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Annual Report

2013/2014

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ContentsAbout The Direct Marketing Commision 4About the Commissioners 5Chief Commissioner’s Report 6A new era of personal data unlocked in an “Internet of Things” 7Complaints History 8Complaint Statistics 10The Complaint Process 12Nuisance Calls - Key Messages 13

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About The Direct Marketing CommisionThe Direct Marketing Commission (DMC) is the body which enforces the DMA Code and forms part of, and is funded by the Association and the Advertising Standards Board of Finance (ASBOF). The DMA Code and DMC are established to give effective protection to recipients, users and practitioners of one-to-one marketing, ensuring that companies observe high standards of integrity and trade fairly with their customers and with each other. This is processed through the investigation of complaints, direct marketing issues and practices, and providing guidance to consumers. The DMC and DMA have also recognised the potential value of shared research or other action to build marketing understanding, awareness of industry standards and compliance.The DMC comprises an independent Chief Commissioner, two independent Commissioners and two industry Commissioners. Independent Commissioners serve on a paid basis and industry Commissioners serve on a voluntary basis. Decisions which relate to the adjudication of complaints about a member of the DMA are taken independently by the DMC and its decisions are final. Where the DMC concludes that a member is in breach of the Code the member is entitled to appeal against the ruling. The DMC’s current Appeals Commissioner is John Bridgeman CBE TD, who is appointed by the Board of the DMA.

The DMC will address any complaints against DMA members where the complaint is within the scope of the DMA Code. If the complaint is not covered by the Code, it is referred to another relevant organisation. The Secretariat of the DMC aims to confirm receipt of all complaints within two working days and aims to achieve at least 65% satisfaction levels with the action taken by the DMC in relation to cases dealt with by formal or informal procedures. Every complainant is informed of the action taken and/or the outcome of investigations. In addition, the DMC aims to complete 80% of formal adjudications within three months of the first dialogue with a DMA member or any other party and register and progress complaints within seven working days. The DMC aims to have no cases reversed after action by the Independent Appeals Commissioner and no successful judicial reviews or legal challenges, and makes available key trend information on complaints as required.Minutes of the DMC Board meetings are published on the DMC website.

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About the Commissioners

George Kidd: (Chief Commissioner)In addition to his role at the Direct Marketing Commission, George is a Board member of the Council for Licensed Conveyancers, Chair of the UK Public Affairs Council and Chief Executive of the Online Dating Association. George was formerly Chief Executive of PhonepayPlus, the national regulatory body for the ‘premium-rate’ phone-pay phone content market and a Director in the Cabinet Office responsible for regulatory policy and practices. He served as British Consul in Chicago for five years and his earlier career was with the Trade and Industry Department, mostly on international trade matters.

Martyn Percy: (independent member)The Revd Canon Professor Martyn Percy is Dean of Christ Church, Oxford. Prior to this, he was Principal of Ripon College, Cuddesdon (Oxford), one of the world’s leading Anglican theological colleges. Martyn is a member of the Faculty of Theology at Oxford University, and writes and teaches on Christianity and contemporary culture. A former publisher, Martyn has undertaken a number of roles in public life, serving as a Director of the Advertising Standards Authority, Adjudicator for the Portman Group (the self-regulating body for the alcoholic drinks industry), and as an Advisor to the British Board of Film Classification.

Rosaleen Hubbard: (independent member)Rosaleen Hubbard is the founder and Senior Partner of Towerhouse Consulting LLP, a law firm specialising in the provision of legal and policy advice to business and regulated sectors. She is named by Who’s Who Legal as one of the UK’s leading telecoms regulatory lawyers.Rosaleen has a particular interest in consumer policy. She was a founding Council member of The Ombudsman Service. She is a graduate of the Aston School of Business and qualified as a solicitor in 1986.

David Coupe: (industry member)David Coupe has had a 25-year career at global information services company Experian. He joined in 1983 as an Account Manager and became Managing Director for the UK in 1995 and Managing Director of International Marketing Services in 2002. David is a Fellow of the Institute of Direct Marketing and a former Chairman of the DMA from 2003 to 2005. He is now a Non-Executive Director of data governance specialists DQM Group, and a Trustee of the Direct Marketing Foundation.

