MASTER THESIS Mobile Advertising A Comparative Regulatory...

.

MSc in EU Business and Law Author: Evelyne Cleff Department of Law Supervisor: René Franz Henschel

MASTER THESIS

Mobile Advertising

A Comparative Regulatory Overview

Århus School of Business, July 2005

.

We shape our tools, and thereafter our tools shape us.

Marshall McLuhan, Understanding Media, 1964

Abstract .

Abstract

The emerging mobile industry is expected to be characterised by increasingly personalised and location-based services. The availability of personal information, physical location and other contextual data are seen to be the most valuable unique characteristics of mobile advertising which allow for one-to-one marketing strategies. Despite the advantages of such marketing practices enabled by mobile devices, there is a risk that they lead to an intrusion of privacy. In addition, mobile user may not perceive received advertising messages as useful services but rather as spam. Often advertisements include an invitation to purchase and therefore several information requirements must be taken into account. Such requirements may not be optimised for m-commerce and may be difficult to fulfil. The most common way of providing mobile users with m-commerce services is the use of premium rate numbers whereas the price for the service is charged by the phone bill. PRS are often misused by certain companies and their misleading marketing practices have raised growing concerns in this area. The thesis illustrates the regulatory framework of the European Union and analyses its applicability to m-commerce.

Table of Content .

INDEX OF FIGURES ....................................................................................................III

INDEX OF TABLES ..................................................................................................... IV

INDEX OF ABBREVIATIONS....................................................................................... V

1 INTRODUCTION.........................................................................................................1

1.1 Introduction to the subject ..............................................................................1 1.2 Problem statement ...........................................................................................2 1.3 Delimitations .....................................................................................................4 1.4 Structure of the thesis......................................................................................5 1.5 Terminology ......................................................................................................5 1.6 Literature review...............................................................................................6

2 OVERVIEW OF M-COMMERCE.................................................................................8

2.1 M-commerce in comparison to e-commerce .................................................8 2.1.1 Definition of m-commerce........................................................................... 8 2.1.2 Separating m-commerce from e-commerce ............................................... 9 2.1.3 Attributes of mobile phones ...................................................................... 10

2.2 State of m-commerce .....................................................................................11 2.2.1 Enabling technologies .............................................................................. 11 2.2.2 Mobile applications and services.............................................................. 14

3 MOBILE ADVERTISING...........................................................................................16

3.1 What is it?........................................................................................................16 3.2 Legal definition of advertising.......................................................................18 3.3 Electronic communication.............................................................................19

3.3.1 Mobile messages...................................................................................... 19 3.3.2 Mobile services......................................................................................... 19

3.4 Relevant EC Directives...................................................................................20 3.4.1 E-Commerce Directive ............................................................................. 20 3.4.2 The Privacy and Electronic Communications Directive ............................ 22 3.4.3 Distance Selling Directive......................................................................... 22 3.4.4 Unfair Commercial Practices Directive ..................................................... 22 3.4.5 Proposal for a Regulation Concerning Sales Promotions in the Internal

Market....................................................................................................... 23 3.5 Information requirements ..............................................................................24

4 THE PRIVACY ISSUE...............................................................................................27

4.1 Overview..........................................................................................................27 4.1.1 EU directives and important definition ...................................................... 28

4.2 Different kinds of data....................................................................................29 4.2.1 Personal data ........................................................................................... 29 4.2.2 Traffic data................................................................................................ 30 4.2.3 Location data (other than traffic data)....................................................... 31

4.3 Legal framework related to data processing ...............................................32 4.3.1 Disclosure................................................................................................. 32 4.3.2 Consent .................................................................................................... 35

4.4 Problems arising due to the directives.........................................................36

I

Table of Content .

4.4.1 Disclosure................................................................................................. 36 4.4.2 Consent .................................................................................................... 37 4.4.3 Technology neutral approach ................................................................... 39

5 SPAM ........................................................................................................................41

5.1 What is spam? ................................................................................................41 5.1.1 Definition and criteria................................................................................ 44

5.2 Spam protection in the EU.............................................................................46 5.2.1 The need to combat mobile spam ............................................................ 46 5.2.2 EU legislation towards spam protection ................................................... 47

5.3 Case Law .........................................................................................................49 5.4 Proposal for solutions....................................................................................51

5.4.1 Legislation ................................................................................................ 51 5.4.2 Technical and self-regulation solutions .................................................... 53 5.4.3 Preventive action by the mobile user........................................................ 54

6 PREMIUM RATE SERVICES....................................................................................56

6.1 Definition of PRS ............................................................................................56 6.2 Formation of contracts...................................................................................56

6.2.1 Contractual Relationship with PRS........................................................... 57 6.2.2 Contracts concluded by means of mobile messages ............................... 59 6.2.3 Offer or invitation ad offerendum.............................................................. 60 6.2.4 Acceptance............................................................................................... 61 6.2.5 Information Requirements ........................................................................ 62

6.3 Selected examples of contractual procedures ............................................66 6.3.1 Website..................................................................................................... 66 6.3.2 WAP site................................................................................................... 67 6.3.3 Mobile message ....................................................................................... 68

6.4 Unfair B2C practices - misuse of PRS..........................................................69

7 CONCLUSION ..........................................................................................................73

LITERATURE...............................................................................................................76

APPENDIX ............................... see second enclosure: “Legislation and Case Law”

II

Index of Figures .

Index of Figures

Figure 1: Data protection……………………………………….................................27

Figure 2: Example of e-mail spam………………………………………..................40

Figure 3 Example of mobile spam….…………………………………….................43

Figure 4 Different contractual relationships ………………………………………...56

Figure 5 Example of the download procedure of a PRS from the Internet………66

III

Index of Tables .

Index of Tables

Table 1: Distinctions between m-commerce and e-commerce……………………….8

Table 2: Details and networking requirements of m-commerce applications…..…12

Table 3 Criteria of spam………………………………………………………………..44

Table 4 Summary of the different regulatory frameworks in the EU and the US...52

IV

Index of Abbreviations .

List of Abbreviations

2 G Second Generation

3 G Third Generation

4 G Fourth Generation

B2B Business to Business

B2C Business to Consumer

e.g. ‘exempli gratia’ (for example)

EC European Community

e-commerce electronic commerce

EEA European Economic Area

EMS Enhanced Messaging Service

etc. et cetera

EU European Union

GPRS General Packet Radio Service

GSM Global System for Mobile Communication

HTML Hypertext Markup Language

m-commerce mobile commerce

MMS Multimedia Messaging Service

MO Mobile Originated

MT Mobile Terminated

OECD Organisation for Economic Cooperation and Development

PC Personal Computer

PRS Premium Rate Service

SIM card Subscriber Identity Module Card

SMS Short Message Service

SMSC Short Message Service Centre

UMTS Universal Mobile Telecommunication System

URL Uniform Resource Locator

V

Index of Abbreviations .

US United States (of America)

WAP Wireless Application Protocol

WLAN Wireless Local Area Network

WWW World Wide Web

VI

1 Introduction

1 Introduction

1.1 Introduction to the subject

“You are visiting a city and decide to take a walk through downtown. After parking your car you consult your mobile phone’s bright, clear colour screen showing you a map of where you are. A message appears on the screen asking if you are interested in visiting the special arts exhibit at the cities fine arts museum which is just one block away.

You type in ‘y’ and the screen displays detailed information about the exhibit, informs that you have three hours until closing and gives you the ticket price. You decide to visit the exhibit and touch ‘yes’ to purchase a ticket. An instant later a confirmation message flashes on the screen. When you enter the museum you show the confirmation message on your mobile phone to the attendant and pass through the gate.

After marvelling at the pieces of art for three hours you have become hungry. You decide that a nice steak dinner would be just right. You consult your mobile phone and after a short time you see three choices of nearby restaurants complete with menus, ratings and estimated wait time. You select ‘The Grill on Main Street’ and make a reservation. The interactive map guides you to the restaurant and half an hour later you are comfortable seated and enjoying your appetisers.

Having finished a delicious meal you answer a message asking for your rating with ‘excellent’ and, guided by the map, retrieve your car. At the parking garage exit you pay by punching your authorization code into your mobile phone and you feel relieved that you did not have to scramble for small change.”1

Is this just a vision or could this be a reality soon? The technology is already in place to

provide all these mobile services, which are called m-commerce. At the moment it is

not clear where the story will end. This is because m-commerce is still in its infancy

because the UMTS, which will provide a variety of advanced services, has not yet been

fully accepted by the mobile users. What makes m-commerce attractive is the fact that

it enables fast access to information and the realisation of time-critical transactions.

Companies have realised the value of marketing opportunities being behind mobile

devices. In addition, mobile advertisements are predicted to be the most promising m-

commerce application and a key provider of m-commerce revenues.2 From a

marketing point of view, a mobile device has highly valuable peculiarities as it is the

only personal channel enabling spontaneous, direct, interactive and/or targeted

communications at anytime and anywhere. The conditions for mass customisation and

one-to-one3 marketing are ideal using the mobile device which is combined with large

reach, low costs, instantaneous feedback, 24 hours reachability and localisation

1 The example is taken from Franz (2002). 2 Müller-Veerse (2002), p. 5. 3 This describes a marketing process through which a business identifies its individual customers, differentiates among those individuals, interacts with customers and records responses, and customizes communications for individual consumers.

1

1 Introduction

contextualisation possibilities.4 This leads to the assumption that mobile advertisement

and also value added services will be highly personalised and location-based.

Already now, the mobile phone is a daily companion for many people, always at hand,

to be able to be connected to friends, family, and society at anytime and anywhere.

Mobile phones are characterising the modern of life way because they provide the user

with independence and especially young people are major users. Next to connection,

entertainment experiences based on SMS that feature games, music, and images are

currently the most popular activities on mobile devices. Mobile devices are more and

more used to arrange payments and in many cities it is already possible to get a

parking ticket via the mobile device.

Nowadays, companies offer customised advertisements but with less focus on location

based services, which will first be interesting when UMTS takes over. SMS-voting,

SMS-information subscription, ringtones, parking tickets, etc. are currently the common

application in the field of m-commerce advertising. Payment based on premium rate

messages allow for a fluent distribution of service because the customer will be

charged by his phone bill.

Anyway, for all these new opportunities to happen, the legal requirements towards

advertising and related issues such as privacy and contracting need to be considered.

The protection of privacy and the spam problem become a new dimension because of

the personal character of mobile phones. Moreover, the current requirements of EU law

regarding to contracting could turn out to be a burden for m-commerce transactions.

1.2 Problem statement

A few years ago, there was very little e-commerce legislation. The existing legal

framework was not optimised for e-commerce and seemed to be over-regulated in

some aspects (such as service provider liability for content) or in other aspects did not

go far enough (such as the issue of spamming). Nowadays, there is a significant legal

framework within the EU applying to e-commerce.

M-commerce is now in the same legislative position as e-commerce was a few years

ago. Even though it is not foreseeable to which extent m-commerce will lead, there are

already some aspects in which legislation may need adjustment. Obviously, m-

commerce is very similar to e-commerce but there are nevertheless some significant

differences:

- a mobile user is more likely to use a voice channel than an e-commerce user;

- location awareness is specifically an m-commerce feature;

4 Müller-Veerse (2002), pp. 48.

2

1 Introduction

- m-commerce devices have more limited text-handling capabilities (display, input and storage);

- m-commerce is more likely to used by minors.

Most of the relevant EU legislations are written in a technology neutral way but in the

first place they were developed when e-commerce became an important subject

matter. Therefore it must be analysed whether the current legal framework will be

sufficient to deal with the challenges of m-commerce. Mobile advertising will be in the

first place performed by means of mobile messages, such as SMS and MMS.

Advertising is partly restricted by law in order to protect the consumer from unfair and

misleading practices. The legal framework will only apply to m-commerce if mobile

messages are taken into account.

The focus of marketing strategies will be on customised services which are tailored to

each individual consumer. This is achieved by collecting and processing personal

information, physical location and other contextual data. This indicates that mobile

advertising is linked to privacy issues. The provision of personalised and location-

based services can lead to extremely intrusive practises and jeopardise the privacy of

personal data. Even though location based services are not common yet the

technology enables to determine the position of every single mobile phone regardless.

Therefore, it must be ensured that legal measures are able to cope with the protection

of privacy in m-commerce.

Besides the worries of privacy, mobile spam caused by unsolicited advertising and

messages becomes an emerging phenomenon. For instance, many unsolicited

messages are used to trick the receiver to phone premium rate numbers which has

generated a growing number of complaints to regulatory authorities. Even though the

mobile spam problem may not be of the same scale as with e-mail it will be of

extremely sensitivity due to the personal nature of mobile devices.

Despite the fact that spam is an intrusion into privacy serious advertiser may also suffer

from the problem. Mobile user may not want to disclose their personal information, thus

the beneficial opportunities of m-commerce may never be realised. These concerns

call for action from industry and legal authorities to establish and enforce effective

measures to minimise the problem. The biggest challenge is to generate solutions

which allow for highly personalised services and at the same time recognise the

interest of consumers.

A purpose of mobile advertising may be to persuade the target person to buy a product

or service. Mobile phones incorporate characteristics for performing electronic

transactions and have therefore been identified as the future ‘electronic wallet’. The

mobile phone combined with user agreements constitute a payment system which

3

1 Introduction

enable next to voice telephony and messaging also to purchase value added services.

These services are often offered based on premium rate numbers or premium SMS

which are more costly than the standard charge. Consequently, a consumer must be

informed of all important terms and conditions that are linked to the purchase before

entering into an agreement. Furthermore, adequate protection mechanisms must be

ensured to carry out the transaction process.

PRS are often misused by spammers and certain advertiser who try to dupe mobile

users into signing up for subscription services. Such manipulating practices are often

aimed to minors because they show more enthusiasm towards content services such

as ringtones and logos. Due to their inexperience and susceptibility they are not aware

of or not able to consider the consequences.

The main purpose of the present thesis is to discuss issues on privacy and

requirements on the marketing and sale of value added services regarding to m-

commerce. It will be analysed to which extent the current legislative framework of the

EU will apply to the future challenges arising in m-commerce. Even though it is not yet

foreseeable to which extent m-commerce will lead, the current market situation of

content services (such as ringtones, SMS chat etc.) makes clear that there is already a

need for legal action. Many complaints were filed at Consumer Advice Centres due to

doubtful offers of service providers mainly when addressed to children. Once a legal

framework is established it will be easier to keep it up-to date related to future

challenges.

1.3 Delimitations

This thesis will only be based on mobile advertising and a selection of several related

issues, namely privacy protection, mobile spam, and mobile contracting. Issues such

as copy right, electronic signatures, jurisdiction and governing law etc. are not

considered. Special attention will be given to personal and location data which are

established to market value added services which can be purchased through PRS.

In general mobile devices may be regarded as any computing device that may be

carried anywhere at anytime, hence devices of varying sizes are included (from laptops

to mobile phones). In this thesis, mobile devices are distinguished as mobile handheld

devices, meaning small, lightweight and portable devices that are operated on the

move.

The thesis is deals exclusively with B2C m-commerce and is furthermore limited to the

legal framework of the European Union. Moreover, the interpretation of the technical

details is based on the current situation in Europe because the infrastructure for mobile

telephony is not standardised between the different continents.

4

1 Introduction

1.4 Structure of the thesis

The thesis starts in chapter 2 with a broad overview of m-commerce to introduce the

features and utilisation of mobile devices. Chapter 3 describes mobile advertising and

illustrates the EU legislation concerning advertising and their requirements. In chapter

4 the privacy issue arising in m-commerce is analysed including an illustration of the

principles of disclosure and consent which are necessary to protect the privacy of a

mobile user. Chapter 5 discusses the mobile spam including a proposal of how to

combat the problem. Chapter 5 deals with the formation of agreements of PRS by

means of mobile devices. Furthermore, several examples of unfair B2C practices in

this area are illustrated. Finally, chapter 6 will complete the present thesis with a

conclusion.

1.5 Terminology The literature and especially the law include several terms and definitions which are

considered to be important for the present thesis. To provide the user with a better

overview these terms will be specified.

Throughout the thesis it will be referred to mobile phones as portable devices, since in

Europe this is predicted to be the largest part of consumer access devices and our

current experience is mainly developed in this field.

Due to the technology neutral approach the definitions in the EU legislations are

without special consideration to the different applicable sectors. For m-commerce the

following problem arises: several actors may be involved the provision of a service,

however the applicable directives only defines ‘service providers’, namely as “any

natural or legal person providing an information society service.”5 An information

society service is defined as “any service normally provided for remuneration, at a

distance, by electronic means and at the individual request of a recipient of services.”6

In terms of m-commerce several services may be available during a transaction which

will be provided by different service providers. The usage of one single term may lead

to confusion and may not allow emphasising certain situations. For the purpose of this

thesis it shall be distinguished between network operator and content supplier.

A ‘network operator’ is any company which provides the mobile telecommunication

network.

A ‘content supplier’ will make use of a mobile operator to distribute his service to the

end user.

5 Directive 2000/31/EC, article 2(b). 6 Directive 98/48/EC, article 1(2)(a).

5

1 Introduction

The term service provider will be used in cases which consider both the network

operator and the content supplier.

1.6 Literature review A number of papers review various aspects of m-commerce. These papers mainly

discuss which technologies and applications are available but leave out or briefly touch

upon legal aspects arising in m-commerce. This may derive from the fact that m-

commerce is still in its infancy. Therefore, the following analysis is mainly based on

current EU law which can be obtained at http://europa.eu.int/eur-lex.

In order to analyse whether the legislative framework comply with m-commerce, certain

literature, which is mainly about e-commerce, is used to discuss the issue and to

enable to come forward with proposals regarding what has to be improved in the area

of m-commerce. In this context, some of the books shall be pointed out: Edwards and

Waelde (2000), Schulze and Baumgartner (2001), Simmons and Simmons (2001) and

Woodley (2003). These books reflect the legal issues arising in e-commerce with

special focus on the harmonisation of EU law. It is argued that due to the use of the

Internet and the WWW legal systems have to adopt principles which were established

by reference to different technologies and business practices. As the introduction of m-

commerce shows, the legislative framework concerning information society services is

an ongoing process.

In addition to the literature dealing with e-commerce, several articles touching on m-

commerce issues have been used in this thesis: Gow (2005, forthcoming), Gratton

(2003) and White (2003) are dealing with the legal and regulatory aspects related to

the processing of personal and location data generated by mobile devices; Camponovo

and Cerutti (2004), Fellner (2003) and Sarrocco (2004) address the issue of mobile

advertising by analysing current legislation restricting advertising and in addition focus

on the spam problem. All these sources make clear that the regulative regimes may not

be sufficient regarding the challenges new technologies bring along. In addition, the

authors challenge the industries to put in place measures to enable secure transactions

carried out via mobile devices.

The analysis in chapter 6 is mainly based on EU law. The formation of contracts of

PRS is currently a contemporary issue. Therefore case law will be consulted to

illustrate how effective the most important elements that can be derived from these

legislations are when it comes to disputes before court.

During the literature research the articles and books used in this thesis were mainly

found on Internet databases, namely the Library of the ‘Århus School of Business:

6

1 Introduction

(especially electronic books) and the search engine ‘Google’. In the case of article

research the focus was on documents in PDF format.

7

2 Overview of M-Commerce .

2 Overview of M-Commerce

In this chapter the focus will be on the characteristics of mobile devices with relation to

m-commerce. Based on the enabling technology of mobile devices a framework for m-

commerce applications and services is provided. The chapter shall give a general

overview of what m-commerce is about to provide the reader with an insight into the

matter of m-commerce.

2.1 M-commerce in comparison to e-commerce

2.1.1 Definition of m-commerce

M-commerce is basically an extension of Internet-based e-commerce. According to the

OECD e-commerce is defined as: “Electronic Commerce refers generally to all

forms of transactions relating to commercial activities, involving both

organisations and individuals that are based upon the processing and

transmission of digitised data, including text, sound and visual images. It also

refers to the effects that the electronic exchange of commercial information may

have on the institutions and processes that support and govern commercial

activities.”7 All types of economic actors, including business and consumers, are

involved, whereas the European law distinguishes between B2B and B2C

transactions.8 The definition does not give any information about the devices used to

access to the internet. The technology could be wire line (e.g. using a home PC) or

wireless (e.g. using a mobile phone).

Thus, with regard to the e-commerce definition it can be assumed that m-commerce is

part of e-commerce; however, the enabling technologies and applications provide new

opportunities, such as personalisation and location-based services.9 If the predictions

are proven to be true that wireless computing will dominate the Internet industry in the

future, e-commerce and m-commerce will become a singular blended entity. M-

commerce can be defined as “any transaction with a monetary value that is conducted

via a mobile telecommunication network.”10 From the definition it can be derived that

the existence of wireless networks and generating sales volumes are important to m-

commerce. Text messages (SMS) from one person to another are not a component of

7 OECD (1997), p. 11. 8 Schwiderski-Grosche and Knospe (2004), p. 228. 9 Ng-Kruelle et al. (2002), p. 8. 10 Müller-Veerse (1999), p. 7.

8


m-commerce, but text messages from a service provider (who receives remuneration)

are covered in the definition.11

2.1.2 Separating m-commerce from e-commerce

There are two main features which differentiate m-commerce from e-commerce:

“mobility” and “localisation”. The distinctions arising from these features are illustrated

in table 1:

Table 1: Distinctions between m-commerce and e-commerce

Source Dholakia and Rask (2002)

Dimension E-Commerce M-Commerce

Core Dimensions

Mobility Limited: User can transact from locations with Internet access.

Ubiquitous: User can transact from anywhere in mobile network area.

Localisation Client-specific: Client computer locatable via IP address.

User-specific: User, device, and geographic location can be identified.

Behavioural, Strategic, and Leadership Dimensions

Key Customer Concern

Money: Because of “free Internet” culture, e-commerce users are money conscious.

Time: Evolving from mobile telephony culture, m-commerce users are time conscious.

Customer location and market served

Fixed Locations: Customers can be served at locations where they have Internet-linked computer access.

Ubiquitous and Global: Customers can be served anywhere within the mobile network coverage area.

National and regional leadership

USA-centric: E-commerce evolved in USA.

Europe and Asia-centric: Scandinavia and Asian nations (Japan) lead in m-commerce.

Industry leadership

New Players: Newer companies such as Yahoo, AOL, Amazon.com, Dell, Cisco, and FreeMarkets have emerged as E-commerce leaders

Transformed Old Players: Older players such as Telcos, Mobile Device Makers, Mobile Network Operators, and Banks have chance to grab leadership

In addition, technology, customer groups and products are differentiating m-commerce

from traditional e-commerce.12 First, e-commerce is based on another technical

infrastructure namely the Internet and fully developed terminals (PC; Laptop). In

contrast, m-commerce uses, in addition to the Internet, a technology that transfers data

over wireless interfaces.13 Second, m-commerce customers wish user friendly and

secure transactions without long searching of the Internet. Finally, only specific

products and services will be successful in m-commerce such as content services14

and products which are subjects to spontaneous decisions, e.g. tickets, travels and

transportation services.15 Transferring existing services from the Internet to the mobile

11 Andris and Balkausky (2001), p. 3. 12 Zobel (2001), pp. 3. 13 Ibid. 14 “Mobile content services are services such as ringtones, pictures, polls, or chatting that are delivered to and used with mobile phones (or other devices) via public telecommunications networks.” Consumer Ombudsman (2004), p. 6. 15 Andris and Balkausky (2001), p. 4.

9


is not straightforward, due to several factors among which the design of the access

media is the most significant (e.g. display and storage capacity).

From a legal perspective it is worth mentioning that mobile devices (especially mobile

phones) to a certain degree are more personal than traditional telephones and

computers.16 This means that in most cases content suppliers, network operators and

users agree to contractual obligations.

2.1.3 Attributes of mobile phones

The key concept of m-commerce is mobility, meaning that users can be reached

regardless of time and location. Basically, m-commerce is about delivering the right

information at the right time. Mobility is therefore an interesting characteristic of m-

commerce because it can be associated with several unique attributes which will be

described below:17

Ubiquity is the most obvious advantage of a mobile device. It indicates the possibility

for mobile device users to get access to real-time information and communication

which are independent from location and time.

Reachability is related to ubiquity and means that a user can be connected to and

available for other people. With a mobile device a user can be contacted anywhere at

all times. More precisely, mobile devices eliminate the need for location-dependent

connections. In addition, a user is always able to limit his availability to particular

persons or at particular times.

Security during mobile communication is guaranteed by means of a SIM card. This

card provides authentication of the owner (it contains the mobile phone number) and

enables a higher security level than a in the fixed internet environment. In addition, the

SIM card can store other information, such as sent or received text messages, picture

messages, and dialled and received phone numbers. The SIM card can also be moved

to another mobile device and all the information saved to the card goes with it.

Convenience refers to the characteristics of mobile devices especially to their size and

weight which enables to have them always at hand. Accessibility makes them an ideal

tool for performing personal tasks.

Providing a user with Location-Based Services and applications will add significant

value to m-commerce. Knowing where the user is located at a particular moment

renders the possibility to recall and provide services matching with the location (e.g.

helping the user to find the nearest restaurant).

16 Trzaskowski (2004), p. 2. 17 Müller-Veerse (1999), pp. 8.

10


The introduction of GPRS services makes instant connectivity possible and enables

a direct connection to the Internet. In addition, it is faster to access information on the

web without booting a PC or connecting a call.

Mobile devices are normally a personal object which makes personalisation much

easier. M-commerce can be tailored to the users’ needs and wishes – accessing

personal information and receiving targeted messages.

2.2 State of m-commerce

Both transfer mode systems and mobile devices are still under development to meet

full requirements needed for m-commerce transactions. On the one hand, applications,

when coordinated with the capabilities of mobile devices, can already lead to

successful revenues in m-commerce.18 On the other hand, some capabilities are still

limited which may have a negative impact when downloading files, information etc. It is

for instance still more costly to connect the Internet via a mobile device.19

2.2.1 Enabling technologies

M-commerce is enabled by different technologies. Network technologies and service

technologies are supplemented by portable terminals and security technologies to be

able to meet the requirements and applications of end-users.20 Mobile hardware,

software, and wireless networks are necessary to transmit data, locate user positions,

and conduct business with security and reliability.21 By means of Mobile Position

Determination systems, the location of a mobile device user can be determined. In this

section the key technologies of m-commerce will be introduced:

Network technologies are evolving with continuous progress. The connections are

becoming faster, more secure, and without restriction in terms of mobility.22 The current

deployed technologies are divided into three categories which are characterised as

“generations” in line with the development of communication technology. GSM is the

so-called second-generation (2G) digital network and the prevailing wireless mobile

standard in Europe.23 In addition to the usual telephony services, a variety of data

services is offered, such as SMS, e-mail, access to basic information from the Internet

etc. which are applied by means of circuit-switched24 technology. A further technology

18 Munusamy and Leang (2002), p.4. 19 These requirements will be described in detail in chapter 4 and 5. 20 Munusamy and Leang (2002), p.4. 21 Siau et al. (2003), pp. 4. 22 Mago and Karras (2001). 23 Siau et al. (2003), p. 5. 24 A Circuit-switched data call is similar to a traditional telephone call where a dedicated channel is established to create a connection for the duration of a call. See also Sicher and Heaton (2002); p. 2.

11


development of GSM is GPRS, also known as the 2.5-generation (2.5G) mobile

telephony. This technology enables much faster data transfer and numerous data

communication services such as “always-on” connection, instant messaging, file

transfer, and many more.25 The most important difference between GSM and GPRS is

the capability of the latter to support packet-based26 connections instead of the circuit-

based connections of 2G networks.27 Thus, the user can connect to the internet

steadily, receive e-mails at anytime, and also to lower costs because GPRS allows for

charging based on data volume downloads (and not for the time of just viewing a

website).28 The so-called 3G technology is currently the latest stage in the

development of wireless communication technology. The European approach for 3G

technologies is UMTS. At the moment 3G is mainly available in high-traffic areas

because new radio networks are necessary which are still not fully employed.29 Since

3G systems support much higher data transmission and offer increased capacity, they

will become a high speed universal standard.30 Due to the high transfer rates a wide

range of data services can be offered, ranging from mobile internet access to

multimedia applications. 3G enabled mobile devices will be used in a multifunctional

way: as a phone, a computer, a television, a video conferencing centre, etc.31

Furthermore, the services can be retrieved at the same time (during the same session),

thus, enabling a phone call while downloading and searching the internet.

Basically, a network provider always knows where the user is located. The three key

technologies supporting locating are mobile devices, wireless Internet access, and

location-sensing equipment. In the case of location-sensing there are two major

technologies which will be explained in more detail: cell identity and GPS.

(1) Network-Dependent Technologies: With these methods the position of a mobile

device can be identified within a range of 15 to 30 meters.32 Mobile devices are

constantly connected with the closets base station33 or antenna (also referred to as

cell) even if no phone call is made. The position of the mobile device is triangulated by

measuring the time at which signals from three cells arrive. The point where the three

25 Sicher and Heaton (2002), pp. 4. 26 This is a communications system that uses digital packets to transmit all forms of communication signals and the primary method of communications for the Internet and other digital communications. http://newsroom.cisco.com/dlls/2004/hd_051904c.html, 11.07.2005. 27 Giaglis et al. (2003), p. 77. 28 Ericsson (2002), pp. 14. 29 http://europa.eu.int/scadplus/leg/en/lvb/l24202.htm, 14.04.2005 30 Giaglis et al. (2003), p. 77. 31 Siau et al. (2003), p. 5. 32 More base stations lead to better positioning, meaning that it will be more difficult to locate a person in the country side. 33 A basis station is the central radio transmitter/receiver that maintains communications with a mobile telephone.

12


signals intersect is the position of the mobile device.34 Only when the mobile device is

logged off it is impossible to locate the position of the mobile device.

(2) GPS: The second location sensing technique which can be used in cellular systems

is GPS a satellite-based mechanism for navigational and security purposes.35 Several

satellites are placed anywhere around the globe in a way that a user has a direct line of

sight to at least three satellites at any time. A receiver, installed inside the mobile

device, triangulates information on the time of signals which are simultaneously

transmitted by the satellites.36 The distance from the receiver to each satellite is

calculated on the difference in time from when the signals are transmitted until they are

received. Again, the intersection point of the four distances is the location of the

receiver. The accuracy of GPS to determine the location is up to centimetres.37 To

pinpoint the location of an individual GPS is used in conjunction with communication

links and computers. However, GPS can only be applied in the outdoor environment

due to the fact that a direct line to the satellites is necessary.38

Some of the service technologies would include SMS, EMS and MMS. SMS is a

service which is available on most digital mobile devices, and it enables the user to

send messages of up to 160 characters to mobile devices. SMS was originally

designed for the GSM standard, but is now available on a wide range of networks

including 3G networks.39 An extension of SMS is EMS which enables the user to send

and receive richer message content. It includes several features such as text

formatting, simple animations, very small pictures, and short melodies. The latest step

in the evolution is MMS which enables the user to send and receive in addition to

formatted text, advanced images and audio, and also video over the GSM network.40

Compared to SMS and EMS messages the MMS system has basically no size limit

(but the delivery of larger messages requires 3G).41 Obviously, larger messages

require a bigger storage capacity and for some phones there are already ways to

expand the capacity individually by upgrading via a memory card. Therefore MMS is

seen to become an attractive business tool.

The access information is in general possible by means of WAP and Bluetooth. WAP

allows receiving Internet contents and services to mobile devices and is an

internationally accepted standard for mobile solutions that operates over wireless

34 Ibid. 35 Sahi (2002), p. 33. 36 Anderson (2005), p. 2. 37 Sahi (2002), p. 33. 38 For more information please refer to: http://www.palowireless.com/gps/tutorial.asp, 11.07.2005. 39 http://en.wikipedia.org/wiki/Short_message_service, 23.06.2005. 40 Ismail et al. (2004), p. 200. 41 Fellner (2003), pp. 7.

13


telecommunication networks.42 The connection with web contents is carried out by a

special WAP Gateway which translates requests from the WAP protocol into HTML

tags and submits it to the web server.43 The Gateway also enables mobile terminals to

communicate with other devices over most wireless network such as GSM and GPRS.

Bluetooth in turn, is a short-range radio technology for communication and data

exchange between compatible devices, such as computers, printers and PDAs.44

Compared to infrared technologies no indivisibility between devices is necessary and in

addition more than two devices are able to communicate at the same time.45 With

Bluetooth the other device generally has to be within five to ten metres, but this

distance may increase in time.

2.2.2 Mobile applications and services

In principle, m-commerce applications can be considered as e-commerce applications.

However, the combination of mobile telecommunication and adopted e-commerce

services lead to the development of additional service customisation and entirely new

services linked to the concept of mobility.46 This is achieved by improved technology

which will implicate comprehensive information and more interactivity.47 The literature

suggests that the leading applications will be those which are simple to operate and

require little time to navigate.48 That is due to the limited capabilities of mobile devices.

