Opting out: How does POPIA impact telemarketing?

April 1st, 2023
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Picture source: Gallo Images/Getty

By Gilad Katzav

Regulating direct marketing is a familiar endeavour for South African law. This marketing practice has garnered the attention of our legislature for over two decades: From the provisions of the Consumer Protection Act 68 of 2008 (CPA) and its Regulations, to the Electronic Communications and Transactions Act 25 of 2002 and, now again, in the Protection of Personal Information Act 4 of 2013 (POPIA), direct marketing is proving to be a thorny issue in the body of consumer and privacy law. For context, we have an overlapping legislative framework, which simultaneously imposes both opt-in and opt-out regimes. This means that if the direct marketing falls under the CPA provisions, the point of departure is that direct marketing is generally permissible unless the consumer exercises their right of refusal (commonly known as opting-out). In contrast, if the direct marketing falls under the provisions of POPIA, the starting point is that the direct marketing is generally prohibited unless the two grounds of exception apply (commonly known as opting-in).

Fortunately, if you do some basic research into this topic, you will come across guidance to help navigate the different rules relating to direct marketing. However, there is one aspect that is written almost as if it is a throw-away point already long-settled in law, which is the assertion that telemarketing does not fall within the opt-in regime under s 69 of POPIA.

In this article, I question whether this assumption stands on well-founded grounds. As will be argued, person-to-person telephone marketing can be covered under ‘electronic communication’ as defined in POPIA, provided it is recorded. I start with an overview of
s 69 of the POPIA, followed by an examination into the definition of ‘electronic communication’. I then critically unpack the arguments, which seek to exclude telemarketers from the opt-in regime and explain why such views are not definitive of the issue. Ultimately, I submit that a telemarketing practice can fall within the opt-in regime under s 69 of POPIA.

Section 69 of POPIA

Section 69(1) of POPIA states that ‘the processing of personal information of a data subject for the purpose of direct marketing by means of any form of electronic communication, including automatic calling machines, facsimile machines, SMSs or e-mail is prohibited unless the data subject –

(a) has given his, her or its consent to the processing; or

(b) is, subject to subsection (3), a customer of the responsible party.’

Understood correctly, s 69 of POPIA regulates a specific form of direct marketing, namely direct marketing via electronic communications. The provision expressly includes several examples of electronic communication, but it is notably a non-exhaustive list. It imposes an ‘opt-in’ regime when electronic communication is used for the purpose of direct marketing. Therefore, it is imperative for any responsible party who wishes to engage in direct marketing to grapple with the meaning of ‘electronic communication’ as it will determine whether the opt-in scheme of POPIA will apply.

Electronic communication

Section 1 of POPIA defines ‘electronic communication’ as ‘any text, voice, sound or image message sent over an electronic communications network which is stored in the network or in the recipient’s terminal equipment until is collected by the recipient’.

From this definition, there are three main considerations for telemarketers. Each will be dealt with in turn.

  • Sending a voice message

What is immediately apparent is that a telephone call will constitute the sending of a voice message. This can be deduced from the fact that automatic calling machines are expressly included under s 69 of POPIA, which indicates that telephonic communication is a ‘voice message’. There is also recent judicial authority to support this view. In Samsung Electronics SA (Pty) Ltd v The Commissioner for the South African Revenue Services 2022 JDR 2654 (SCA), the court held that smartphones are ‘simply an evolved and more advanced cellphone than earlier cellphones’. This evolution includes ‘digital telephony … where voice is digitised and transmitted as data’. In other words, the court explained that when we speak into our phones, our voice is converted into a digital message. That message makes its way through intermediaries (such as cellphone towers) and it is eventually transmitted to the recipient’s telephone to be reconstructed as an audible ‘voice message’.

Some may push back to say that sending a ‘voice message’ envisages some sort of a singular package form of direct marketing. In other words, you receive a single message, which promotes a product or service and a person-to-person telephone call does not comfortably fit into that kind of idea. In support of this position, they may point to the fact that automatic call machines are expressly included in s 69 of POPIA and the distinguishing feature about that form of telephonic communication is that there is no element of reciprocity. There is no chance of any dialogue and the data subject cannot tell the automatic machine to stop. It is a once-off message.

In response, I proffer two main reasons why this view is wrong. First, there is nothing inherent in the definition of electronic communications to exclude reciprocity or dialogue. Put differently, there is no obvious indication that any given direct marketing communication is not a ‘message’ for the purposes of
s 69 of POPIA simply because there is also accompanying reciprocal dialogue. Secondly, even if we accept that the meaning of electronic communication requires a ‘once-off’ message, this actually does not result in the exclusion of telemarketing. This is because the act of direct marketing is triggered the moment the telemarketer approaches the data subject for the purposes of, inter alia, promoting goods and services over the telephone. Whatever happens after that is beside the point – whether I engage further or simply decide to end the call – the voice message has been sent.