Danny Meadows-Klue: (industry member)Danny Meadows-Klue is Chief Executive of the Digital Strategy Consulting group, President of the Digital Training Academy, and helped create the key organisations in the internet marketing industry. Back in the ‘90s he was one of Europe’s pioneers in online media and marketing. As publisher of the UK’s first online newspaper (Telegraph.co.uk), he helped launch dozens of online magazines before setting up the Internet Advertising Bureau which he ran for 10 years as CEO or President in the UK, and then across Europe. He led in building the initial standards and frameworks for digital marketing self-regulation, and advised government departments on policies to grow the digital economy. As an accomplished writer and broadcaster he has been an active commentator on the digital marketing industry for almost 20 years and has lectured on digital strategy in more than 40 countries at universities and business schools, as well as through the www.DigitalTrainingAcademy.com marketing coaching group.

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Chief Commissioner’s ReportI am pleased to be able to introduce our annual report and to say something about our past work and current activities. This report covers a fifteen month period to end June 2014 as we move to a different reporting cycle for the future.Simplicity and ownership were perhaps our watchwords over the last year. I realise that is a strange thing to say in an increasing complicated and inter-related world. Today marketing and delivery of goods and services happens across a multitude of traditional and digital platforms often involving a mind-boggling mix of designers, manufacturers, marketers, sellers and re-sellers and delivery businesses. Things I used to walk down the high street to buy are now bought via price comparison sites and online voucher and discount schemes, through Amazon or e-bay platforms, with contracts with whole-sellers and retailers, and delivery via a lock-box is a neighbouring co-op shop. And in the process I will make a number of conscious or unconscious decisions about what permission I give on how my data can be used by these parties, shared and traded with others who will want to mail, text, e-mail and call to solve my financial problems, compensate for my hospital treatment or buy my time-share in Malta.And even that is a slightly cheeky and slightly dated example. The so-called Internet of Things is fast becoming a reality. My car is my telephone, my telephone is my TV, my PC is an empty box as my online world now sits in a cloud while my clubcards and store cards tell supermarkets more about my habits and needs that I care to think about. According to research firm Gartner there will be nearly 26 billion devices on the Internet of Things by 2020.How then can we talk of simplicity and ownership in the marketing field? Precisely because of this volume and variety. We do need a framework of rights and we do need laws that tell us what’s right and what’s wrong and which empower people in terms of their data and its uses. But regulators and lawmakers have to think afresh about their roles and responsibilities. You can no longer tell people exactly what they can and cannot watch as broadcasters could 20 years ago, any more than you can prescribe trading hours online or where and how information is stored and shared.That does not mean simply giving up and hoping for the best. For us it means focusing on the outcomes that we are trying to achieve and getting them understood widely and brought into practice. It means dealing fast with problematic behaviours through a smarter combination of industry and commercial leverage alongside tough tactical action by our statutory regulators when this is needed. And it means giving the public more control -

as ISPs and mobile carriers have stepped up to do with filters and access tools to manage what a household can see across every device. In a digital world state enforcement agencies alone cannot deal with every challenge from across the globe. They do not have the resources and compliance toolkit for the task.Market-based solutions are one answer. Might “telcos” and ISPs act to cut-off spam calls? What of the influence search providers, publishers, payment businesses and retailers have over what is traded? This raises questions on how action to protect the public sits with concern on players abusing their power. But I worry our leaders lack understanding of markets when they think that the only answer to any problem is more laws, sanctions and regulation.The new Direct Marketing Association Code which we enforce could not have come at a better time or with any sharper a focus. When you set some procedural stuff aside the actual Code as a set or rules and outcomes runs to only five pages. It addresses the key issues for customers and for the public at large; honest marketing, respect for people’s privacy, care in the collection and handling of personal data and high operational standards that deliver what is promised and take responsibility for what’s happened if things do go wrong. For me the Code ticks all the boxes. It is simple to understand. It is flexible and future-proof – allowing maximum flexibility over how outcomes are achieved without losing commitment to the outcomes. As such it is easy to communicate and enforce. And it is a set of outcomes and requirements that reach beyond the boundaries of its trade association sponsor; it is a package that could and should be seen at the legitimate expectation of any serious business in the marketing and data field. This sense of shared cause is important if the other concept of “ownership” is to have meaning. Businesses need to feel and own responsibility for standards in their market. But this is not about replacing the role of state bodies, but complementing them. Today businesses rely as never before on search marketing and online credibility and on partnerships with data firms, broadcasters, communications businesses to deliver messages, services and goods. We should recognise that this community of partners and providers has a legitimate interest in maintaining standards and has a unique ability to use their commercial and other leverage to put a stop to wrongdoing. That is the sense of ownership the DMA and others are showing with a new Code and a genuine commitment to putting the consumer first.

