The following submission was sent to the Australian Consumer and Competition Commission (ACCC) on 19 November 1998 by Andrew Freeman FACS - afreeman@pcug.org.au, Director of the Community Affairs Board (CAB) of the Australian Computer Society (ACS). It was prepared by Dr Roger Clarke FACS - Roger.Clarke@anu.edu.au, a member of the ACS Economic, Legal and Social Implications Committee (ELSIC).

19 November 1998

To: john.oneill@accc.gov.au (John O'Neill, Senior Assistant Commissioner, Adjudication Branch, ACCC)

cc:
angela.razborsek@accc.gov.au (Angela Razborsek - ACCC),
Roger.Clarke@anu.edu.au (Dr Roger Clarke FACS)

bcc:
ACS ELSIC list
ACS National Council list
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Mr J.P. O'Neill
Senior Assistant Commissioner
Adjudication Branch
Australian Competition and Consumer Commission
P.O. Box 1199
Dickson ACT 2602

Dear Mr O'Neill

Re: Application for Authorisation No. A40077 - A.D.M.A. This document is submitted to the Commission in relation to the above Application for Authorisation.

The Australian Computer Society (ACS), Economic, Legal and Social Implications Committee (ELSIC), the workings of which I oversight in my ACS Director, Community Affairs Board (CAB) role, will be represented at the s.90 ('pre-decision') conference on 26 November, by Dr Roger Clarke FACS, a member of the ACS Economic, Legal and Social Implications Committee (ELSIC).

Yours sincerely

Andrew Freeman FACS
Director, Community Affairs Board
Australian Computer Society Inc.

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Australian Computer Society Inc. - ELSIC Submission to the Australian Competition and Consumer Commission in relation to Application for Authorisation No. A40077 - A.D.M.A.

19 November 1998

Background

The Australian Computer Society is the professional association of the country's information technology professionals. It was formed in 1966, has around 15,000 members, and has long been active in relation to the economic, legal and social impacts of technology.

Direct marketing is of considerable concern to the Society. Both direct mail and tele-marketing are heavily reliant on computer technology. Irresponsible marketing practices are significantly retarding consumer adoption of the Internet. Each of these industries employ information technology professionals. Information technology professionals who are Members of the Society are bound by its Code, which requires members to "consider and respect people's privacy which might be affected by [their] work".

Accordingly, the representatives of the Australian Computer Society claim to be an "interested person" in relation to this Application for Authorisation, within the meaning of s.90A(12) of the Trade Practices Act 1974,. The ACS, as well as each of its representatives personally, have a real and substantial interest in ensuring that IT professionals' conduct in Australia is aligned to consumer-protection and privacy-protection principles. The ADMA Code purports to reflect such principles.

Direct Mail and Tele-Marketing

There are very considerable public concerns about the practices of direct marketers, especially in relation to tele-marketing. Marketers and their associations have nominally operated off-lists for many years; but their performance has not been such as to create public belief in self-regulation. The recent, substantial increase in the incidence of unsolicited telephone calls for sales purposes is causing a great deal of public disquiet about the interruption of people's home-environment.

In this context, it is critical that the direct marketing industry meet with representatives of consumer and privacy interests, in order to negotiate an appropriate means whereby the various interests can be satisfied. But no such public consultation process has taken place. ADMA seeks to rely on prior consultation processes with the Commission and the Privacy Commissioner, which do not represent open, public processes.

The draft code contains provisions that fail to balance the interests of marketers against those of consumers. Hence, the Society submits, the draft Code fails the 'public benefit' test. Moreover, for the Commission to provide its imprimatur to the code in its present form would send the wrong message about the extent to which Australian regulatory authorities will intervene to protect the public interest, and would therefore encourage non-members of ADMA to ignore even the limited protections that it contains.

Direct Electronic Marketing

Paragraph D1 of ADMA's proposed Code states that "The same level of protection provided by the practices that apply to other methods of commerce should be afforded to customers who participate in electronic commerce".

This evidences failure by the code's architects to appreciate the completely different environment that applies in the electronic context. The Society expresses especially serious concern about marketers applying their conventional presumption of 'consumer opt-out opportunities' to electronic channels.

The following are critical factors about charging in the networked world:

• whereas the post and telephone are, in general, financed through a 'sender-pays' model, the Internet tends to be 'receiver-pays';
• hence direct marketing may impose direct dollar-costs on the receiver, above and beyond the interruption, clutter and receiver-time factors;
• the present tariffs used by ISPs are a mixture of connection-time, transmission-volume and subscription, but this may well change shortly, because carriers and carriage service providers may drive retail tariffs towards volume-based charging as the dominant means of collecting money from consumers; and
• hence should the Commission give approval to ADMA's code, it would have the effect of locking consumers into not only receiving, but also paying for, unsolicited materials.

The matter was already serious while the dominant communications medium was text-based email. There are currently many projects in train whose purpose is to provide much more intrusive and bandwidth-intensive 'push-technologies'. Images can be hundreds, or even thousands, of times larger than the text of a typical message. While one picture may not be worth a thousand words, it may cost the unwilling consumer that much more to receive it. During the last few weeks, an unsolicited email has been offering the means to transmit a video-and-voice message to large numbers of people via the Internet. Such messages can be many orders of magnitude larger than text and still images, and will cost all recipients money and attention-span.

In short, irrespective of the various balances between economic and social objectives that may be appropriate in respect of direct mail, and of tele-marketing, it is essential that electronic marketing be 'consumer opt-in', with prior communications of the conditions and costs involved.

In summary

The Society submits that ADMA has failed to undertake the public consultation process that is a necessary pre-cursor to the submission of a draft code for authorisation by your Commission.

The Society is concerned that the Commission could possibly grant a determination, without ensuring that such a comprehensive and public negotiation process has been conducted, resulting in an instrument that reflects the interests of the public, and of involved professionals.

The Society expressly rejects the suggestion that the formal process of submissions to the Commission, followed by a structured pre-decision conference, represents an appropriate form of public consultation. The pre-decision conference is appropriate means only for the Commission to satisfy itself that the appropriate public process has been conducted, and has resulted in a code that is sufficiently consensual that it can be reasonably argued to satisfy the public interest.

Submission

The Australian Computer Society submits that:

• that there is insufficient public interest to support the adoption of the proposed code, because of the inadequacy of the provisions dealing with electronic communications.