The CAP Code

This guide is based on UK law. It was last updated in August 2005.

Introduction

Marketing by email has become a key channel of communication for many businesses across the UK. However the level of government and industry regulation has greatly increased in recent years in this area creating what many businesses now regard as an overly complex patchwork of rules and standards.

This is intended to set out the basic rules in this area and suggest a number of practical compliance measures.

The rules

The law in this area is primarily made up of the following pieces of legislation and standards:

• The Data Protection Act 1998;
• The Privacy and Electronic Communications (EC Directive) Regulations 2003 ("the Regulations"); and
• The British Code of Advertising, Sales Promotion and Direct Marketing (otherwise known as the CAP Code).

The CAP Code

Marketers need to remember that they will already be subject to the British Code of Advertising, Sales Promotion and Direct Marketing (otherwise known as the CAP Code), administered by the Advertising Standards Authority (ASA).

The 11th Edition of the CAP Code was issued in March 2003 and this edition contained strict new provisions on direct marketing by email and SMS. The CAP Code is topical as the ASA has recently issued a number of adjudication rulings on the new provisions and the Code has recently been updated to bring it into line with the regulations and the guidance from the Information Commissioner.

What is the CAP Code?

The provisions of the CAP Code comprise the rule book for non-broadcast advertisements, sales promotions and direct marketing communications. They relate to, for example, advertisements in newspapers, leaflets, mailings, emails, text transmissions, fax transmissions, other electronic and printed material and marketing databases containing consumers' personal information.

It is not statutory but it is not without teeth. First, anyone can complain to the ASA about non-compliance and the ASA can adjudicate a decision as demonstrated by The Training Guild case (see below) this can provide a relatively quick and easy method for a consumer to complain. These decisions are made publicly available on ASA's website, newspapers, TV and radio, leading to adverse publicity for the organisation involved.

Second, media and industry organisations that subscribe to the CAP Code can refuse advertising space to anyone who breaks the Code. An Ad Alert is sent out to members who can then deny space until the organisation complies. Such media and industry organisations can also remove incentives or concessions associated with membership of their body. As a last resort the ASA can refer an organisation to the Director General of Fair Trading at the OFT under the Control of Misleading Advertisements Regulations 1988.

The Training Guild case

The ASA issued a ruling on 10 September 2003 in response to a complaint against The Training Guild. The Training Guild sent an email advertising training seminars which, in the subject field, said "Business Seminars – Telesales & Selling Skills Made Easy". The headline in the content read "The Training Guild Business Training Seminar" and went on to say "Tele-Sales & Selling Skills ...MADE EASY...At last a selling skills course for non-aggressive sales people...The most successful sales course in the UK ...More than 650 companies have attended...".

The complaint was in respect of various sections in the Code. Section 22.1 requires marketing communications to be designed and presented in such a way that it is clear that they are marketing communications. In relation to unsolicited email marketing communications, these should be clearly identifiable as marketing communications without the need to open them.

Section 43.4 requires the explicit consent of consumers before marketing by email or SMS with the proviso that marketers may market their similar products to existing customers without explicit consent so long as an opportunity to object to further such marketing is given on each occasion.

In relation to the first issue, the adjudication found that by including "Business Seminars – Telesales & Selling Skills made Easy" in the subject field, this was sufficiently clear that it was a marketing communication.

On the second issue the complaint was upheld. The ASA found that the advertisers had not got the explicit consent of the individual and that it was their responsibility to do so. This applied even where, in this case, they had bought in lists in good faith believing that the people on the list were people in businesses that had opted in to receive information about business development topics.

Ultimately the ASA was lenient in its punishment and advised the advertisers to take more care in their targeting of emails in the future, but said sanctions would follow if they did not.

There have been other similar cases since September 2003, with cases being decided at the rate of about 10 a week.

What does this mean?

It is helpful for marketers that the ruling found that the subject field made it clear that this was a marketing communication. The Regulations do not go so far as to regulate the content of the subject field but the E-Commerce Regulations 2002 arguably do. These state that unsolicited commercial email marketing communications must be clearly and unambiguously identifiable as such as soon as they are received.

UK marketers are now somewhere between those in jurisdictions such as Spain where such communications must be marked "publi" or California where they should be marked "ADV" and jurisdictions where there is no regulation and spammers can happily bombard inboxes with subject fields such as "fancy a drink?" or "remember me?".

The second point reinforces the fact that marketers must take care when sending unsolicited commercial email. If they have collected the information themselves then, unless they can say that the communication is not unsolicited, they will need prior consent or to bring themselves within the existing customer relationship provisions which are similar under the Code and the Regulations. If buying in lists they will need a warranty and indemnity from the provider that those on the list have opted in to receiving third party electronic marketing communications, although this will not give them any protection under the Code or the Regulations if the lists are not 'clean'.

Although under the Regulations the unsolicited email marketing provisions only apply to individual subscribers, under the CAP Code a consumer is defined as anyone who is likely to see a given marketing communication, whether in the course of business or not which potentially could cover Business to Business (B2B) marketing. However, the recent changes to the Code make it clear that the requirement for consent does not apply to marketing business products to corporate subscribers including their named employees although it will apply when marketing non-business products to named employees of corporate subscribers.

In any event, the CAP Code may leave many marketers with permission-based marketing as their only option.

Contacts

Clare Francis
Biography
email Clare
+44 (0) 121 335 2927

Matthew Dowell
Biography
email Matthew
+44 (0) 121 625 3058