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A new era of personal data unlocked in an “Internet of Things” by Danny Meadows-Klue

Marketing in the 20th century was characterised by mass media, broadcast television, and the rise of direct marketing. Marketing today in the 21st century is about leveraging those mass market channels to deliver messages targeted with such precision that zero media wastage is within reach. The Internet of Things is unlocking a new paradigm in relevancy of messages, and for brands and agencies that get it right, the rewards will be rich.In the last decade, John Wanamaker’s challenge of a hundred years ago has been answered: “half the money I spend on advertising is wasted; the trouble is I don’t know which half”.The combination of analytics for conversion tracking, with behavioural targeting and programmatic trading has unlocked a new level of precision that enables display advertising to be focused on the devices of people with relevant interests. For the last decade, the sites people visit and a few of their actions there have proved a rich source of insight to fuel targeting, but with hindsight it will look like nothing more than an early warm-up act, compared to what’s coming.The arrival of an “Internet of Things” will unlock a new order of magnitude in volume and relevance, as rich data from the physical world flows into the same consumer profiling tools. Brace yourself for what’s coming.After years of hype, the concept of an ‘Internet of Things’ is becoming real. From smartwatches and intelligent thermostats, to connected toothbrushes and eventually driverless cars, data is flowing to and from the physical world around us, and unlocking this type of messaging. This is technology people will love and readily opt into:• When a fridge is out of milk, it will add some to your

online retailer’s shopping basket• When you miss a dose of medication, your drug

company’s app will remind you• When your kids cheat on brushing their teeth, you’ll

be the one getting reminded, and if they wander away in a crowd your app will tell you where they are

• When your car is heading on a long journey, it will tell you what needs topping up, and book itself in for the next service

• When your gym pass shows enough points, your health insurance will fall

• When you’re away overnight, your pets will get fed, and if they’re unwell your vet’s app will tell you in a way they can’t

As sensors spread into the objects of our lives, and as the phones in our pockets become the dashboards for our daily lives, the way we live will gradually change. All of these are already being tested and the information from each brand is a service people find valuable, while at the same time driving sales for the sponsor. For marketers this is the one-to-one future you’ve been chasing. Use it wisely, treat the data responsibly, create value and trust among your customers. Direct marketing is at the dawn of a new era. The responsibility of agencies, brands and their marketers will decide whether it’s an era in which the direct marketing industry triumphs as a champion of the consumer, or is restricted because of abuse of trust to a small role on the side lines.More about the latest IoT trends is available at www.DigitalStrategyConsulting.com/intelligence/tag/internet-of-things

Google’s Nest ‘learning thermostat’The home automation firm claims it can bring home energy prices down by up to 29%. The Nest thermostat connects to a user’s WiFi network and to the Nest controls in a boiler, talking to the thermostat and telling the boiler to turn on or off. The device is controllable from smartphones.

Amazon turns the kitchen into a checkoutAmazon’s dash wand is the first barcode scanner for your groceries, simplifying the shopping process by filling the basket without leaving the kitchen. It’s part of the pilots for Amazon Fresh as the business evaluates taking on the grocery chains.

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Complaints HistoryThe complaint numbers over the fifteen month period of this report highlight DMA members’ compliance and high standards across the industry. Out of 360 complaints, the Commission Secretariat received 103 consumer complaints and 12 business-to-business complaints which involved members of the DMA. We recorded almost twice this number of complaints against non-member companies, and referred those where possible to the relevant organisation or regulatory body. In a number of cases the initial complaint to the Commission proved to be a window onto hundreds and in some cases thousands of parallel complaints to the Telephone Preference Service, the Information Commissioner’s Office and to online campaigns protesting the actions seen.When investigating complaints, the Commission Secretariat follows a set process used to ensure we deal with them proportionately and also consistently, taking the right course of action. We look at the nature of the possible Code breaches and at whether the issue is unique to the specific complainant or a symptom of a wider and more systemic problem. We also look at the nature of the harm, on the basis it would be right to take formal action in the face of serious harm even if complaints are few in nature. Where there are potential serious breaches of the Code, repeated offences, repeated complaints or minor breaches which may affect a large number of consumers, we progress to a formal investigation.During this period we also looked at how we can best help and encourage companies who are under the microscope of a formal investigation, to reduce complaints and improve their compliance prior to adjudication. In one case, the member produced information which showed where they had taken remedial actions and where they planned future remedial action thereby improving compliance and reducing complaints. This set of mitigating information helped to inform the Commissioners’ decisions at the adjudication stage of our process. We have now incorporated this formally into our complaints procedure and this is reflected in our complaints process chart which you will find further in this report. During the fifteen month period, the Commission found five companies in breach of the DMA Code. Two of those companies have been subsequently expelled from DMA membership. These cases are described further in this article. The details of each adjudication were published on our website, and we informed the DMA of our conclusions, and where appropriate, notified the relevant regulatory body. As always, in most cases, each investigation involved direct marketing activities that had or could have had an impact on a very large number of people and small businesses.

