Italy: Arms’ War In Italy: Aggressive Marketers Versus Privacy Watchdog1

Article by Felix Hofer²

(As per January 2010)

1. Implementing both, EU Directive 2002/58/EC of July 12^th, 2002 (Directive on privacy and electronic communications) as well as Directive 2000/31/EC of June 8^th, 2000 (Directive on electronic commerce) the Italian legislator decided that unsolicited commercial communication had always to adopt a strictly "opt-in" approach. The choice clearly didn't drive marketers into a status of happiness: they felt that their business was unnecessarily harassed by complex and costly burdens. Therefore they decided initially not to care too much about the requirements set by the new regulations and to continue in their proven aggressive marketing techniques.

In doing so they nevertheless had underestimated a couple of factors: on one hand, consumers' reaction (who resulted more and more annoyed by spamming practices and behavioural targeting and were no longer prepared to tolerate disturbing intrusions into their sphere of personal intimacy), on the other hand, the role of a special Authority (the Privacy or Information Commissioner - DPA) in charge – in all countries members to the EU - of supervising proper compliance with the key principles of protection of personal data (and quickly focusing on the purpose of achieving a correct balance between consumers' privacy and electronic marketing).

2. In the light of such purpose the Italian Privacy Commissioner during the years – and especially after the Italian Privacy Code³ came into force - has frequently addressed various aspects of marketing both, through specific guidelines as well as through case by case decisions, issued with respect to objections filed against practices performed by companies. In year 2003 the Commissioner delivered his views and indications on MM⁴, SMS⁵ and E-mail⁶ marketing, while in 2005-2006 the Authority put Electoral marketing⁷, Hotels guests registration practices⁸ as well as their fidelity programs⁹ and Fax marketing¹⁰ under scrutiny.

3. The reins for the local marketing industry were drawn even tighter after the EU Directive 2005/29/EC of May 11^th,¹¹ 2005 received domestic implementation through the so-called "Consumer Code"¹², which considers¹³ unsolicited commercial communication as an excessively aggressive and illicit practice.

At that point the marketers felt that they had only few options left for avoiding the requirement of specific in-advance consent before targeting consumers with commercial communication. Their ultimate idea therefore was to refer to "publicly available" personal data, such as those contained in telephone books or other freely accessible general directories. Especially providers of Internet connections, of Internet related or of phone services widely used to refer to such data sources for achieving addresses of prospect clients and to target them with frequent and intensely repeated promotional offers.

But again the general public strongly disliked such intrusive practice and therefore inundated the Privacy Commissioner with a significant amount of complaints, which induced the Authority to hoist a clear warning flag by opening an infringement investigation and serving the leading Italian Telco with an injunction prescribing corrective measures¹⁴ within a given deadline¹⁵. In order to deliver a clear signal to the entire industry sector the Commissioner in the following extended its investigation to the five major local providers of phone and Internet services, served them also with a prescriptive injunction, announced its firm intention to provide them with even more stringent measures in case the targeted companies should fail in radically changing their business habits¹⁶ and finally required all of them to submit – no later than by July 5^th, 2007 - a set of good business practices, apt to avoid further inconveniences to consumers.

4. While this intense confrontation took place the marketing industry succeeded in obtaining some relief at the legislative level. In February 2006 it was set¹⁷ that the Consumer Code's provisions¹⁸, allowing promotional messages occurring between individuals and not relying on automated technical systems or devices without involvement of an operator, would prevail over the strict in-advance consent requirements established by the Privacy Code for all commercial communication performed via electronic means. In other terms, in such case marketers benefit from an exemption of the consent requirement.

5. The Privacy Commissioner had to acknowledge the changes made to the previous legal framework and therefore issued – in June 2008¹⁹ - specific guidelines meant to grant a fair balance between the – frequently conflicting – interests of the marketing industry and those of the targeted consumers. In detail the Commissioner held that in-advance consent was not necessary when the used data:

(a) are available in public directories or other generally accessible listings,

(b) are originating from a previous business relation and are used for market surveys or profiling purposes,

and provided that:

- the promotional messages refer to items or services identical to those object of the previous business relation,

- targeted subjects are properly informed (at any delivery of commercial communication) about their right to obtain ease and immediate interruption of such practice,

- targeted subjects do not object to the delivery of promotional material.

6. Companies involved in direct marketing now felt that many of their problems had come to a satisfying solution, especially as use of data contained in public directories or generally accessible lists appeared available for unconditional use.

But already a few days after the publication of the guidelines above the Privacy Commissioner delivered them a nasty wake up call. Picking up on the previous issues at stake in the confrontation with providers of Internet or phone services, the Commissioner informed the respective companies²⁰ about his convincement that only "publicly" accessible personal data available in public directories/listings prior to August 1^st, 2005 (or in private data bases construed before such reference date) could be considered exempt from the in-advance consent requirement, while all other data from sources not present at the mentioned reference moment would not fall under such benefit. Through three decisions issued on the same day the Commissioner banned the use of data base not meeting the particular requirement. A few weeks later companies involved in telemarketing through call centres were hit by two additional decisions of the Authority²¹.

7. The discussion around this aspect of 'time sensitiveness' induced the lawmakers to an additional step: in February 2009 a provision²², inserted in a law with multiple regulations (typical for the end of year period), clarified that, irrespective of the prescriptions and restrictions laid down in Sections 13 and 14 of the Privacy Code (Legislative Decree no. 196 of 2003), "identification data contained in databases construed with data originating from phone directories existing prior to August 1^st 2005 may legitimately be used for promotional purposes until December 31^st, 2009 by those who had set up such databases before August 1^st, 2005"²³.

