UK: E-commerce news

• Fine for UK mobile phone text message spammer
• Data Privacy - Subject Access Request (SAR) consultation
• UK uses new eCommerce Regulations to fine Spanish and Greek websites
• Implementation of the eCommerce Directive in the financial services sector
• Is mention of a name on a website a data transfer?
• Are your website terms and conditions enforceable?

Fine for UK mobile phone text message spammer

ICSTIS, the Independent Committee for the Supervision of Standards of Telephone Information Services, is the industry-funded regulatory body for all premium rate charged telecommunications services. It regulates the content and promotion of premium rate services through a Code of Practice. All premium rate service providers are obliged to comply with the ICSTIS Code of Practice through their contracts with network operators. In late August, ICSTIS fined an advertising company £50,000 and barred it from continuing a mobile phone text messaging promotion. The company had been sending large numbers of unsolicited text messages to mobile phone users telling them they had won a mystery prize worth £500. Users were told to urgently ring a premium rate number only to be offered holiday discount vouchers rather than a £500 prize. The same company was fined a further £10,000 in October for texting recipients with a message indicating they had won money in an instant lottery competition. Recipients were told to ring a premium rate number only to find that after a lengthy delay they could merely obtain holiday vouchers. Although mobile phone text messaging is currently not specifically regulated in the UK it is regulated by the new Privacy and Electronic Communications Directive which is due to be implemented in the UK and other EU member states by 31 October 2003.

Data Privacy - Subject Access Request (SAR) consultation

The Data Protection Act 1998 protects the personal data of data subjects. Employers will be data controllers under the Act if they hold personal data about current and past employees and also unsuccessful applicants for positions. Examples of such data include employee records, sickness records, interview reports and employer/peer reviews whether formal or informal (e.g. in an email). When the wide definition of personal data is coupled with the data subject’s right under the Act to access that data for the very modest sum of £10 it creates a potential headache for data controllers who must comply with subject access requests within 40 days.

As well as the practical difficulties of compliance, the employer will also need to consider the legal issues. The Act contains a complex series of exemptions and limitations to the obligation to provide the data. The disclosure of the information may conflict with the data privacy rights of other employees, reveal the employer’s trade secrets and/or be damaging to any current or potential litigation involving the employer. The recently launched public consultation by the Lord Chancellor’s Department does not of itself offer any possible solutions to these problems but rather contains a number of questions on the following issues as a means of encouraging debate on the issue of SARs:

• The general workability of SARs under the Act;
• Subject access fees;
• Response time;
• Locating the information sought;
• Methods of providing information;
• Frequency of requests; and
• Exemptions.

Comments must be submitted by 31 January 2003. Please click through for a copy of the Lord Chancellor’s consultation paper.

UK uses new eCommerce Regulations to fine Spanish and Greek websites
As discussed in the April 2002 IT Bulletin the UK’s progress toward implementation of the eCommerce Directive has been slow. The Directive regulates Information Society Service Providers (ISSPs). As Information Society Services (ISSs) include the provision of goods, services or information most businesses that use the Internet will come within the Directive. The general rule under the Directive is that an ISSP will normally only be regulated by the laws in its home state (i.e. the home state/country of origin rule). There are however several exceptions to that rule. One exception is that a Member State is able to take action against an ISSP located in another Member State if it is necessary in the interests of the public to take immediate action.

On 21 August 2002 after several public consultations the UK’s Electronic Commerce (EU Directive) Regulations 2002 finally came into force. The UK’s premium rate services regulator ICSTIS has moved quickly to take advantage of the Regulations. Two websites, one based in Spain and the other in Greece, were promoting child pornography and were also secretly downloading software to users which diverted them to a premium rate internet dial up service that was charged at £1.50 a minute. ICTIS recently fined the companies, barred access for two years and the companies were also ordered to offer redress to any subscribers that complained to ICSTIS.

The actions of ICSTIS are a timely reminder to businesses located in the EU that if they are conducting business online the "home state rule" does not offer blanket protection. The exception from the rule mentioned above is only one of several in the Directive. Some of the other exceptions (e.g. consumer protection laws, copyright law) severely dilute the impact of the Directive. The UK, like the other Member States, must repeat the exceptions in their implementing legislation. This means that those conducting business in multiple EU countries will still need to consider the law in each of those countries.

Please click through for a copy of the Electronic Commerce (EU Directive) Regulations 2002.

Implementation of the eCommerce Directive in the financial services sector

The UK’s Electronic Commerce (EU Directive) Regulations 2002 discussed in article 1.3 above, implemented the Electronic Commerce Directive (2000/31/EC), in all sectors except the financial services sector. Separate legislation has now come into force in the UK to apply the Directive to that sector. The "home state/country of origin" rule means that in principle a UK ISSP which provides financial services will only need to comply with the laws of the UK even if it is providing the financial services to another Member State. Unfortunately for providers of financial services the same exceptions to the "home state/country of origin" rule discussed above have also been applied to the financial services sector. It will therefore also still be necessary for financial service providers to consider the law in each of the EU member states in which they provide those services.

Is mention of a name on a website a data transfer?
In a recent case before the European Court of Justice (ECJ) the court had to decide whether the posting of personal information on a globally accessible web page constitutes a 'transfer of information' outside the European Economic Area (EEA) for the purposes of data protection legislation. Under the EU’s Data Protection Directive such transfers are prohibited unless one of the exceptions are satisfied.

The case involved a Swedish nurse setting up a web page for her church that included information about the congregation including the fact that one of the church officials had injured her foot. The nurse was charged under the Swedish data protection law with transferring sensitive personal data (i.e. health information) outside the country. ECJ Advocate General Tizzano concluded that the bare mention of a person's name and telephone number on a non-profit website covering parish affairs does not contravene the EU Data Protection Directive.

Like the Swedish data protection laws the UK’s Data Protection Act 1998 also implements the EU’s Data Protection Directive. The issue of posting personal information on a website however has yet to be considered by the UK courts.

Are your website terms and conditions enforceable?

In general, the terms and conditions on a website will be enforceable provided that the user has indicated acceptance. Typically this is done by requiring the user to click an "I accept" icon below the terms and conditions prior to the user being allowed to use the website or place an order. One of the notable US cases in this area is Specht v. Netscape Communications Corp. The trial judge’s decision in 2001 was discussed in the November 2001 IT Bulletin. That decision was appealed and on 1 October 2002, the US Second Circuit Court of Appeals affirmed the earlier ruling and held that some of the terms and conditions on Netscape’s website were not enforceable.

The Netscape software in issue consisted of two components – Communicator which is an internet browser and the Smart Download plug-in (i.e. a program which enhances the Communicator browser). When downloading Communicator, users were obliged to click "I accept" to the terms and conditions. If users attempted to download it without clicking acceptance the download would be automatically aborted. The terms and conditions did not however mention Smart Download. It was not necessary for the plaintiffs to click "I accept" prior to separately downloading Smart Download from a different website. On the page of the website where Smart Download could be obtained the sole reference to the Smart Download licence conditions was located in text that would only have become visible to the user if they scrolled down to the next screen.

On 1 October 2002 the US Second Circuit Court of Appeals held that users neither received reasonable notice of the existence of the license terms nor gave clear assent to those terms before acting on the webpage's invitation to download Smart Download. If there had been some mention of terms and conditions on the download page, Netscape may have had more success with its argument that the users had been given reasonable notice and were bound by the terms and conditions relating to Smart Download. The most prudent practice however would have simply been to require users to click "I accept" on the Smart Download website as a condition of receiving that software.

© Herbert Smith 2002