In one case, concerns had been raised by three businesses which related to email marketing. One complaint related to an unwanted email and the difficulty of finding out the source of the data; a second complaint related to claims that email addresses had not been suppressed adequately; and a third claim from a business related to the sale of email data for an email campaign which resulted in a very high hard bounce rate. The business concerned was not a member of the DMA but listed on the former List Warranty Register and therefore bound by the regulations of the Code. The resulting investigation highlighted a number of uncertainties over the source of data, the access to and management of data, and an admission that in one case data had knowingly been used when it had been held for over two years. Based on this admission and on the absence of reliable information about data sources the Commissioners concluded that the data in question in two of the cases was not up to date and could not be shown to be accurate. There were also levels of uncertainties as to the data in terms of its origin and accuracy, and a lack of assurances to the Commission as to its quality and verification which led the Commissioners to conclude that the company did not have the arrangements in place to demonstrate it was acting fairly and reasonably and was therefore able to fulfil its contractual obligations. Another investigation looked at a complaint against a member from a business which related to a data order for 1000 records which had not met the criteria requested. The data provided did not include essential address or telephone details and replacement data offered in compensation appeared similarly incomplete, inaccurate or out of date. The member did not provide the Commission with a response to the issues raised or any assurances over future compliance with the Code. The Commission did, however, have sufficient information from the complainant including mail exchanges to reach a set of decisions.There was a clear unwillingness on the part of the member to liaise with the Secretariat, seeming disinterest in the Code and little evidence of any concern over their client’s circumstances. In reaching a decision as to sanction the Commissioners noted that there had been a number of previous complaints including a case with many similarities which had resolved informally following assurances from that it was a ‘one off’ incident attributable to a single member of staff. In the light of serious, repeated Code breaches and a seeming indifference to the needs of their consumer, and their responsibilities to their industry and trade association, this led Commissioners to conclude that there should be

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a recommendation to the DMA that membership of the Association is terminated. This was actioned by the DMA.We undertook three formal investigations into complaints about unwanted calls. One of these investigations related to complaints from TPS registrants about unwanted calls in relation to a lead generation survey, and in two cases those consumers were passed to other third parties against their wishes. The company had provided full co-operation to the investigation and agreed that the Commission could access data recorded with the Telephone Preference Service. It was found that around 1,000 complaints had been logged by TPS in the period of a year. The Commissioners concluded that the company was in breach of Code rules that prohibit calls to TPS registrants unless the company has express permission to make that call. The Commissioners were particularly concerned over the lack of documentation, safeguards and record-keeping of data and the call-permissions associated with it.There were, however, strong grounds for mitigation in information and assurances sent by the member to the Commission prior to adjudication. The Commissioners believed that the actions taken or promised should bring them into Code compliance and dramatically reduce the level of complaints received. This proved to be correct and complaint numbers have been reduced greatly.In a further case calls had been received by TPS registrants in relation to the possible mis-selling of PPI. Once again, the member agreed that the Commission could access data recorded with the Telephone Preference Service. It was found that around 100 complaints had been logged by TPS against the member over the period of a year, and over 200 complaints had additionally been logged against one of the member’s other trading names. Based on information provided by the member in relation to the call script used by the firm providing them with names to call and on the answers given by the member, the Commissioners concluded, on a balance of probability, that the company was not named by its data supplier in its call script and should not be calling TPS registrants as they did not have express permission to make these calls.There were similar issues with the calls made by the firm supplying the data used by the member. The company made “lifestyle survey” calls but the Commissioners were not shown any evidence to explain what permissions the company had from the people called for making “lead generation” calls of this nature. There were additionally concerns over the member’s own telephone script in terms of the company’s own identification. The Commission decided this was misleading as to the identity of the people and the intent of the call.