SMS, EMS, and MMS are considered being the most popular applications which

enable the access to value added services.

Typically services imply of content transactions and credit transactions: Content

transactions are those that involve the transfer of information one-way which can also

be personalised information to meet the needs of a particular user. In addition to

ringtones, logos, etc. content services can also include for example information about

weather, stock quotes, and sports. Such services can also be provided by a so-called

‘push transaction’, where mobile users are targeted by unsolicited advertisements. This

could be provide in form of mass advertising or targeted to users in a specific

location.49

Credit transactions, in turn, are basically two-way transactions that involve a payment

function. This service will be used for shopping for music, books, tickets, etc. The

42 Siau et al. (2003), p. 7. 43 Hu et al. (2004), p. 11. 44 Siau et al. (2003), p. 6. 45 Ericsson (2002), p. 24. 46 Ng-Kruelle et al. (2002), p. 8. 47 Andris and Balkausky (2001), pp. 9. 48 For example: Dean and Sirkin (2000), p. 21. 49 Department of Justice (2002), p. 3.

14


example illustrated in the introduction will be a typically credit transaction. It could take

the form of paying for the parking place, including loading additional credit when the

parking time is about to run out, without the need to return to the car.50

Table 2 summarises a few selected classes of applications combined with examples to

point out the subject matter:

Table 2: Details and networking requirements of m-commerce applications

Class of Applications Examples

Mobile financial applications (B2C, B2B) Banking, brokerage, and payments for mobile users.

Mobile advertising (B2C) Sending user specific and location sensitive advertisements.

Mobile inventory management (B2C, B2B)/ Location tracking of goods, boxes, troops, and people.

Product locating and shopping (B2C, B2B) Finding the location of a new/used car of certain model, colour and features.

Proactive service management (B2C, B2B) Transmission of information related to aging (automobile) components to vendors.

Wireless re-engineering (B2C, B2B) Instant claim-payments by insurance companies.

Mobile auction or reverse auction (B2C, B2B) Services for a customer to buy or sell certain items

Mobile entertainment services and games (B2C) Video-on-demand, audio-on-demand, and interactive games.

Mobile office (B2C) Working from traffic jams, airport, and conferences

Mobile distance education (B2C) Taking a class using streaming audio and video.

Wireless data centre (B2C, B2B) Detailed information on one or more products can be downloaded by mobile users/vendors.

Mobile Music(Music-on-demand (B2C) Downloading and playing music using a mobile device

Source: Varshney and Vetter (2002)

By exploiting the m-commerce attributes m-commerce customers are able to gain new

benefits. The ubiquity of the use of a mobile device enables an ongoing relationship

with the customer. A mobile phone, for example is permanent, at hand and always

connected to the Internet. Actually, a mobile device can be seen as a daily tool which is

used for all kind of activities such as an organiser and as a payment feature. Context

specific operations are possible because of location-based functions enabling targeted

information and services.

50 Ibid, pp. 3.

15

3 Mobile Advertising


Advertisements seem to be everywhere and people are bombarded with them every

day; however, they pay attention to very few of them. And even when they pay

attention, it does not mean that they will actually learn anything from the advertisement,

or be positively influenced by it. Therefore, it becomes more attractive to marketers to

advertise by means of new media which enable versatility, low cost and reach. In

addition, advertisers can tailor messages to specific groups or even individuals, and a

wide audience can be reached world wide to low costs.

3.1 What is it?

Advertising is the non-personal communication of information with the purpose of

persuading recipients to respond in a certain way towards what is advertised, e.g.

buying a product or service.51 From this appears that there exist a close relationship

between information and advertising. A differentiation of those terms is necessary to

impose a restriction on advertising based on basic rights.52 The Privacy and Electronic

Communications Directive permits advertising by electronic mail only if prior consent is

obtained.53 There is an obvious problem: where begins unsolicited advertising and

where ends permitted information? This problem will be discussed throughout this

thesis.

“Mobile advertising, or m-advertising, refers to ads sent to and presented on mobile

devices, i.e. cellular phones, PDA’s, and other handheld devices.”54 The method of

sending advertisements can vary due to the technological opportunities: messages can

be sent via SMS, EMS, MMS, WAP push message55 or, to devices which support this

function, in form of an e-mail message.56 The availability of personal information,

physical location and other contextual data are seen to be the most valuable unique

characteristics of mobile advertising.57 For instance, devices supporting Bluetooth can

communicate with each other and a shop owner may be able to send a passing person

a message which includes a special offer. sides sending unique, personalised and

51 Camponovo and Cerutti (2004), p. 7. 52 Stieger (2000), p. 4. 53 Directive 2002/58/EC, article 13(1). 54 Tähtinen and Salo (2004), p. 2. 55 WAP Push messages are specially formatted SMS messages that display an alert message to the user, and give the user the option of connecting directly to a particular URL via the mobile phone’s WAP browser. 56 To simplify the matter the term ‘mobile massage’ will be used throughout the thesis, which comprises all kind of messages sent by means of a mobile device such as SMS, EMS, MMS, e-mail, and WAP push messages. According to the law all these applications qualify as electronic communications (as will be analysed in section 3.4.1), thus, a separation of the terms is not necessary. 57 Camponova and Cerutti (2004), p. 7.

16


customised ads it is also possible to engage customers to discussions and transactions

with the advertiser. Mobile advertisements can be sent to targeted individuals within

few minutes making mobile messages to a “real up-to-date communication tool”.58

Besides the technology enables in addition to text messages also transmission of

animated text, images and pictures which allows highlighting the advertisement. An

advantage for the sender is that mobile messages are always read by the receiver

especially since they carry their mobile devices around-the-clock. This in turn, can be

less convenient for the mobile which will be illustrated in chapter 5.

Location-based advertising allows providing mobile users with information relative to

their geographical position and based on their needs in a particular moment. This kind

of advertising is achieved through the use of location data which can be gathered by

tracking the mobile user.59 As a matter of fact, personal data is included and

consequently the rules regarding data protection have to be taken into account to avoid

that consumers are tracked, located or receive unsolicited messages against their

will.60

The field of application of mobile advertising is extensive because mobile devices are

the first personal media which enables spontaneous, direct, interactive and/or target

communications allowing for customised advertisements with a real-time, location-

based component.61 Applications can range from SMS-voting (e.g. voting in a TV

show) to SMS and WAP supporting lotteries (e.g. “send SMS with CODE to specific

number and take part in a lottery”) to the point of WAP-gaming (downloading of JAVA-

games with interaction possibilities), SMS-information subscription (e.g. weather

service), mobile shopping offers (e.g. CD purchase by means of SMS), mobile parking-

tickets (tied up to location-based advertising or city information), or the purchase of

concert tickets etc. by means of SMS or WAP.62

Mobile advertising includes conflictive aspects: On the one hand mobile ads are most

persuasive if they are time and location sensitive as well as targeted and personalised,

but such ads appearing as banner ads or billboards may be ineffective and irritating.

On the other hand mobile advertising will only be successful if it is driven by an opt-in

approach which will increase the probability to get a respond from the target person

58 Fellner (2003), p. 2. 59 Gratton (2002), p. 73. 60 Simmons and Simmons (2001), p. 122. The issue of data protection will be illustrated in the next chapter.61 Tähtinen and Salo (2004), p. 2. 62 Pollak (2004), p. 2.

17


and burnish the image of the company. This is because mobile device users will turn

away from advertising if their devices are bombarded with unwanted ads.63

3.2 Legal definition of advertising

As a starting point, advertising is guaranteed by legislation because consumers are

provided with necessary information which is seen to be essential to make decisions in

the market place. In addition, advertising must be in line with the principle of free

movement of goods and services to ensure cross-border trade and article 28 and 30 of

the EC Treaty state that quantitative restrictions on imports and measures having

equivalent effect are prohibited.64 Such restrictions may affect amongst others

marketing opportunities for the imported products. The informational benefit arising

from advertising was stressed in the “Yves Rocher” judgement.65 The Court decided

that price comparison were not misleading and argued that such advertising practices

could be considered as "...extremely useful to enable the consumer to make his choice

in full knowledge of the facts." However, restrictive legislation may be adopted under

certain conditions, i.e. where it is meant to protect the public interests, is not

disproportionate to the intended objective66 and does not go beyond what is necessary

to achieve that objective.67 An example would be a misleading advertisement68

especially when it has an unethical, political or aggressive effect.

The E-Commerce Directive refers to advertising as commercial communication which

is defined as “any form of communication designed to promote, directly or indirectly,

the goods, services or image of a company, organisation or person pursuing a

commercial, industrial or craft activity or exercising a regulated profession.”69 In the

proposal presented by the Commission for the E-Commerce Directive70 it is mentioned

that existing definitions in this area (e.g. ‘advertising’) “give rise to uncertainty when

63 Camponova and Cerutti (2004), p. 6. 64 Article 28 states: “Quantitative restrictions on imports and all measures having equivalent effect shall be prohibited between Member States.” In addition article 30 contains: “The provisions of Articles 28 and 29 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States.” 65 ECJ judgement of 18 May 1993, C-126/91 Schutzverband gegen Unwesen in der Wirtschaft e.V. v Yves Rocher GmbH 1991 (3) I -2361. 66 ECJ judgment of 26 April 1988, C-352/85 (Bond van Adverteerders, Rec. 1988, 2085), paragraph 36. 67 ECJ judgment of 22 January 2002, C-390/99 (Canal Satélite Digital, Rec. 2002, I-6087), paragraph 33. 68 ‘Misleading advertising' is defined as “any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behaviour or which, for those reasons, injures or is likely to injure a competitor.” Directive 84/450/EEC, article 2(2). 69 Directive 2000/31/EC, article 2(f). 70 http://europa.eu.int/comm/internal_market/comcom/newsletter/edition16-17/page04-02_en.htm, 13.06.05.

18


they are applied to online services”. It is criticised that national law against unfair

competition is often too restrictive which may have influence on advertising practices

using the new technologies. To remove the obstacles which resulted due to different

national legislations a harmonisation of rules is necessary.

3.3 Electronic communication

3.3.1 Mobile messages

The Privacy and Electronic Communications Directive defines in Article 2(h) the term

electronic mail as “any text, voice, sound or image message sent over a public

communications network which can be stored in the network or in the recipient's

terminal equipment until it is collected by the recipient.” Furthermore, the Data

Protection Directive considers that the scope of protection of individuals “must not in

effect depend on the techniques used, otherwise this would create a serious risk of

circumvention.”71 Even though the different kind of mobile messages are not expressly

mentioned in the law the technological neutral approach leads to the assumption that

they are included. This argument is stressed by a statement of the E-Commerce

Directive which makes reference to electronic mail or “equivalent individual

communications”.72

3.3.2 Mobile services

The E-Commerce Directive applies to information society services which are defined as

“any service normally provided for remuneration, at a distance, by electronic means

and at the individual request of a recipient of services.”73 Even though a service

provided for remuneration normally includes the realisation of profits and purchase, it is

not mentioned that payment of the service must be compensated by the receiver,

meaning that self-marketing can fall within this category.74

It shall now be analysed whether the E-Commerce Directive applies to services

conducted by means of mobile messages. A service provided by ‘electronic means’

“means that the service is sent initially and received at its destination by means of

electronic equipment for the processing (including digital compression) and storage of

data, and entirely transmitted, conveyed and received by wire, by radio, by optical

means or by other electromagnetic means.”75 Traditional voice telephony, for example,

71 Directive 95/46/EC, recital 27. 72 For example: recital 18 of Directive 2000/31/EC. 73 Directive 98/48/EC, article 1(2)(a). 74 This leads to the fact that every advertising message can be seen as an information society service. Fellner (2003), p. 23. 75 Directive 98/48/EC, article 1(2)(a).

19


is excluded from this definition:76 the transmission of voices via mobile network as well

as via fixed network is circuit-switched, which creates a continuous connection

between caller and receiver until the connection is released. Consequently, no storage

of data takes place and resulting from the definition it does not qualify as a service

provided by electronic means. The transmission of a mobile message is carried out by

a packet-based connection meaning that the message is divided in different packages

to send it in different ways over the network and reassembled before it arrives at the

receiver. The packages are stored due to different running times.77 This illustration

demonstrates that a service provided by electronic means is available.

Another precondition of information society services is that the individual request of a

service must be enabled. Those services which can be requested by an unlimited

number of receivers (e.g. television broadcasting services) are excluded.78 Mobile

messages, in turn, are sent to devices which as a general rule belong to only one user

who will receive the service. As a result of this analysis it can be said that the E-

commerce Directive applies to mobile services.

3.4 Relevant EC Directives

Currently, there are different EU legislations regarding the issue of advertising: sector-

specific rules applying for example to information society services,79 product-related

provisions applying for example to advertising for alcohol or medical products and

general rules which basically apply to all type of media and products.80 All legislations

share the same basic principles, namely to remove barriers hindering the smooth

functioning of the internal market and to protect consumers from misleading or

aggressive advertising. Basically, EU law regulates advertising in the electronic media

in accordance with the case law of the European Court of Justice. The following

directives and regulations are reflecting the developed principles for information society

services:81

3.4.1 E-Commerce Directive

The E-Commerce Directive deals with fundamental provisions concerning e-commerce

and incorporating advertising on the Internet. All electronic media are recognised

76 Ibid, Annex V. 77 Fellner (2003), p. 24. 78 Directive 98/48/EC, Annex V. 79 The term information society service will be explained in detail in section 3.4.2. 80 IRIS plus (2005), p. 2. 81 A short overview of the applicable legislation is seen to provide an insight in the substantive legal framework related to advertising.

20


except for television and radio.82 In recital 18 of the directive commercial

communication is emphasised as an information society service.

According to article 3 of the directive a ‘country of origin principle’ applies for service

providers offering information society services. This rule was implemented because e-

commerce is mainly conducted via the Internet and websites can be accessed from

anywhere in the world.83 For businesses it is impossible to comply with the rules of

every national law. Member States must ensure that a business engaged in e-

commerce complies with national rules no matter where in the EU the business is

conducted. Moreover, other Member States must recognise the freedom to provide

information society services.

The principle applies to the ‘coordinated field’ which is defined as “the requirements

laid down in member states’ legal systems applicable to information society service

providers or information society services […].”84 Form this definition appears that it is

irrelevant whether the requirements are general or specific to the information society.

Requirements which are applicable to advertising are included in the coordinated

field.85 Consequently, the country of origin principle applies to all national regulations

regarding advertising that are applicable to information society services (including

mobile advertising). However, the national requirements related to goods (e.g.

labelling, security requirements etc.) are not covered by the coordinated field which

means that a service provider has to comply with national rules.86 Moreover, the

country of origin principle is subject to exceptions, such as in the case of consumer

protection.87 It is worth mentioning that the freedom of the parties to choose the law of

their contract and the permissibility of unsolicited advertising are excluded from the

country of origin principle.88 This derogation prevents spammers to establish in a

country with less stringent rules in order to reach consumers in other Member States.

The E-Commerce Directive constitutes a supplementation to the law applicable to

information society services, meaning that it does not have an effect on other directives

relevant to commercial communication.89

82 Directive 2000/31/EC, article 2(a). 83 Since transaction by means of a mobile phone can also be performed from everywhere the principle seems to be suitable for m-commerce. 84 Directive 2000/31/EC, article 2(h). 85 Directive 2000/31/EC, recital 21 and article 2(i). 86 Directive 2000/31/EC, recital 21. 87 Ibid, article 3(4). 88 Ibid, Annex. 89 Ibid, recital 29.

21


3.4.2 The Privacy and Electronic Communications Directive90

The Privacy and Electronic Communications Directive covers practices of unsolicited

advertising and seeks to protect private individuals or consumers. The purpose of this

directive is to update the legal framework of the EU by taking the ongoing technological

developments in communication services into account. Thus, it applies to all media

used to provide telecommunications and other electronic communication services.91

The Privacy and Electronic Communications Directive applies in conjunction with the

Data Protection Directive since it primarily deals with the protection of certain kind of

data.92 Basically, the new directive “translates” the Data Protection Directive into

specific rules for the electronic communication sector.93 More importance will be

attached to the directive in chapter 4 (protection of privacy) and 5 (spam).

3.4.3 Distance Selling Directive94

When drafted in 1997, the focus of implementing the Distance Selling Directive was

mainly on mail order and telephone sales. This is why it does not deal with specific

problems raised by transactions via the Internet. Nevertheless, the Directive does

consider the introduction of new technologies and applies therefore to issues regarding

m-commerce.95

The directive refers to commercial communication in matters where it relates to a

distance contract and states that certain means of distance communications may be

used only where there is no clear objection from the consumer. This is including mobile

messages.96 A message used for the purpose of marketing must be clearly identifiable

as such in order to avoid that a customer responds to an apparent relationship, on

which the sending of unwanted commercial communication will later follow.97

3.4.4 Unfair Commercial Practices Directive98

The aim of the directive is to standardise the rules on unfair99 commercial practices,

including misleading and aggressive advertising within the EU.100 Article 5 of the

90 Directive 2002/58/EC. 91 Ibid, recital 4. 92 Directive 95/46/EC. 93 The definitions and basic rules of the Data Protection Directive apply to the electronic communications sector. 94 Directive 97/7/EC. 95 Ibid, recital 4. 96 Directive 97/7/EC, article 10. 97 Directive 97/7/EC; article 4(2). 98 Directive 2005/29/EC. 99 In order for a commercial practice to be unfair (and thus illegal) must the practice 1) be contrary to the requirements of professional diligence and 2) materially distorts the behaviour of the average consumer targeted. Directive 2005/29/ EC, article 5(2).

22


directive contains a general clause on the prohibition of unfair commercial practices

and annex I of the Directive includes a non-exhaustive list which specifies prohibited

practices (e.g. the unauthorised use of quality marks or falsely claiming that a product

can cure illnesses). Hereby, is made clear what is prohibited and a service provider can

market his products and services in the same way throughout the EU as on his

domestic market. The consumer is provided with the same level of protection within the

EU.101 In addition, more certainty for consumers is created in terms of commercial

communications that do not originate in their home country.102

The directive applies to B2C relations and also to all kind of “commercial practices

directly related to influencing consumers' transactional decisions in relation to

products”103 (not services). According to article 3(4) other Community rules regulating

specific aspects of unfair commercial practices takes precedence, meaning that this

includes the E-Commerce Directive in matters concerning information society services.

3.4.5 Proposal for a Regulation Concerning Sales Promotions in the Internal Market104

Sales promotions are a form of commercial communications that are designed to have

an immediate impact on sales. The aim is to increase consumer demand, stimulate

market demand or improve product availability.105 Examples include discounts,

contests, coupons etc. The aim of the proposal is that it must be clarified to consumers

what conditions are attached to their participation, what the offer is worth and what

effect the sales promotion has on the price.106 In addition to the proposal, the E-

Commerce Directive sets out information requirements concerning sales promotion.107

The Regulation includes all forms of commercial communication linked to sales

promotions and is not excluding certain media.108 Due to the principle of mutual

recognition, Member States cannot prohibit a legitimate advertisement for a discount

promotion from another Member State, even though this promotion is illegal under the

national law of the first state (this only applies to sales promotion).109

100 Directive 2005/29/EC, article 1. 101 EU Document MEMO 05/64, p. 2. 102 Ibid, p. 1. 103 Directive 2005/29/EC, recital 7. 104 COM(2002) 585 final. 105 COM(2001) 546 final, p. 3. 106 COM(2002) 585 final, article 4. 107 Directive 2000/31/EC, article 6. 108 COM(2002) 585 final, article 1. 109 Ibid, article 3(1).

23


3.5 Information requirements

Certain information requirements in relation to commercial communication are imposed

on the basis that a well-informed consumer is less likely to be misled. In cases of

information society services the service provider must provide certain information

required by the E-Commerce Directive. It is differentiated between general information

requirements110 and specific information requirements such as for commercial

communications.111 The problem related to mobile services is the applicability of such

information since it is difficult to implement these requirements in a message with a

length of 160 characters.112 Especially the obligation of article 5 to provide such

information easily, directly, and permanently accessible seems to be difficult. This

includes the name, the geographical address, contact details and registrations

numbers of the service provider to the recipients of the service and competent

authorities. The only way to comply with the requirement is to include an URL into the

SMS which links the receiver to the information which seems to be sufficient enough to

meet the requirement.113

It is at least required that commercial communications which are part of, or constitute,

an information society service must be clearly identifiable as such and the natural or

legal person on whose behalf the commercial communication is made must be clearly

identifiable.114 It is prohibited to send electronic communications for the purpose of

direct marketing without including a valid address or number to which the recipient can

send a request that further communication cease.115 Problems arise when an SMS is

sent over the Internet. It will be illustrated later on that the identity of a sender who uses

the Internet to send messages to a mobile phones is more difficult to trace.

The Unfair Commercial Practice Directive contains no direct information requirements.

The directive points out that ignoring the information requirements included in other

directives leads to a misleading omission.116 Moreover, it is stated that dependent on

the means of communication it shall be determined whether an information requirement

has not been met.117 A mobile advertisement obviously cannot contain as much

information as a website, but in any case the required information must be made

110 Directive 2000/31/EC, article 5. 111 Ibid, article 6. 112 Currently the most common mobile messages are SMS and as long as UMTS is not fully employed the capabilities of text messages will continue to be limited. 113 Trzaskowski (2004), p. 5. 114 Directive 2000/31/EC, article 6. 115 It is explicitly pointed out that the use of false identities or false return addresses or numbers is prohibited. Directive 2002/58/ EC, recital 43. 116 Directive 2005/29/EC, article 7. 117 Directive 2005/29/EC, article 7(3).

24


available to consumers, even if by other means.118 Especially in cases where the trader

makes an invitation to purchase119 the disclosure of the required information (such as

the identity of the service provider, price and characteristic of the product) become

indispensable.120 This can be done with an URL (as mentioned above) or a toll-free

number included in the message.

The Proposal for a Regulation concerning Sales Promotions121 refers to information

requirements regarding sales promotion.122 Again, this information must be provided in

a clear and appropriate manner including the price and any additional costs, the name

and address of the promoter, the start date of the promotion, and either the end date or

the available stock. In addition, detailed information requirements concerning discounts

and premiums are also listed in the Annex of the proposal. Almost in the same line as

the Unfair Commercial Practice Directive not all the information needs to be directly

included in the advertisement, but it is required that the necessary information is made

available before the goods are purchased. The Annex of the proposal lists when certain

information needs to be made available to the user.

From the above illustration appears that the information requirements listed in the

different legislations are partly intersecting in their provisions. Most of them state, for

example, that the advertiser must be clearly identifiable to provide the consumer with

contact information. Which law prevails depends on the circumstances of the situation.

To give an example: both the E-Commerce Directive and Proposal for a Regulation

Concerning Sales Promotions in the Internal Market apply to sales promotion and both

require that the advertiser must be clearly identifiable. The regulation refers to the

advertiser as requires the name and address of the company responsible for a sales

promotion,123 while the E-Commerce Directive requires the name of the service

provider, the address where it is established and information that allows it to be

contacted rapidly. If sales promotions are marketed on the Internet the E-Commerce

takes priority which follows subsidiary124 respected by the Regulation.125 In addition, the

Unfair Commercial Practice Directive recognises that identical information can be

misleading and states therefore that “in the case of conflict between the provisions of 118 IRIS plus (2005), p. 6. 119 An "’invitation to purchase’ means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase.” Directive 2005/58/EC, article 2(i). 120 Directive 2002/58/ EC, recital 14. 121 If the Regulation were to come into force, the existing provisions on sales promotions would not be affected. COM (2002) 585 final, recital 12. 122 COM (2002) 585 final, article 4 and Annex. 123 COM (2002) 585 final, article 4 and Annex. 124 The principle of subsidiary is set out in article 5 of the EC Treaty. It was implemented to debar the Community institutions from extending their powers to the detriment of those of the Member States. For further information please refer to: http://europa.eu.int/scadplus/glossary/subsidiarity_en.htm, 08.07.2005. 125 COM (2002) 585 final, recital 5.

25


this Directive and other Community rules regulating specific aspects of unfair

commercial practices, the latter shall prevail and apply to those specific aspects.”126

126 Directive 2005/29/EC, article 3(4).

26

4 The Privacy Issue

4 The Privacy Issue

“There is a growing consensus that if the jumble of … statutes, consumer pressure, and self-

help is to be unified into meaningful privacy protection in the digital age, then we will have to do

more than pass a law. The law in general and each of us in particular, will have to make some

fundamental changes in the way we think of personal information and electronic

communication." (Aldermann and Kennedy (1997), p. 332)

As location-based advertising becomes more and more interesting it shall be analysed

when a service provider is allowed to process the needed data. In general, targeted

advertising is only legitimate when the protection of privacy is considered. This section

will in particular pay attention to the principles of disclosure and consent.

4.1 Overview

In general, privacy is recognised as a fundamental right, and efforts of developing

privacy protection goes back a long way.127 Nowadays the focus on privacy matters is

moving towards information privacy or data protection due to the development of new

technologies. Especially the introduction of the Internet makes the collection and

processing of data in large amounts much easier which is in particular of interest for

marketing activities.128 Posting information on a website makes it available to anyone in

the world, and the cross-border transfer of personal data has made a global focus on

personal privacy necessary to ensure adequate legal protection for data privacy. The

EU Directive on Data Protection129 and the OECD Privacy Guidelines130 are two

examples of the most international actions taken to ensure that personal data of

individuals is used in a fair way and to protect their rights.131

In respect to m-commerce both the technology and the nature of location-based and

personalised services lead to the necessity of considering privacy issues. The

convenience of connectivity offered by mobile devices allows amongst others tracking,

recording, and perusing the movements and information of the mobile device user.132

Location-based advertising, for example, allows users to receive messages relative to

their geographical position and their needs may vary depending on their location at a

specific moment. This kind of advertisement can only be carried out by making the

127 European Convention on Human Rights and Fundamental Freedoms of 1950. 128 Ng-Kruelle et al. (2002), pp. 5. 129 Directive 95/46/EC. 130 OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data. Also refer to http://www.oecd.org/document/18/0,2340,en_2649_201185_1815186_1_1_1_1,00.html; 04.05.2005. 131 Ng-Kruelle et al. (2002), pp. 7. 132 Trzaskowski (2004), p. 8.

27

http://www.oecd.org/document/18/0,2340,en_2649_201185_1815186_1_1_1_1,00.html

4 The Privacy Issue

message personalized. Hence, a combination of demographic, psychographic133 and

location data collected over time (historical data) and based on the user’s habits,

lifestyle, preferences, and location patterns leads to an individual profile.134

4.1.1 EU directives and important definition

Within the EU there are two main directives which have to be considered regarding the

processing of data: the above mentioned Data Protection Directive which applies to

general aspects of data processing and the Privacy and Electronic Communications

Directive135 which deals with more specific issues and can be seen as a complement to

the former.136 The directives are meant to create a balance between economic

interests and the privacy rights of individuals while still taking the free movement of

personal data into consideration.137 Irrespective from the applicability the different

regulations all include general criteria such as limitation of purposes, informational self-

determination, transparency, and security. Figure 1 illustrates the basic definitions and

summarises the procedure of data protection.

Figure 1: Data protection

Personal DataAny Information relating

to a data subject

Processing Any operation which is performed upon

personal data

Controller A person, public authority, agency or

any other body which determines the purposes and means of the

processing of personal data

Data Subject An identified or

identifiable person

E.g. Name: John Smith Age: 36

The figure only contains certain definitions138 which are seen to be most important for

the following analysis. ‘Personal data’ potentially cover a wide range of types of

133 The term psychographic describes consumers on the basis of some psychological trait, characteristics or life style. http://www.ignitingministry.org/advertising/mediaterms.aspx, 19.07.2005. 134 Gratton (2002), p. 60. 135 Directive 2002/58/EC. 136 The Directive 2002/58/EC replaces (see recital 4) the Telecommunications Data Protection Directive (97/66/EC). Due to the rule of ’lex specialis’ the new directive (2002/58/EC) has priority over the Data Protection Directive (95/46/EC) on issues covered by both directives. 137 http://europa.eu.int/scadplus/leg/en/lvb/l14012.htm; 07.04.2005. 138 The definitions are listed in Directive 95/46/EC under article 2.

28

http://europa.eu.int/scadplus/leg/en/lvb/l14012.htm

4 The Privacy Issue

information, such as information pertaining to an individual’s identity, his or her name,

address and security number, and information revealing an individual’s personal

preferences, such as records of purchases or visits to websites. ‘Processing’ of data is

legitimate only in certain specified situations, and must comply with a list of data

protection principles, although there are a number of exceptions.139 A ‘data controller’

is basically anyone who decides how data are dealt with and is therefore responsible to

comply with the law. In addition, processing of data may be carried out by an outside

person or organisation on behalf of the data controller. The Data Protection Directive

refers to such persons as ‘data processors’.140 For the purpose of this thesis ‘data

subjects’ will be users of mobile devices.

4.2 Different kinds of data

In this section a broad overview of the different kind of data which are interesting for

personalised advertising shall be given. This is assumed to be useful for the following

analysis which determines when a data collector may be in the legal position to

process personal data.

4.2.1 Personal data

The following example illustrates why processing of personal data is a very sensitive

matter: A service provider offers a location-based service that finds the nearest

restaurant via a WAP interface. During this process the service provider gains

knowledge about the eating habits and price expectations of the user when choosing a

restaurant. Just as in traditional Internet a cookie141 could be combined with other

personal information and identifiers142 to aggregate information about the context, for

instance location information, into an extensive user profile. Such a profile can be used

to tailor B2C transactions to the customer needs.143 The problem arises when profiling

turns out to be threatening for instance when it leads to increased intrusion of privacy.

Thus, it must be determined when profiling is legitimate.

The definition of personal covers a wide range of information and therefore a mobile

phone number can be categorise as personal data even though it does not directly

disclose any information about the individual. An advertiser who is in the possession of

139 The applied operations may be: collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction. Directive 95/46/EC, article 2 (b). 140 Directive 95/46/EC, article 2 (e): 141 A ‘cookie’ is “a packet of information sent by a server to a World Wide Web browser and then sent back by the browser each time it accesses that server.” http://en.wikipedia.org/wiki/HTTP_cookie, 16.07.2005. 142 Bluetooth is for example such an identifier to gain knowledge about the current location of the mobile device. 143 Gow (2005, forthcoming), p. 10.

29

http://en.wikipedia.org/wiki/Web_server

http://en.wikipedia.org/wiki/World_Wide_Web

http://en.wikipedia.org/wiki/Web_browser

4 The Privacy Issue

a mobile number is able to direct messages to that person. Even though the data

collector does not necessarily know the individual’s name, address, sex etc. the

individual may nevertheless be identified in the virtual world. It is argued that an

individual who can be identified in the virtual world may receive targeted

advertisements such as in the physical world by traditional mail to the individual’s

postal address.144

Nevertheless, some amount of disclosure must be accepted in order to interact with

one another socially. How much information people will release depends on several

factors, e.g. to which extend information is considered to be sensitive, expectations as

how information is used, trust and reputation of the data collector etc.145 Thus, the data

subject must have control over his personal data but also be provided with

transparency about the data processing. Especially a mobile user who wishes to

receive personalises advertisements must accept that a huge amount of personal data

will be collected. The law guarantees this right by limiting the access to personal data,

as processing is only legal if the data subject has clearly given his (prior) consent.146

4.2.2 Traffic data

Traffic data147 refers to non-content information recorded by the network provider which

accrues during all forms of communication made with the mobile phone. In the

traditional telephone system traffic data was merely the person who was calling or the

person called, and the duration of the call. With the development of new technologies

the collection of traffic data becomes a new dimension. In addition to phone calls data

trails are generated while sending mobile message that are used for these

communications. Traffic data may include data referring to routing, duration, volume or

time of the communication, and notes of the location of the mobile device as it moves

from cell to cell, every visited WAP page, every download etc.148

Even though traffic data is necessary for the provision of communication services (such

as billing, enabling handoffs, and regional roaming), they reveal details of an

144 Simmons and Simmons (2001), pp. 92. 145 Camponovo and Cerutti (2004), p. 3. s 146 Directive 95/46/EC, article 7(a); however, the article 7 also includes several exceptions for cases in which prior consent does not have to be obtained. 147 Under EU law ‘traffic data’ is defined as “any data processed for the purpose of the conveyance of a communication on an electronic communications network or for the billing thereof.” Directive 2002/58/EC, article 2(b). Another definition can be found in the Discussion Paper for Data Preservation Workshop of the G8 Lyon Group whereby ‘traffic data’ means the "non-content information recorded by network equipment concerning a specific communication or set of communications. Traffic data includes the origin of a communication, the duration, the nature of the communication activity (not including content) and its destination. In the case of Internet communications, traffic data will almost always include an IP address and port number." 148 Gow (2005, forthcoming), p. 14. See also: http://europa.eu.int/information_society/topics/ecomm/all_about/todays_framework/privacy_protection/index_en.htm#traffic, 16.05.2005.

