Outsourcing no escape from liability for telemarketing without consent
The Supreme Court of Poland ruled on 17 February 2016 that an entity conducting direct marketing using automated generating systems (in that case SMS ads) is liable for failure to obtain consent from recipients also when it has contracted out the marketing to an external firm.
The case involved a marketing campaign by a telecom operator which sent text messages to its subscribers in 2010–2011 encouraging them to participate in a promotional lottery. Poland’s telecom regulator, the president of the Office of Electronic Communications (UKE), fined the operator PLN 5 million for conducting direct marketing using automated generating systems without the consent of the recipients.
The fine was imposed pursuant to Art. 209(1)(25) of the Telecommunications Law of 16 July 2004, under which any person (and therefore not just a telecom company) who does not comply with the obligation to obtain the consent of the subscriber or end user pursuant to Art. 172 of the Telecommunications Law is subject to a fine. Under Art. 172(1), use of automated generating systems (and from the end of 2014 also end-user telecommunications devices) for direct marketing purposes requires the prior consent of the subscriber or end user.
In other words, simply put, conducting marketing campaigns addressed to specific persons by telephone (e.g. SMS) or computer (e.g. e-mailing) requires the user’s consent before sending the person ads or offers. It should be stressed that under the Telecommunications Law, such consent cannot be implied or presumed from some other statement (for example concluding a contract to use the services of the advertised firm). Such consent may be given by electronic means (on condition that it is recorded and is confirmed by the user), but the user must have the option of withdrawing consent at any time, easily and without any fees.
In this case, the regulator found that the telecom operator had violated these regulations because it did not obtain any consent from the recipients of the marketing, and this justified imposition of the fine. The telecom did not agree with the decision and challenged it in court. The telecom argued in its defence that it was not liable for failure to obtain the users’ consent because it had hired an outside firm to conduct the marketing, and therefore it was the contractor that should be liable for any violations.
Because of doubts raised by this issue, the appellate court submitted a legal question to the Supreme Court, which by resolution dated 17 February 2016 (Case III SZP 7/15) ruled that a fine based on these regulations may also be imposed on a telecom which has “contracted with another entity using automated generating systems for the purpose of direct marketing of the services of the telecom among its subscribers or end users, using a supplied database of telephone numbers.”
This ruling appears to be universal and essentially applies to any entity contracting out telemarketing to another firm, particularly considering that in the oral justification for the ruling delivered by the court, as reported at the UKE website, the Supreme Court stressed that the prohibition under Art. 172(1) of the Telecommunications Law is broadly applicable in terms of the entities it covers. Moreover, it should be assumed that this liability applies also to outsourcing of marketing via end users’ telecommunications devices (a broad category covering most devices connected to a telecommunications network, such as computers and phones). The dispute in which the Supreme Court issued its resolution arose under the prior law, but the only change since then in Art. 172(1) of the Telecommunications Law consisted in adding to this provision the words “end-user telecommunications devices.” Thus the holding by the court is universal in nature. It does not appear that liability in this case depended on the specific technical means used for the marketing.
However, one should be cautious in concluding that in the case of outsourcing of marketing to a third party, liability for failure to obtain the required consent will always be borne by the party contracting out this service. The ruling by the Supreme Court was issued under a specific set of facts, and it also appears from the oral grounds for the ruling that in this case the contractor conducting the marketing used a database of recipients provided by the other party and was not authorised to verify the database. It cannot be ruled out that if the telecom had imposed more extensive obligations on the contractor with respect to preparation of the marketing campaign, e.g. a duty to obtain the consent of the recipients, then it would nonetheless be the contractor that would be liable for any irregularities. But for now it is difficult to evaluate the significance of the Supreme Court resolution for direct marketers. The written justification for the ruling, which should be published in the near future, will no doubt be highly instructive.
Rafał Kuchta, New Technologies Practice, Wardyński & Partners