Council's Views on Strengthening the Regulation of Person-to-Person Telemarketing Calls

31 July 2017
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1.       The Consumer Council (the Council) is pleased to provide its views, from the perspective of consumer protection, on the public consultation put forward by Commerce and Economic Development Bureau (CEDB) on "Strengthening the egulation of Person-to-Person (P2P) Telemarketing Calls" in Hong Kong. The proliferated use of P2P commercial advertising calls and the nuisance caused by such calls have aroused huge public concern. In response to those concerns, although individual trades in Hong Kong have put in place some self-regulatory measures, the pleas for more stringent controls over P2P telemarketing calls has been intensified. To protect consumer's privacy, the Council would like to provide the following views for the Government to consider.
 
Hong Kong Needs a Statutory Regime for P2P Telemarketing Calls
 
2.       From the public surveys conducted respectively by the Privacy Commissioner for Personal Data ("PCPD") in 2014 and the Government in 2015, it was found that majority of respondents perceived P2P telemarketing calls negatively and fewer and fewer respondents reported any gains from the call. Many respondents of these surveys found that the P2P telemarketing calls were very disturbing to daily lives and became a big nuisance, leading to a strong public call for a more stringent regulatory regime to govern these calls.
 
3.       The Council believes a statutory regime for P2P telemarketing call is necessary to address the concerns of the public. However, it is obvious that for business convenience the industry prefers self-regulation. From the Council's experience, self-regulation would not be effective to balance industry against public interests. According to CEDB's 2015 study, over 96% of the respondents still regarded P2P telemarketing calls as nuisance. The tailor-made codes of practices implemented since 2011 obviously failed to tackle the problem. The public demand for mandatory regulation of P2P telemarketing calls remains high.
 
4.       Besides, any self-regulation regime is premised on customer's initiatives to make opt-out requests to telemarketers. At present, consumers have to opt out one company by another. This fragmented registration arrangement is very user-unfriendly and without sufficient deterrent effect on non-compliance would further demotivate consumers to act proactively. 
 
5.       In addition, the fragmented nature of P2P telemarketing call services market makes it difficult to coordinate sufficient number of services providers in the trade to enable a meaningful self-regulatory regime. Some overseas governments started with self-regulatory regime initially have changed to mandatory regime in view of the unsatisfactory outcome. The Council believes that Hong Kong should follow the international development and consider introducing a statutory regime in regulating P2P telemarketing calls. 
 
All P2P Telemarketing Calls Should Be Regulated
 
6.       P2P telemarketing calls involving personal data are regulated under Personal Data (Privacy) Ordinance ("PDPO"). Some people argued that P2P telemarketing calls (usually denoted as "warm calls") using personal data made are already subject to legal requirements, and therefore marketers need to take specific actions such as obtaining consent before making the calls. They suggested that any proposed regulation should only be applied to "cold calls", which made by telemarketers to phone number randomly generated without using personal data of the recipients; and, in other words, "warm calls" should be exempted. 
 
7.       Over the years, the Council received many complaints related to P2P marketers claiming that they were sales representatives of the banks, telecommunications service providers or beauty service providers of the call recipients. Many of the complainants could not ascertain whether telemarketers actually represented the company to which they had provided their personal data and had given the consent. It is unlikely that consumers when receiving the call, be able to distinguish clearly whether it is a "cold call" or a "warm call". If the "warm call" is exempted, some marketers might take advantage of the exemption to claim they have already obtained the consent of the call recipient. This will affect the effectiveness of mandatory regulation in curbing the nuisance caused by unwanted P2P telemarketing calls. Furthermore, it could be anticipated that an aggrieved consumer will find it difficult to prove that the call was "cold". This difficulty in discharging the burden of proof would be a barrier to enforcement. 
 
Which Statutory Regulatory Regime
 
8.       The Council noted that some advocated that the Government should assign specific number prefixes for P2P telemarketing calls for ease of identification by consumers. The telemarketers should also register with the Communication Authority as the enforcement agency of the registrar. This can address part of the nuisance problems caused by unwanted P2P telemarketing calls.
 