30

4 The Privacy Issue

individual’s privacy. A person’s contacts, habits, interests, activities etc. can be traced

and actually used to generate a user profile. Under article 5(1) the Privacy and

Electronic Communications Directive requires that Member States must ensure the

confidentiality of communications and related traffic data through national legislation. In

particular, article 6 of the directive enforces the claim of confidentiality with the

requirement that network providers must erase or make anonymous traffic data relating

to subscribers or users when it is no longer needed for the transmission of a

communication. Traffic data are due to their characteristics interesting for marketing

purposes for example in relation to value added services but the usage for such

purposes requires the prior consent of the data subject. Article 6 also includes a list of

exemptions where no consent is needed as in the case of police investigations of

criminal offences. Any measures adopted must be in accordance with general

principles of EU law and the Treaty on European Union.149 Moreover, recital 11 states

that any action by the Member States must be “in accordance with the European

Convention for the Protection of Human Rights and Fundamental Freedoms, as

interpreted by rulings of the European Court of Human Rights.”

4.2.3 Location data (other than traffic data)

One reason for the relevance of location data150 arose due to the need for emergency

services to get the exact position of an incident or accident. While calls over a land line

can be tracked, by matching the caller’s number to a location, the link between a

mobile phone number and its location is more complex. This is because and as

described in the previous chapter, special location-sensing equipment is necessary.

Particularly in cases where the person is distressed and may not be able to describe

the exact position, emergency service can be improved when it is legitimate to trace

the location, and quicker treatment may save and improve life. In this respect, the

European Commission has established the Coordination Group on Access to Location

Information for Emergency Services (CGALIES).151 Moreover, the Privacy and

Electronic Communications Directive provides the legal framework to grant access to

location information in emergency cases.152

149 http://europa.eu.int/information_society/topics/ecomm/all_about/todays_framework/privacy_protection/ index_en.htm#traffic, 16.05.2005. 150 ‘Location data’ or information “means any data processed in an electronic communications network, indicating the geographic position of the terminal equipment of a user of a publicly available electronic communications service.” Directive 2002/58/EC, article 2 (c). 151 The mission of CGALIS is to define requirements for a Pan European common location provisioning mechanism that can be accessed and used by the European 1-1-2 community and emergency service operators. For more information please refer to: http://europa.eu.int/comm/environment/civil/prote/112/112_en.htm, 15.05.2005. 152 Directive 2002/58/EC, recital 36 and article 10(b).

31

4 The Privacy Issue

In this thesis Gow’s153 point of view is taken, namely that location information alone is

not personal information, but it becomes such when it is coordinated with other kinds of

information. This is because gathering location information is not necessarily equivalent

to the collection of personal information since the knowledge of a person’s geographic

position is not revealing anything about her needs.

The case of a prepaid card shall be considered as an example: basically the use of a

prepaid card for mobile phone services does not disclose any personal information

because in many Member States it can be obtained without revealing the name,

address, banking information, etc. This leads to an anonym carrier-customer

relationship. However, it may be possible to obtain customer identity in certain m-

commerce transactions. For example, in cases where a customer is using his credit

card number for payment, location information may be collected related to the

transaction and by linking the credit card number to the mobile phone number personal

details may be revealed.

The processing of location data is regulated similarly as the processing of personal

data, as described above. The Privacy and Electronic Communications Directive

requires clear and informed (opt-in) consent for the provision of commercial services

based on the use of location data.154 In the case of anonymous data processing,

consent is not necessary.

4.3 Legal framework related to data processing

In the previous section the different kind of data were introduced and it became

apparent that such data can be collected when a target individual is using a mobile

phones. The combination of the data will lead to extended profiling which may include

enough details about the individual to send personalised messages to his mobile

phone.

In order to obtain a valid consent from the mobile user, the service provider has to

make an effective disclosure that informs about all the data he is using. An analysis of

current EU law may help to determine what aspects the consent must cover regarding

m-commerce and to protect personal and location data as well as control spam.

4.3.1 Disclosure

Disclosure basically means the notice to the data subject of the processing of his

personal and location data. This principle can be seen as the most important one,

regarding the processing of personal data. This is because without information a data

153 Gow (2005, forthcoming). 154 Directive 2002/58/EC, article 9.

32

4 The Privacy Issue

subject is not able to make a decision as to what extent his personal data may be used

or to agree to be provided with, for example location-based advertisements.155 In cases

of traffic data, it may not be necessary to disclose the mobile device user that he will be

tracked, and the law regulating such data is already narrowing down the usage of such

data.

Legislation regarding the processing of personal data seems to agree that the data

collector should disclose the purpose of the collection to the data subject. More

precisely, the Data Protection Directive regulates under article 6 the principles relating

to data quality and states that personal data must be:

(1) obtained fairly and lawfully;

(2) used only for original specified purpose;

(3) adequate, relevant, and not excessive to purpose;

(4) accurate and up to date;

(5) accessible to the subject;

(6) kept secure; and

(7) destroyed after its purpose is completed.

It is also required that the processing of data is transparent towards the data subject.

Transparency means that the data subject has information about the identity of the

data controller, the purpose of the processing, and the recipients of the data.156 This is

necessary to ensure that the data subject can assert his rights and prove if the

processing is fair and legal. Furthermore, the regulations entitle the data subject to get

access to all data processed about him. He even has the right to demand the

rectification, deletion or blocking of data that is incomplete, inaccurate or isn't being

processed in compliance with the data protection rules.157

Regarding data protection the term security implies three targets; confidentiality,

integrity and availability of data. This is because certain information is necessary to

avoid the anonymity within the cyberspace world.

By means of the Internet data can be transferred regardless of distance and State

borders. As a consequence, companies trade and act more internationally which also

accounts for the transfer of personal data. Both the required technology and content

can be accessed anywhere in the world. The same applies to the m-commerce

activities. Foreign companies may wish to enter the European market and in order to

do so try to get access to data of mobile users. Consequently, the EU reacted with

155 Gratton (2002), p. 61. 156 Directive 95/46/EC, article 10. 157 Ibid, article 12(b).

33

4 The Privacy Issue

special and strict rules regarding the transfer of data to third countries.158 In general,

personal data may only be transferred to countries outside the EEA, if that country

provides an adequate level of protection. However, the Directive also contains a list of

exceptions to this rule as in the case where the controller can guarantee that the

recipient will comply with the data protection rules.159

The protection of data offered by the US is considered to be inadequate. Nevertheless,

a special agreement with the US exists to enable companies to collect and transfer

data between US and EU Member States. This agreement states the conditions under

which the transfer of data is allowed and ensures that US organisations process

personal data in line with EU standards.160

The aim of the law is to protect the personal information of consumers, hence, they

may not apply when anonymous data is stored and used, since this purpose is not

longer applicable. When analysing the law it seems that the processing of anonymous

and pseudonymous data is basically allowed according to the Data Protection

Directive.161 Anonymous data is not protected, because in principle it is not possible to

establish a personal link between the profile and the data subject. Creating such an

anonymous profile is therefore not infringing anyone’s interests.162

The intention of pseudonymity is to make the re-identification of the person behind the

data more difficult, namely through rewriting of personal data to a fictional user name or

a number. Technical and organizational actions have to be considered by the data

controller in order to ensure that the profiles cannot be traced back to the data

subject.163

The Privacy and Electronic Communications Directive164 even goes so far as data

controllers are asked to minimise the processing of personal data and therefore use

anonymous and pseudonymous data.165 That is due to the fact that the usage of

information technologies is increasing and more and more data can be collected. In

addition, data controllers may use personal data only for those purposes agreed on by

the user and only to that extent necessary to fulfil these purposes.166 For example, data

collected to enable a user to receive information about the weather may not be used for

158 Ibid, article 25. 159 Ibid, article 26. 160 Schulze and Baumgartner (2001), pp. 50. 161 Recital 26 of directive 95/46/EC states that “the principles of protection shall not apply to data rendered anonymous in such a way that the data subject is no longer identifiable.” 162 Heinemann et al. (2004), p. 164. 163 Ibid. 164 Directive 2002/58/EC. 165 Ibid, recital 9. 166 Directive 95/46/EC, article 6.

34

4 The Privacy Issue

other purposes, such as advertising for ringtones. With the end of the subscription

service all personal data must be deleted when the account is terminated. The best

way to enforce these requirements is by avoidance or at least minimisation of personal

data.

4.3.2 Consent

There are mainly two types of consent required: (1) consent related to the tracking and

collecting of personal and location data with all its implications (e.g. processing and

purpose) and (2) consent related to receiving additional services such as location-

based advertising.

Data protection is subject to informational self-determination of the data subjects,

meaning that they have the right to determine for themselves the circumstances and

extent that information about them is exposed to others.167 The right of informational

self-determination is stated under article 7(a) of the Data Protection Directive, namely

that data may be processed if the data subject has clearly given his (prior) consent.168

Furthermore, the data subject must be provided with all information concerning the use

of the data, e.g. the nature, extent, and purpose. However, article 7 also contains an

exhaustive list of situations where such consent is not required. This concerns cases

where the processing is necessary for the performance of a contract to which the data

subject is a party, where the processing is necessary for compliance with the legal

obligations of the controller or when it is necessary to protect the vital interests of the

data subject or, in certain cases, a third party interest.

In addition to the requirement of prior consent, the Data Protection Directive states that

the data subject must have “the right to object, on request and free of charge, to the

processing of personal data relating to him which the controller anticipates being

processed for the purposes of direct marketing (…).”169 Moreover, the data controller

must clearly inform the data subject when disclosure of the data is made to third

parties.170

167 Ng-Kruelle et al. (2001), p.6. 168 ‘Consent’ is defined as any “freely given specific and informed indication of wishes by which the data subject signifies his agreement to personal data relating to him being processed.” Directive 95/46/EC, article 2(h). 169 Directive 95/46/EC, article 14(b). 170 Ibid.

35

4 The Privacy Issue

4.4 Problems arising due to the directives

4.4.1 Disclosure

Receiver of disclosure

As seen above, data can either be processed on a personal or on an anonymous

basis. There is no doubt that in the first case clear disclosure with regard to the

processing must be obtained. In some circumstances it may be questionable whether

anonymous data does not need to be disclosed. Consider the case of location data:

according to the law carriers actually have the ability to do whatever they want with

location data even transferring them to a third party – assumed that they do not include

identifying information. In the case of location-based advertising, for example, location

data may “contain or merge” with information that lead to the identification of the data

subject as pointed out in the example with the prepaid card.171 Therefore, it may in any

case be useful to provide disclosure whether the data contains personal information or

not. This will lead to more confidence for the consumer when he enters a m-commerce

transaction.

In cases which implicate for example value added services disclosure is definitely

necessary, because the informed disclosure will enable a mobile user to make a

deliberate decision whether or not to agree to receive services based on the service

provider’s policies relating to the processing of the data.

Who should be responsible for providing disclosure?

The law, as mentioned above, only states that the data controller should be responsible

for the disclosure.172 The Directive does not specify which party should be seen as the

data controller - for example in the case of location-based advertising: the service

provider which actually deploys the service, the mobile device manufacturer, the carrier

that provide the telecommunication services, the advertisers and content providers or

all of them? The law does not specify the types of relationship the mobile user may

have with parties involved in the matter. The solution that all parties should be

responsible does not seem to be a practical one, since it rather leads to confusion and

requires coordination between the parties.173

Considering the fact, that the network operator has already a contractual relationship

with the mobile user it may be advisable that he is made responsible for providing

disclosure. Following from this, his task would be to maintain protection of privacy and

most notably to avoid confusion and perform as a distribution channel for any new

171 Gratton (2002), p. 68. 172 Directive 95/46/EC, article 6(2). 173 Gratton (2002), p. 68.

36

4 The Privacy Issue

mobile services offered to the mobile user. The provider of services on the other hand

benefit from the established relationship between the carrier and the mobile user. The

carrier is authorised by the mobile user to use his information for several

telecommunication purposes (e.g. for billing), it can therefore be assumed that they

have a trusted relationship because an unsatisfied subscriber would most likely change

the carrier. Another argument for this consideration is that the mobile marketplace is

very competitive, and a carrier who wishes to keep his customer will therefore share

their interests in safeguarding and protecting information.174

How to provide disclosure

Due to the limited capabilities of mobile devices, particularly with regard to screen

sizes, an alternative must be found for the disclosure of personal data. As a basic rule,

and no matter which media and format of notice is used, it should be considered that

the notice is easy to find and understandable.175 The Cellular Telecommunications

Industry Association (CTIA) presents several methods in which such disclosure can be

provided: “There are several ways in which a service provider can inform customers

about their location information practices. Notification could be included in a service

agreement prior to the commencement of services. The provider could also describe

location information policies in electronic mail, on a web site, or in a letter sent to

subscribers. Consumers could also get notice on a bill directing subscribers to a toll-

free number or Internet site address for a description of the carrier’s complete policies

and practices. Obviously, given the constraints associated with the size of the display

on most wireless phones or other terminal equipment today, the notice requirement

must fit the circumstances. (…).”176 It shall be assumed that the carrier is responsible

for providing disclosure to the mobile user; the unambiguous disclosure should then be

made at the point of sale of the device. This could be done either in written or by a

clear statement on a website which allows the mobile user to give informed consent.

Regardless of which way will be chosen, disclosure should always be made prior to the

collection of personal and location data to avoid any privacy breaches.177

4.4.2 Consent

First of all, it is important that the mobile user is besides being adequately informed

about the purpose of the processing of personal data able to choose to which extent

his data may be used. This is in particular necessary to avoid receiving unsolicited

messages which will be discussed in the next chapter. Again it is advisable to obtain

174 Ibid. 175 Ibid. 176 Altschul and Coleman (2000), p. 9. 177 Gratton (2002), p. 69.

37

4 The Privacy Issue

consent prior to the collection of personal and location data and as argued above also

in cases where the processing is made anonymously. Furthermore, the carrier is again

seen to be in the position of obtaining consent due to the reasons mentioned before.

As mentioned above the way how consent should be obtained is not specified in the

legislation. Therefore, it shall now be analysed how to communicate in a fair and

appropriate way with the mobile user to ensure that he is only opting anticipated

services. Consent could be obtained in any form, such as in written, electronic etc, but

it should be designed in a way that gives evidence that the mobile user is clearly

informed about the processing of his data and the participation of additional services.

Opt-in versus Opt-out

In the case of obtaining consent, two basic mechanisms exist which enable the mobile

user to give his consent for receiving services. The opt-in system requires that a

customer agrees to be provided with services explicit before the sender is allowed to

send them. The opt-out system on the other hand basically allows the sending of

messages but must contain a value reply address or a link with which the user can ban

further messages from the service provider.178

The opt-in system is a fair procedure of obtaining consent and should apply in cases

where the mobile user has to choose whether he wants to receive a service or not.

Since the opt-out system involves that the mobile user has to disagree of being

tracked, this system should apply when he wants to terminate the agreement with the

service provider.179 However, there is a conflict of interests as to which mechanism

shall apply. Service providers will prefer the opt-out system since it allows for sending

messages until the receiver will oppose. Mobile users on the other hand will rather

prefer the opt-in system, as they will not receive unwanted messages.180 Nevertheless,

service providers should adopt the opt-in system in obtaining consent before sending

messages to the mobile user, as the consumer gets the chance to give explicit

permission. This system is also considered to be an adequate mechanism to avoid

spam and is therefore in line with EU law which requires an opt-in approach regarding

the sending of unsolicited commercial communication.181

In the case of processing anonymous data it may be advisable to give the mobile user

the opportunity to opt-out of such tracking. This is due to the fact that even though the

data is made anonymously, the mobile user may feel uncomfortable with the idea of

being tracked. Before a mobile user can give his consent he must be provided with an

178 Camponovo and Cerutti (2004), p. 8. 179 Gratton (2002), pp. 71. 180 Camponovo and Cerutti (2004), p. 8. 181 Directive 2002/58/EC, article 13.

38

4 The Privacy Issue

appropriate and effective disclosure which contains all necessary information about the

tracking, the collection, and the use of their personal and location data through mobile

technologies.182

4.4.3 Technology neutral approach

Critics claim that the technology neutral mode of expression of the Privacy and

Electronic Communications Directive has led to ambiguity and confusion concerning

the procession of personal data. Especially the problem of finding a clear distinction

between ‘traffic data’ and ‘location’ data is indicative of this ambiguity.183 Even though

the directive includes two separate definitions in article 2, it confuses the issue in recital

35 with a statement that a clear distinction in the case of mobile telecommunications

cannot be made: “In digital mobile networks, location data giving the geographic

position of the terminal equipment of the mobile user are processed to enable the

transmission of communications. Such data are traffic data covered by Article 6 of this

Directive. (…).”

The problem arising from maintaining technology neutral language can have adverse

effects on customer consent and pervasive use of location data. To give an example, in

cases where location data falls under the category of traffic data an erasure

requirement has to be maintained, and operators need to inform the customer of the

purpose and the duration of processing the data.184 For location data other than traffic

data article 9 requires that the data is made anonymous or that consent must be

obtained from the customer. To gain consent the terms and conditions of use and

disclosure of location data must be given to the customer. Thus, article 9 does not

include an erasure requirement what means that in principle, such location data can be

held for an indefinite period of time. As Gow recognises, a potential loophole is created

because no clear distinction of the two terms is made. Service providers with

commercial interests are able to tailor their collection and use of customer data in a

way to circumvent the erasure requirement.185

Another problem arises in the case where blanket consent is obtained for bundled

packages of services. As mentioned earlier, article 9 requires that customers must get

the opportunity to actively opt-in for services, but does not imply specific limitations on

the extent to which that consent may apply. The condition stated in the first paragraph

includes that data can be processed “(…) to the extent and for the duration necessary

for the provision of a value added service.” The outcome of this is that in the case

182 Gratton (2002), pp. 73. 183 Gow (2005, forthcoming), p. 17. 184 Directive 2002/58/EC, article 6(1) and (2). 185 Gow (2005, forthcoming), p. 18.

39

4 The Privacy Issue

where a service package is offered, consent may be obtained for an ongoing basis. To

proof this proposition recital 17 of the Directive shall be consulted which states that

“consent may be given by any appropriate method enabling a freely given specific and

informed indication of the user's wishes, including by ticking a box when visiting an

Internet website.” The service provider could basically formulate his policy in a way,

e.g. by means of carefully wording, that the customer may not be aware that he is

giving his consent for a service package and opting in to a blanket provision for use of

his data.

In addition, there arises a problem with the customer’s option of “refusing the

processing of such data for each connection to the network or for each transmission of

a communication.”186 Furthermore, the possibility to opt-out must be “free of charge”

but the “costs for the transmission of this refusal” are not considered.187 In the case of

e-mail such costs do not incur but each time a mobile message is sent a fee is charged

for the transmission. This may give offence and the customer may consider to refuse to

provide the mobile number right from the start of the survey.

186 Directive 2002/58/EC, article 9(2). 187 Ibid, recital 41.

40

5 Spam .

5 Spam

As seen in the previous chapter, the introduction of mobile networks, particular with

regard to the ability to send and receive mobile messages, lead to the fact that the

privacy issue becomes seven more salient. This is mainly because the mobile phone is

intimately connected with the user. One major concern of privacy is spam caused by

unsolicited mobile messages or advertisements and becoming a major nuisance for

users.

5.1 What is spam?

Most Internet users most likely have at some point received e-mail messages of the

following kind as illustrated in figure 2:

Figure 2: Example of e-mail spam

Subject: Fantastic opportunity!!!

From: [email protected]

MAKE MONEY THE EASY WAY!!!

Your skills and experience can make you $$$$$$ in only a few months. Send $50 dollars to

Make Money Promotions to set yourself up in easy street for life.

Go to http://www.makemoney.com/getajob/index.html for further details!!!

E-mail spam may be filtered by the provider and the subject heading may provide an

indication that the message is spam (e.g. irrelevant wording is used). With regard to

mobile devices there exists no software for filtering incoming messages and therefore

there is currently no protection against mobile spam.188 Furthermore, it can be argued

that consumers are more sensitive to mobile spam because mobile devices are more

personal and with the invasion of privacy a more private sphere is entered. 189 Spam is

a particular problem for many reasons as it raises privacy concerns, affects efficiency

and reliability of services, and diminishes consumer trust.

In addition to costs and wasting time, unsolicited commercial communication also

poses security risks, such as:190

- Violation of privacy: Collection of phone numbers is often carried out without the

knowledge of the mobile device user and as said before mobile spam constitutes

an intrusion into privacy.

188 Stieger (2000), p. 21. 189 Camponovo and Cerutti (2004), p. 5. 190 See also Sarrocco (2004), p. 9.

41

5 Spam .

- Identity theft: “Phishing” means that a message is sent which looks like it comes

from a legitimate company stating that the user must update his data and verify the

password and username.191

- Viruses: In relation to mobile spam this problem is small today but it is considered

grow quickly and therefore an area which has to be monitored.192

- Advertising illicit/offensive content such as pornography and as mentioned before

sent indiscriminately to all users, regardless of age.

The intention and content of mobile spam can vary. There are spam messages with the

invitation to purchase or simply messages of a commercial nature that are considered

threatening, or intruding upon a user’s privacy. Moreover, some messages are

designed in a way that they destroy or change the handset settings.193 Spam

messages can also contain a simple request to call back a specific number. When

calling this number a user may be unaware that he has been fraudulently misled to call

a premium-rate line. Often there is an attempt to get the caller hold on the line as long

as possible in order to increase the revenue from this fraud.194 Based on the same

principle is a one-ring incoming call, meaning that the call is timed to a certain extent so

that it will only ring once. The number of the missed call appears on the display and

when it is called back the same fraud will appear as described above. In this case, it is

the calling number details which are spammed to the phone, as these kinds of calls are

made in huge amounts.195 The call is at little or no cost to the caller since in most

countries there is no charge for calls which do not connect. Even though premium

numbers take a specific shape in most of the European countries and the mobile user

should basically be aware about it. There are several problems:

- There is no standardisation of premium rate numbers in Europe, in cases were a

spam message comes from another Member State the receiver may be unaware

that the message contains a bout a premium number.

- The mobile users may be in a situation that does not allow him to have full view of

the message and as a consequent does not recognise what kind of number the

message/call contains.

Figure 3 is demonstrating the spam problem considering a message sent by

“Apanatchi”.196

191 The information of the user are collected which can lead to identity theft, lost of money, etc. 192 Please refer to http://news.bbc.co.uk/1/hi/technology/3809855.stm or http://edition.cnn.com/2004/TECH/ptech/02/04/cellphone.spam.reut/, 14.06.2005. 193 For more information please refer to: http://www.leavcom.com/pdf/Mobilecode.pdf, 07.07.2005. 194 http://en.wikipedia.org/wiki/Mobile_phone_spam, 07.06.05. 195 Ibid. 196 The example was taken from www.robertprice.co.uk, 07.06.2005.

42

5 Spam .

Figure 3: Example of mobile spam

1 2 3

4 5 6

7 8

The different images were taken from www.robertprice.co.uk

A free ringtone is offered via an SMS whereas the details are revealed in a ‘WAP Push

message’. Such a message forwards the mobile user to an external WAP site where

the content can easily be downloaded by just one click (“OK”) and without entering a

long URL. While the message is downloaded the IP address of the sender is shown for

a very short time which has to be followed up to see the detailed information about the

sender. When the user now chooses the free ringtone, the terms and conditions are

presented in a new “window” and the content shows that the message is spam.

Especially the information that the user is signing up for “promotional” messages and

43

5 Spam .

for a ringtone service that cost 1.50UKP every five days underlines this assumption.

Moreover, the required information which have to be included in a commercial

communication – as pointed out in chapter 3 – are almost not provided.

In general it is not that complicated to gather mobile numbers. Many websites, like

those offering ringtones and logo downloads, are including a system to collect mobile

phone numbers.197 Each time a mobile user is downloading a service his number will

be disclosed to the service provider. This process is of course interfering with the

principle of privacy.

5.1.1 Definition and criteria

An EU study about unsolicited commercial communication focuses on the commercial

character of such messages and defines spam in the following way: “Strictly speaking,

an unsolicited commercial communication has two essential characteristics: its

commercial nature and the fact that it is unsolicited i.e. not requested in advance by the

Internet user.”198 Most frequently, spam is sent in large numbers to individuals with

whom the sender had no previous contact.199 Particularly with regard to mobile spam,

such unwanted or unsolicited messages are received on a mobile device, sent through

the SMS-, MMS- or EMS-gateway.200 Bulk messages are actually a common

phenomenon, especially for the use of discussion forums or newsletters. However, the

difference between spam and such newsletters is that the latter is wanted by the

receiver who has expressed his consent beforehand (opt-in).

Table 3: Criteria of Spam

Individual Mass communication

Welcome „Normal“ communication

between known persons Mailing list, Newsletter

Unsolicited First-contact Spam

Source: Dirk Schmidt (2004)

The following characteristics of spam shall be described in detail, namely electronic,

commercial, mass communication, and personal. 201

197 Sarrocco (2004), p. 8. 198 Gauthronet and Drouard (2001), p. 38. 199 Sarrocco (2004), p. 6. 200 TeleCommunication Systems, Inc. (2003), p. 2. 201 The following illustration is taken from Camponovo and Cerutti (2004) because it is considered to be helpful in understanding the complicated matter of spam.

44

5 Spam .

- Electronic: an electronic communication is defined as any communication (e.g.

signs, signals, sounds, data) convoyed through electronic communication networks:

“transmission systems […] which permit the conveyance of signals by wire, by

radio, by optical or by other electromagnetic means, including satellite networks,

fixed […] and mobile terrestrial networks, electricity cable systems […] networks

used for radio and television broadcasting, and cable television networks,

irrespective of the type of information conveyed”202. From this definition appears

that Internet and mobile telephony are recognised as electronic communication

networks. Therefore communications by means of mobile messages are

considered to be electronic and may constitute spam.

- Unsolicited: This is the case where the recipient has not granted explicit permission

for the message to be sent and he is most probably unaware that his personal data

is used for advertising. In order to assure privacy protection, the core principle must

be the ability of the receiver to give his informed consent to allow the use of his

personal information.

- Commercial: Even though the law seems to focus on spam messages with an

advertising or commercial nature only, there are also non-commercial messages

which have the same intrusive character and should be considered as spam.

Consequentially, ‘commercial’ should be defined in terms of message content

rather than the purpose of the sender for sending the message. Concretely, a

message containing a link to a free web site that contains advertisement can also

be considered as commercial especially if it is sent on behalf of the website’s

operator.

- Mass communication: Messages considered to be spam are commonly sent in

bulk, meaning that a huge amount of users receive identical content. The

problematic lies in the question how this number of users must be set. Basically the

number should take into account the capabilities of the receiving device; hence in

the case of mobile messages it may be lower than for e-mails. This is due to the

fact that it is more extensive to deal (e.g. in terms of deleting a message) with

mobile spam and as mentioned before a mobile phone is of extreme sensitivity.

Alternatively, other criteria may be taken into consideration, e.g. if the message is

sent to a specific group: A message to 100 arbitrary chosen users has to be

evaluated different than for example 100 messages to members of the European

Council (always bearing the content in mind).

- Personal: Unsolicited messages are personally directed towards a number of users

and therefore messages conveyed via mass media are not considered to be spam. 202 Directive 2002/21/EC, article 2(a).

45

5 Spam .

More precisely, EU law excludes “any information conveyed as part of a

broadcasting service to the public over an electronic communications network

except to the extent that the information can be related to the identifiable subscriber

or user receiving the information.”203

5.2 Spam protection in the EU

The recent initiative of the European Commission towards the spam problems is based

on the following principle: “The greater the threat to privacy, the greater should be the

level of protection provided.”204 The purpose is to show why there is a need to combat

mobile spam and how the establishment of the legal framework applies to unsolicited

communications sent to mobile phones.

5.2.1 The need to combat mobile spam

Mobile spam should be subject to regulation out of several reasons. Many of the

concerns to spam relate to the content of the message. Beside the fact that spam is

annoying it may also be offensive to its recipient.205 This can be the case where the

message promotes questionable activities as illustrated in figure 3, or includes or

advertises unethical explicit material. Senders of unsolicited messages rarely know the

identity (e.g. age) of persons to whom the messages are sent, especially due to the

fact that a phone number alone does not disclose any detailed information about the

mobile user, and therefore this messages are likely to be sent to minors.206

The mobile user has to open each incoming message before he can recognise the

sender of the message (unless the number is saved in the mobile phone. In addition,

the content of the message becomes first apparent after reading it since a subject

heading as for example in the case of e-mail is not included.207 Thus, the mobile user

must first take notice of the mobile message before he knows that it is about

advertising. Mobile phones often audibly alert the user when a message arrives which

can lead to nuisance if too many advertising or spam messages are received.208 This

may lead to an intrusion of the privacy of the user especially in the case of unsolicited

commercial communication which will be illustrated later. Finally, the storage capacity

of many mobile devices may lead to the fact that legitimate mobile messages are

unable to receive until the user deletes some of them from the inbox.209 So far the

203 Directive 2002/58/EC, article 2(d). 204 Gauthronet and Drouard (2001), p. 115. 205 Sorkin, David E. (2001), p. 336. 206 Edwards, Lilian (2000), pp. 310. 207 Gratton (2002), p. 61. 208 Fellner (2003), p. 33. 209 Ibid.

46

5 Spam .

technology does not enable the option to choose which message the user wants to

receive and store and which one should be filtered out.

Next to this, spamming can also have economic implications and serious

consequences for the development of mobile marketing because it may impede

consumer confidence in m-commerce as a safe and serious transaction place.210 The

problem is that spamming will disturb fair trading and honesty standards; hence serious

adverts from reputable advertisers might be ignored or deleted.

5.2.2 EU legislation towards spam protection

The EU regulates the issue of spam mainly in two directives: the Electronic Commerce

Directive and the Privacy and Electronic Communications Directive. Under these

directives spam is also referred to as unsolicited commercial communication. The EU

legislation concerning spam has gone through a transition process, namely from the

opt-out system to the opt-in system. The E-commerce Directive requires the opt-out

system for unsolicited communications by e-mails as a minimum approach but

basically leaves it open to the Member States which rule shall apply.211 In contrast, the

Privacy and Electronic Communications Directive has adopted the opt-in system and

states that “direct marketing may only be allowed in respect of subscribers who have

given their prior consent.”212 As analysed in chapter 3 direct marketing can be

performed by means of mobile messages. Moreover, the Data Protection Directive

considers that the scope of protection of individuals must “must not in effect depend on

the techniques used, otherwise this would create a serious risk of circumvention”213.

The Privacy and Electronic Communications Directive only concerns natural persons214

and therefore applies to B2C transactions. In addition to the rule of ’lex specialis’215 the

new directive (2002/58/EC) has priority over the E-Commerce Directive on issues

covered by both Directives. Concretely, where the recipient is not a natural but a legal

entity the member states can still chose between the opt-in and opt-out systems. The

E-Commerce Directive requires that the legitimate interest of subscribers with regard to

unsolicited messages must be taken into account.

The opt-in approach was chosen to avoid that users are going to be overwhelmed with

messages since the current technology enables to send easily and inexpensive

210 http://www.theregister.co.uk/2004/01/23/eu_antispam_laws_are_ok/, 09.06.2005. 211 Directive 2000/31/EC, article 7. 212 Directive 2002/58/EC, article 13(1). 213 Directive 95/46/EC, recital 27. 214 Hereby are meant subscribers which are defined as “any natural person or legal entity who or which is party to a contract with the provider of publicly available electronic communications services for the supply of such services.” Article 2(k) of Directive 2002/21/EC. 215 ‘lex specialis (derogat generali)’: the specific law prevails over general law.

47

5 Spam .

electronic commercial communications. An opt-out approach would have allowed

marketers to send unsolicited mail to individuals until they object.216

The Privacy and Electronic Communications Directive includes an exception for the

consent clause in cases of existing customer relationship (implied consent).

Consequently, the opt-out system comes into force “where a natural or legal person

obtains from its customers their electronic contact details for electronic mail, in the

context of the sale of a product or a service, in accordance with Directive 95/46/EC, the

same natural or legal person may use these electronic contact details for direct

marketing of its own similar products or services provided that customers clearly and

distinctly are given the opportunity to object, free of charge and in an easy manner, to

such use of electronic contact details when they are collected and on the occasion of

each message in case the customer has not initially refused such use.”217 To

summarise, the main requirements are that the service provider must prove that the

consumer has not initially refused commercial contact and that the consumer has

obtained clear and appropriate information to object free of charge and in easy manner

from receiving future e-mails (opt-out). Moreover, customer details must only be used

by the seller to which they were originally given.218

It will be difficult to evaluate what can be considered as a similar product: Is it

dependent on substitution or is advertising about accessories and spare parts also

included? Furthermore, the pure opportunity to refuse from further advertisement is not

enough rather the seller must inform the consumer about the use of the data for direct

marketing in a clear and distinct manner and about the opportunity to refuse.219 This

information must be given in every sending of direct advertisement. With respect to e-

mail this procedure is relatively easy since a link “unsubscribe” can be added. In view

of the limited length of mobile messages it will be difficult to realise the requirements.

