The Australian Competition and Consumer Commission has conditionally authorised the Australian Direct Marketing Association's Direct Marketing Code of Practice, ACCC Chairman, Professor Allan Fels, said today.
"The code is designed to protect consumers from undesirable marketing methods by direct marketers who include businesses selling via telephone, magazines, mail-outs and the Internet.
"The code, as originally proposed, was extremely limited. Many of the provisions only covered ADMA members who actually entered into a contract for the sale of goods or services 'negotiated at a distance'. This means that the direct marketer and consumer had not met face-to-face. Further, the transaction had to be recorded and maintained on a list or database for future marketing purposes.
"In its final determination, the ACCC decided the application of these provisions of the code was too narrow and that little or no public benefit arose from it to allow authorisation without conditions.
"It has required ADMA to broaden the application of the code. A major change is the definition of direct marketer. At its narrowest, the code's provisions would apply to ADMA members contacting potential customers through a form of distance communication to supply goods/services under a contract negotiated at a distance. At its broadest, the code will apply to all ADMA members.
"The code regulates pre- and post-sale conduct which:
- provides consumers with the right to a cooling off period of seven days (an improvement on previous arrangements);
- provides an independent dispute resolution process and also an 'opt-out' system where consumers can direct they receive no further offers from ADMA members.
Consumers also gained rights to refunds for goods not delivered within the time specified in a contract (usually 30 days) and the incorporation of national privacy principles which sets standards about data collection. These rights are additional to those already enjoyed by consumers under fair trading laws.
"The code's provisions are drawn from a range of sources. Parts B and C are based on the Model Code of Practice for the Direct Marketing Industry, approved by the Ministerial Council on Consumer Affairs in 1997. Part D is based on the Draft OECD Guidelines for Consumer Protection (Electronic Commerce) and Part E on the National Principles for the Fair Handling of Personal Information.
"When determining whether to authorise the code, the ACCC considered if the code's provisions were likely to result in a public benefit and if that benefit outweighed the public detriment of any lessening of competition which followed, or was likely to follow, from giving effect to the code.
"The ACCC considered that the extent to which the code would in practice benefit the public depended on the level of compliance with the code's rules. As first drafted, the ACCC was concerned with the structure and operations of the code's enforcement provisions including the independence and accountability of decision making bodies, the remedies available and the complaints handling process. The ACCC therefore required a number of amendments to the enforcement provisions of the code.
"The ACCC granted authorisation of the Code of Practice until 16 August 2003. However, the authorisation is subject to additional conditions that require ADMA to keep its Code up to date with regulatory developments (as reflected in amendments to the Model Code of Practice for the Direct Marketing Industry, the OECD Guidelines for Consumer Protection in the context of Electronic Commerce, and the National Principles for the Fair Handling of Personal Information) on which the ADMA Code is based".
Copies of the determination will be available on the ACCC's website under 'adjudication' or directly from the ACCC by contacting Cecily Wills on (02) 6243 1058.