9.       Since 1995 Hong Kong has adopted an 8-digit telecommunications numbering plan and the demand for telecommunications numbers continues to rise as telecommunications services have become mature in Hong Kong. The expansion of mobile services, through proliferation of prepaid mobile service and the advent of future generation mobile services, such as the Internet of Things and fifth generation mobile service, is particularly phenomenal. In fact, the amount of 8-digit numbers available for allocation to telecommunications services is already highly stretched. 
 
10.      The Council is concerned that assigning specific prefixes to telemarketer could shorten the life span of the existing 8-digit numbering plan and would not optimize the effectiveness of the current system. The social cost of upgrading the telecommunications numbering system, i.e. to a 9 or 10 digit numbering plan, is significant and it is not fair and desirable to see all telecommunications service users of Hong Kong have to bear such cost while other alternatives are available in the market in addressing the malpractices of P2P telemarketing problem.
 
11.      Out of three proposals presented in the Consultation Paper, the Council supports the establishment of a Do-not-call Register via legislation to prohibit telemarketers to have access to the numbers listed on the Register. The Council believes that if the Register is equipped with the following features, it will help tackle the public concerns of nuisance from local P2P telemarketing calls. 
 
            i. The Do-not-call register for P2P telemarketing calls and Do-not-call register under Unsolicited Electronic MessagesOrdinance should be administrated by the same agency. This offers convenience for consumers to register and avoids the hassle of going through different administrative procedures and interfaces from two different authorities;
 
            ii. Exemptions should be carefully granted to balance the risk of abuse and the genuine public needs for certain mission critical services for organizations operated in the public interest;
 
            iii. A code of practice should be in place to clearly guiding telemarketers to comply with the laws in their marketing behaviour and conduct. This will help to address the core issue of nuisance by P2P telemarketing call; and
 
            iv. Furthermore, the registration system should be user-friendly, and offer the right to consumers to select which industry P2P telemarketing calls should be blocked and when to allow access according to their own need under the Do-not-call register.
 
Non- Statutory Measures in Place in the Interim 
 
12.      The establishment of a statutory Do-not-call Register is a long term solution and it takes time to implement. Therefore to ease the current situation the Council supports the second proposal under the Consultation Paper, i.e. to have the Government to facilitate development of call-filtering applications as an interim solution so that consumers could have more reliable tools to filter the P2P telemarketing calls. The Council has to emphasize that the privacy of the consumer should not be compromised and stringent security safeguards should be upheld in designing the filter applications. The public should also have free access and right of cancellation in using the applications.
 
13.      In views of the filter application cases of "DC Caller" and "Cheetah Mobile", the Council is highly concerned with the underlying privacy risk for these call-filtering applications. Access and use by software developers the information collected from phone books of users' phone devices which installed the call-filtering applications should not be permitted. Without effective measures to govern the compliance of the requirements, the Council would have reservations on sparing public fund for this initiative as the outcome will be questionable.
 
14.      Business-to-business calls should be well defined to avoid dispute. Although the focus of the consultation resides with P2P telemarketing calls, under Part 6A of the Personal Data (Privacy) Ordinance that regulates direct marketing made to specific individuals by using their personal data (e.g. phone numbers and names), grey areas may emerge in the case where telemarketers make the calls according to the business capacity or identity of the individuals. This could even possibly constitute as a defence. The Council would urge the Government to clarify the nature of a business-to-business telemarketing call that would be exempted and define properly the scope of exemption under the legislation.
 
15.      The Council fully understands that mandatory Do-not-call register is not a panacea to the nuisance problem of P2P telemarketing call. Complementary education effort to empower consumers to protect themselves against the malpractice of P2P telemarketing is necessary. Only by doing so, the consumers could have a good sense to select and judge the validity of the call, and stay away from malpractices subsequent to listening these calls. While society is reaching its consensus on the solution of P2P telemarketing issue, the Government should engage traders and the related enforcement agencies proactively to address concerns of consumers on nuisance and privacy issues of P2P telemarketing calls before the Do-not-call register is put in place.