The opportunity to reject must be free of charge but the costs of transmission of it are

not considered.220 The costs for sending a mobile can give offence and therefore the

customer may consider to refuse to provide the mobile number right from the start of

the survey.

Depending on the wording of the opportunity to reject, although such information must

be clear and distinct, there may result problems between the differentiation of explicit

consent and implied consent. An option button could be designed in the following ways,

namely either that the user can press a button which includes “I would like to be

216 Sorkin, David E. (2001), p. 353. 217 Directive 2002/58/EC, article 13(2). 218 Directive 2002/58/EC, recital 41. 219 Directive 2002/58/EC, recital 41. 220 Directive 2002/58/EC, recital 41

48

5 Spam .

informed about product up dates” or “I do not want to get any further information”. In

case that the first alternative implies already a preset parameter namely in the form of

an implied consent is existent. If in turn, either of the two buttons has to be chosen than

an explicit consent is given.221

Other exceptions were adopted to keep a balance between economic interests and

privacy protection. Hence, the use of personal data is regarded to be lawful when it is

“necessary for the conclusion or performance of a contract binding on the data subject,

or as a legal requirement, or for the performance of a task carried out in the public

interest or in the exercise of official authority, or in the legitimate interests of a natural

or legal person, provided that the interests or the rights and freedoms of the data

subject are not overriding” and “in order to maintain a balance between the interests

involved while guaranteeing effective competition, Member States may determine the

circumstances in which personal data may be used or disclosed to a third party in the

context of the legitimate ordinary business activities of companies and other bodies”222.

From the viewpoint of the Privacy and Electronic Communications Directive mobile

services such as location-based services, mobile advertising and push information

services are not belonging to this exception and, hence, should be both subject to the

opt-in approach and in cases where consent was given be rejected free of charge.223

5.3 Case Law

To demonstrate how the matter of spam is transformed in practise some cases

involving SMS spam shall be demonstrated.

An Austrian court224 judged the case of a company sending SMS messages which

indicate that the receiver has won a prize and must call a number to take it up. The

judgement states that these messages are considered as spam for two reasons: First,

these messages violate the law because unsolicited advertising messages underlie the

opt-in principle and may only be sent with the previous consent of the receiver.

Second, the court regarded the messages as an aggressive form of advertising which

constitutes private nuisance because they are taken by surprise and due to the

inadequate content of the message a call follows without considering the proposal. In

addition, the court considered this practice as an infringement of the unfair competition

law because the user had no choice to give his consent.

221 Fellner (2003), pp. 16. 222 Directive 95/46/EC, recital 30. 223 Directive 2002/58/EC, recital 35. 224 Judgment of the Administrative Court of Styria, 29th March 2002. Available on http://www.rechtsprobleme.at/doks/urteile/101tkg-uvsstmk.html; 13.06.2005.

49

5 Spam .

A German court225 dealt with a case of a consumer who subscribed on a website to a

service for sending free SMS but received afterwards unsolicited advertising

messages. The court justified its decision on the grounds that the sending of SMS

constitutes an intrusion into privacy. The judgement disagreed with the opinion of the

defendant, that the sending of SMS is equal to advertising by traditional mail. An SMS

is much more personal because each incoming SMS is reported by a signal and each

SMS must be opened before the identity of the sender is disclosed. In addition, the

storage capacity of a mobile device is limited and enables only a certain amount of

SMS and therefore the inbox may be “overflowed” so that wanted messages cannot be

received. In general, the court decision points out the importance to provide the

consumer with the opportunity to give previous consent. Again it was considered that

the applied practice is contrary to the unfair competition law because it causes

damages competitors and moreover the sending of unsolicited SMS was seen to be an

interference with the right of exercising an economic activity for employed users.226

The Danish Maritime and Commercial Court in Copenhagen227 judged the case of the

Danish telecom supplier Debitel sending unsolicited advertising messages by e-mail

and SMS without the prior consent of the users. It was stated that “electronic mail”

includes all technologies used for distribution of electronic communication. Again it was

indicated that spam constitutes an intrusion into privacy. More interestingly, the

imposed sanction of about €270,000 shows that spammers must to count on huge

fines for their improper marketing activities.

These court decisions have some common conclusions about the transmission of

advertising messages to a mobile device: First, unsolicited SMS can be considered as

an aggressive form of advertising and are therefore under responsibility of unfair

competition law. Second, because such messages are seen as an unjustified intrusion

into privacy of the receiver privacy protection law comes into force. Finally, these SMS

are not in line with data protection law especially in terms of the use of personal

data.228

225 Judgement of the District Court Berlin, 14th of January 2003 (15 O 420/02). Available on http://www.jurpc.de/rechtspr/20030078.pdf, 13.06.05. 226 The judgement of the German Federal Court of Justice, 5th of May 2004 (I ZR 87/02) illustrates a distinction between a private and a professional user. See http://www.bundesgerichtshof.de, 13.06.2005. 227 The judgement of the Danish Maritime and Commercial Court Copenhagen, 14th of March 2005. Available on http://www.domstol.dk/media/-300011/files/m000104.pdf, 13.06.2005. Debitel intends to appeal against the Maritime and Commercial Court’s decision and try the case before the Supreme Court ((j.nr. 134/05). 228 Camponovo and Cerutti (2004), p. 12.

50

5 Spam .

5.4 Proposal for solutions

Due to the complex nature of mobile devices (different technological specifications)

several issues related to the mobile spam problem must be considered. Basically, to

combat spam a combination of flexible and adaptive technology with a sound economic

and legal policy is necessary. In addition, due to the significant and growing problem of

spam an international coordination should be intended.229

5.4.1 Legislation

As analysed before legislation is designed to eliminate spam before it is delivered to

the mobile user. The opt-in approach, which applies in the EU in B2C cases, requires

detailed contact information with the messages of the advertiser. Fighting spam turns

out to be rather complicated because it is related to different legal aspects, such as

trade, privacy and consumer protection. Several laws apply and several different

national authorities deal with the issue.

The identification of the sender is one main requirement of the EU Directives; however,

the problem is that in some countries it is still possible to use anonymous registration

methods (e.g. as in the case of prepaid cards). Furthermore, there exist websites which

offer the sending of anonymous SMS.230 This in turn, has an impact of the

enforceability of the law because it is technically difficult to trace them.

The requirement of labelling (meaning that the e-mail header includes a specific

content) is also difficult to apply to SMS and dependent of the technological

specification of the mobile phone. Such tags would allow the user to identify the

commercial SMS more easily. Again, in cases of anonymous spammers it is difficult to

enforce the rule.

Most important is the harmonisation of legislative approaches regarding spam on EU

level. One enforcement agency acting against spam would be the most efficient

solution which coordinates the enforcement measures of the different jurisdictions.231

Due to the borderless nature of new media, messages can be sent from anywhere in

the world which makes it even more difficult to locate a sender and enforce a

judgement on someone from another country. This fact shows that even a good and

effective legislation implemented in one country or region cannot stop unsolicited

messages coming from other countries. International initiatives are therefore crucial

since spam is a global concern and the European approach (especially Directive

2002/58/EC) can be seen as a step towards the right direction but still not sufficient

229 Sarrocco (2004), ch. 3. 230 For instance http://www.sharpmail.co.uk/html/sms.html, 15.06.2005. 231 Sarrocco (2004), pp. 17.

51

5 Spam .

enough to combat spam. This is due to the fact, that most of the spam comes from

countries outside the EU which testifies that international cooperation is

indispensable.232

The OECD is also dealing with the spam issue, namely in collaboration with the EU,

aiming an international cooperation in the fight of spam.233 The focus of the OECD is

mainly on effective anti-spam law legislation, international cooperation and

enforcement, self-regulation by industry, innovative technical solutions and increasing

awareness and education.234 Once the proposals are implemented Member States

could deal the spam problem in a more organised and cooperative manner.

Even though many countries have developed and implemented anti-spam legislations,

only a few spam cases were brought before court. The reasons are laying in the

problems described above: anonymity of the sender, different enforcement

mechanisms due to different jurisdiction and the absence of international cooperation.

Table 4 shows the different approaches between EU and US law regarding the spam

issue. It is obvious that the legislation differ mainly in the approach of consent.

232 EC COM(2004) 28 final pp. 18. 233 For further information please refer to http://www.oecd.org/department/0,2688,en_2649_22555297_1_1_1_1_1,00.html, 15.06.2005, and in particular the “Anti-Spam Law Enforcement Report. 234 http://www.oecd.org/document/24/0,2340,en_2649_22555297_34804568_1_1_1_1,00.html, 15.06.2005.

52

5 Spam .

Table 4: Summary of the different regulatory frameworks in the EU and the US

European Union The United States

Principle laws

Directives 95/46/EC (Directives on data protection) Directive 2002/21/EC (Framework Directive) Directive 2002/31/EC (Directive on electronic commerce) Directive 2002/58/EC (Directive on privacy and electronic communications)

Wireless Communication and Public Safety Act (1999) CAN-SPAM Act (2003)

Mobile advertising principles

Opt-in principle: advertising is considered unlawful except if the user has previously provided an informed and specific consent to receive such messages However, the legislation states the exception of the previously existing commercial relationship, where a first contact giving the possibility to opt-out is allowed.

Opt-out principle: unsolicited advertising on the mobile medium is allowed, provided that receivers are given the possibility to easily refuse to receive subsequent messages

Non commercial spam

The law about unsolicited advertising focuses on commercial messages. However, non commercial messages can basically be treated in the same way in the view of a teleological interpretation of the norms.

The legislation essentially focuses on commercial messages. The application of spam measures to non commercial messages is open to question given the freedoms of expression, religion etc. contained in the First Amendment.

Sanctions

The legal sanctions of infringements to the above mentioned laws and the conditions for filing lawsuits against spammers are set by the single member states.

The legislation contains both criminal penalties, to deter the most offensive forms of spam, as well as substantial civil penalties.

Source: Sarrocco (2004)

5.4.2 Technical and self-regulation solutions

Although legislations regarding spam are already implemented in many countries

technological measures are necessary to allow sufficient enforcement. In the case of e-

mail there exist several filtering techniques. The issue of mobile spam is still in its

infancy and a rather new concern, meaning that solutions are still under development.

Therefore several carriers started to build proactive spam filters trying to stop the

messages which are sent to customers in the first place. The Japanese carrier NTT

DoCoMo235 for example tries to combat the problem by blocking huge amounts of

incoming messages which have no specific receiver,236 the problem, is that also

anticipated messages may be blocked. T-Mobile, in turn, is offering a spam filter on its

website which can be used by the customers to block massages from certain senders.

Moreover, almost all carriers post clear policies prohibiting the use of their facilities for

sending spam.237 Updated roaming agreements between carriers (national and

235 http://www.nttdocomo.com/, 15.06.2005. 236 Spammers are generating addresses randomly. For further (technical) information see http://www.telecomsys.com/carriers/documents/Whitepaper_Antispam.pdf, 15.06.2005. 237 T-Mobile states on its website: “Our terms and conditions of service, which our customers must accept as a condition to their use of the network, prohibit any use or attempt to use our network for any fraudulent,

53

5 Spam .

international) and contractual agreements with content providers can make contribution

in combating the spam problem.

The higher the risks and costs of spamming the more unattractive it will become.

Yahoo!, EarthLink, AOL, and Microsoft decided in 2004 to track down and sue together

the biggest spammer in the United States.238 The trial was particular expensive and

was creating additional expenses for the spammers. This case shows that spam can

be combated successful by means of technology and legislation and even though the

concern was about e-mail spam this procedure can be applied to mobile spam as well.

The Australian Communication Industry Forum (ACIF)239 has developed a Code of

Practice240 which aims to focus on SMS marketing, with special consideration to the

spam problem. The Code covers the sending of mobile advertising messages by

carriers and the relationship between carriers and the commercial marketing bodies.

The idea is that any commercial operator that is using a carrier to send advertising

messages must comply with the Code. In addition, ACIF aims to implement legal

enforcement measures with financial penalties for any breaches.241

5.4.3 Preventive action by the mobile user

The problem with spam is that it is mainly caused by persons or companies who are

ignoring the regulations and hide their identity to avoid criminal proceedings. Therefore,

mobile users should take themselves preventing actions:

- The best way to avoid receiving spam messages is not to enter the mobile number

into web forms. For instance, when ordering ringtones, images or the like over such

a form, users should pay attention whether it is a serious provider, who ensures to

comply with the legal requirements concerning data protection and consequently

spam.

- When sending an SMS over an Internet portal, the sender should consider, in

interest of the receiver, to use a serious provider.

unlawful, harassing or abusive purpose, or so as to damage or cause risk to our business, reputation, employees, subscribers, facilities, or to any person. Improper uses include sending or attempting to send SPAM, "pyramid schemes", "chain mail" or "junk mail"; using or attempting to use the network to send altered, deceptive or false source-identifying information; or interfering or attempting to interfere with the access of any user, host or network, including without limitation, sending a "virus" to the network, overloading, "flooding," "spamming," "crashing," or "mailbombing" the network.” See http://www.t-mobile.com/hotspot/support_faq.htm#U11, 14.06.2005. 238 http://www.ecommercetimes.com/story/33086.html, 15.06.2005. 239 ACIF is a self-regulatory body for the Australian telecommunications industry. 240 A Code of Practice can be described as “an agreement that certain professions can sign up to in which they agree to act or serve in a certain way and which therefore protects the consumer in areas which are not regulated by an institution.” (http://strategis.ic.gc.ca/epic/internet/inimr-ri.nsf/en/gr106948e.html, 15.07.2005.) 241 http://www.acif.org.au/publications/codes, 15.07.2005.

54

5 Spam .

- Spam mails should not be answered. Once the sender receives a reply he really

knows that the number exits.

A network provider has not many possibilities to avoid that mobile user are receiving

spam messages. Basically, there exits the possibility to block messages from a foreign

SMSC but this would lead to the fact that other customers will not receive any

messages from this SMSC even not desired messages. Another possibility, though, is

that the provider of an Internet portal can block the transmission when it is obvious that

from a certain server many SMS are sent within a short period of time.

Altogether, it can be concluded that there is currently no way to stop mobile spamming,

but the mentioned actions may help to narrow down the problem.

55

6 Premium Rate Services .

6 Premium Rate Services

PRS are currently the common form in m-commerce. PRS allow for fast and effective

transactions because mobile user are charged by their phone bill or prepaid

simultaneously. Thus, most advertisements sent to a mobile phone include an invitation

to purchase a PRS.

6.1 Definition of PRS

There is no precise definition for PRS, however, the characteristics of a PRS can be

described as follows: “Premium rate services are provided by means of calls using the

electronic communications network. The definition of premium rate calls can extend to

reverse text messages where the ‘caller’ pays for content and a premium rate charge is

applied.”242 Basically, the customer sends an SMS, to a higher price than normal SMS

to a service provider who returns a service. The most common PRS applications are

currently content services, meaning “services such as ringtones, pictures, polls or

chatting that are delivered to and used with mobile phones (or other mobile devices)

via public telecommunications networks.” 243 Premium SMS are also used to start a

subscription with the customer to order a certain number of information messages for

instance about the weather forecast. Advertisements of such PRS can be found in

many places e.g. in magazines, TV spots, etc.

Premium numbers are indicated to specific numerical sequences. Many countries have

set up special numbers for different categories of content which are also used to

signalise different price levels for PRS. So far there is no harmonisation in the EU

meaning that premium rate numbers are different in each Member State.244 In general,

a national authority is in charge for the regulation of numerical sequences. The network

operator, in turn, is in charge for the distribution of the PRS and determines the

premium number for content suppliers.

6.2 Formation of contracts

Contract law is not harmonised at EU level but there is a trend towards harmonisation

which is reflected in the Action Plan for a more coherent European contract law.245 It is

also argued that electronic contracts are not fundamentally different to traditional

contracts and therefore rules applying to the formation of contracts shall be developed

242 IARN (2002), p. 2. 243 Consumer Ombudsman (2004), p. 6. 244 Guettler, J.H. and D. Elixmann (2005), p. 26. 245 COM(2003) 68 final.

56


in a technology neutral language to avoid duality in the approaches.246 Currently there

exist “Principles of European Contract Law” which cover some fundamental principles

of contract law such as rules concerning the formation, interpretation, validity etc. As to

the formation of contracts, the PECL are in harmonisation with substantive contract

laws of most of the EU Member States and also with the United Nations Convention for

International Sale of Goods (CISG).247

The Principles are based on ‘freedom of contract’,248 meaning that nothing shall

preclude the parties from concluding a contract and independent from the means used

for the contract formation. Communications are categorised as notices and this can be

made in any form which is appropriate in the circumstances.249 New technologies are

taken into account as the PECL refers explicit to such means of communication as

electronic mails.250 In several parts of the following analysis the Principles will be

consulted to illustrate the situation arising in m-commerce.

6.2.1 Contractual Relationship with PRS

There are likely to be a range of different relationships that will be established in the

PRS transaction: there may be several actors who sell and provide content services to

end users and the services may be marketed through television, newspapers and

Internet portals. The more actors are involved the more complex the situation. This is

because each single contract is regulated by terms and conditions which may be

different between the single parties. Nevertheless, there is consensus that the mobile

operator has a billing relationship with his subscriber who agreed with the terms and

conditions of the mobile contract. Irrespective of which actors are involved in the

transaction, the revenue for the service will be distributed by the operator to the other

involved actors.251

In the following (see figure 4) it shall be explored in some detail what kind of

relationships could emerge in m-commerce and which problems may arise:

246 Kryczka (2004), p. 112. 247 United Nations Convention for International Sale of Goods (Vienna 1980). 248 This is limited by good faith, fair dealing and certain mandatory rules established by the Principles. PECL, article 1.102. 249 PECL, article 1.303(1). 250 PECL, article 1.301(6). 251 Areskoug and Engström (2001), p 10.

57


Figure 4: Different contractual relationships

Customer Network Operator

Content Supplier

Example 1

In example 1 a scenario is illustrated, where a relationship exists between the customer

and the network provider, who provides content service and charges the customer for

the service. The network operator has a separate relationship with the content supplier.

Even though the customer purchases (indirect) the services from a third party this

relation ship is transparent. Therefore, it can be argued from the customer’s point of

view that only a single relationship exist, namely that with the network operator. The

terms and conditions of the contract between network operator and customer have to

apply.

Customer Network Operator Content Supplier

Example 2

In the second example, the customer has in addition to the relationship with the

network provider also one with the content supplier. The network operator adds the

cost for the service to the phone bill and in addition surcharges the customer for using

the service. The relationship between customer and service provider includes the

conditions and terms of the agreement to receive of the product.

Compared to the first example, the customer must now receive certain information (see

section 6.2.5) to be able to enter into an agreement with the content supplier.

Customer Network Operator

Credit Institution/

Bank

Department Store

Example 3

Source (example 1-3): Department of Justice (2002)

58


The scenario in example 3 describes a more complex m-commerce transaction. The

relationship between customer and network operator is still the same as in the above

described examples. In order to purchase a product by means of the mobile phone, the

customer may be requested to open a virtual bank account to conduct transactions that

the customer makes, e.g. to pay for the products. As in the previous example, the

customer will also have a relationship with the provider of the good, in this case with a

department store.

This situation involves several consumer contracts (contractual relationships between

the other parties will not be explained in detail) and the customer must be provided with

information about each single agreement. The problem will arise if the customer must

read and store all information on his device. Beside of the limited capabilities of mobile

devices the situation may become too complex to keep track of every single contractual

relationship.

6.2.2 Contracts concluded by means of mobile messages

It was already argued that services can be offered by means of SMS, now it must be

analysed if it is also possible to enter a contract via SMS. The E-Commerce Directive

determines in article 9(1) that Member States have the duty to “ensure that their legal

system allows contracts to be concluded by electronic means.” Of particular importance

is that “legal requirements may not create obstacles for the use of electronic contracts,

and the legal effectiveness and validity may not be deprived on the account of

contracts being electronic.”252 This is necessary to eliminate obstacles hampering the

development of information society services – which also includes m-commerce – and

to be able to conduct business by electronic means a service provider must be able to

enter into a contract electronically.253 It was necessary to include the issue of

contracting in the E-Commerce Directive to counteract requirements such as “in

writing” which can create obstacles to this. Certain exceptions to this requirement

continue to be permitted, e.g. contracts which create or transfer rights in real estate.254

Another requirement for the formation of a contract is that a contract must be signed.

The EU guarantees the recognition of electronic signatures within the Union to ensure

security of data transmitted electronically.255

252 A similar definition can be found in article 5 and 5bis of the UNCITRAL Model Law on Electronic Commerce: “Information shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the form of a data message.” 253 “Member States’ obligation to remove obstacles to the use of electronic contracts, concerns only obstacles resulting from legal requirements and not practical obstacles resulting from the impossibility of using electronic means in certain cases.” Directive 2000/31/EC, recital 37. 254 Directive 2000/31/EC, article 9(2). 255 Directive 1999/93/EC, however, the matter of electronic signatures will not be discussed further in this thesis.

59


As seen before mobile message qualify as communications by electronic means.

Consequential, electronic mail (SMS etc.) in m-commerce must be treated in the same

manner as e-mails in traditional e-commerce and therefore it must be possible to

conclude contracts by means of mobile messages. As mentioned above the E-

Commerce Directive applies to information society services including activities carried

out online.256 However, the definition does not contain the physical delivery of goods

and services but in turn the prior online marketing and conclusion of contract are

considered. Since a technology neutral definition is adopted m-commerce activities are

taken into account and this argument is proved by the Communication on Mobile

Broadband Services, which states that “mobile broadcasting services could either be

considered as information society services or as broadcasting services”.257

M-commerce transactions are basically a convergence of several networks, distribution

platforms and services. Different kind of mobile technologies and devices provide, as

seen before, next to telephony services also high speed data communication and

broadcast services. When analysing m-commerce transactions it must be considered

that the transaction may take place through a combination of different media (e.g.

advertising on a Web site while the contract formation takes place by means of a

mobile device).

There is no reason to suppose that new technologies such as mobile devices will affect

in any way the application of traditional principles of contract law (e.g. general rules

determining the formation of contracts). Nevertheless, unique technological issues in

the case of contract formation will emerge and even the legislations applying to e-

commerce may not be sufficient for contract issues in m-commerce.

6.2.3 Offer or invitation ad offerendum

The conclusion of a contract requires the agreement of the parties involved and this is

usually when there is an unconditional acceptance of an offer.258 As a general rule an

offer must be addressed to one or more specific persons, it must be sufficiently definite

and indicate the intention of the offeror to be bound.259 The question therefore when is

an offer construed in a way that when the mobile user selects a product, this

constitutes an acceptance of the offer, thus creating a binding contract?

It shall be drawn an analogy between a CD displayed in shops and a ringtone offered

on the above mentioned media to determine whether it is about an offer or an invitation

256 Directive 2000/31/EC, recital 18. 257 Com (2004) 447, p. 8. 258 Simmons & Simmons (2001), p. 6. 259 In other words, a legally binding offer will include (1) clearly stated terms, (2) intention to do business and (3) communication of that intention. PECL, article 2.201.

60


to treat. The display CDs in shops is seen to be an invitation to treat260 (an invitation to

make an offer) which is not binding on the supplier.261 This is because the proposal is

not addressed to one ore more specific persons and can be accessed by an indefinite

number of customers.262 An invitation to treat will lead to the formation of a binding

contract when the customer takes the CD to the cash register, which constitutes

basically an offer, and this offer is accepted by the sales person accepting payment

and handing over the goods.263 An ‘acceptance’ of an invitation to make offers is

basically an offer. When applying this scenario now to the m-commerce situation,

offering a ringtone on one of the media has to be dealt within a similar manner to their

actual ‘reality’ counterparts. Consequently, it is about an invitation to treat and when

sending a confirmation by means of a message an offer is made by the consumer.264

6.2.4 Acceptance

The PECL states that “any form of statement or conduct by the offeree is an

acceptance if it indicates assent to the offer.”265 The offeree must be agreeing to all the

terms of the offer, the acceptance must be firm, and must be communicated.266 In

general, it can be said that an acceptance consist of a communication to the offeror.

There are different ways in which the offer can be accepted by the service provider,

e.g. through the delivery of the good/service or by sending a mobile message to the

customer confirming their order (just as it is the case with purchasing ringtones). The

communication can be in form of an electronic message or a by means of a ‘WAP push

message’ (applies for the transaction process on WAP sites).

Obviously, in order that an acceptance becomes effective it must reach the person to

whom it was addressed. The problem is that a mobile message is not an instantaneous

communication like the telephone, telex or fax. In this kind of communications the

sender knows immediately whether their transmission has been successful.267 As

already mentioned, the PECL refers to a communication as to a notice whereas an

acceptance falls within this category. As a general rule it is stated that “any notice

becomes effective when it reaches the addressee.”268 There is no requirement that the

260 The willingness to enter into negotiations and to accept offers. 261 Simmons and Simmons (2001), p. 8. 262 Kryczka (2004), p. 112; if such a proposal is to be treated as an offer the provider of goods and services could find himself obliged to conclude an unpredictable number of contracts, which could be beyond his stock capacity or intended range of activity (e.g. geographically) or even intended conditions (e.g. pricing errors). 263 Simmons and Simmons (2001), pp. 9. 264 Ibid, p. 10. 265 PECL, article 2.204(1). 266 Simmons and Simmons (2001), p. 10. 267 Edwards and Waelde (2000), pp. 22. 268 Also known as the “receipt theory”, PECL, article 1.303(4).

61


notice should have come to the attention of the addressee. In addition the E-

Commerce Directive states in article 11 “the order and the acknowledgement of receipt

are deemed to be received when the parties to whom they are addressed are able to

access them.” The moment of formation of a contract is not very clear fixed but it

becomes apparent that not the time of reading by the addressee is meant but the

moment of its receipt. After sending a mobile message it is also possible to ask for a

delivery request, but this only confirms delivery to a mailbox not to a user. The question

now is how to deal with the fact that a mail-box must be considered. In this thesis it is

argued that a mailbox has to be dealt with as a normal post office box.269 It can be said

that the sender would have done everything necessary to reach the addressee.

Furthermore, a receipt in a mailbox can be even more secure than receipt in traditional

post office box. This is because confirmation is sent by the addressee’s service

provider and therefore, notice is been given that the message is at least in his mailbox.

The main difference between WAP push messages and mobile message is that the

former allows for an instantaneous communication between the mobile device user and

the service provider. It can be seen in analogous to a phone call because if either party

goes offline at any point of time the other will be aware of this due to the change in

status. Therefore, it can be argued that a WAP push message should be treated as

instantaneous and effective on being received.

6.2.5 Information Requirements

Standard Terms

The terms of any contract will be those agreed upon by the parties at the time the

contract is concluded. These terms must be incorporated into the contract meaning that

they must be introduced to the customer before or at the same time the contract is

concluded.270 Both parties are bound to the terms of the contract; however, if they are

not properly implied a court will decide what terms could be implied as governing the

contract. Such terms could be imposed by statute, general contract law or through the

course of conduct that the parties have adopted.271 An inadequate contract clause will

not classify as a clear indication and will not be taken into consideration in the case of a

dispute.

269 Snijders and Weatherill (2003), pp. 79, are strengthening exactly this argument but in the case of communication by e-mail. Due to the similar sending procedure of mobile messages and e-mail it is assumed that the same applies to m-commerce. 270 Simmons and Simmons (2001), pp. 10. 271 The terms of a contract are not necessarily of equal importance. In the case of a breach of the contract it gives rise to different rights according to the importance of the breached term. See also Kryczka (2004), p. 112.

62


Special requirements in Consumer Contracts

M-commerce contracts will normally be considered as a ‘distance contract’ which is

regulated under the Distance Selling Directive. This is defined as “any contract

concerning goods or services concluded between a supplier and a consumer under an

organized distance sales or service-provision scheme run by the supplier, who, for the

purpose of the contract, makes exclusive use of one or more means of distance

communication up to and including the moment at which the contract is concluded.”272

A ‘means of distance communication’ is defined as “any means which, without the

simultaneous physical presence of the supplier and the consumer, may be used for the

conclusion of a contract between those parties.”273 Consequently, a mobile message

are means of distance communication since the service provider and the consumer are

physically separated during the transaction process and therefore m-commerce

contracts must conform to the requirements stated in the Distance Selling Directive.274

A number of obligations have to be considered which are affecting the contracting

process. There is some overlap on this point with the E-Commerce Directive which

includes some general information requirements and these requirements are also

applicable if there is no contract between the provider and the recipient (meaning that

they must be presented in any commercial communication).275

Article 4(1) of the Distance Selling Directive includes a list of information which has to

be given to the consumer prior to the conclusion of a distance selling contract:

(a) the identity of the supplier and, in the case of contracts requiring payment in

advance, his address;

(b) the main characteristics of the goods or services;

(c) the price of the goods or services including all taxes;

(d) delivery costs, where appropriate;

(e) the arrangements for payment, delivery or performance;

(f) the existence of a right of withdrawal, except in the cases referred to in Article 6(3);

(g) the cost of using the means of distance communication, where it is calculated other

than at the basic rate;

(h) the period for which the offer or the price remains valid;

(i) where appropriate, the minimum duration of the contract in the case of contracts

for the supply of products or services to be performed permanently or recurrently.

272 Directive 97/7/EC, article 2(1). 273 Directive 97/7/EC, article 2(4). An indicative list of the means covered by this Directive is contained in Annex I. 274 Article 3 of the Directive contains a list of exemptions for contracts which do not fall under the Directive. 275 Hereby is referred to article 5 of Directive 2000/31/EC.

63


This information must be provided in a clear and comprehensive manner appropriate to

the means of distance communication used.276 Recital 11 makes clear that “the use of

means of distance communication must not lead to a reduction in the information

provided to the consumer; whereas the information that is required to be sent to the

consumer should therefore be determined, whatever the means of communication

used; whereas the information supplied must also comply with the other relevant

Community rules.” Consequently, the disclosed information must be assessed

regarding to the likely customer and the goods being sold or services being provided.

Any commercial communication which constitutes an invitation to purchase must

contain all important terms and conditions that are linked to the purchase before the

consumer decides to enter into the agreement (exact those information listed above).

Any failure to provide this information will be a misleading omission according to the

Unfair Commercial Practices Directive.277 This is because it is seen to be of particular

importance that the consumer needs to take an informed transactional decision

especially when the information is not apparent from the context.278

The Directive on Unfair Contract Terms requires that written contract terms must be

expressed in “plain, intelligible language” and in case of doubts about a term, the

“interpretation most favourable to the consumer will prevail.”279 A term is unfair if it fails

to fulfil the requirements of good faith and this causes a significant imbalance in the

parties’ contractual relationship, which is prejudicial to the consumer’s interests.280 To

find out whether the seller or supplier acted in good faith, all circumstances relevant to

the conclusion of the contract must be taken into account.

Information during Contracting

The E-Commerce Directive imposes an obligation to give certain information in a

“clearly, comprehensibly and unambiguously [manner] and prior to the order being

placed.”281 Unlike in article 5, the information required here is only of interest for those

aiming to enter into an agreement. Therefore, it is argued that the information can be

provided during the formation of the contract. For instance, if someone clicks on a

specific product, the information can be provided at that time. The information to be

furnished is:

(a) the different technical steps to follow to conclude the contract;

276 Directive 97/7/EC, article 4(2). 277 Directive 2005/29/EC, article 7. 278 Directive 2005/29/EC, recital 14. 279 Directive 93/13/EEC, article 5. 280 Directive 93/13/EEC, article 3. In addition the Annex of the Directive contains a non-exhaustive list of the terms which may be regarded as unfair. 281 Directive 2000/31/EC, article 10.

64


(b) whether or not the concluded contract will be filed by the service provider and

whether it will be accessible;

(c) the technical means for identifying and correcting input errors prior to the placing of

the order; and

(d) the languages offered for the conclusion of the contract.

The above listed information does not affect the validity of the contract, which is still to

be determined under national law.282 This becomes clear due to article 11 of the E-

Commerce Directive, since the moment at which the contract is concluded is not

determined.283 In some Member States the contract is concluded after delivery, while in

others agreement between the parties is sufficient.284 Therefore, a seller who receives

and order by technological means must acknowledge the receipt of the order without

undue delay,285 and provides the opportunity for input corrections and order

acknowledgement by appropriate, effective and accessible means.286 A simple ‘OK’

bottom to place an order is therefore not sufficient because it is impossible to correct

errors. A solution can for instance be a message containing an overview of the order

while asking whether the order is correct.