These conclusions highlighted permission issues over extended value-chains over the supply of data, and failures to understand the regulations. The Commissioners sought agreement that the member would provide a full Report and Review of Actions taken as a result of the investigation, together with information on their handling of any future TPS complaints. However, this was not produced, and the matter eventually rested with a recommended sanction to the DMA that the company should be expelled from membership of the Association and this was actioned by the DMA. A final investigation examined complaints from consumers who were registered on the Telephone Preference Service and had received calls about a survey. The Commission was asked to consider whether the company was complying with rules regarding calls to those registered with the TPS, whether there were issues in relation to customer service and whether the purpose of the calls was clear. Two breaches of the Direct Marketing Code were upheld, and these were in relation to the clarity of their communication when consent is secured on-line and the importance of ensuring that the purpose of a telephone call, as a form of lead generation, is made clear when contact is then made subsequent to the initial consent. The Commission saw, however, grounds for mitigation because the company had made a number of changes in order to reduce TPS complaints.

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General Nature of Complaints (DMA members)1st April 2013 – 30th June 2014

Number of Complaints 1st April 2013 – 30th June 2014

Data, Privacy & Quality

Consumer

Customer Service issues

Business to Business

Contractual issues

Non-Member Referrals or Enquiries

Complaint Statistics

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Unwanted calls Unwanted emails Unwanted mailings

Misleading information

Contractual

issuesUnclean dataD oor to Door

DeliveryUnwanted text Poor customer

servicePrivacy & data

protection

Apr-Jun 2013 Jul-Sep 2013 Oct-Dec 2013 Jan-Mar 2014 Apr-Jun 2014

aD

Nature of Complaints (DMA members only)1st April 2013 – 30th June 2014

Monthly Complaints 1st April 2013 – 30th June 2014

0

5

10

15

20

25

30

Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14

Consumer Business to Business Non-Member Referrals or Enquiries

Put your customer firstValue your customer, understand their needs and offer relevant products and services

Be honest and fairBe honest, fair and transparent throughout your business Take responsibilityAct responsibly at all times and honour your accountability

Respect privacyAct in accordance with your customer’s expectations

Be diligent with dataTreat your customer’s personal data with the utmost care and respect

The Complaint Process

The DMA Code Principles

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Nuisance Calls - Key MessagesKey messages to consumers

You can help stop the calls• Don’t forget that you can register with the

Telephone Preference Service, an easy way to help reduce live marketing calls and you may be able to block some calls.

Watch out what you agree to• Remember that there are a lot of tick boxes out there

asking your permission for future marketing – read it with care and think about it before you tick the box.

Trust in common sense • People are usually calling to sell or to help others sell.

That’s no crime but never forget that’s their purpose.

Don’t get angry get help • Note the number that is calling you if you can. Press

the caller to give their identity and ask how they got your number - report suspected fraud.

Be clear about what you want • Make it crystal clear if you want to be removed

from their lists.

Key messages to data users/buyers

Assume nothing • Ask for evidence that data you rent, buy or use is up

to date and has the necessary consents.

Your outbound call? Your responsibility• Whether it’s you, your call centre agents or your

sub-contractors who are making the call, you are responsible for any data protection issues and nuisance call complaints that may occur.

Be business-like• Be clear; sensible in your record-keeping; test the

data.

Being decent is good business • There is no point calling and pestering those who

don’t want to talk to you or buy what you offer. Know when no means no.

Remember – the offer matters• Good data and a good offer need to go hand in hand.

Key messages to data suppliers/lead generation businesses

Size isn’t everything • Selling or renting out data files you know have

appalling response rates would be self-defeating.

Thank before you act• Selling to clients you think aren’t playing by the rules

isn’t worth it – you will look bad in the industry and to consumers.

Be open• Tell people about who you are, what you are doing

and who data will be shared with.

Use it or lose it • Making calls based on old data and unclear consent

given years ago is not acceptable – if it ever was.

The world has moved on • People will complain if you contact them against

their wishes and your business will pay a price.

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Direct Marketing CommissionRegistered Number: 6469055Registered Office: 70 Margaret Street, London, W1W 8SSTelephone: 020 7291 3350Email: dm@dmcommission.comWeb: www.dmcommission.com