriers and service providers may themselves undertake telemarketing activities. An approach which addresses telemarketing activities generally would need to regulate activities undertaken by the general public. Regulation of activities undertake by the general public is not within the intended scope of the post-1997 telecommunications legislation.

AUSTEL agrees with the PAC's recommendation that a mandatory code of practice should be developed under a co-regulatory scheme by government, consumer groups and organisations which undertake telemarketing activities and implemented under State and Territory Fair Trading legislation to resolve the privacy concerns of individuals relating to these activities. AUSTEL recognises that this approach may require complicated negotiations between the States and Territories to ensure the adoption of a uniform approach throughout Australia to the regulation of telemarketing activities. In accepting the PAC's recommendation that a mandatory code of practice should be implemented under State and Territory Fair Trading legislation AUSTEL notes that the implementation of a mandatory code of practice under the Privacy Act 1988 (Cth) ("the Privacy Act") would necessitate extension of the Privacy Act to the private sector which would raise the difficult issue of the Commonwealth's constitutional power to legislate with respect to privacy for the private sector.

AUSTEL agrees with the PAC's recommendation that public awareness in relation to telemarketing activities should be raised through use of AUSTEL's existing procedures for the distribution of general telecommunications information to the public.

In the context of the Minister's announcement of 1 August 1995 concerning the policy framework for the regulation of telecommunications post-1997 AUSTEL notes that a telecommunications specific approach to the regulation of telemarketing activities under the post-1997 telecommunications legislation may be possible and more certain than under the existing Telecommunications Act. Regulation of telemarketing activities under the post-1997 telecommunications legislation should be considered if the privacy concerns of individuals relating to these activities are unable to be resolved in a timely manner by the general approach favoured by the PAC of implementing a mandatory code of practice under State and Territory Fair Trading legislation. Regulation of telemarketing activities under the post-1997 telecommunications legislation might be considered as a limited and interim solution only until such time as a more general approach to the privacy concerns of individuals may be taken.

Norm O'Doherty

GENERAL MANAGER

CONSUMER AFFAIRS BRANCH

October 1995