Written Confirmation of Information

According to article 5 of the Distance Selling Directive a written confirmation of the

‘prior information’ (mentioned above) has to be provided to the consumer. It must be

given in a durable medium available and accessible to the consumer. The confirmation

must contain further detailed information concerning the right of withdrawal, after sales

services, guarantees and where to address complaints. This article makes clear that

information can be delivered to a mobile device such as through SMS. The obligation

does also apply to information required in the Distance Selling Directive because they

must be regarded as contract terms.287 A message is only regarded to be sufficient if

the consumer can safe the information. Due to the technological opportunities the

current limited storage capacities of mobile phones are not considered to be

problematic because messages can be transferred to another durable medium. This is

282 Kryczka (2004), pp. 109. 283 “The order and the acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them.” 284 Lodder and Kaspersen (2002), p. 85. 285 Directive 2000/31/EC, article 11(1). 286 Ibid, article 11(2). 287 Directive 97/7/EC states under article 5 amongst others that “the consumer must receive written confirmation or confirmation in another durable medium available and accessible to him of the information referred to in Article 4 (1) (a) to (f), in good time during the performance of the contract, and at the latest at the time of delivery where goods not for delivery to third parties are concerned, unless the information has already been given to the consumer prior to conclusion of the contract in writing or on another durable medium available and accessible to him”. And Directive 2000/31/EC, article 10(3).

65


especially very simple by means of Bluetooth and Infrared but there exist also the

possibility to forward the message to an email account.

An exception of written confirmation is made in case of “services which are performed

through the use of a means of distance communication, where they are supplied on

only one occasion and are invoiced by the operator of the means of distance

communication.”288 This applies to situations where the network operator is charging

the consumer which is most likely the case for PRS. Nevertheless, the ‘information

prior contracting’ and the ‘right of withdrawal’ must be given.

The right of Withdrawal

The right of withdrawal is one of the main issues of the Distance Selling Directive. This

right applies to both contracts on goods and services and requires that the consumer

“shall have a period of at least seven working days in which to withdraw from the

contract without penalty and without giving any reason.”289 However, the article

includes several exceptions such as stocks, transportation, certain recreational

services, gaming and lottery services.290 If no details of the obligation have been given

by the supplier to the consumer, the period of withdrawal is extended up to three

months from the receipt by the consumer (in case of goods) or from the day of

conclusion of the contract (in case of services). Regarding to m-commerce it is

important to recognise that article 6(3) states that the consumer cannot exercise the

right of withdrawal for the “provision of services if performance has begun, with the

consumer’s agreement, before the end of the seven working day period.” The ordering

of many m-commerce services will be processed like this and therefore the seller

should make sure that customers agree to the time of delivery and the lapse of the right

of withdrawal.291

6.3 Selected examples of contractual procedures

6.3.1 Website

Basically the transaction process in this situation does not lead to serious problems.

The mobile user visits a website by means of his PC or Laptop to choose for example a

ringtone. The capabilities to gain information about terms and conditions are suitable

since an adequate display and enough storage capacity is available. Moreover, most of

the websites offering mobile content services provide sufficient information about the

288 Directive 97/7/EC, article 5(2). 289 Directive 97/7/EC, article 6(1). The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods. 290 Directive 97/7/EC, article 6(3). 291 Jan Trzaskowski (2004), p. 14. This will add more information to the mobile commerce solution, but the directive presupposes some kind of agreement even when it is an obvious (implied) condition that the service will be provided immediately.

66


purchase procedure, including the requirements of article 4 of the Distance Selling

Directives and those of article 10 of the E-Commerce Directive.

In general, the information requirements include the statement that the consumer

cannot exercise the ‘right of withdrawal’. The content is transmitted to the mobile phone

after the customer has entered a specific code in an SMS which is sent to the content

supplier. The user receives then a WAP push message which enables him to download

(by pressing the ‘OK’ button) the requested service. The received SMS contains the

price of the service, the name of the content supplier and his WAP address. First when

the download is completed the mobile user will be charged by his phone bill.

Figure 5: Example of the download procedure of a PRS from the Internet

Source: Maxis Mobile (2002)

All in all, it seems that a website complies with the requirements stated in the law and

shall be considered to be appropriate for mobile users to enter into an m-commerce

contract.

6.3.2 WAP site

The content provider builds a WAP site and uses a combination of SMS and WAP push

to direct the user to the site. Once the user is connected to the site he is able to browse

the content before choosing to buy a certain item. Remember, if a mobile phone

supports GPRS only the downloaded data volume will be charged not the time which is

used to visit the site. When clicking a certain item a new “window” opens which usually

contains the following information: name, address and phone number of the company;

the price of the service and a statement that the customer will be charged by his phone

bill; a statement that when clicking the “OK” button, the customer agrees to download

the service and cannot exercise the ‘right of withdrawal’; and a notice that the customer

must ensure that his phone posses enough capacity for the service. When the

67


download is completed the user receives an SMS which includes the price and the

identity (including the phone number) of the content supplier.

As in the previous scenario, the basic requirements which are necessary to enter into

an agreement with a consumer are fulfilled.

6.3.3 Mobile message

The situation where a mobile user receives a message with the invitation to purchase is

in a way different to the above described scenarios. The spam issue will be

disregarded in this section as it was analysed in detail above.

A clearly addressed message to one to one or more specific persons, sufficiently

definite and indicating the intention of the offeror will generally qualify as an offer which

has a binding effect. This may be the case for transactions conducted per e-mail. In the

case of m-commerce several aspects have to be taken under consideration to prove if

such an offer can have a binding effect.

The contexts in which mobile customers operate during a transaction are characterized

by factors that prevent a mobile user to have a full view of the contract. A mobile phone

is always at hand which enables a consumer to enter into an agreement while he is for

example walking in the street and not fully aware of the content of the message. He

may gain less knowledge about the contract than compared to the situation at home

where he is searching the Internet for the same service. Due to the smaller display the

reader may not take notice of all information presented in the message.

Especially messages which contain a push button to enter for instance a chat or

competition whereas the terms and conditions (particularly the price and possible

subscription agreements) are first included at the end of the message after a blanc part

and first visible when scrolling down the message. Beside that such a message has a

misleading character

The constraints required to validate the contract are dependent on the nature of the

mobile device. Therefore, a message which is sent to a mobile user should, as a

starting point, not be considered as a binding offer but rather as an invitation to

purchase.

In order to comply with the law regarding the terms and conditions of a contract the

service provider should ensure that he considers the following principles:

1. The terms and conditions should be provided in the underlying m-commerce

transaction, namely integrated on the specific WAP site or into a WAP push

message which leads the user directly to the information.

68


2. The amount of information should only include the essential terms and conditions to

ensure readability and comprehensibility.

3. In case of linking it should be ensured that the links are noticeable (especially when

they lead to important information).

4. Depending on the transaction it may appropriate to make the terms and conditions

on another medium available. Either per sending an e-mail, traditional mail, or even

per SMS.

5. It may be useful to establish fixed terms and conditions for common contracts, such

as in the case for mobile content services. This will simplify the matter since a

consumer will be confronted with the same procedure each time he enters into a

certain agreement.

The situation in m-commerce is rather complex since service providers may enter into

an agreement with mobile users for example when the mobile user visits a website or a

WAP site, or because of direct marketing strategies in the form of a message sent to

the mobile user and including an invitation to purchase. In the next section will illustrate

the different situation separately to analyse how a contract may be concluded and if the

requirements are applied.

6.4 Unfair B2C practices - misuse of PRS

Many National Consumer Councils pay attention to the issue of PRS due to continues

misuse of such services, particularly with regard to m-commerce. The following

illustration consists of examples where content suppliers and network operators offer

m-commerce services which are regarded to be unfair. The list of such cases is

exhaustive and therefore only some drastic situations will be discussed.

Children are increasingly the target of highly sophisticated marketing campaigns. This

is particular the case for advertising spots on TV especially those used for mobile

ringtones and logos. The aim is to capture the attention of children and taking

advantage of their credulousness and inexperience. Some Member States are taking

action in this area by imposing restrictions on advertisement aimed to children.292 On

EU level the Directive on Unfair Commercial Practices claims that it is impossible to

protect all consumer groups and establishes the rules in terms of the average

consumer. Nevertheless, the need to protect children is recognised: “Where a

commercial practice is specifically aimed at a particular group of consumers, such as

292 The different actions of certain European Member States can be consulted in a compilation of legal texts, short summaries, and other background information concerning the regulation of advertising targeting children/minors. European Audiovisual Observatory (2000), http://www.obs.coe.int/online_publication/reports/childadv.pdf.de, 17.07.2005.

69


children, it is desirable that the impact of the commercial practice be assessed from the

perspective of the average member of that group. It is therefore appropriate to include

in the list of practices which are in all circumstances unfair a provision which, without

imposing an outright ban on advertising directed at children, protects them from direct

exhortations to purchase. The average consumer test is not a statistical test. National

courts and authorities will have to exercise their own faculty of judgement, having

regard to the case-law of the Court of Justice, to determine the typical reaction of the

average consumer in a given case.”293 Advertisements which include a “direct

exhortation to children to buy advertised products or persuade their parents or other

adults to buy advertised products for them”294 are considered to be an aggressive

commercial practice.

Many national ‘regulations on advertising aimed to children’ prohibit advertisements

which include a direct appeal to purchase for example a certain service. In general, it is

required that “advertising to minors must not take advantage of the inexperience of

minors or prejudice their interests.”295 Mobile content services are favoured by minors

and therefore advertisements entice minors to acquire a certain service. Compared to

adults, minors often act on impulse. It is seen to be immoral to seduce minors by

abusing their inexperience and susceptibility. Minors show special enthusiasm towards

such services because they aim to personal their mobile phones.296 The Danish

Consumer Council for, example, objects that minors run the risk to enter without

knowledge into a subscription service because they ignore the important facts which

are often presented in small prints.297

Advertising spots for mobile content services shown on TV (most notably for ringtones)

are in most of the cases misleading: on the one hand the spots are too short to

recognise the terms and conditions of the offered service which are often provided in

small prints; on the other hand the attention of the viewer is directed towards the

marketed service. Such spots do not only entice mobile users (primarily children) to

purchase a ringtone by means of their mobile phone but often turn out to be a

subscription service.298 Independent from the targeted group, such practices are

misleading and they violate the requirements stated in the Directive on Unfair Contract

293 Directive 2005/29/EC, recital 18. 294 Ibid, annex I item 28. 295 European Audiovisual Observatory (2000), p. 10. 296 Judgement of the Higher Regional Court of Hamburg, 10.04.2003 (Az: 5 U 97/02). Available on: http://www.jurpc.de/rechtspr/20030164.pdf, 19.07.2005. 297 Pedersen (2004). 298 Scholz (2005).

70


Terms, namely that contract terms must be presented in a “plain, intelligible

language.”299

A similar problem applies to advertisements in magazines and newspapers. Often the

presentation of the required information is unclear, inadequate or missing. Especially

magazines aimed to minors often include (eye-catching) advertisements about mobile

content services. The situation is similar to those illustrated above. The information is

not given clear enough and presentation of important terms and conditions in small

print is considered to be misleading.

The Danish Consumer Council requires stricter rules for advertising SMS-services.300

Beside that information are often not given clear enough the offered services are seen

to be too expensive especially when they turn out to be a subscription service. The

German content provider ‘Jamba’, for example, is meeting criticism because terms and

conditions are written in English and in small prints. As a result, the network operator

‘Sonofon’ refused further cooperation with the German company due to their

questionable marketing practices.301 The Council is also of the opinion that minors shall

only be able to make phone calls and send messages without any commercial impact –

all other services shall be blocked.302 Technological specifications enable to meet this

demand: there are still phones on the market which are not WAP-compatible (which is

a requirement to download content services) and in addition most network operators

offer their customers to sign out for specific services such as the access to the Internet.

However, such a solution only prevents for purchasing certain PRS namely those

which require the WAP service. The problem of SMS-chats will still remain: Premium

SMS-chats which promise direct contact with “like-minded people” but turn out to be

carried out by employers of call centres are considered to be unfair and misleading.

This is because advantage is taken of e.g. lonely people who have certain expectations

but in reality are animated to send expensive messages.303 The employers are trained

to keep hold of the customer as long as possible to increase the revenue.

A further problem is that such companies often have their residence in a country

outside of Europe which makes it difficult to take account on such companies. With the

help of so-called content aggregators304 such companies gain access to the different

network operators and are able to enter the market of a certain country. Every involved

299 Directive 93/13, article 5. 300 Pedersen (2004). 301 Ibid. 302 Ibid. 303 Judgement of the District Court of Munich, 17th of May 2003 (Az: 22 O 9966/03). Available on: http://www.dr-bahr.com/news/news_det_20030919000158.html, 19.07.2005. 304 A content aggregator is basically a “content collector and often distributor to network operators/content providers.” http://www.itvdictionary.com/c.html, 19.07.2005.

71


party gains a part of the revenue which accounts for each message sent by the mobile

user. To give an example: In Denmark an American company called ‘SMS.ac’ is one of

the major providers for SMS-chats. This company advertises with gratis SMS to tempt

people to sign up for the service. However, it turns out that after signing up on the

website of ‘SMS.ac’ (which requires the phone number of the mobile user) spam

messages are sent which intend to animate the receiver to participate in SMS-chats.305

Once a mobile user agreed to the “free SMS-service” he has basically no chances to

stop the following spam messages.

As seen in the above analysis such a business practice is violating the law in several

respects: they are not in line with the requirements of the Unfair Contract Terms

Directive since the disclosed information are misleading as the mobile user does not

know that he enters an SMS-chat whereas every message sent is based on premium

rate principle; the information requirements laid down in the E-Commerce Directive and

in the Distance Selling Directive are completely ignored; etc.

The problem with the misuse of PRS is different from the spam problem. Since the

network operator has a billing contract with the customer and distributes the revenue of

a PRS to other involved party he can be made responsible insofar that he must ensure

that content and promotions of such content suppliers is in line with the law. A network

operator is in the position to refuse the cooperation with a content supplier to avoid that

a mobile user enters into an unfair agreement. Resulting from this approach the mobile

user will have a contact person to report his complaints. The relationship to the network

operator is in addition more transparent. Moreover, regulatory authorities will have a

better chance to enforce legal action against fraudulent practices.

As a matter of fact, the contractual relationship between the network operator and the

mobile user will constitute the basis for fair transactions with content suppliers: the

contract could for example include that the network operator will only cooperate with

serious content suppliers. In the case that the content supplier turns out to use unfair or

misleading practices, the network operator may promise that he calls the content

supplier to account who has to pay the expenses which arose during the transaction.

This can be enforced by a contract between the network operator and the content

supplier which includes strict terms and contracts which are in line with the legal

framework.

305 http://www.fbr.dk/presse/alle/presse559/, 19.07.2005.

72

7 Conclusion .

7 Conclusion

The more complex and profitable forms of m-commerce seem to remain some years

away. Nevertheless, the discussed issues related to m-commerce are already

challenging current EU law to a certain extent. In general, the basic rules applying to e-

commerce can be transferred to m-commerce. However, certain areas need special

considerations just as in the case of data protection and the distribution of PRS.

Location-based advertising presents a unique opportunity for both the advertiser and

the consumer: With the systematic processing of data which enables to create updated

user profiles an advertiser may be able to predict the users’ preferences and buying

patterns. Targeted advertising messages can be provided to the exact moment and

location of the consumer. Consequently the relationship between advertiser and the

consumer can be mutual beneficial. The desirability and acceptance of the consumer to

disclose personal information will depend on several factors: The consumer must in

any circumstances be aware of how their personal data is used and who has access to

it. In order for the mobile user to provide consent he must have knowledge about all

information regarding to the processing of his data. Therefore, it should be considered

whether the network operator should be in the position of a data controller who

coordinates the processing and transfers data to third parties when necessary. A

mobile user may not be able to keep control over the collected data especially when he

is involved in several transactions with different content suppliers. A network operator

has already a contractual relationship due to the provision of the mobile

telecommunication service. In order to give up privacy the consumer must also be able

to keep control over the advertising to which he is exposed.

Due to the personal character of a mobile device the user has certain expectations

regarding the usability: he wishes to operate with it without any disturbance of his

privacy. Consequently, only permission based advertising will be successful to ensure

that there is a level of intimacy and not an intrusion of privacy. However, the same

technology which enables unique and highly advanced opportunities to offer value

added services may lead to the fact that the consumer receives unsolicited

communication. Consumers are already bombarded with unsolicited advertising by

mail, telephone and e-mail. Therefore, there is a risk that dissatisfaction towards

advertisements may increase which would result in the loss of a promising

communication tool for advertisers. Once a consumer loses trust in service providers it

may be to difficult and too expensive to win back a valuable costumer.

The present EU law provides a general framework but may have adverse effects in

certain m-commerce situations. Particularly, the principle of consent will be one of the

73

7 Conclusion .

most fundamental challenges for m-commerce services to become successful.

Especially the technology neutral approach of the directives may cause problems

because the rules have to be translated into actual business and information society

practices. The law does not consider specific standards and the different definitions

have to apply for all means of commercial communications. For instance, the

distinction between ‘traffic data’ and ‘location data’ is in terms of m-commerce not clear

enough. Depending on the interpretation of the data controller he may try to circumvent

the erasure requirement and keep sensitive data for an indefinite time.

Technological development is an ongoing process and the technology neutral mode

was chosen to avoid developing new legislations each time a new technology is

implemented. As a matter of fact, it will be indispensable that the industry is working on

specifications guaranteeing the protection of privacy and secure transaction for

consumers in the area of m-commerce. This is especially important in the case of

spam. So far, neither technical nor legal approaches have succeeded in eliminating

spam. E-mail spam filters have reduced the problem but only to a certain extent. Legal

procedures may have been successful in driving out some spammers but since only a

few cases were brought to trial they have achieved little to change the behaviour of

spammers. As a matter of fact, the most promising approach to the spam problem is

considered to be a cooperation of industry and legal authorities. Several companies are

already trying to create consortia to exchange information and experience and to

establish Code of Conducts which set up common standards for sender authentication.

Such mechanisms must be enforced by law to ensure that any breaches are disciplined

by a financial remedy. In addition a common international legal framework is necessary

as new technologies allow for trans-border spam messages. Serious efforts to combat

spam within a region are less helpful when the messages are coming from other

countries.

Nevertheless, the mobile user must be aware that with the disclosure of personal data

he may agree to receive commercial communication. Terms and conditions of such

agreements must therefore be taken into careful consideration and in cases of

uncertainty a mobile user should rather turn away from the offer. The ongoing

development of new technology will always offer new business practices and certain

companies will find new opportunities to make revenue even with unfair practices.

Therefore, consumers must take action for themselves by careful consideration to who

disclosure of the phone number and other personal information is made. Even the

strictest legislations may not be able to prevent that certain business exercise unfair

practices.

74

7 Conclusion .

Information requirements imposed by EU law on service providers are not suitable for

the current state of m-commerce. Especially the E-Commerce Directive and the

Distance Selling Directive include a number of obligations which have to be fulfilled in

order to enter into an agreement with the consumer. The requirements in the directives

are binding, meaning that most of them must be presented independent from what kind

of medium is used during the transaction process.

The main problem will be to structure and present the required information in an

appropriate and clear manner on the mobile device. A WAP push message which

contains a hyperlink to the information about the terms and condition is seen to be the

best solution. Since a mobile device also supports voice telephony a toll free number

could be offered which can be called to gain knowledge about the terms and

conditions. Such message can be stored just like a common SMS on the device and

can be accessed at anytime. Where the product or service is marketed on an

alternative media, e.g. in a newspaper or on a website, some of the information

requirements can be presented by means of these media. In addition a service provider

may have the opportunity to send an email which contains the imposed obligations.

An alternative approach to enable m-commerce transaction may be to consider

whether to relax the current legislations regarding the information requirements. The

most common applications are currently content services which can be accessed by

means of mobile messages and are of little value. The convenience for the mobile user

is that such services are simple to operate and require little time to navigate.

Nevertheless, the requirements relating to advertisements become more important due

to the fraudulent and misleading practices of several content suppliers.

In addition, it should be considered to put more responsibility on network operators.

Since most of the current services are offered in connection with a premium rate

number or premium SMS and such services are distributed by the operator. Thus, the

operator is in the position to select which content supplier may use his network. The

market of PRS would become more transparent and secure for consumers.

The market for m-commerce transactions is it in its infancy. Nevertheless, the services

currently available can be seen as a gateway to more advanced services which will

arrive from the time 3G will be accepted by mobile users. The greater the use of mobile

content service, the more probably it is that 3G will overtake. New, challenges will

arrive for both the industry and the law makers.

75

IV Literature .

IV Literature

Aldermann, E. and C. Kennedy (1997): The right to Privacy. New York: Random House.

Altschul, M. and R.S. Coleman (2000): Petition of the Cellular Telecommunications and Industry Association for a Rulemaking to establish fair Location Information Practices. Washington: Cellular Telecommunications and Industry Association.

Anderson, P. (2005): Mobile technologies and their use in education - new privacy implications. Presented at the JISC Legal conference Privacy, Technology and the Law; London, 7th April.

Andris, P. and J. Balkausky (2001): M-Commerce. Seminar Java aktuell. University of Zurich, 2nd July.

Areskoug, Christer and Johan Engström (2001): The consumer market for mobile content services. Stockholm: The Swedish National Post and Telecom Agency (PTS-ER-2002:21).

Baker and McKenzie (2001): Doing E-commerce in Europe. Chicago: Baker and McKenzie, Cited August 2001, URL: http://www.bakerinfo.com, 06.04.2005.

Camponovo, G. and D. Cerutti (2004): The Spam Issue in Mobile Business: A Comparative Regulatory Overview. Proceedings of the 3rd International Conference on Mbusiness, New York.

Chen, L. (2005): Mobile Commerce Application Development. Hershey, PA: CyberTech Publishing.

Commission of the European Union (2001): Communication from the Commission on sales promotions in the Internal Market. Brussels: COM(2001)546 final.

Commission of the European Union (2002): Amended proposal for a European Parliament and Council Regulation concerning sales promotions in the Internal Market. Brussels: COM(2002) 585 final.

Commission of the European Union (2004): Commission Communication to the Council, the European Parliament, the Economic and Social Committee and the Committee of Regions on unsolicited commercial communications or ‘spam’. Brussels: COM(2004) 28 final.

Consumer Ombudsman (2004): The Consumer Ombudsman’s Guidelines on Mobile Content Services. Oslo: Forbrukerombulet.

Council of the European Union (1950): The European Convention on Human Rights. Rome: European Union.

Dean, D.R. and H.L. Sirkin (2000): Mobile Commerce: Winning the On-Air Consumer. White Paper, Boston Consulting Group.

DigReb (2001): GSM, GPRS, HSCSD FAQ - Einführung in die Mobilfunktechnik. URL: http://www.digreb.net/files/acid/GSM-GPRS-HSCSD.pdf, 20.05.2005.

76

http://www.digreb.net/files/acid/GSM-GPRS-HSCSD.pdf

IV Literature .

Dholakia, N. and M. Rask (2002): Dynamic Elements of emerging Mobile Portal Strategies: M-Commerce is all about Personalization, Permission and Specification. RITIM Workingpaper.

Edwards, L. (2000): Canning the Spam: Is There a Case for Legal Control of Junk Electronic Mails? In L. Edwards and C. Waelde (editors), Law and the Internet: a framework for electronic commerce. Oxford – Portland Oregon: Hart, pp. 309-330.

Ericsson (2002): Von GSM zu UMTS – Informationen über neue Mobilfunktechniken. Düsseldorf: Ericcson, URL: http://www.ericsson.com/de/broschueren/infrastruktur_mobilfunknetze.pdf, 30.04.2005.

EU Document MEMO/0/64: Questions and answers on the proposed Unfair Commercial Practices Directive. Brussels and Strasbourg: The European Parliament.

European Audiovisual Observatory (2000): Regulation on Advertising Aimed at Children in EU-Member States and some neighbouring States. The Legal Framework. STRASBOURG: European Audiovisual Observatory, URL: http://www.obs.coe.int/online_publication/reports/childadv.pdf.de, 16.05.2005.

Fellner, G. (2003): Spam-SMS und Werbung zur Inanspruchnahme von Mehrwertdiensten. University of Vienna: September, URL: www.it-law.at, 20.06.2005.

Franz, G.A. (2002): Mobile e-commerce - will it take off? Plainsboro: A.G. Franz Associates, LLC, URL: www.agfranz.com, 15.07.2005.

Gauthronet. S. and E. Drouard (2001): Unsolicited Commercial Communications and Data Protection. Brussels: Commission of the European Communities, Contract n. ETD/99/B5-3000/E/96.

Giaglis, G.M., P. Kourouthanassis and A. Tsamakos (2002): Towards Classification Framework for Mobile Location Based Services. In B. Mennecke (editor), Mobile Commerce: Technology, Theory and Applications. Hershey, PA: Idea Group Inc., pp. 67-85.

Gow, G.A. (2005, forthcoming): Pinpointing Consent: Wireless Location Privacy and Mobile Phones. In K. Nyíri (editor), A Sense of Place. Vienna: Passagen Verlag.

Gratton, E. (2002): M-Commerce: The Notion of Consumer Consent in Receiving Location Based Advertising. Canadian Journal of Law and Technology, Volume 1, Number 3 (November).

Guettler, J.H. and D. Elixmann (2005): Draft final report for Study on pan-European market for premium rate services. Namur: Cullen International SA and WIK Consult GmbH.

Heinemann, A., J. Ranke and T. Straub (2004): Zur rechtsverträglichen Technikgestaltung anhand einer M-Commerce-Anwendung. In: Mobile Economy - Transaktionen, Prozesse, Anwendungen und Dienste. Proceedings of the 4th Mobile Commerce Workshop, Universität Augsburg. Gesellschaft für Informatik e.V., Bonn: pp. 162-177.

Hu, W.C., C. Lee and J. Yeh (2004): Mobile Commerce Systems. In N. Shi (editor), Mobile Commerce Applications. Hershey, PA: Idea Group Inc., pp.1-23.

77

http://www.it-law.at/

IV Literature .

IRIS plus (2005): Advertising Law in the Electronic Media. Strasbourg: IRIS, Issue 2005-06, URL: http://www.obs.coe.int/oea_publ/iris/iris_plus/iplus6_2005.pdf.en, 13.05.2005.

IARN (2002): Handbook for Premium Rate Services. Hamburg: IARN Handbook Working Group, URL: http://www.iarn.org/, 15.07.2005.

Ismail, M.A., R. Md-Noor and M. Othman (2004): Short Message Service (SMS) and its Applications. In N. Shi (editor), Mobile Commerce Applications. Hershey, PA: Idea Group Inc, pp. 179-202.

Kryczka, K. (2004): Principles of European Contract Law and the Formation of Contracts in the Information Society. In R. Nielsem, S. Sandfeld Jakobsen and J. Trzaskowski (editors): EU Electronic Commerce Law, DJØF Publishing, Copenhagen (109-123).

Lodder, A.R. and H.W.K. Kaspersen (2002): eDirectives: Guide to European Union Law of E-Commerce: Commentary on the Directives on Distance Selling, Electronic Signatures, Elöectronic Commerce, Copyright in the Information Society, and Data Protection. The Hague/London/New York: Kluwer Law International.

Mago, J. and M. Karras (2001): Mobile Commerce wächst aus den Kinderschuhen - Szenarien für die Zukunft der mobilen Wirtschaft. Frankfurter Rundschau; 20th of March.

Müller-Veerse, F. (1999): Mobile Commerce Report. London – Bonn: Durlacher Research Ltd.

Munusamy, M. and H.P. Leang (2002): Characteristics of Mobile Devices and an Integrated M-Commerce Infrastructure for M-Commerce Deployment. Proceedings of the Second International Workshop on Internet Computing and E-Commerce (ICECE), 23-25 October, Florida.

Ng-Kruelle, G., P.A. Swatman, D.S. Rebne and F. Hampe (2002): The Price of Convenience – Privacy and Mobile Commerce. Quarterly Journal of Electronic Commerce, Volume 3, Number 3, pp. 273-285.

OECD (1980): Guidelines on the Protection of Privacy and Transborder Flows of Personal Data. Paris: OECD.

OECD (1997): Electronic Commerce: Opportunities and Challenges for Government (The “Sacher Report“). Paris: OECD.

OECD (2005): Task Force on Spam. (“Anti-Spam Law Enforcement Report”). Paris: OECD, DSTI/CP/ICCP/SPAM(2004)3/FINAL.

Pedersen, K. (2004): Forbrugerrådet kræver indgreb overfor sms-udbydere. Politiken/Telepolis, URL: http://www.comon.dk/index.php/news/show/id=19639, 18.07.2005.

Pollak, C. (2004): Mobiles Marketing – verbotene Werbung oder rechtsfreier Raum? Keinesfalls! Die neue Rechtslage macht’s in Grenzen möglich. Vienna: Rechtsprobleme.at, URL: http://www.rechtsprobleme.at/doks/mobiles-marketing-pollak.pdf, 13.06.2005.

Sahi, P. (2002): Geolocation on Cellular Networks. In B. Sarikaya (editor), Geographic Location in the Internet, Hingham. MA: Kluwer Academic Publishers, pp. 13-49.

78

http://www.obs.coe.int/oea_publ/iris/iris_plus/iplus6_2005.pdf.en

http://www.itprofiler.dk/index.php?page=profile:show,id=200

IV Literature .

Sarrocco, C. (2004): Spam in the Information Society: Building Frameworks for International Cooperation. ITU WSIS Thematic Meeting on Countering Spam; Geneva: ITU New Initiatives Programme

Schmidt, D. (2004): 'Spam' in neuen Informations- und Kommunikationstechnologien: Wirkung und politisch-rechtliche Bekämpfung unerwünschter Information. Master Thesis. Justus-Liebig-University Gießen.

Scholz (2005): Werbespots für Kinder verstoßen gegen Jugendmedienschutz [online]. URL: www.teltarif.de, 19.07.2005.

Schulze, C. and J. Baumgartner (2001): Don't Panic Do E-Commerce; a beginner's guide to European Law affecting e-commerce. Electronic Commerce Team (Information Society Directorate General); Brussels: Published by the European Commission’s.

Schwiderski-Grosche, S. and H. Knospe (2002): Secure Mobile Commerce. In C.J. Mitchell (editor), Security for Mobility, Special issue of the IEE Electronics and Communication Engineering Journal, Volume 14, Number 5, pp. 228-238.

Siau, K., E. Lim and Z. Shen (2003): Mobile Commerce: Current States and Future Trends. In E. Lim and S. Keng (Editors), Advances in Mobile Commerce Technologies. Hershey, PA: Idea Group Inc, pp. 1-17.

Sicher, A. and R. Heaton (2002): GPRS Technology Overview. White Paper, Round Rock: Dell.

Simmons and Simmons (2001): E-Commerce Law - Doing Business Online. Bembridge: Palladian Law Publishing Ltd.

Sieger, A. (2000): Werbung, Personalisierung und Spam: Werbung mit neuen Medien – Sag JA!? Marketing und Zustimmung. Master Thesis. University of Vienna.

Snijders, H. and S. Weatherill (2003): E-commerce law: national and transnational topics and perspectives. The Hague: Kluwer Law International.

Tähtinen, J. and J. Salo (2004): Special features of mobile advertising and their utilization. Proceedings of the 33rd EMAC conference; Murcia: EMAC.

TeleCommunication Systems Inc. (2003): Wireless Spam: Issues and Solution. Anti-Spam White Paper, Annapolis, URL: www.telecomsys.com, 30.06.2005.

Trzaskowski, J. (2004): Information Requirements and Mobile Commerce in the European Union. Copenhagen: Julebogen, DJØF Publishing.

US Delegation (2001): Discussion Paper for Data Preservation Workshop. Tokyo: G8 Conference on High-Tech Crime, May 22-24.

Varshney, U. and R. Vetter (2002): Mobile Commerce: Framework, Applications, and Networking Support. ACM/Kluwer Journal on Mobile Networks and Applications (MONET), Volume 7, Number 3, pp. 185-198.

White, J.C. (2003): People, Not Places: A Policy Framework for Analyzing Location Privacy Issues. Masters Memo Prepared for the Electronic Privacy Information Center, Terry Sanford Institute of Public Policy, Duke University.

Woodley, Susan (editor) (2003): E-commerce. The Hague: Kluwer Law International, 2003.

79

http://www.telecomsys.com/

IV Literature .

Zobel, J. (2001): Mobile Business and M-Commerce. Die Märkte der Zukunft erobern. Munich - Vienna: Hansa Verlag.

80

IV Literature .