  • Electronic communications network

Next, what is the meaning of an ‘electronic communications network’? Although there is no guidance or definition for the phrase under POPIA, it is defined in the Electronic Communications Act 36 of 2005 as ‘any system of electronic communications facilities (excluding subscriber equipment), including without limitation –

(c) mobile systems;

… and;

(f) other transmission systems, used for conveyance of electronic communications’.

Furthermore, the court in Samsung Electronics SA explained that the objective characteristic of the modern cell phone reveals that it is still a ‘telephone facility network’ which has, on the one end, an audible speaker for the operator to listen to communication and, on the other end, a microphone to receive speech from the operator’s mouth.

In the end, we need only apply the ordinary meaning to ‘electronic communications network’ to find that telemarketing practices will fall within its ambit without any linguistic difficulty.

  • Storage

Finally, in order for direct marketing to constitute ‘electronic communication’, the message sent over the electronic communications network must be stored either in the network or in the recipient’s terminal equipment for collection at a later stage. ‘Storage’ of the message is, therefore, an essential and necessary element to the definition of electronic communication.

In the context of direct marketing by way of telephonic communication, the medium is not the message. Once we establish that the message is direct marketing, and the medium chosen to convey the message is telephony, then we are positioned to uncover the full extent of the telemarketing red herring. This is because exactly who sends the message is immaterial and inconsequential to the definition of ‘electronic communication’. Accordingly, it must follow that the application of s 69 of POPIA is not contingent on whether the telephone call is made by human or machine. In my view, the real crux of the issue lies in whether or not the message is stored in the network or in the recipient’s terminal device. It is my submission that telemarketers will satisfy the storage element of ‘electronic communication’ when they record their telephone calls for the purpose of direct marketing; bearing in mind that s 50(3) of the CPA states that, where consumer agreements are not in writing, suppliers are required to keep a record of transactions entered into over the telephone or any other recordable form.

Recommendations of the SA Law Reform Commission

During the early stages of drafting the Protection of Personal Information Bill, the legislature received the South African Law Reform Commission’s (the Commission) ‘Project 124: Privacy and Data Protection’ report. This report was the product of a thorough and wide-ranging consultation process, which collated the opinions, concerns and recommendations from various stakeholders as to what Parliament ought to consider before finally enacting POPIA. Interestingly, the report refers to the government’s policy to promote the telemarketing industry by attracting investment, creating jobs and permitting tax-break incentives. Accordingly, the report recommended that telemarketing practices should fall under the opt-out regime in terms of the CPA, rather than the opt-in regime under POPIA. For this reason, some rely on this report to assert that POPIA strategically excluded telemarketing from the scope of s 69.

In response, there are two reasons why maintaining this position is erroneous. The first relates to the nature of the Commission’s report. We must always bear in mind that the Commission’s mandate is to consult, research and provide recommendations on the draft Bill. While the pre-legislative background may aid the interpretation of POPIA, we should caution against over-reliance on the Commission’s report as an authoritative source of interpretation. The reason why heavy reliance on the Commission’s report is misplaced is because it runs the risk of presuming that Parliament simply accepted the report’s recommendations. This brings me to my next point.

The recommendations of the Commission were not blindly adopted by Parliament without alterations. If we engage in legislative interpretation by way of reverse engineering, then we do so consistently throughout the exercise. Importantly, the Commission’s report recommended that the new opt-in regime under POPIA should only apply to automated calling machines, faxes, electronic mails and SMS’s used for direct marketing. Furthermore, the report suggested that the direct marketing provision be drafted in the following terms: ‘The processing of personal information of a data subject for the purpose of direct marketing by means of automatic calling machines, facsimile machines, SMSs or electronic mail is prohibited unless the data subject …’. I wish to draw attention to the fact that when POPIA was finally enacted, the legislature added the crucial concept of ‘electronic communication’ to the provision and it also broadened its scope by inserting ‘including’ before listing automatic calling machines, faxes etcetera.

What we gather from this exercise is that Parliament clearly sought to widen the scope of the opt-in regime relative to what the Commission had initially recommended. This is precisely why it is unacceptable to place heavy reliance on the Commission’s report as a source of statutory interpretation. It is entirely within the legislature’s power to widen, narrow, alter, accept and/or reject the Commission’s recommendations. There is an abundance of authority as to how we go about interpreting legislation, which need not be covered in this piece. Suffice to say that we interpret legislation holistically, with an eye on protecting and promoting constitutional imperatives. It may be permissible to look at the pre-legislative background and context to aid the interpretation, but this exercise must be done very carefully to avoid the mistake of invoking authority in the draft of the legislation without a consistent comparison to the statute in its final form.

Conclusion

I have demonstrated the telemarketing practices will fall under s 69 of POPIA, provided the communication is recorded. If I am correct, telemarketers will have to comply with the more stringent opt-in provisions under POPIA as opposed to the opt-out regime in the CPA. This is something I urge the industry to seriously consider and to weigh its options going forward.

Gilad Katzav BCom LLB LLM (Wits) is a candidate legal practitioner at Norton Rose Fulbright in Johannesburg.

This article was first published in De Rebus in 2023 (April) DR 15.

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