Principal, Xamax Consultancy Pty Ltd, Canberra
Visiting Fellow, Department of Computer Science, Australian National University
Version of 21 October 1998
© Xamax Consultancy Pty Ltd, 1998
This document is at http://www.anu.edu.au/people/Roger.Clarke/DV/ACCC-ADMA.html
21 October 1998Mr J.P. O'Neill
Dear Mr O'Neill
I have only become aware of the above draft determination during the last few days.
I write to express the most serious concern at the possibility that the A.C.C.C. could possibly grant dispensation on the basis of A.D.M.A.'s flimsy submission and inadequate undertakings.
During the last decade, my specialisations have been in electronic commerce, information infrastructure, and dataveillance and privacy matters. I spent over a decade as a senior academic at the Australian National University, where I continue as a Visiting Fellow. I have been active as a public interest advocate since the early 1970s, with particular reference to privacy and specific consumer issues.
I have undertaken research into direct marketing over an extended period, and summarised 'Direct Marketing and Privacy' issues in a paper of that name in early 1998, at http://www.anu.edu.au/people/Roger.Clarke/DV/DirectMkting.html. I enclose a printed copy.
Very substantial changes are currently taking place in the public acceptability of direct marketing practices. Unsolicited mail has long been regarded as a significant nuisance by much of the population; but it has not been sufficiently annoying to stimulate any major reaction by consumers. Unsolicited telephone calls, on the other hand, or 'outbound telemarketing', as it is dubbed by the industry, is causing a great deal of distress to many people. This, alone, is likely to see a significant revolt by consumer organisations in the near future.
It is in the context of Internet marketing, however, that the turnaround is most apparent. Public confidence has emphatically NOT been achieved by net-based marketers, and electronic commerce has not enjoyed anything like the growth rates of community-oriented Internet services. The reasons for this, and remedies, are discussed in various papers indexed at http://www.anu.edu.au/people/Roger.Clarke/EC/AnnBibl.html#Trust.
In brief (and the very early closing date for comments on your draft determination forces this submission to be brief), consumers have good reason to be very nervous about a number of aspects of electronic commerce, including:
In recognition of the seriousness of these problems, steps are being taken by authorities in various countries, most notably by the U.S. Federal Trade Commission. In addition, industry associations have stampeded into various initiatives that offer nominal, but in most cases not real, protections (e.g. TRUSTe, and the Privacy Alliance). Commercial services are emerging that provide genuine scope for consumer self-protection (e.g. Junkbusters, which, although American-based, is Australian-driven). One genuinely constructive business initiative is the W3C's P3P standard, in whose development I have been a participant. See http://www.anu.edu.au/people/Roger.Clarke/DV/P3POview.html and http://www.anu.edu.au/people/Roger.Clarke/DV/P3PCrit.html.
Despite the fact that the P3P standard is a product of an industry consortium, it is essentially 'opt-in' rather than 'opt-out' in nature. I believe this to be strong evidence that the balance-point is about to shift: direct marketers have not been subject to effective countervailing power; but they are about to experience backlash against their unreasonable practices. They will be forced to adapt their activities, in order to satisfy the demands of consumers who will be increasingly able to use the Internet to make life as uncomfortable for marketers as it has been for consumers.
Given this imminent threat to marketers' way of life, it is unsurprising that, after decades of inaction, A.D.M.A. chooses this juncture in the history of marketer-consumer relationships to stampede towards a Code.
A.D.M.A. seeks benefits for itself and its members by acquiring the imprimatur of a government agency for a self-regulatory scheme. It contends that the submitted draft code offers public benefits in the form of "significant promotion and enhancement of consumer protection", "promotion of consumer confidence" and "consumer views being taken into account by the presence of an independent chairman and consumer representatives on the Code Authority".
Contrary to the impression that A.D.M.A.'s submission was designed to create, the draft code before the Commission is emphatically NOT the result of a consultative process involving the participation of advocates for and representatives of privacy and consumer interests. It was prepared by A.D.M.A., and has not been subjected to consideration by the public until the last few days. Even if consumer representatives were prepared to participate on the proposed 'Code Authority', they would be constrained by terms and conditions that were designed by a self-interested organisation with little or no input from the consumer perspective.
A.D.M.A. was a participant in the consultation process conducted by the Privacy Commissioner in relation to the possibility of a set of 'national principles' for the fair handling of personal information. Through that forum, if through no other channels, it has had ample opportunity to seek the participation of consumer and privacy advocates and representatives in the process of code development. It has, signally, failed to do so. The (to A.D.M.A., no doubt desirable) effect is that those advocates and representatives have been provided with just a few days in which to consider a potentially far-reaching document, which already carries your Commission's tentative imprimatur in the form of a draft determination.
It would be a travesty for your Commission to proceed to full determination on the basis of an application that asserts benefits to consumers, but has failed to include meaningful consumer participation in its development. The impression would be that the Competition aspects of the Commission's remit were completely dominant over its Consumer responsibilities.
I submit that A.D.M.A. must be directed to conduct open, public consultation processes, negotiate modification (or, far more likely, wholesale re-writing) of the document. This would lead to the re-submission to the Commission of a consensual document, which consumers' representatives are satisfied reflects their needs as well as those of marketing organisations, and which reflects the contemporary, and necessarily rapid adjustment towards much more consumer-sensitive behaviour on the part of marketers.
I would be pleased to speak to this brief submission at your conference on 29 October.
Roger Clarke MComm UNSW PhD ANU FACS
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Created: 21 October 1998
Last Amended: 21 October 1998
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