Internet Sources:

http://www.acif.org.au/publications/codes, 15.07.2005.

http://www.a-remortgages-website.co.uk/remortgage-jargon-c.asp, 15.07.2005.

http://www.bundesgerichtshof.de, 13.06.2005.

http://www.domstol.dk/media/-300011/files/m000104.pdf, 13.06.2005.

http://edition.cnn.com/2004/TECH/ptech/02/04/cellphone.spam.reut/, 14.06.2005.

http://www.ecommercetimes.com/story/33086.html, 15.06.2005.

http://europa.eu.int/comm/environment/civil/prote/112/112_en.htm,15.05.2005.

http://europa.eu.int/comm/internal_market/comcom/newsletter/edition16-17/page04-02_en.htm, 13.06.05.

http://europa.eu.int/information_society/topics/ecomm/all_about/todays_framework/privacy_protection/index_en.htm#traffic, 16.05.2005.

http://europa.eu.int/scadplus/glossary/subsidiarity_en.htm, 08.07.2005.

http://europa.eu.int/scadplus/leg/en/lvb/l14012.htm, 07.04.2005.

http://europa.eu.int/scadplus/leg/en/lvb/l24202.htm, 14.04.2005.

http://www.fbr.dk/presse/alle/presse559/, 19.07.2005.

http://www.ignitingministry.org/advertising/mediaterms.aspx, 19.07.2005.

http://www.itvdictionary.com/c.html, 19.07.2005.

http://www.jurpc.de/rechtspr/20030078.pdf, 13.06.05.

http://www.leavcom.com/pdf/Mobilecode.pdf, 07.07.2005.

http://news.bbc.co.uk/1/hi/technology/3809855.stm, 14.06.2006.

http://newsroom.cisco.com/dlls/2004/hd_051904c.html, 11.07.2005.

http://www.nttdocomo.com/, 15.06.2005.

http://www.obs.coe.int/online_publication/reports/childadv.pdf.de, 17.07.2005.

http://www.oecd.org/document/18/0,2340,en_2649_201185_1815186_1_1_1_1,00.html, 04.05.2005.

http://www.oecd.org/department/0,2688,en_2649_22555297_1_1_1_1_1,00.html, 15.06.2005.

http://www.oecd.org/document/24/0,2340,en_2649_22555297_34804568_1_1_1_1,00.html, 15.06.2005.

http://www.palowireless.com/gps/tutorial.asp, 11.07.2005.

http://www.robertprice.co.uk, 07.06.2005.

http://www.rechtsprobleme.at/doks/urteile/101tkg-uvsstmk.html, 13.06.2005.

http://www.sharpmail.co.uk/html/sms.html, 15.06.2005.

http://www.telecomsys.com/carriers/documents/Whitepaper_Antispam.pdf, 15.06.2005.

http://www.teltarif.de, 17.07.05.

http://www.theregister.co.uk/2004/01/23/eu_antispam_laws_are_ok/, 09.06.2005.

http://www.t-mobile.com/hotspot/support_faq.htm#U11, 14.06.2005.

http://www.jus.uio.no/lm/un.electronic.commerce.model.law.1996/, 19.07.2005.

http://en.wikipedia.org/wiki/HTTP_cookie, 16.07.2005.

81

IV Literature .

http://en.wikipedia.org/wiki/Mobile_phone_spam, 07.06.05.

http://en.wikipedia.org/wiki/Short_message_service, 23.06.2005.

82

IV Literature .

MSc in EU Business and Law Author: Evelyne Cleff Department of Law Supervisor: René Franz Henschel

MASTER THESIS

Mobile Advertising

A Comparative Regulatory Overview

- Appendix -

Århus School of Business, July 2005

Legislation and Case Law

Table of Contents .

Legislation page

COM (2002) 585 final: Amended proposal for a European Parliament and Council Regulation concerning sales promotions in the Internal Market (presented by the Commission pursuant to Article 250 (2) of the EC Treaty) 1

Council Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts. 4

Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data. 6

Directive 97/7/EC of the European Parliament and of the Council of 20 May 1997 on the protection of consumers in respect of distance contracts. 10

Directive 98/48/EC of the European Parliament and of the Council of 20 July 1998 amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations. 13

Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce). 15

Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive). 21

Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications). 22

Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the Internal Market. 26

The Principles Of European Contract Law 1998, Parts I and II (Parts I and II completed and revised) 31

Case Law

ECJ judgment of 26 April 1988, C-352/85 (Bond van Adverteerders, Rec. 1988, 2085) 33

ECJ judgement of 18 May 1993, C-126/91 Schutzverband gegen Unwesen in der Wirtschaft e.V. v Yves Rocher GmbH 1991 (3) I -2361 34

ECJ judgment of 22 January 2002, C-390/99 (Canal Satélite Digital, Rec. 2002, I-6087) 35

IV Literature .

Judgment of the Administrative Court of Styria, 29th March 2002 37

Judgement of the District Court Berlin, 14th of January 2003 38

Judgement of the Higher Regional Court of Hamburg, 10.04.2003 (Az: 5 U 97/02) 40

Judgement of the District Court of Munich, 17th of May 2003 (Az: 22 O 9966/03) 43

Judgement of the German Federal Court of Justice, 5th of May 2004 44

Judgement of the Danish Maritime and Commercial Court Copenhagen, 14th of March 2005 46

COM (2002) 585 final .

COM (2002) 585 final: Amended proposal for a EUROPEAN PARLIAMENT AND COUNCIL REGULATION concerning sales promotions in the Internal Market (presented by the

Commission pursuant to Article 250 (2) of the EC Treaty)

(5) In the absence of uniform rules at Community level, obstacles to cross-border services and goods or the freedom of establishment might be justified in the light of the caselaw of the Court of Justice as long as they seek to protect recognised public interest objectives and are proportionate to those objectives; in the light of Community objectives, of the provisions, in particular articles 28, 43 and 49 of the Treaty relating to free movement of secondary Community law, and in accordance with the Commission’s policy on commercial communications5, such obstacles can only be eliminated by establishing uniform rules at Community level and by clarifying certain legal concepts at Community level to the extent necessary for the proper functioning of the Internal Market; other restrictions have been identified as requiring replacement by less restrictive measures; remaining restrictions relating to the use and communication of sales promotions should be submitted to the principle of mutual recognition of national legislation.

(10) This Regulation applies without prejudice to Community and national competition law, which contains specific provisions concerning the press.

(12) This Regulation does not affect the Community acquis, which is applicable to the use and communication of sales promotions, which covers, in particular, Council Directive 84/450/EEC concerning misleading advertising and comparative advertising6 , Council Directive 89/552/EEC concerning the pursuit of television broadcasting activities Council Directive 92/59/EEC on general product safety8, Directive 95/46/EC of the European Parliament and of the Council on the protection of individuals with regard to the processing of personal data and on the free movement of such data9, Directive 97/66/EC of the European Parliament and of the Council concerning the processing of personal data and the protection of privacy in the telecommunications sector10, Directive 98/6/EC of the European Parliament and of the Council on consumer protection in the indication of prices of products offered to consumers, Directive 98/27/EC of the European Parliament and of the Council on injunctions for the protection of consumers’ interests, Council Directive 92/28/EEC on the advertising of medicinal products, Directive 1999/44/EC of the European Parliament and of the Council on certain aspects of the sale of consumer goods and associated guarantees, Council Recommendation “Drinking of alcohol by children and adolescents and Directive 2000/31/EC of the European Parliament and of the Council on electronic commerce16.

Article 2

Definitions

For the purposes of this Regulation:

(b) ‘sales promotion’ means the offer of a discount, a free gift, a premium or an opportunity to participate in a promotional contest or game.

Article 3

The use and commercial communication of sales promotions

1. Member States or non-public regulatory bodies shall not impose:

- a general prohibition on the use or commercial communication of a sales promotion unless required by Community law;

- a limitation on the value of a sales promotion, except for discounts on fixed price products and sales below cost;

- a prohibition on discounts preceding seasonal sales; or

- a requirement to obtain prior authorisation, or any requirement having equivalent effect, for the use or commercial communication of a sales promotion.

Article 4

Information to be provided in respect of sales promotions

In addition to other information requirements deriving from Community law, the promoter shall ensure that the commercial communication of a sales promotion complies with the requirements

1

COM (2002) 585 final .

set out at Annex to this Regulation. All the information requirements set out in Annex shall be provided in a clear and unambiguous manner. The information that the promoter must make available to the client on request must be available on the launch of the relevant sales promotion.

ANNEX

Information to be provided in respect to the use and the commercial communication of sales promotions

1. ALL SALES PROMOTIONS

1.1. Information to be provided in the commercial communication:

- the price (inclusive of taxes) of the promoted good or service and any additional costs associated with freight, delivery or postage;

- the promoter’s name and address;

- the duration of the offer including the start date and either the end date or the quantity of stock available;

- where the offer is subject to conditions, an indication of where these conditions or any other information can be obtained; and

- an indication of how the terms and conditions governing the sales promotion can be obtained.

2. DISCOUNTS


- the exact amount of the discount represented as either a percentage or a unit cost; and

- an indication of a sale below cost.

2.2. Information to be made available on request unconditional on purchase of the promoted product or service:

- any conditions or limitations applicable to the discount;

- the preceding price of the promoted good or service and the length of time (including dates) that this preceding price was applied; and

- where the good or service in question has previously been bundled and/or distributed in a format that prevents a direct price comparison with the promotional offer, the basis for assessing the pre-discount price.

2.3. Information to be made available on a coupon or voucher:

- the redemption value of the coupon or voucher, which may be a good or service, or where the coupon or voucher can be exchanged for cash, the cash value;

- any limitation on its use including its expiry date; and

- the goods or services against which the coupon or voucher may be redeemed.

3. FREE GIFTS AND PREMIUMS


- the actual value of the free gift or premium; and

- any costs associated with obtaining the free gift or premium.


- any conditions or limitations applicable to the free gift or premium.

4. PROMOTIONAL CONTESTS AND PROMOTIONAL GAMES


- the commercial value and nature of the prize;

2

COM (2002) 585 final .

- the closing date for receipt of entries;

- any geographical or personal restrictions such as location or age;

- the need to obtain permission to enter from an adult or employer;

- any associated costs other than the purchase of the promoted good or service in the participation in the promotional contest or promotional game; and

- in the case of a promotional game, sufficient information for any participant in the promotion to understand their likely chance of winning.


- any conditions applicable to the promotional contest or game including any limitations on entries or prizes;

- the number of prizes which may be won and the number of prizes of any one type if more than one type of prize is on offer;

- the rules governing who is eligible to participate and the award of prizes; - the criteria for judging entries;

- the selection procedure for the award of prizes and, where the selection is made by jury, the composition of the jury;

- the date of the results and the manner in which they are to be announced;

- the means by which prizes may be delivered or collected and any associated costs;

- the time period during which prizes must be collected;

- any intention and conditions to use winners in post event publicity; and

- details of prize-winning entries subject to the agreement of prize winners and data protection rules.

3

Directive 93/13/EEC .

Council Directive 93/13/EEC

of 5 April 1993

on unfair terms in consumer contracts

Article 3

1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

2. A term shall always be regarded as not individually negotiated where it has been drafted in advance and the consumer has therefore not been able to influence the substance of the term, particularly in the context of a pre-formulated standard contract. The fact that certain aspects of a term or one specific term have been individually negotiated shall not exclude the application of this Article to the rest of a contract if an overall assessment of the contract indicates that it is nevertheless a pre-formulated standard contract. Where any seller or supplier claims that a standard term has been individually negotiated, the burden of proof in this respect shall be incumbent on him.

3. The Annex shall contain an indicative and non-exhaustive list of the terms which may be regarded as unfair.

Article 5

In the case of contracts where all or certain terms offered to the consumer are in writing, these terms must always be drafted in plain, intelligible language. Where there is doubt about the meaning of a term, the interpretation most favourable to the consumer shall prevail. This rule on interpretation shall not apply in the context of the procedures laid down in Article 7 (2).

ANNEX

TERMS REFERRED TO IN ARTICLE 3 (3)

1. Terms which have the object or effect of:

(a) excluding or limiting the legal liability of a seller or supplier in the event of the death of a consumer or personal injury to the latter resulting from an act or omission of that seller or supplier;

(b) inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations, including the option of offsetting a debt owed to the seller or supplier against any claim which the consumer may have against him;

(c) making an agreement binding on the consumer whereas provision of services by the seller or supplier is subject to a condition whose realization depends on his own will alone;

(d) permitting the seller or supplier to retain sums paid by the consumer where the latter decides not to conclude or perform the contract, without providing for the consumer to receive compensation of an equivalent amount from the seller or supplier where the latter is the party cancelling the contract;

(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;

(f) authorizing the seller or supplier to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the seller or supplier to retain the sums paid for services not yet supplied by him where it is the seller or supplier himself who dissolves the contract;

(g) enabling the seller or supplier to terminate a contract of indeterminate duration without reasonable notice except where there are serious grounds for doing so;

(h) automatically extending a contract of fixed duration where the consumer does not indicate otherwise, when the deadline fixed for the consumer to express this desire not to extend the contract is unreasonably early;

4

Directive 93/13/EEC .

(i) irrevocably binding the consumer to terms with which he had no real opportunity of becoming acquainted before the conclusion of the contract;

(j) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;

(k) enabling the seller or supplier to alter unilaterally without a valid reason any characteristics of the product or service to be provided;

(l) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded;

(m) giving the seller or supplier the right to determine whether the goods or services supplied are in conformity with the contract, or giving him the exclusive right to interpret any term of the contract;

(n) limiting the seller's or supplier's obligation to respect commitments undertaken by his agents or making his commitments subject to compliance with a particular formality;

(o) obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his;

(p) giving the seller or supplier the possibility of transferring his rights and obligations under the contract, where this may serve to reduce the guarantees for the consumer, without the latter's agreement;

(q) excluding or hindering the consumer's right to take legal action or exercise any other legal remedy, particularly by requiring the consumer to take disputes exclusively to arbitration not covered by legal provisions, unduly restricting the evidence available to him or imposing on him a burden of proof which, according to the applicable law, should lie with another party to the contract.

2. Scope of subparagraphs (g), (j) and (l)

(a) Subparagraph (g) is without hindrance to terms by which a supplier of financial services reserves the right to terminate unilaterally a contract of indeterminate duration without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof immediately.

(b) Subparagraph (j) is without hindrance to terms under which a supplier of financial services reserves the right to alter the rate of interest payable by the consumer or due to the latter, or the amount of other charges for financial services without notice where there is a valid reason, provided that the supplier is required to inform the other contracting party or parties thereof at the earliest opportunity and that the latter are free to dissolve the contract immediately. Subparagraph (j) is also without hindrance to terms under which a seller or supplier reserves the right to alter unilaterally the conditions of a contract of indeterminate duration, provided that he is required to inform the consumer with reasonable notice and that the consumer is free to dissolve the contract.

(c) Subparagraphs (g), (j) and (l) do not apply to:

- transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the seller or supplier does not control;

- contracts for the purchase or sale of foreign currency, traveller's cheques or international money orders denominated in foreign currency;

(d) (d) Subparagraph (l) is without hindrance to price-indexation clauses, where lawful, provided that the method by which prices vary is explicitly described.

5

Directive 95/46/EC .

Directive 95/46/EC of the European Parliament and of the Council

of 24 October 1995

on the protection of individuals with regard to the processing of personal data and on the free movement of such data

(26) Whereas the principles of protection must apply to any information concerning an identified or identifiable person; whereas, to determine whether a person is identifiable, account should be taken of all the means likely reasonably to be used either by the controller or by any other person to identify the said person; whereas the principles of protection shall not apply to data rendered anonymous in such a way that the data subject is no longer identifiable; whereas codes of conduct within the meaning of Article 27 may be a useful instrument for providing guidance as to the ways in which data may be rendered anonymous and retained in a form in which identification of the data subject is no longer possible; (27) Whereas the protection of individuals must apply as much to automatic processing of data as to manual processing; whereas the scope of this protection must not in effect depend on the techniques used, otherwise this would create a serious risk of circumvention; whereas, nonetheless, as regards manual processing, this Directive covers only filing systems, not unstructured files; whereas, in particular, the content of a filing system must be structured according to specific criteria relating to individuals allowing easy access to the personal data; whereas, in line with the definition in Article 2 (c), the different criteria for determining the constituents of a structured set of personal data, and the different criteria governing access to such a set, may be laid down by each Member State; whereas files or sets of files as well as their cover pages, which are not structured according to specific criteria, shall under no circumstances fall within the scope of this Directive; (30) Whereas, in order to be lawful, the processing of personal data must in addition be carried out with the consent of the data subject or be necessary for the conclusion or performance of a contract binding on the data subject, or as a legal requirement, or for the performance of a task carried out in the public interest or in the exercise of official authority, or in the legitimate interests of a natural or legal person, provided that the interests or the rights and freedoms of the data subject are not overriding; whereas, in particular, in order to maintain a balance between the interests involved while guaranteeing effective competition, Member States may determine the circumstances in which personal data may be used or disclosed to a third party in the context of the legitimate ordinary business activities of companies and other bodies; whereas Member States may similarly specify the conditions under which personal data may be disclosed to a third party for the purposes of marketing whether carried out commercially or by a charitable organization or by any other association or foundation, of a political nature for example, subject to the provisions allowing a data subject to object to the processing of data regarding him, at no cost and without having to state his reasons;

Article 2 Definitions For the purposes of this Directive (a) 'personal data' shall mean any information relating to an identified or identifiable natural

person ('data subject'); an identifiable person is one who can be identified, directly or indirectly, in particular by reference to an identification number or to one or more factors specific to his physical, physiological, mental, economic, cultural or social identity;

(b) 'processing of personal data' ('processing') shall mean any operation or set of operations which is performed upon personal data, whether or not by automatic means, such as collection, recording, organization, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, blocking, erasure or destruction;

(c) 'personal data filing system' ('filing system') shall mean any structured set of personal data which are accessible according to specific criteria, whether centralized, decentralized or dispersed on a functional or geographical basis;

(d) 'controller' shall mean the natural or legal person, public authority, agency or any other body which alone or jointly with others determines the purposes and means of the processing of personal data; where the purposes and means of processing are determined by national or Community laws or regulations, the controller or the specific criteria for his nomination may be designated by national or Community law;

6


(e) 'processor' shall mean a natural or legal person, public authority, agency or any other body which processes personal data on behalf of the controller;

(f) 'third party' shall mean any natural or legal person, public authority, agency or any other body other than the data subject, the controller, the processor and the persons who, under the direct authority of the controller or the processor, are authorized to process the data;

(g) 'recipient' shall mean a natural or legal person, public authority, agency or any other body to whom data are disclosed, whether a third party or not; however, authorities which may receive data in the framework of a particular inquiry shall not be regarded as recipients;

(h) 'the data subject's consent' shall mean any freely given specific and informed indication of his wishes by which the data subject signifies his agreement to personal data relating to him being processed.

PRINCIPLES RELATING TO DATA QUALITY

Article 6 1. Member States shall provide that personal data must be: (a) processed fairly and lawfully; (b) collected for specified, explicit and legitimate purposes and not further processed in a way

incompatible with those purposes. Further processing of data for historical, statistical or scientific purposes shall not be considered as incompatible provided that Member States provide appropriate safeguards;

(c) adequate, relevant and not excessive in relation to the purposes for which they are collected and/or further processed;

(d) accurate and, where necessary, kept up to date; every reasonable step must be taken to ensure that data which are inaccurate or incomplete, having regard to the purposes for which they were collected or for which they are further processed, are erased or rectified;

(e) kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the data were collected or for which they are further processed. Member States shall lay down appropriate safeguards for personal data stored for longer periods for historical, statistical or scientific use.

2. It shall be for the controller to ensure that paragraph 1 is complied with.

CRITERIA FOR MAKING DATA PROCESSING LEGITIMATE

Article 7 Member States shall provide that personal data may be processed only if: (a) the data subject has unambiguously given his consent; or (b) processing is necessary for the performance of a contract to which the data subject is party

or in order to take steps at the request of the data subject prior to entering into a contract; or (c) processing is necessary for compliance with a legal obligation to which the controller is

subject; or (d) processing is necessary in order to protect the vital interests of the data subject; or (e) processing is necessary for the performance of a task carried out in the public interest or in

the exercise of official authority vested in the controller or in a third party to whom the data are disclosed; or

(f) processing is necessary for the purposes of the legitimate interests pursued by the controller or by the third party or parties to whom the data are disclosed, except where such interests are overridden by the interests for fundamental rights and freedoms of the data subject which require protection under Article 1 (1)

INFORMATION TO BE GIVEN TO THE DATA SUBJECT

Article 10 Information in cases of collection of data from the data subject

7


Member States shall provide that the controller or his representative must provide a data subject from whom data relating to himself are collected with at least the following information, except where he already has it: (a) the identity of the controller and of his representative, if any; (b) the purposes of the processing for which the data are intended; (c) any further information such as - the recipients or categories of recipients of the data, - whether replies to the questions are obligatory or voluntary, as well as the possible

consequences of failure to reply, - the existence of the right of access to and the right to rectify the data concerning him in so far as such further information is necessary, having regard to the specific circumstances in which the data are collected, to guarantee fair processing in respect of the data subject.

THE DATA SUBJECT'S RIGHT OF ACCESS TO DATA

Article 12 Right of access Member States shall guarantee every data subject the right to obtain from the controller: (a) without constraint at reasonable intervals and without excessive delay or expense: - confirmation as to whether or not data relating to him are being processed and information

at least as to the purposes of the processing, the categories of data concerned, and the recipients or categories of recipients to whom the data are disclosed,

- communication to him in an intelligible form of the data undergoing processing and of any available information as to their source,

- knowledge of the logic involved in any automatic processing of data concerning him at least in the case of the automated decisions referred to in Article 15 (1);

(b) as appropriate the rectification, erasure or blocking of data the processing of which does not comply with the provisions of this Directive, in particular because of the incomplete or inaccurate nature of the data;

(c) notification to third parties to whom the data have been disclosed of any rectification, erasure or blocking carried out in compliance with (b), unless this proves impossible or involves a disproportionate effort.

THE DATA SUBJECT'S RIGHT TO OBJECT

Article 14 The data subject's right to object Member States shall grant the data subject the right: (b) to object, on request and free of charge, to the processing of personal data relating to him

which the controller anticipates being processed for the purposes of direct marketing, or to be informed before personal data are disclosed for the first time to third parties or used on their behalf for the purposes of direct marketing, and to be expressly offered the right to object free of charge to such disclosures or uses.

Member States shall take the necessary measures to ensure that data subjects are aware of the existence of the right referred to in the first subparagraph of (b).

TRANSFER OF PERSONAL DATA TO THIRD COUNTRIES

Article 25

Principles 1. The Member States shall provide that the transfer to a third country of personal data which are undergoing processing or are intended for processing after transfer may take place only if, without prejudice to compliance with the national provisions adopted pursuant to the other provisions of this Directive, the third country in question ensures an adequate level of protection.

8


2. The adequacy of the level of protection afforded by a third country shall be assessed in the light of all the circumstances surrounding a data transfer operation or set of data transfer operations; particular consideration shall be given to the nature of the data, the purpose and duration of the proposed processing operation or operations, the country of origin and country of final destination, the rules of law, both general and sectoral, in force in the third country in question and the professional rules and security measures which are complied with in that country. 3. The Member States and the Commission shall inform each other of cases where they consider that a third country does not ensure an adequate level of protection within the meaning of paragraph 2. 4. Where the Commission finds, under the procedure provided for in Article 31 (2), that a third country does not ensure an adequate level of protection within the meaning of paragraph 2 of this Article, Member States shall take the measures necessary to prevent any transfer of data of the same type to the third country in question. 5. At the appropriate time, the Commission shall enter into negotiations with a view to remedying the situation resulting from the finding made pursuant to paragraph 4. 6. The Commission may find, in accordance with the procedure referred to in Article 31 (2), that a third country ensures an adequate level of protection within the meaning of paragraph 2 of this Article, by reason of its domestic law or of the international commitments it has entered into, particularly upon conclusion of the negotiations referred to in paragraph 5, for the protection of the private lives and basic freedoms and rights of individuals. Member States shall take the measures necessary to comply with the Commission's decision.

9

Directive 97/7/EC .


of 20 May 1997

on the protection of consumers in respect of distance contracts

(4) Whereas the introduction of new technologies is increasing the number of ways for consumers to obtain information about offers anywhere in the Community and to place orders; whereas some Member States have already taken different or diverging measures to protect consumers in respect of distance selling, which has had a detrimental effect on competition between businesses in the internal market; whereas it is therefore necessary to introduce at Community level a minimum set of common rules in this area;

(11) Whereas the use of means of distance communication must not lead to a reduction in the information provided to the consumer; whereas the information that is required to be sent to the consumer should therefore be determined, whatever the means of communication used; whereas the information supplied must also comply with the other relevant Community rules, in particular those in Council Directive 84/450/EEC of 10 September 1984 relating to the approximation of the laws, regulations and administrative provisions of the Member States concerning misleading advertising (7); whereas, if exceptions are made to the obligation to provide information, it is up to the consumer, on a discretionary basis, to request certain basic information such as the identity of the supplier, the main characteristics of the goods or services and their price;

Article 2

Definitions

For the purposes of this Directive:

(1) 'distance contract` means any contract concerning goods or services concluded between a supplier and a consumer under an organized distance sales or service-provision scheme run by the supplier, who, for the purpose of the contract, makes exclusive use of one or more means of distance communication up to and including the moment at which the contract is concluded;

(4) 'means of distance communication` means any means which, without the simultaneous physical presence of the supplier and the consumer, may be used for the conclusion of a contract between those parties. An indicative list of the means covered by this Directive is contained in Annex I;

Article 4

Prior information

1. In good time prior to the conclusion of any distance contract, the consumer shall be provided with the following information:

(a) the identity of the supplier and, in the case of contracts requiring payment in advance, his address;

(b) the main characteristics of the goods or services;

(c) the price of the goods or services including all taxes;

(d) delivery costs, where appropriate;

(e) the arrangements for payment, delivery or performance;

(f) the existence of a right of withdrawal, except in the cases referred to in Article 6 (3);

(g) the cost of using the means of distance communication, where it is calculated other than at the basic rate;

(h) the period for which the offer or the price remains valid;

(i) where appropriate, the minimum duration of the contract in the case of contracts for the supply of products or services to be performed permanently or recurrently.

2. The information referred to in paragraph 1, the commercial purpose of which must be made clear, shall be provided in a clear and comprehensible manner in any way appropriate to the means of distance communication used, with due regard, in particular, to the principles of good faith in commercial transactions, and the principles governing the protection of those who are unable, pursuant to the legislation of the Member States, to give their consent, such as minors.

10

Directive 97/7/EC .

3. Moreover, in the case of telephone communications, the identity of the supplier and the commercial purpose of the call shall be made explicitly clear at the beginning of any conversation with the consumer.

Article 5

Written confirmation of information

1. The consumer must receive written confirmation or confirmation in another durable medium available and accessible to him of the information referred to in Article 4 (1) (a) to (f), in good time during the performance of the contract, and at the latest at the time of delivery where goods not for delivery to third parties are concerned, unless the information has already been given to the consumer prior to conclusion of the contract in writing or on another durable medium available and accessible to him.

In any event the following must be provided:

- written information on the conditions and procedures for exercising the right of withdrawal, within the meaning of Article 6, including the cases referred to in the first indent of Article 6 (3), - the geographical address of the place of business of the supplier to which the consumer may address any complaints,

- information on after-sales services and guarantees which exist,

- the conclusion for cancelling the contract, where it is of unspecified duration or a duration exceeding one year.

2. Paragraph 1 shall not apply to services which are performed through the use of a means of distance communication, where they are supplied on only one occasion and are invoiced by the operator of the means of distance communication. Nevertheless, the consumer must in all cases be able to obtain the geographical address of the place of business of the supplier to which he may address any complaints.

Article 6

Right of withdrawal

1. For any distance contract the consumer shall have a period of at least seven working days in which to withdraw from the contract without penalty and without giving any reason. The only charge that may be made to the consumer because of the exercise of his right of withdrawal is the direct cost of returning the goods.

The period for exercise of this right shall begin:

- in the case of goods, from the day of receipt by the consumer where the obligations laid down in Article 5 have been fulfilled,

- in the case of services, from the day of conclusion of the contract or from the day on which the obligations laid down in Article 5 were fulfilled if they are fulfilled after conclusion of the contract, provided that this period does not exceed the three-month period referred to in the following subparagraph.

If the supplier has failed to fulfil the obligations laid down in Article 5, the period shall be three months. The period shall begin:

- in the case of goods, from the day of receipt by the consumer,

- in the case of services, from the day of conclusion of the contract.

If the information referred to in Article 5 is supplied within this three-month period, the seven working day period referred to in the first subparagraph shall begin as from that moment.

3. Unless the parties have agreed otherwise, the consumer may not exercise the right of withdrawal provided for in paragraph 1 in respect of contracts:

- for the provision of services if performance has begun, with the consumer's agreement, before the end of the seven working day period referred to in paragraph 1,

- for the supply of goods or services the price of which is dependent on fluctuations in the financial market which cannot be controlled by the supplier,

11

Directive 97/7/EC .

- for the supply of goods made to the consumer's specifications or clearly personalized or which, by reason of their nature, cannot be returned or are liable to deteriorate or expire rapidly,

- for the supply of audio or video recordings or computer software which were unsealed by the consumer,

- for the supply of newspapers, periodicals and magazines,

- for gaming and lottery services.

Article 10

Restrictions on the use of certain means of distance communication

1. Use by a supplier of the following means requires the prior consent of the consumer:

- automated calling system without human intervention (automatic calling machine),

- facsimile machine (fax).

2. Member States shall ensure that means of distance communication, other than those referred to in paragraph 1, which allow individual communications, may be used only where there is no clear objection from the consumer.

ANNEX I

Means of communication covered by Article 2 (4)

- Unaddressed printed matter

- Addressed printed matter

- Standard letter

- Press advertising with order form

- Catalogue

- Telephone with human intervention

- Telephone without human intervention (automatic calling machine, audiotext)

- Radio

- Videophone (telephone with screen)

- Videotex (microcomputer and television screen) with keyboard or touch screen

- Electronic mail

- Facsimile machine (fax)

- Television (teleshopping).

12



of 20 July 1998

amending Directive 98/34/EC laying down a procedure for the provision of information in the field of technical standards and regulations

Article 1

Article 1 is amended as follows:

the following new point shall be inserted:

'2. "service", any Information Society service, that is to say, any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services.

For the purposes of this definition:

- "at a distance" means that the service is provided without the parties being simultaneously present,

- "by electronic means" means that the service is sent initially and received at its destination by means of electronic equipment for the processing (including digital compression) and storage of data, and entirely transmitted, conveyed and received by wire, by radio, by optical means or by other electromagnetic means,

- "at the individual request of a recipient of services" means that the service is provided through the transmission of data on individual request.

An indicative list of services not covered by this definition is set out in Annex V.

This Directive shall not apply to:

- radio broadcasting services,

- television broadcasting services covered by point (a) of Article 1 of Directive 89/552/EEC.

ANNEX

ANNEX V

Indicative list of services not covered by the second subparagraph of point 2 of Article 1

1. Services not provided “at a distance”

Services provided in the physical presence of the provider and the recipient, even if they involve the use of electronic devices

(a) medical examinations or treatment at a doctor's surgery using electronic equipment where the patient is physically present;

(b) consultation of an electronic catalogue in a shop with the customer on site;

(c) plane ticket reservation at a travel agency in the physical presence of the customer by means of a network of computers;

(d) electronic games made available in a video-arcade where the customer is physically present.

2. Services not provided “by electronic means”

- Services having material content even though provided via electronic devices:

(a) automatic cash or ticket dispensing machines (banknotes, rail tickets);

(b) access to road networks, car parks, etc., charging for use, even if there are electronic devices at the entrance/exit controlling access and/or ensuring correct payment is made,

- Off-line services: distribution of CD roms or software on diskettes,

- Services which are not provided via electronic processing/inventory systems:

(a) voice telephony services;

(b) telefax/telex services;

(c) services provided via voice telephony or fax;

13


(d) telephone/telefax consultation of a doctor;

(e) telephone/telefax consultation of a lawyer;

(f) telephone/telefax direct marketing.

3. Services not supplied “at the individual request of a recipient of services”

Services provided by transmitting data without individual demand for simultaneous reception by an unlimited number of individual receivers (point to multipoint transmission):

(a) television broadcasting services (including near-video on-demand services), covered by point (a) of Article 1 of Directive 89/552/EEC;

(b) radio broadcasting services;

(c) (televised) teletext.