8. The Privacy Commissioner, while consistently recalling its views on the necessity of targeted subjects' specific in-advance consent for e-mail²⁴ and fax marketing²⁵, felt that he had also to provide some guidelines with respect to the recent Statute Law provisions.

In March 2009 the Authority therefore explained²⁶ that companies, owning databases construed after the content of phone directories set up prior to August 1^st, 2005 and intending to use such databases for purposes of marketing or commercial communication, had to:

- substantiate, by documentary evidence, the exact moment of the database's construction,

- process such data directly and without transferring them to third subjects,

- inform the targeted subject both, about his right of opposition to the planned processing as well as of data processor's identity,

- register immediately oppositions received and confirm cease of data's use,

- use data exclusively for marketing purposes within the deadline of December 31^st, 2009,

- notify the Data Protection Authority²⁷ about ownership of the respective databases.

Later on an additional guideline²⁸ provided instructions on profiling performed in the context of electronic communication services.

9. Again the Commissioner's indications failed to meet the expectation of the marketers. They brought their outcry and disappointment about the DPA's consistently tough stand to the sympathetic ears of the legislator. The Italian House felt that a more conclusive approach to the problem appeared necessary and therefore decided – through a quite discussed majority vote - to radically overturn the current opt-in system through the following mechanism²⁹:

* the Privacy Code was amended and telephone-marketing is now allowed in absence of targeted subject's specific choice in favour of enlisting his number with a do-not-call register,

* such register should be organized, functioning and effective within six months³⁰,

* it will become subject to supervision and control of the Italian DPA,

* the (already mentioned) deadline, set³¹ on December 31^st, 2009 for using databases with personal information deriving from earlier public phone directories, was also extended to the moment of coming in force of the new do-not-call register³².

10. It goes without saying that the recent legislative initiatives received some "spicy" comments from the Data Protection Authority, which was all but happy about the ways paved - once more - for aggressive marketing practices.

As they say: "If you can't go around a law, have it changed!" It's not difficult to predict that this debate is definitely not over yet.

Footnotes

1. N.B: Kindly acknowledge that the content of this news blurb is exclusively meant to provide only general information. By no means should its content therefore be considered as professional or legal advice, which has always to be sought by consulting directly the lawyer.

2.Felix Hofer is a naming partner of Florence (Italy) based law firm Hofer Lösch Torricelli; contact him by fax at the number +39 055 578230 or via E-mail at the following address: fhofer@hltlaw.it.

3. Legislative Decree no. 106 of June 30^th, 2003. Section from 121 to 132 of the Code are entirely dedicated to electronic communication; an unofficial English version of the Code may be found at: . http://www.garanteprivacy.it/garante/document?ID=1219452

4. Document no. 1672134 of March 12th, 2003, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1672134.

5. Document no. 29844 of March 12^th, 2003, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=29844.

6. Document no. 1589969 of May 29th, 2003, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1589969.

7. Document no. 1187710 of September 7th, 2005, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1187710; also document no. 1409206 of May 3^rd, 2007, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1409206.

8. Opinion no. 1138725 of June 1st, 2005, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1138725.

9. Documents nos. 1109624 of February 24^th, 2005, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1109624 and 1252220 of March 9^th, 2006, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1252220.

10. Document no. 1376148 of March 2nd, 2006, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1376148; the issue was also dealt with in adjudication n. 1367602 of November 23^rd, 2006, see at: http://www.garanteprivacy.it/garante/doc.jsp?ID=1367602 and many others in the following.

11. Concerning unfair business-to-consumer commercial practices in the internal market.

12. Legislative Decree no. 206 of September 6th, 2005.

13. See Section 24 of the Code.

14. Document no. 1371041 of December 7th, 2006, to be found at:

http://www.garanteprivacy.it/garante/doc.jsp?ID=1371041.

15. Set on March 31st, 2007.

16. Injunctions nos. 1412557, 1412586, 1412598, 1412610, 1412626, all dated May 30th, 2007

17. Through Section 19-bis of Law no. 51 of February 23rd, 2006.

18. Reference is to Section 58 of Legislative Decree no. 2006 of September 6^th, 2005.

19. Document no. 1526724 of June 19th, 2008.

20. Through decisions nos. 1544315, 1544326 and 1544338, all dated June 26th, 2008.

21. Documents nos. 1562758 and 1562780 dated September 25th, 2008.

22. So Section 44 of Law no. 14 of February 27th, 2009.

23. Unofficial English translation provided by the author of the article.

24. Decisions nos. 1597151 and 1597146, 1601506 of February 19th, 2009.

25. Decisions nos. 1597163 February 19th, 2009, 1601506 and 1601475 of February 26^th, 2009.

26. Guideline document no. 1613568 of March 12th, 2009, see at:

http://www.garanteprivacy.it/garante/doc.jsp?ID=1613568.

27. A fifteen days deadline was set at April 4th, 2009 for fulfilling such requirement.

28. Guideline document no. 1636001 issued on June 25th, 2009.

29. Introduced by Section 20-bis of Law no. 166 dated November 20^th, 2009.

30. Starting on November 25th, 2009.

31. By Section 44 of Law no. 14 of February 27th, 2009, see footnote no. 22 above.

32. Six months from November 25th, 2009.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.