14



of 8 June 2000

on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (Directive on electronic commerce)

(18) Information society services span a wide range of economic activities which take place on-line; these activities can, in particular, consist of selling goods on-line; activities such as the delivery of goods as such or the provision of services off-line are not covered; information society services are not solely restricted to services giving rise to on-line contracting but also, in so far as they represent an economic activity, extend to services which are not remunerated by those who receive them, such as those offering on-line information or commercial communications, or those providing tools allowing for search, access and retrieval of data; information society services also include services consisting of the transmission of information via a communication network, in providing access to a communication network or in hosting information provided by a recipient of the service; television broadcasting within the meaning of Directive EEC/89/552 and radio broadcasting are not information society services because they are not provided at individual request; by contrast, services which are transmitted point to point, such as video-on-demand or the provision of commercial communications by electronic mail are information society services; the use of electronic mail or equivalent individual communications for instance by natural persons acting outside their trade, business or profession including their use for the conclusion of contracts between such persons is not an information society service; the contractual relationship between an employee and his employer is not an information society service; activities which by their very nature cannot be carried out at a distance and by electronic means, such as the statutory auditing of company accounts or medical advice requiring the physical examination of a patient are not information society services

(21) The scope of the coordinated field is without prejudice to future Community harmonisation relating to information society services and to future legislation adopted at national level in accordance with Community law; the coordinated field covers only requirements relating to on-line activities such as on-line information, on-line advertising, on-line shopping, on-line contracting and does not concern Member States' legal requirements relating to goods such as safety standards, labelling obligations, or liability for goods, or Member States' requirements relating to the delivery or the transport of goods, including the distribution of medicinal products; the coordinated field does not cover the exercise of rights of pre-emption by public authorities concerning certain goods such as works of art.

(29) Commercial communications are essential for the financing of information society services and for developing a wide variety of new, charge-free services; in the interests of consumer protection and fair trading, commercial communications, including discounts, promotional offers and promotional competitions or games, must meet a number of transparency requirements; these requirements are without prejudice to Directive 97/7/EC; this Directive should not affect existing Directives on commercial communications, in particular Directive 98/43/EC.

(37) Member States' obligation to remove obstacles to the use of electronic contracts concerns only obstacles resulting from legal requirements and not practical obstacles resulting from the impossibility of using electronic means in certain cases.

Article 1

Objective and scope

1. This Directive seeks to contribute to the proper functioning of the internal market by ensuring the free movement of information society services between the Member States.

2. This Directive approximates, to the extent necessary for the achievement of the objective set out in paragraph 1, certain national provisions on information society services relating to the internal market, the establishment of service providers, commercial communications, electronic contracts, the liability of intermediaries, codes of conduct, out-of-court dispute settlements, court actions and cooperation between Member States.

3. This Directive complements Community law applicable to information society services without prejudice to the level of protection for, in particular, public health and consumer interests, as established by Community acts and national legislation implementing them in so far as this does not restrict the freedom to provide information society services.

15


4. This Directive does not establish additional rules on private international law nor does it deal with the jurisdiction of Courts.

5. This Directive shall not apply to:

(a) the field of taxation;

(b) questions relating to information society services covered by Directives 95/46/EC and 97/66/EC;

(c) questions relating to agreements or practices governed by cartel law;

(d) the following activities of information society services:

- the activities of notaries or equivalent professions to the extent that they involve a direct and specific connection with the exercise of public authority,

- the representation of a client and defence of his interests before the courts,

- gambling activities which involve wagering a stake with monetary value in games of chance, including lotteries and betting transactions.

6. This Directive does not affect measures taken at Community or national level, in the respect of Community law, in order to promote cultural and linguistic diversity and to ensure the defence of pluralism.

Article 2

Definitions

For the purpose of this Directive, the following terms shall bear the following meanings:

(a) "information society services": services within the meaning of Article 1(2) of Directive 98/34/EC as amended by Directive 98/48/EC;

(b) "service provider": any natural or legal person providing an information society service;

(c) "established service provider": a service provider who effectively pursues an economic activity using a fixed establishment for an indefinite period. The presence and use of the technical means and technologies required to provide the service do not, in themselves, constitute an establishment of the provider;

(d) "recipient of the service": any natural or legal person who, for professional ends or otherwise, uses an information society service, in particular for the purposes of seeking information or making it accessible;

(e) "consumer": any natural person who is acting for purposes which are outside his or her trade, business or profession;

(f) "commercial communication": any form of communication designed to promote, directly or indirectly, the goods, services or image of a company, organisation or person pursuing a commercial, industrial or craft activity or exercising a regulated profession. The following do not in themselves constitute commercial communications:

- information allowing direct access to the activity of the company, organisation or person, in particular a domain name or an electronic-mail address,

- communications relating to the goods, services or image of the company, organisation or person compiled in an independent manner, particularly when this is without financial consideration;

(g) "regulated profession": any profession within the meaning of either Article 1(d) of Council Directive 89/48/EEC of 21 December 1988 on a general system for the recognition of higher-education diplomas awarded on completion of professional education and training of at least three-years' duration(26) or of Article 1(f) of Council Directive 92/51/EEC of 18 June 1992 on a second general system for the recognition of professional education and training to supplement Directive 89/48/EEC(27);

(h) "coordinated field": requirements laid down in Member States' legal systems applicable to information society service providers or information society services, regardless of whether they are of a general nature or specifically designed for them.

16


(i) The coordinated field concerns requirements with which the service provider has to comply in respect of:

- the taking up of the activity of an information society service, such as requirements concerning qualifications, authorisation or notification,

- the pursuit of the activity of an information society service, such as requirements concerning the behaviour of the service provider, requirements regarding the quality or content of the service including those applicable to advertising and contracts, or requirements concerning the liability of the service provider;

(ii) The coordinated field does not cover requirements such as:

- requirements applicable to goods as such,

- requirements applicable to the delivery of goods,

- requirements applicable to services not provided by electronic means.

Article 3

Internal market

4. Member States may take measures to derogate from paragraph 2 in respect of a given information society service if the following conditions are fulfilled:

(a) the measures shall be:

(i) necessary for one of the following reasons:

- public policy, in particular the prevention, investigation, detection and prosecution of criminal offences, including the protection of minors and the fight against any incitement to hatred on grounds of race, sex, religion or nationality, and violations of human dignity concerning individual persons,

- the protection of public health,

- public security, including the safeguarding of national security and defence,

- the protection of consumers, including investors;

(ii) taken against a given information society service which prejudices the objectives referred to in point (i) or which presents a serious and grave risk of prejudice to those objectives;

(iii) proportionate to those objectives;

(b) before taking the measures in question and without prejudice to court proceedings, including preliminary proceedings and acts carried out in the framework of a criminal investigation, the Member State has:

- asked the Member State referred to in paragraph 1 to take measures and the latter did not take such measures, or they were inadequate,

- notified the Commission and the Member State referred to in paragraph 1 of its intention to take such measures.

Section 1: Establishment and information requirements

Article 5

General information to be provided

1. In addition to other information requirements established by Community law, Member States shall ensure that the service provider shall render easily, directly and permanently accessible to the recipients of the service and competent authorities, at least the following information:

(a) the name of the service provider;

(b) the geographic address at which the service provider is established;

(c) the details of the service provider, including his electronic mail address, which allow him to be contacted rapidly and communicated with in a direct and effective manner;

17


(d) where the service provider is registered in a trade or similar public register, the trade register in which the service provider is entered and his registration number, or equivalent means of identification in that register;

(e) where the activity is subject to an authorisation scheme, the particulars of the relevant supervisory authority;

(f) as concerns the regulated professions:

- any professional body or similar institution with which the service provider is registered,

- the professional title and the Member State where it has been granted,

- a reference to the applicable professional rules in the Member State of establishment and the means to access them;

(g) where the service provider undertakes an activity that is subject to VAT, the identification number referred to in Article 22(1) of the sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment(29).

2. In addition to other information requirements established by Community law, Member States shall at least ensure that, where information society services refer to prices, these are to be indicated clearly and unambiguously and, in particular, must indicate whether they are inclusive of tax and delivery costs.

Section 2: Commercial communications

Article 6

Information to be provided

In addition to other information requirements established by Community law, Member States shall ensure that commercial communications which are part of, or constitute, an information society service comply at least with the following conditions:

(a) the commercial communication shall be clearly identifiable as such;

(b) the natural or legal person on whose behalf the commercial communication is made shall be clearly identifiable;

(c) promotional offers, such as discounts, premiums and gifts, where permitted in the Member State where the service provider is established, shall be clearly identifiable as such, and the conditions which are to be met to qualify for them shall be easily accessible and be presented clearly and unambiguously;

(d) promotional competitions or games, where permitted in the Member State where the service provider is established, shall be clearly identifiable as such, and the conditions for participation shall be easily accessible and be presented clearly and unambiguously.

Article 7

Unsolicited commercial communication

1. In addition to other requirements established by Community law, Member States which permit unsolicited commercial communication by electronic mail shall ensure that such commercial communication by a service provider established in their territory shall be identifiable clearly and unambiguously as such as soon as it is received by the recipient.

2. Without prejudice to Directive 97/7/EC and Directive 97/66/EC, Member States shall take measures to ensure that service providers undertaking unsolicited commercial communications by electronic mail consult regularly and respect the opt-out registers in which natural persons not wishing to receive such commercial communications can register themselves.

Section 3: Contracts concluded by electronic means

Article 9

Treatment of contracts

18


1. Member States shall ensure that their legal system allows contracts to be concluded by electronic means. Member States shall in particular ensure that the legal requirements applicable to the contractual process neither create obstacles for the use of electronic contracts nor result in such contracts being deprived of legal effectiveness and validity on account of their having been made by electronic means.

2. Member States may lay down that paragraph 1 shall not apply to all or certain contracts falling into one of the following categories:

(a) contracts that create or transfer rights in real estate, except for rental rights;

(b) contracts requiring by law the involvement of courts, public authorities or professions exercising public authority;

(c) contracts of suretyship granted and on collateral securities furnished by persons acting for purposes outside their trade, business or profession;

(d) contracts governed by family law or by the law of succession.

Article 10

Information to be provided

1. In addition to other information requirements established by Community law, Member States shall ensure, except when otherwise agreed by parties who are not consumers, that at least the following information is given by the service provider clearly, comprehensibly and unambiguously and prior to the order being placed by the recipient of the service:

(a) the different technical steps to follow to conclude the contract;

(b) whether or not the concluded contract will be filed by the service provider and whether it will be accessible;

(c) the technical means for identifying and correcting input errors prior to the placing of the order;

(d) the languages offered for the conclusion of the contract.

2. Member States shall ensure that, except when otherwise agreed by parties who are not consumers, the service provider indicates any relevant codes of conduct to which he subscribes and information on how those codes can be consulted electronically.

3. Contract terms and general conditions provided to the recipient must be made available in a way that allows him to store and reproduce them.

4. Paragraphs 1 and 2 shall not apply to contracts concluded exclusively by exchange of electronic mail or by equivalent individual communications.

Article 11

Placing of the order

1. Member States shall ensure, except when otherwise agreed by parties who are not consumers, that in cases where the recipient of the service places his order through technological means, the following principles apply:

- the service provider has to acknowledge the receipt of the recipient's order without undue delay and by electronic means,

- the order and the acknowledgement of receipt are deemed to be received when the parties to whom they are addressed are able to access them.

2. Member States shall ensure that, except when otherwise agreed by parties who are not consumers, the service provider makes available to the recipient of the service appropriate, effective and accessible technical means allowing him to identify and correct input errors, prior to the placing of the order.

3. Paragraph 1, first indent, and paragraph 2 shall not apply to contracts concluded exclusively by exchange of electronic mail or by equivalent individual communications.

ANNEX

DEROGATIONS FROM ARTICLE 3

19


As provided for in Article 3(3), Article 3(1) and (2) do not apply to:

- copyright, neighbouring rights, rights referred to in Directive 87/54/EEC(1) and Directive 96/9/EC (2) as well as industrial property rights,

- the emission of electronic money by institutions in respect of which Member States have applied one of the derogations provided for in Article 8(1) of Directive 2000/46/EC(3),

- Article 44(2) of Directive 85/611/EEC(4),

- Article 30 and Title IV of Directive 92/49/EEC(5), Title IV of Directive 92/96/EEC(6), Articles 7 and 8 of Directive 88/357/EEC(7) and Article 4 of Directive 90/619/EEC(8),

- the freedom of the parties to choose the law applicable to their contract,

- contractual obligations concerning consumer contacts,

- formal validity of contracts creating or transferring rights in real estate where such contracts are subject to mandatory formal requirements of the law of the Member State where the real estate is situated,

- the permissibility of unsolicited commercial communications by electronic mail. (1) OJ L 24, 27.1.1987, p. 36.

20



of 7 March 2002

on a common regulatory framework for electronic communications networks and services

(Framework Directive)

Article 2

Definitions


(a) electronic communications network. means transmission systems and, where applicable, switching or routing equipment and other resources which permit the conveyance of signals by wire, by radio, by optical or by other electromagnetic means, including satellite networks, fixed (circuit- and packet-switched, including Internet) and mobile terrestrial networks, electricity cable systems, to the extent that they are used for the purpose of transmitting signals, networks used for radio and television broadcasting, and cable television networks, irrespective of the type of information conveyed;

(k) subscriber. means any natural person or legal entity who or which is party to a contract with the provider of publicly available electronic communications services for the supply of such services;

21



of 12 July 2002

concerning the processing of personal data and the protection of privacy in the electronic communications sector (Directive on privacy and electronic communications)

(4) Directive 97/66/EC of the European Parliament and of the Council of 15 December 1997 concerning the processing of personal data and the protection of privacy in the telecommunications sector(5) translated the principles set out in Directive 95/46/EC into specific rules for the telecommunications sector. Directive 97/66/EC has to be adapted to developments in the markets and technologies for electronic communications services in order to provide an equal level of protection of personal data and privacy for users of publicly available electronic communications services, regardless of the technologies used. That Directive should therefore be repealed and replaced by this Directive.

(7) In the case of public communications networks, specific legal, regulatory and technical provisions should be made in order to protect fundamental rights and freedoms of natural persons and legitimate interests of legal persons, in particular with regard to the increasing capacity for automated storage and processing of data relating to subscribers and users.

(9) The Member States, providers and users concerned, together with the competent Community bodies, should cooperate in introducing and developing the relevant technologies where this is necessary to apply the guarantees provided for by this Directive and taking particular account of the objectives of minimising the processing of personal data and of using anonymous or pseudonymous data where possible.

(11) Like Directive 95/46/EC, this Directive does not address issues of protection of fundamental rights and freedoms related to activities which are not governed by Community law. Therefore it does not alter the existing balance between the individual's right to privacy and the possibility for Member States to take the measures referred to in Article 15(1) of this Directive, necessary for the protection of public security, defence, State security (including the economic well-being of the State when the activities relate to State security matters) and the enforcement of criminal law. Consequently, this Directive does not affect the ability of Member States to carry out lawful interception of electronic communications, or take other measures, if necessary for any of these purposes and in accordance with the European Convention for the Protection of Human Rights and Fundamental Freedoms, as interpreted by the rulings of the European Court of Human Rights. Such measures must be appropriate, strictly proportionate to the intended purpose and necessary within a democratic society and should be subject to adequate safeguards in accordance with the European Convention for the Protection of Human Rights and Fundamental Freedoms.

(17) For the purposes of this Directive, consent of a user or subscriber, regardless of whether the latter is a natural or a legal person, should have the same meaning as the data subject's consent as defined and further specified in Directive 95/46/EC. Consent may be given by any appropriate method enabling a freely given specific and informed indication of the user's wishes, including by ticking a box when visiting an Internet website.

(35) In digital mobile networks, location data giving the geographic position of the terminal equipment of the mobile user are processed to enable the transmission of communications. Such data are traffic data covered by Article 6 of this Directive. However, in addition, digital mobile networks may have the capacity to process location data which are more precise than is necessary for the transmission of communications and which are used for the provision of value added services such as services providing individualised traffic information and guidance to drivers. The processing of such data for value added services should only be allowed where subscribers have given their consent. Even in cases where subscribers have given their consent, they should have a simple means to temporarily deny the processing of location data, free of charge.

(36) Member States may restrict the users' and subscribers' rights to privacy with regard to calling line identification where this is necessary to trace nuisance calls and with regard to calling line identification and location data where this is necessary to allow emergency services to carry out their tasks as effectively as possible. For these purposes, Member States may adopt specific provisions to entitle providers of electronic communications services to provide access to calling line identification and location data without the prior consent of the users or subscribers concerned.

22


(41) Within the context of an existing customer relationship, it is reasonable to allow the use of electronic contact details for the offering of similar products or services, but only by the same company that has obtained the electronic contact details in accordance with Directive 95/46/EC. When electronic contact details are obtained, the customer should be informed about their further use for direct marketing in a clear and distinct manner, and be given the opportunity to refuse such usage. This opportunity should continue to be offered with each subsequent direct marketing message, free of charge, except for any costs for the transmission of this refusal.

(43) To facilitate effective enforcement of Community rules on unsolicited messages for direct marketing, it is necessary to prohibit the use of false identities or false return addresses or numbers while sending unsolicited messages for direct marketing purposes.

Article 1

Scope and aim

1. This Directive harmonises the provisions of the Member States required to ensure an equivalent level of protection of fundamental rights and freedoms, and in particular the right to privacy, with respect to the processing of personal data in the electronic communication sector and to ensure the free movement of such data and of electronic communication equipment and services in the Community.

2. The provisions of this Directive particularise and complement Directive 95/46/EC for the purposes mentioned in paragraph 1. Moreover, they provide for protection of the legitimate interests of subscribers who are legal persons.

3. This Directive shall not apply to activities which fall outside the scope of the Treaty establishing the European Community, such as those covered by Titles V and VI of the Treaty on European Union, and in any case to activities concerning public security, defence, State security (including the economic well-being of the State when the activities relate to State security matters) and the activities of the State in areas of criminal law.

Article 2

Definitions

Save as otherwise provided, the definitions in Directive 95/46/EC and in Directive 2002/21/EC of the European Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive)(8) shall apply.

The following definitions shall also apply:

a) "user" means any natural person using a publicly available electronic communications service, for private or business purposes, without necessarily having subscribed to this service;

b) "traffic data" means any data processed for the purpose of the conveyance of a communication on an electronic communications network or for the billing thereof;

c) "location data" means any data processed in an electronic communications network, indicating the geographic position of the terminal equipment of a user of a publicly available electronic communications service;

d) "communication" means any information exchanged or conveyed between a finite number of parties by means of a publicly available electronic communications service. This does not include any information conveyed as part of a broadcasting service to the public over an electronic communications network except to the extent that the information can be related to the identifiable subscriber or user receiving the information;

e) "call" means a connection established by means of a publicly available telephone service allowing two-way communication in real time;

f) "consent" by a user or subscriber corresponds to the data subject's consent in Directive 95/46/EC;

g) "value added service" means any service which requires the processing of traffic data or location data other than traffic data beyond what is necessary for the transmission of a communication or the billing thereof;

23


h) "electronic mail" means any text, voice, sound or image message sent over a public communications network which can be stored in the network or in the recipient's terminal equipment until it is collected by the recipient.

Article 4

Security

1. The provider of a publicly available electronic communications service must take appropriate technical and organisational measures to safeguard security of its services, if necessary in conjunction with the provider of the public communications network with respect to network security. Having regard to the state of the art and the cost of their implementation, these measures shall ensure a level of security appropriate to the risk presented.

2. In case of a particular risk of a breach of the security of the network, the provider of a publicly available electronic communications service must inform the subscribers concerning such risk and, where the risk lies outside the scope of the measures to be taken by the service provider, of any possible remedies, including an indication of the likely costs involved.

Article 5

Confidentiality of the communications

1. Member States shall ensure the confidentiality of communications and the related traffic data by means of a public communications network and publicly available electronic communications services, through national legislation. In particular, they shall prohibit listening, tapping, storage or other kinds of interception or surveillance of communications and the related traffic data by persons other than users, without the consent of the users concerned, except when legally authorised to do so in accordance with Article 15(1). This paragraph shall not prevent technical storage which is necessary for the conveyance of a communication without prejudice to the principle of confidentiality.

Article 6

Traffic data

1. Traffic data relating to subscribers and users processed and stored by the provider of a public communications network or publicly available electronic communications service must be erased or made anonymous when it is no longer needed for the purpose of the transmission of a communication without prejudice to paragraphs 2, 3 and 5 of this Article and Article 15(1).

2. Traffic data necessary for the purposes of subscriber billing and interconnection payments may be processed. Such processing is permissible only up to the end of the period during which the bill may lawfully be challenged or payment pursued.

3. For the purpose of marketing electronic communications services or for the provision of value added services, the provider of a publicly available electronic communications service may process the data referred to in paragraph 1 to the extent and for the duration necessary for such services or marketing, if the subscriber or user to whom the data relate has given his/her consent. Users or subscribers shall be given the possibility to withdraw their consent for the processing of traffic data at any time.

4. The service provider must inform the subscriber or user of the types of traffic data which are processed and of the duration of such processing for the purposes mentioned in paragraph 2 and, prior to obtaining consent, for the purposes mentioned in paragraph 3.

5. Processing of traffic data, in accordance with paragraphs 1, 2, 3 and 4, must be restricted to persons acting under the authority of providers of the public communications networks and publicly available electronic communications services handling billing or traffic management, customer enquiries, fraud detection, marketing electronic communications services or providing a value added service, and must be restricted to what is necessary for the purposes of such activities.

6. Paragraphs 1, 2, 3 and 5 shall apply without prejudice to the possibility for competent bodies to be informed of traffic data in conformity with applicable legislation with a view to settling disputes, in particular interconnection or billing disputes.

Article 9

Location data other than traffic data

24


1. Where location data other than traffic data, relating to users or subscribers of public communications networks or publicly available electronic communications services, can be processed, such data may only be processed when they are made anonymous, or with the consent of the users or subscribers to the extent and for the duration necessary for the provision of a value added service. The service provider must inform the users or subscribers, prior to obtaining their consent, of the type of location data other than traffic data which will be processed, of the purposes and duration of the processing and whether the data will be transmitted to a third party for the purpose of providing the value added service. Users or subscribers shall be given the possibility to withdraw their consent for the processing of location data other than traffic data at any time.

2. Where consent of the users or subscribers has been obtained for the processing of location data other than traffic data, the user or subscriber must continue to have the possibility, using a simple means and free of charge, of temporarily refusing the processing of such data for each connection to the network or for each transmission of a communication.

Article 10

Exceptions

Member States shall ensure that there are transparent procedures governing the way in which a provider of a public communications network and/or a publicly available electronic communications service may override:

b) the elimination of the presentation of calling line identification and the temporary denial or absence of consent of a subscriber or user for the processing of location data, on a per-line basis for organisations dealing with emergency calls and recognised as such by a Member State, including law enforcement agencies, ambulance services and fire brigades, for the purpose of responding to such calls.

Article 13

Unsolicited communications

1. The use of automated calling systems without human intervention (automatic calling machines), facsimile machines (fax) or electronic mail for the purposes of direct marketing may only be allowed in respect of subscribers who have given their prior consent.

2. Notwithstanding paragraph 1, where a natural or legal person obtains from its customers their electronic contact details for electronic mail, in the context of the sale of a product or a service, in accordance with Directive 95/46/EC, the same natural or legal person may use these electronic contact details for direct marketing of its own similar products or services provided that customers clearly and distinctly are given the opportunity to object, free of charge and in an easy manner, to such use of electronic contact details when they are collected and on the occasion of each message in case the customer has not initially refused such use.

3. Member States shall take appropriate measures to ensure that, free of charge, unsolicited communications for purposes of direct marketing, in cases other than those referred to in paragraphs 1 and 2, are not allowed either without the consent of the subscribers concerned or in respect of subscribers who do not wish to receive these communications, the choice between these options to be determined by national legislation.

4. In any event, the practice of sending electronic mail for purposes of direct marketing disguising or concealing the identity of the sender on whose behalf the communication is made, or without a valid address to which the recipient may send a request that such communications cease, shall be prohibited.

5. Paragraphs 1 and 3 shall apply to subscribers who are natural persons. Member States shall also ensure, in the framework of Community law and applicable national legislation, that the legitimate interests of subscribers other than natural persons with regard to unsolicited communications are sufficiently protected.

25



of 11 May 2005

concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of

the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council

(‘Unfair Commercial Practices Directive’)

(Text with EEA relevance)

(7) This Directive addresses commercial practices directly related to influencing consumers’ transactional decisions in relation to products. It does not address commercial practices carried out primarily for other purposes, including for example commercial communication aimed at investors, such as annual reports and corporate promotional literature. It does not address legal requirements related to taste and decency which vary widely among the Member States. Commercial practices such as, for example, commercial solicitation in the streets, may be undesirable in Member States for cultural reasons. Member States should accordingly be able to continue to ban commercial practices in their territory, in conformity with Community law, for reasons of taste and decency even where such practices do not limit consumers’ freedom of choice. Full account should be taken of the context of the individual case concerned in applying this Directive, in particular the general clauses thereof.

(14) It is desirable that misleading commercial practices cover those practices, including misleading advertising, which by deceiving the consumer prevent him from making an informed and thus efficient choice. In conformity with the laws and practices of Member States on misleading advertising, this Directive classifies misleading practices into misleading actions and misleading omissions. In respect of omissions, this Directive sets out a limited number of key items of information which the consumer needs to make an informed transactional decision. Such information will not have to be disclosed in all advertisements, but only where the trader makes an invitation to purchase, which is a concept clearly defined in this Directive. The full harmonisation approach adopted in this Directive does not preclude the Member States from specifying in national law the main characteristics of particular products such as, for example, collectors’ items or electrical goods, the omission of which would be material when an invitation to purchase is made. It is not the intention of this Directive to reduce consumer choice by prohibiting the promotion of products which look similar to other products unless this similarity confuses consumers as to the commercial origin of the product and is therefore misleading. This Directive should be without prejudice to existing Community law which expressly affords Member States the choice between several regulatory options for the protection of consumers in the field of commercial practices. In particular, this Directive should be without prejudice to Article 13(3) of Directive 2002/58/EC of the European Parliament and of the Council of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector (1). (18) It is appropriate to protect all consumers from unfair commercial practices; however the Court of Justice has found it necessary in adjudicating on advertising cases since the enactment of Directive 84/450/EEC to examine the effect on a notional, typical consumer. In line with the principle of proportionality, and to permit the effective application of the protections contained in it, this Directive takes as a benchmark the average consumer, who is reasonably well-informed and reasonably observant and circumspect, taking into account social, cultural and linguistic factors, as interpreted by the Court of Justice, but also contains provisions aimed at preventing the exploitation of consumers whose characteristics make them particularly vulnerable to unfair commercial practices. Where a commercial practice is specifically aimed at a particular group of consumers, such as children, it is desirable that the impact of the commercial practice be assessed from the perspective of the average member of that group. It is therefore appropriate to include in the list of practices which are in all circumstances unfair a provision which, without imposing an outright ban on advertising directed at children, protects them from direct exhortations to purchase. The average consumer test is not a statistical test. National courts and authorities will have to exercise their own faculty of judgement, having regard to the case-law of the Court of Justice, to determine the typical reaction of the average consumer in a given case.

Article 1

Purpose

26


The purpose of this Directive is to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices harming consumers’ economic interests.

Article 2

Definitions


i) "invitation to purchase" means a commercial communication which indicates characteristics of the product and the price in a way appropriate to the means of the commercial communication used and thereby enables the consumer to make a purchase;

Article 3

Scope

4. In the case of conflict between the provisions of this Directive and other Community rules regulating specific aspects of unfair commercial practices, the latter shall prevail and apply to those specific aspects.

Article 5

Prohibition of unfair commercial practices

1. Unfair commercial practices shall be prohibited.

2. A commercial practice shall be unfair if:

(a) it is contrary to the requirements of professional diligence, and

(b) it materially distorts or is likely to materially distort the economic behaviour with regard to the product of the average consumer whom it reaches or to whom it is addressed, or of the average member of the group when a commercial practice is directed to a particular group of consumers.

3. Commercial practices which are likely to materially distort the economic behaviour only of a clearly identifiable group of consumers who are particularly vulnerable to the practice or the underlying product because of their mental or physical infirmity, age or credulity in a way which the trader could reasonably be expected to foresee, shall be assessed from the perspective of the average member of that group. This is without prejudice to the common and legitimate advertising practice of making exaggerated statements or statements which are not meant to be taken literally.

4. In particular, commercial practices shall be unfair which:

(a) are misleading as set out in Articles 6 and 7, or

(b) are aggressive as set out in Articles 8 and 9.

5. Annex I contains the list of those commercial practices which shall in all circumstances be regarded as unfair. The same single list shall apply in all Member States and may only be modified by revision of this Directive.

Article 7

Misleading omissions

1. A commercial practice shall be regarded as misleading if, in its factual context, taking account of all its features and circumstances and the limitations of the communication medium, it omits material information that the average consumer needs, according to the context, to take an informed transactional decision and thereby causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

2. It shall also be regarded as a misleading omission when, taking account of the matters described in paragraph 1, a trader hides or provides in an unclear, unintelligible, ambiguous or untimely manner such material information as referred to in that paragraph or fails to identify the commercial intent of the commercial practice if not already apparent from the context, and where, in either case, this causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise.

27


3. Where the medium used to communicate the commercial practice imposes limitations of space or time, these limitations and any measures taken by the trader to make the information available to consumers by other means shall be taken into account in deciding whether information has been omitted.

4. In the case of an invitation to purchase, the following information shall be regarded as material, if not already apparent from the context:

(a) the main characteristics of the product, to an extent appropriate o the medium and the product;

(b) the geographical address and the identity of the trader, such as his trading name and, where applicable, the geographical address and the identity of the trader on whose behalf he is acting;

(c) the price inclusive of taxes, or where the nature of the product means that the price cannot reasonably be calculated in advance, the manner in which the price is calculated, as well as, where appropriate, all additional freight, delivery or postal charges or, where these charges cannot reasonably be calculated in advance, the fact that such additional charges may be payable;

(d) the arrangements for payment, delivery, performance and the complaint handling policy, if they depart from the requirements of professional diligence;

(e) for products and transactions involving a right of withdrawal or cancellation, the existence of such a right.

5. Information requirements established by Community law in relation to commercial communication including advertising or marketing, a non-exhaustive list of which is contained in Annex II, shall be regarded as material.

ANNEX I

COMMERCIAL PRACTICES WHICH ARE IN ALL CIRCUMSTANCES CONSIDERED UNFAIR

Misleading commercial practices

1. Claiming to be a signatory to a code of conduct when the trader is not.

2. Displaying a trust mark, quality mark or equivalent without having obtained the necessary authorisation.

3. Claiming that a code of conduct has an endorsement from a public or other body which it does not have.

4. Claiming that a trader (including his commercial practices) or a product has been approved, endorsed or authorised by a public or private body when he/it has not or making such a claim without complying with the terms of the approval, endorsement or authorisation.

5. Making an invitation to purchase products at a specified price without disclosing the existence of any reasonable grounds the trader may have for believing that he will not be able to offer for supply or to procure another trader to supply, those products or equivalent products at that price for a period that is, and in quantities that are, reasonable having regard to the product, the scale of advertising of the product and the price offered (bait advertising).

6. Making an invitation to purchase products at a specified price and then:

(a) refusing to show the advertised item to consumers; or

(b) refusing to take orders for it or deliver it within a reasonable time; or

(c) demonstrating a defective sample of it, with the intention of promoting a different product (bait and switch)

7. Falsely stating that a product will only be available for a very limited time, or that it will only be available on particular terms for a very limited time, in order to elicit an immediate decision and deprive consumers of sufficient opportunity or time to make an informed choice.

8. Undertaking to provide after-sales service to consumers with whom the trader has communicated prior to a transaction in a language which is not an official language of the Member State where the trader is located and then making such service available only in

28


another language without clearly disclosing this to the consumer before the consumer is committed to the transaction.

9. Stating or otherwise creating the impression that a product can legally be sold when it cannot.

10. Presenting rights given to consumers in law as a distinctive feature of the trader’s offer.

11. Using editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer (advertorial). This is without prejudice to Council Directive 89/552/EEC (1).

12. Making a materially inaccurate claim concerning the nature and extent of the risk to the personal security of the consumer or his family if the consumer does not purchase the product.

13. Promoting a product similar to a product made by a particular manufacturer in such a manner as deliberately to mislead the consumer into believing that the product is made by that same manufacturer when it is not.

14. Establishing, operating or promoting a pyramid promotional scheme where a consumer gives consideration for the opportunity to receive compensation that is derived primarily from the introduction of other consumers into the scheme rather than from the sale or consumption of products.

15. Claiming that the trader is about to cease trading or move premises when he is not.

16. Claiming that products are able to facilitate winning in games of chance.

17. Falsely claiming that a product is able to cure illnesses, dysfunction or malformations.

18. Passing on materially inaccurate information on market conditions or on the possibility of finding the product with the intention of inducing the consumer to acquire the product at conditions less favourable than normal market conditions.

19. Claiming in a commercial practice to offer a competition or prize promotion without awarding the prizes described or a reasonable equivalent.

20. Describing a product as ‘gratis’, ‘free’, ‘without charge’ or similar if the consumer has to pay anything other than the unavoidable cost of responding to the commercial practice and collecting or paying for delivery of the item.

21. Including in marketing material an invoice or similar document seeking payment which gives the consumer the impression that he has already ordered the marketed product when he has not.

22. Falsely claiming or creating the impression that the trader is not acting for purposes relating to his trade, business, craft or profession, or falsely representing oneself as a consumer.

23. Creating the false impression that after-sales service in relation to a product is available in a Member State other than the one in which the product is sold.

(1) Council Directive 89/552/EEC of 3 October 1989 on the coordination of certain provisions laid down by Law, Regulation or Administrative

Action in Member States concerning the pursuit of television broadcasting activities (OJ L 298, 17.10.1989, p. 23). Directive as amended by Directive 97/36/EC of the European Parliament and of the Council (OJ L 202, 30.7.1997, p. 60).

Aggressive commercial practices

24. Creating the impression that the consumer cannot leave the premises until a contract is formed.

25. Conducting personal visits to the consumer’s home ignoring the consumer’s request to leave or not to return except in circumstances and to the extent justified, under national law, to enforce a contractual obligation.

26. Making persistent and unwanted solicitations by telephone, fax, e-mail or other remote media except in circumstances and to the extent justified under national law to enforce a contractual obligation. This is without prejudice to Article 10 of Directive 97/7/EC and Directives 95/46/EC (1) and 2002/58/EC.

27. Requiring a consumer who wishes to claim on an insurance policy to produce documents which could not reasonably be considered relevant as to whether the claim was valid, or failing

29


systematically to respond to pertinent correspondence, in order to dissuade a consumer from exercising his contractual rights.

28. Including in an advertisement a direct exhortation to children to buy advertised products or persuade their parents or other adults to buy advertised products for them. This provision is without prejudice to Article 16 of Directive 89/552/EEC on television broadcasting.

29. Demanding immediate or deferred payment for or the return or safekeeping of products supplied by the trader, but not solicited by the consumer except where the product is a substitute supplied in conformity with Article 7(3) of Directive 97/7/EC (inertia selling).

30. Explicitly informing a consumer that if he does not buy the product or service, the trader’s job or livelihood will be in jeopardy.

31. Creating the false impression that the consumer has already won, will win, or will on doing a particular act win, a prize or other equivalent benefit, when in fact either:

- there is no prize or other equivalent benefit, or

- taking any action in relation to claiming the prize or other equivalent benefit is subject to the consumer paying money or incurring a cost.

30

The Principles of European Contract Law .

The Principles of European Contract Law 1998, Parts I and II

(Parts I and II completed and revised)

SECTION 1 - SCOPE OF THE PRINCIPLES

Article 1.102 - Freedom of contract 11

(1) Parties are free to enter into a contract and to determine its contents, subject to the requirements of good faith and fair dealing, and the mandatory rules established by these Principles.

(2) The parties may exclude the application of any of the Principles or derogate from or vary their effects, except as otherwise provided by these Principles.

SECTION 3 - TERMINOLOGY AND OTHER PROVISIONS

Article 1.301 (ex art. 1.105) - Meaning of Terms

In these Principles, except where the context otherwise requires:

(1) ‘act’ includes omission;

(2) ‘court’ includes arbitral tribunal;

(3) an ‘intentional’ act includes an act done recklessly;

(4) ‘non-performance’ denotes any failure to perform an obligation under the contract, whether or not excused, and includes delayed performance, defective performance and failure to cooperate in order to give full effect to the contract.

(5) A matter is ‘material’ if it is one which a reasonable person in the same situation as one party ought to have known would influence the other party in its decision whether to contract on the proposed terms or to contract at all.

(6) ‘Written’ statements include communications made by telegram, telex, telefax and electronic mail and other means of communication capable of providing a readable record of the statement on both sides.

Article 1.303 (ex art. 1.110) - Notice 45

(1) Any notice may be given by any means, whether in writing or otherwise, appropriate to the circumstances.

(2) Subject to paragraphs (4) and (5), any notice becomes effective when it reaches the addressee.

(3) A notice reaches the addressee when it is delivered to it or to its place of business or mailing address, or, if it does not have a place of business or mailing address, to its habitual residence

(4) If one party gives notice to the other because of the other’s non-performance or because such non-performance is reasonably anticipated by the first party, and the notice is properly dispatched or given, a delay or inaccuracy in the transmission of the notice or its failure to arrive does not prevent it from having effect. The notice shall have effect from the time at which it would have arrived in normal circumstances.

(5) A notice has no effect if a withdrawal of it reaches the addressee before or at the same time as the notice.

(6) In this Article, ‘notice’ includes the communication of a promise, statement, offer, acceptance, demand, request or other declaration.

SECTION 2 - OFFER AND ACCEPTANCE

Article 2.201 (ex art. 5.201) - Offer

(1) A proposal amounts to an offer if:

(a) it is intended to result in a contract if the other party accepts it, and

(b) it contains sufficiently definite terms to form a contract.

(2) An offer may be made to one or more specific persons or to the public.

31

The Principles of European Contract Law .

(3) A proposal to supply goods or services at stated prices made by a professional supplier in a public advertisement or a catalogue or by a display of goods, is presumed to be an offer to sell or supply at that price until the stock of goods, or the supplier’s capacity to supply the service, is exhausted.

Article 2.204 (ex art. 5.204) - Acceptance

(1) Any form of statement or conduct by the offeree is an acceptance if it indicates assent to the offer.

(2) Silence or inactivity does not in itself amount to acceptance.

32

ECJ C-352/85 .

ECJ, judgment of 26 April 1988, C-352/85 (Bond van Adverteerders, Rec. 1988, 2085)

Prohibition of advertising and subtitling in television programmes transmitted from abroad.

Keywords

++++

1. FREEDOM TO SUPPLY SERVICES - SERVICES - CONCEPT - TRANSFRONTIER DISTRIBUTION BY CABLE NETWORK OF TELEVISION PROGRAMMES CONTAINING ADVERTISEMENTS

( EEC TREATY, ARTS 59 AND 60 )

2. FREEDOM TO SUPPLY SERVICES - RESTRICTIONS - CABLE DISTRIBUTION OF PROGRAMMES TRANSMITTED FROM ANOTHER MEMBER STATE - PROHIBITION OF ADVERTISEMENTS INTENDED ESPECIALLY FOR THE PUBLIC IN THE STATE CONCERNED AND OF PROGRAMMES WITH SUBTITLING - DISCRIMINATION - NOT PERMISSIBLE - DEROGATIONS - GROUNDS OF PUBLIC POLICY - MAINTAINING THE NON-COMMERCIAL AND PLURALISTIC NATURE OF THE NATIONAL BROADCASTING SYSTEM - DISPROPORTIONATE NATURE OF RESTRICTIONS IMPOSED SPECIFICALLY ON PROGRAMMES COMING FROM OTHER MEMBER STATES - NOT PERMISSIBLE

( EEC TREATY, ARTS 56, 59 AND 66 )

Summary

1. THE DISTRIBUTION, BY OPERATORS OF CABLE NETWORKS ESTABLISHED IN A MEMBER STATE, OF TELEVISION PROGRAMMES SUPPLIED BY BROADCASTERS ESTABLISHED IN OTHER MEMBER STATES AND CONTAINING ADVERTISEMENTS INTENDED ESPECIALLY FOR THE PUBLIC IN THE MEMBER STATE WHERE THE PROGRAMMES ARE RECEIVED, COMPRISES A NUMBER OF SERVICES WITHIN THE MEANING OF ARTICLES 59 AND 60 OF THE TREATY .

2. NATIONAL LEGISLATION UNDER WHICH THE DISTRIBUTION BY CABLE OF PROGRAMMES TRANSMITTED BY BROADCASTERS ESTABLISHED IN OTHER MEMBER STATES IS CONDITIONAL ON THE ABSENCE OF ADVERTISEMENTS INTENDED ESPECIALLY FOR THE PUBLIC IN THE MEMBER STATE IN QUESTION, WHILST NATIONAL TELEVISION STATIONS ARE NOT SUBJECT TO SUCH RESTRICTIONS, ENTAILS RESTRICTIONS WHICH, IN VIEW OF THEIR DISCRIMINATORY NATURE, ARE PROHIBITED BY ARTICLE 59 OF THE TREATY. THE SAME IS TRUE OF THE PROHIBITION OF SUBTITLING OF SUCH PROGRAMMES IN THE LANGUAGE OF THE MEMBER STATE IN QUESTION, SINCE IT SIMPLY HAS THE AIM OF COMPLEMENTING THE PROHIBITION OF ADVERTISING.

EVEN WHERE THEY ARE PRESENTED AS BEING JUSTIFIED ON GROUNDS OF PUBLIC POLICY, NAMELY THE MAINTENANCE OF THE NON-COMMERCIAL AND, HENCE, PLURALISTIC NATURE OF THE NATIONAL BROADCASTING SYSTEM, SUCH DISCRIMINATORY RESTRICTIONS CANNOT FALL WITHIN THE DEROGATIONS AUTHORIZED BY ARTICLE 56 OF THE TREATY SINCE THEY ARE NOT PROPORTIONATE TO THE INTENDED OBJECTIVE.

33

ECJ C-126/91 .

ECJ judgement of 18 May 1993, C-126/91 Schutzverband gegen Unwesen in der Wirtschaft e.V. v Yves Rocher GmbH 1991 (3) I -2361

Keywords

++++

Free movement of goods ° Quantitative restrictions ° Measures having equivalent effect ° Rules prohibiting advertisements making use of comparisons of prices charged on the same product at different times ° Application to an advertising campaign relating to products imported from another Member State ° Not permissible ° Justification ° Protection of consumers ° Fair trading ° None

(EEC Treaty, Art. 30)

Summary

Article 30 of the Treaty is to be interpreted as precluding the application of a rule of law of a Member State which prohibits an undertaking established in that State, carrying on mail order sales by catalogue or sales brochure of goods imported from another Member State, from using advertisements relating to prices in which the new price is displayed so as to catch the eye and reference is made to a higher price shown in a previous catalogue or brochure.

Such a prohibition, by compelling a trader either to adopt advertising or sales promotion schemes which differ from one Member State to another or to discontinue a scheme which he considers to be particularly effective, may constitute an obstacle to imports even if it applies to domestic products and imported products without distinction. In so far as the prohibition affects all eye-catching advertisements making use of price comparisons, whether they are true or false, it cannot be justified by urgent requirements relating either to consumer protection, since the objective pursued can be ensured by measures which are less restrictive of intra-Community trade, or to the protection of fair trading, since correct price comparisons cannot in any way distort the conditions of competition.

34

ECJ judgment of 22 January 2002, C-390/99 (Canal Satélite Digital, Rec. 2002, I-6087)

Articles 30 and 59 of the EC Treaty (now, after amendment, Articles 28 EC and 49 EC) - Directive 95/47/EC - National legislation requiring operators of conditional-access television services to register in a national register created for that purpose, indicating the characteristics of the technical equipment they use, and subsequently to obtain administrative certification thereof - Directive 83/189/EEC - Meaning of "technical regulation".

Keywords

1. Preliminary rulings - Jurisdiction of the Court - Limits - Manifestly irrelevant questions and questions regarding hypothetical problems in a context which precludes any useful answer - Questions not related to the purpose of the main proceedings

(Art. 234 EC)

2. Approximation of laws - Transmission of television signals - Directive 95/47 - Ability of the Member States to establish prior authorisation procedures - Conditions for exercise

(Directive of the European Parliament and of the Council 95/47)

3. Free movement of goods - Freedom to provide services - Restrictions - National legislation on digital television - Activities of the operators of conditional-access services and the marketing of their products made subject to prior authorisation - Justification - Conditions - Criteria for assessment

(EC Treaty, Arts 30 and 59 (now, after amendment, Arts 28 EC and 49 EC))

4. Approximation of laws - Procedure for the provision of information in the field of technical standards and regulations - Technical regulations within the meaning of Directive 83/189 - Meaning - National legislation on digital television requiring operators of conditional-access services to enter information in a register and to obtain prior certification for their products - Whether included - Obligation of Member States to communicate the draft of such a technical regulation to the Commission - Scope

(Council Directive 83/189, Art. 1, points 8, 9 and 10)

Summary

1. In the context of the cooperation between the Court of Justice and the national courts established by Article 234 EC, it is solely for the national court before which the dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine in the light of the particular circumstances of the case both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted by the national court concern the interpretation of Community law, the Court of Justice is, in principle, bound to give a ruling.

In exceptional circumstances, however, the Court can examine the conditions in which the case was referred to it by the national court, in order to assess whether it has jurisdiction. The Court may refuse to rule on a question referred for a preliminary ruling by a national court only where it is quite obvious that the interpretation of Community law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it.

( see paras 18-19 )

2. Although Directive 95/47, on the use of standards for the transmission of television signals, does not contain any provisions concerning detailed administrative rules for implementing Member States' obligations under that directive, that finding does not justify the conclusion that the Member States may not establish a prior authorisation procedure consisting of compulsory entry in a register together with the requirement of a prior technical report drawn up by the national authorities. However, where they establish such an administrative procedure, Member States must at all times comply with the fundamental freedoms guaranteed by the Treaty.

( see paras 27-28 )

3. National legislation which makes the marketing of apparatus, equipment, decoders or digital transmission and reception systems for television signals by satellite and the provision of

35

related services by operators of conditional-access services subject to a prior authorisation procedure restricts both the free movement of goods and the freedom to provide services. Therefore, in order to be justified with regard to those fundamental freedoms, such legislation must pursue a public-interest objective recognised by Community law and comply with the principle of proportionality; that is to say, it must be appropriate to ensure achievement of the aim pursued and not go beyond what is necessary in order to achieve it.

In determining whether such national legislation complies with the principle of proportionality, account must be taken of the following considerations in particular:

for a prior administrative authorisation scheme to be justified even though it derogates from those fundamental freedoms, it must, in any event, be based on objective, non-discriminatory criteria which are known in advance, in such a way as to circumscribe the exercise of the national authorities' discretion, so that it is not used arbitrarily;

a measure introduced by a Member State cannot be regarded as necessary to achieve the aim pursued if it essentially duplicates controls which have already been carried out in the context of other procedures, either in the same State or in another Member State;

a prior authorisation procedure will be necessary only where subsequent control must be regarded as being too late to be genuinely effective and to enable it to achieve the aim pursued;

a prior authorisation procedure does not comply with the fundamental principles of the free movement of goods and the freedom to provide services if, on account of its duration and the disproportionate costs to which it gives rise, it is such as to deter the operators concerned from pursuing their business plan.

( see para. 43, and operative part 1-2 )

4. National legislation which requires operators of conditional-access services to enter the equipment, decoders or systems for the digital transmission and reception of television signals by satellite which they propose to market in a register and to obtain prior certification for those products before being able to market them constitutes a technical regulation within the meaning of Article 1, point 9, of Directive 83/189, laying down a procedure for the provision of information in the field of technical standards and regulations, as amended and updated by Directive 94/10.

Concerning the obligation under Article 8 of the directive to communicate the draft of such a technical regulation to the Commission, that obligation applies to the said national legislation in so far as the latter establishes a system of prior administrative authorisation, and cannot therefore be regarded as legislation, referred to in the exemption laid down by Article 10, whereby the Member State complies with a binding Community measure resulting in the adoption of technical specifications.

( see paras 48-50, and operative part 3 )

36

Judgment of the Administrative Court of Styria .

Judgment of the Administrative Court of Styria, 29th March 2002 UVS Steiermark am 29. März 2002, Bescheid Geschäftszahl 30.2-153/2001, Stichworte: SMS-Nachricht, E-Mail Werbung, grobe Belästigung, §75 Abs1 Z2 TKG, §101 TKG

Rechtssatz:

Eine unverlangte SMS-Nachricht mit dem Inhalt: "Firma P. ... Sie haben gewonnen. Rufen Sie uns unter der Telefonnummer ... an. Wir gratulieren!" stellt nicht nur eine unzulässige Zusendung einer elektronischen Post zu Werbezwecken ohne vorherige Zustimmung des Empfängers dar (Übertretung nach § 101 TKG), sondern auch eine grobe Belästigung des betreffenden Benützers (Übertretung nach § 75 Abs 1 Z 2 TKG; ein Betrug nach § 146 StGB liegt nicht vor, wenn die erhöhten Telefongebühren bekannt gegeben und die Gewinne auf Verlangen ausbezahlt werden). So handelt es sich um eine elektronische Post "zu Werbezwecken" im weiteren Sinne, da diese SMS-Nachricht dazu dient, einen erstmaligen Kontakt zu einem potentiellen Kunden und Geschäftspartner herzustellen, der beim Telefongespräch den Namen des an einem Geschäftsabschluss interessierten Unternehmers erfährt und auf angebotene Leistungen bzw. Gewinne aufmerksam gemacht wird. Weiters ist die damit verbundene Belästigung des Benützers als "grob" einzustufen, da der Adressat der SMS-Nachricht wegen der Ungewissheit über den tatsächlichen Inhalt der Nachricht (des Gewinnes) meist gewillt und genötigt sein wird, sich auf einen Anruf bzw. auf ein Gespräch einzulassen, bevor er sich zur Fortsetzung oder Abbrechung des Gespräches entscheiden kann. Hierbei wird der Anrufer mit Ausführungen und Mitteilungen eines geschulten Gesprächsteilnehmers konfrontiert, ohne eine ausreichende Überlegungszeit zu haben, weshalb der damit zwangsläufig verbundene Überraschungseffekt zu einer nicht gewollten Zustimmung zu Kontakten führen kann. Schließlich stellt die betreffende Telefonnummer eine dem Unternehmen zugeordnete Mehrwertnummer dar, weshalb dem Anrufer auch höhere Gesprächsgebühren verrechnet werden. Dies alles wird mit solchen SMS-Nachrichten bezweckt, weshalb die damit verbundene Belästigung wesentlich höher ist als jene von Werbezusendungen, die nicht unkontrollierbar in die Privatsphäre des Anschlussinhabers eindringen.

37

Judgment of the District Court in Berlin .

Judgement of the District Court Berlin, 14th of January 2003 (15 O 420/02)

LANDGERICHT BERLIN

IM NAMEN DES VOLKES

URTEIL

Aktenzeichen: 15 O 420/02

Entscheidung vom 14. Januar 2003

In dem Rechtsstreit hat die Zivilkammer 15 des Landgerichts Berlin in 10589 Berlin (Charlottenburg), Tegeler Weg 17/21, auf die mündliche Verhandlung vom 14. Januar 2003 durch den Vorsitzenden Richter am Landgericht ..., die Richterin am Landgericht ... und den Richter am Landgericht ...für Recht erkannt:

1. Die Beklagten werden verurteilt, es bei Meidung eines für jeden Fall der Zuwiderhandlung festzusetzenden Ordnungsgeldes bis zu 250.000,00 €‚ ersatzweise von Ordnungshaft, oder von Ordnungshaft bis zu sechs Monaten, zu vollziehen an den jeweiligen Geschäftsführern bzw. Vorstandsmitgliedern der Beklagten, zu unterlassen, und zwar

a) die Beklagten zu 1) und 2)

an den Kläger unaufgefordert Werbung per SMS auf sein Mobiltelefon unter der Telefonnummer (...) zu übersenden, Dritte mit der Übersendung von Werbung per SMS zu beauftragen oder durch Weitergabe der Mobiltelefonnummer des Klägers an Dritte, insbesondere Werbe- und Kooperationspartner, Werbung per SMS an diesen zu veranlassen, zu ermöglichen oder zu fördern, es sei denn, der Kläger hat der jeweiligen Sendung oder Weitergabe zuvor zugestimmt

b) die Beklagte zu 3)

an den Kläger unaufgefordert Werbung per SMS auf sein Mobiltelefon unter der Telefonnummer (...) zu übersenden oder Dritte mit der Übersendung von Werbung per SMS zu beauftragen es sei denn der Kläger hat der jeweiligen Sendung zuvor zugestimmt.

2. Die Beklagten haben ihre eigenen außergerichtlichen Kosten jeweils selbst und die übrigen Kosten des Rechtsstreits zu jeweils 1/3 zu tragen.

3. Das Urteil ist hinsichtlich des Tenors zu 1. gegen Sicherheitsleistung in Höhe von jeweils 7.500,00 € und wegen der Kosten gegen Sicherheitsleistung in Höhe des jeweils zu vollstreckenden Betrages vorläufig vollstreckbar.

Tatbestand

Die Beklagte zu 2) betreibt das lnternetportal „... .de“ und bietet für Handybesitzer die Möglichkeit, nach Registrierung mit der Mobilfunknummer, dem Namen und der Anschrift auf ihrem lnternetportal kostenlose SMS-Nachrichten zu übersenden. Der Kläger füllte am 5. Februar 2002 online das Registrierungsformular der Beklagten zu 2) aus, in welchem er seine Mobilfunknummer ... eintrug. Auf dem Anmeldeformular (vgl. Anlage B2 3) kreuzte der Kläger an:

„Ja, ich akzeptiere die Nutzungsbedingungen‘ sowie ja, ich will mit meinem Handy an coolen sms-votings von ... und ... .de teilnehmen, ... fragt dich mit einer sms zu verschiedenen Themen und Aktionen nach deiner Meinung, du antwortest mit deinem Handy und ... veröffentlicht die Ergebnisse im Internet.“

Welche Nutzungsbedingungen der Beklagten zu 2) zum Zeitpunkt der Anmeldung galten, ist streitig. Der Kläger geht von den Bedingungen in der Fassung der Anlage K 8 aus. Darin heißt es unter § 3 (,‚Datenschutz“):

„...

(3) mit der Registrierung stimmt der nutzer ausdrücklich zu, dass allgemein gehaltene Informationen über den nutzer und dessen verhalten Werbekunden und Kooperationspartnern zur Verfügung gestellt werden dürfen. dies gilt der zielgerichteten Werbung, z. b. im online bereich oder per sms.“

Die Beklagten behaupten die Geltung der Nutzungsbedingungen gemäß Anlage B2 1, in denen es heißt:

„14.) Anmeldung bei .../... .de

38

Judgment of the District Court in Berlin .

nutzer, die bei der Anmeldung der teilnähme an SMS-Abstimmungen von ... .de und ... .de zugestimmt haben, erhalten von ... .de und ... .de in unregelmäßigen Abständen entsprechende sms. ... .de darf die Daten dieser nutzer explizit an ... oder entsprechende andere Partner weitergeben, um den versand von sms durch den Partner zu ermöglichen, selbstverständlich werden die Daten auf anfrage sofort gelöscht.“

Auf der Grundlage eines Kooperationsvertrages zwischen der Beklagten zu 2) und der Beklagten zu 1) gab die Beklagte zu 2) an diese die Mobilfunknummer des Klägers weiter. Am 14. April 2002 empfing der Kläger eine SMS-Werbung der Beklagten zu 1) für das Geschäft der Beklagten zu 3) mit folgendem Wortlaut:

„Neu bei ... fish & chips - very british, very lecker! Auf jede Portion fish & chips erhalten Sie bei ... 50 Cent Rabatt bis 11.5. SMS zeigen und sparen! ...“.

Eine Abmahnung des Klägers vom 22. Mai 2002 an die Beklagten blieb ohne Erfolg. Die Daten des Klägers sind zwischenzeitlich aus der Datei der Beklagten zu 1) und 2) genommen worden.

Der Kläger ist der Ansicht, es liege eine Persönlichkeitsrechtsverletzung durch den Erhalt einer unerbetenen SMS-Werbung vor. Es seien die Grundsätze zur eMail- Werbung heranzuziehen. Die Beklagte zu 1) sei als Werberin unmittelbare Störerin, die Beklagte zu 2) wegen der Weitergabe seiner Handynummer an die Beklagte zu 1) mittelbare Störerin; ebenso sei die Beklagte zu 3) mittelbare Störerin wegen der Beauftragung der Werbung der Beklagten zu 1). Eine wirksame Einwilligung in den Erhalt von SMS-Werbung liege nicht vor, sondern - gemäß § 3 Abs. 3 der Nutzungsbedingungen gemäß Anlage K 8 - lediglich eine Einwilligung in die Weitergabe von Informationen über den Kläger. Eine im ersteren Sinne zu verstehende Klausel sei jedenfalls auf Grund der Überschrift „Datenschutz“ gemäß § 305 c BGB überraschend. Gemäß § 4 Abs. 2 Nr. 1 TDDSG und § 4 a BDSG analog müsse eine Einwilligungserklärung auch deutlich erteilt werden.

Der Kläger beantragt, wie erkannt.

Die Beklagten beantragen, die Klage abzuweisen.

Sie rügen die örtliche Zuständigkeit des Landgerichts Berlin und bestreiten, dass der Kläger am 14. April 2002 eine etwaige SMS-Werbung in Berlin zur Kenntnis genommen habe. Ferner meinen sie, dass der Streitwert allenfalls mit 3.000,00 € (3 x 1.000,00 €) angenommen werden könne und daher das Amtsgericht sachlich zuständig sei.

Die Beklagten bestreiten mit Nichtwissen, dass eine SMS-Werbung mit dem genannten Inhalt an den Kläger abgesandt und von diesem empfangen worden sei. Sie meinen, dass sich die Zulässigkeit von SMS-Werbung nicht nach den Grundsätzen der eMail-Werbung, sondern der Briefkastenwerbung richte; da der Abruf der SMS-Werbung nicht mit Kosten verbunden ist, bedürfe es auch keiner Einwilligung des Empfängers. Jedenfalls sei eine solche vorliegend nach § 14 der Nutzungsbedingungen gegeben. Im Übrigen müsse der Nutzer eines kostenlosen Internet-Services damit rechnen, dass sich dieser über Werbeeinnahmen finanziere, so dass bereits in der Registrierung ein konkludentes Einverständnis mit dem Erhalt von Werbung zu sehen sei. Auch habe der Kläger - so behaupten die Beklagten - zwischen dem 5. Februar und 13. April 2002 von der Beklagten zu 1) mehrere SMS, „u. a. auch werbenden Inhalts“, erhalten. Die Beklagte zu 3) wisse nicht, wem die Beklagte zu 1) SMS-Werbung schicke, und stelle nur den Werbetext „zur Verfügung“. Der Haftung der Beklagten zu 1) stehe § 9 TDG entgegen. Die Werbung sei auch durch § 28 BDSG gerechtfertigt. Wegen zwischenzeitlicher Löschung der Daten und einer überhöhten Vertragsstrafeforderung in der Abmahnung fehle die Wiederholungsgefahr.

Wegen des weiteren Vorbringens der Parteien wird auf den Inhalt der gewechselten Schriftsätze nebst Anlagen Bezug genommen.

39

Judgement of the Higher Regional Court of Hamburg .

Judgement of the Higher Regional Court of Hamburg, 10.04.2003 (Az: 5 U 97/02)

In dem Rechtsstreit hat das Hanseatische Oberlandesgericht Hamburg 5. Zivilsenat nach der am 6. März 2003 geschlossenen mündlichen Verhandlung für Recht erkannt:

I. Die Berufung der Beklagten gegen das Urteil des Landgerichts Hamburg, Zivilkammer 12 vom 14. Mai 2002 (Az. 312 O 845/01) wird zurückgewiesen.

II. Die Beklagte hat die Kosten des Berufungsverfahrens zu tragen.

III. Das Urteil ist vorläufig vollstreckbar. Die Beklagte kann die Vollstreckung des Klägers gegen Sicherheitsleistung in Höhe von € 5.000 abwenden, wenn nicht der Kläger vor der Vollstreckung Sicherheit in gleicher Höhe leistet.

IV. Die Revision gegen das Urteil wird nicht zugelassen.

und beschließt:

Der Streitwert wird auf € 25.000 festgesetzt.

Tatbestand:

Der Kläger ist der Bundesverband der Verbraucherzentralen und Verbraucherverbände und damit der Dachverband von 16 Verbraucherzentralen und 18 weiterer Verbraucher- und sozialorientierter Verbände.

Die Beklagte ist eine im Bereich der neuen Medien tätige Gesellschaft. Sie vertreibt an Endverbraucher u.a. Klingeltöne, Logos, SMS - Bilder und dergleichen mehr, die diese sich mit einem Anruf auf ihr Handy laden könne. Ihre Dienste bewirbt sie u.a. auch in der Zeitschrift „B G". Die Klingeltöne usw. werden über eine kostenpflichtige 0190er Service-Telefonnummer geladen, bei der Gebühren von € 1,86 (= DM 3,63) pro Minute anfallen.

Der Kläger hält eine solche Werbung gegenüber Jugendlichen für gegen die guten Sitten verstoßend und hat vorgetragen, Jugendliche seien besonders anfällig für solcherlei Werbung. Sie neigten verglichen mit Erwachsenen eher zu spontanen Entscheidungen. Dies gelte gerade auch im Hinblick auf die von der Beklagten angebotenen Leistungen, zu deren Inanspruchnahme Kinder und Jugendliche leicht zu verführen seien. Die Ausnutzung der dem Werbenden bekannten geschäftlichen Unerfahrenheit der angesprochenen Personengruppe, denen die notwendige geschäftliche Kenntnis, Erfahrung und Reife fehle, sei unlauter. Demgemäß sei es auch sittenwidrig, Kinder und Jugendliche unter Ausnutzung ihrer Unerfahrenheit, Ungewandtheit und leichten Beeinflussbarkeit zu unwirtschaftlichen Ausgaben und Anschaffungen über Bedarf zu verführen. Gerade auch die Begeisterungsfähigkeit und Spiellust der hier speziell angesprochenen Verkehrskreise nutze die Beklagte aus. Bekanntermaßen seien Jugendliche bestrebt, ihnen gehörende Gegenstände individualisierend zu gestalten. Bei Handys gehöre dazu die Ausstattung mit speziellen Klingeltönen.

Tatsächlich würde bei rationaler Betrachtung kein durchschnittlich aufgeklärter Verbraucher auf die Idee kommen, für die telefonische Bestellung eines Klingeltons DM 3,63 pro Minute auszugeben. Dies gelte um so mehr, als bei der bloßen Angabe des Minutenpreises nicht klar sei, wie teuer der Klingelton tatsächlich werde. Hinzu komme, dass Jugendliche nicht gewohnt seien, Telefonrechnungen zu bezahlen, zumal sie im Regelfall das Telefon ihrer Eltern benutzten. So seien etwa bei der Bestellung eines solchen Klingeltons in einem 4minütigen Gespräch Kosten in Höhe von DM 14,52 verursacht worden. Der hohe Preis sei nicht aufgrund fehlerhafter Eingaben entstanden. Bei dem als Zeugen benannten Jugendlichen Jan Wilhelms handele es sich um einen erfahrenen Handybenutzer. Abgesehen davon müsste bei Kindern und Jugendlichen ohnehin häufiger mit Eingabefehlern gerechnet werden, von denen die Beklagte profitiere. Dass das durchschnittliche Herunterladen eines Klingeltons 110 Sekunden dauere und € 3,40 koste (DM 6,66), werde bestritten

Gerade mit kostenträchtigen 0190er Rufnummern würden immense Telefonkosten verursacht, wie der dem Urteil des Landgerichts Berlin (Anl. K3) zugrunde liegende Sachverhalt zeige, in dem ein 16jähriger innerhalb von 2 Monaten mit 0190er Nummern Telefonkosten in Höhe von knapp DM 17.000 verursacht hätte. Auf die Frage, ob generell Kinder und Jungendliche wüssten, dass 0190 - Nummern kostenpflichtig seien und häufig Minutenpreise von (früher) DM 3,63 verlangt würden, komme es nicht an.

Dass es sich bei „B-G" um eine Jugendzeitschrift handele, zeige gerade die Erhebung von Bauer-Media (Anl. B2), wonach 48,5% der Leserinnen minderjährig seien.

40


Das Angebot sei auch deshalb zu beanstanden, weil die Leistung in krassem Missverhältnis zum Preis stehe.

Schließlich verstoße das Verhalten der Beklagten auch gegen den Verhaltenskodex der „Freiwilligen Selbstkontrolle Telefonmehrwertdienste". Danach seien Angebote an die Zielgruppe „Minderjährige" nur bis zu einem maximalen Preis von DM 3,00 zulässig. Eine Animation zu Wiederholungsanrufen dürfe nicht erfolgen. Letzteres tue die Beklagte dadurch, dass sie für „weitere Logos, Klingeltöne, SMS-Bilder, Logo-Painter, u.v.m." auf ihre Internetdomain verweise. Dies stelle eine nachhaltige Animation zu Wiederholungsanrufen und eine Aufforderung dar, mehrere Klingeltöne, SMS-Bilder, Logos u.a. auf das Handy zu laden.

Er hat beantragt, die Beklagte zu verurteilen, es bei Vermeidung eines für jeden Fall der Zuwiderhandlung festzusetzenden Ordnungsgeldes bis zu DM500.000, ersatzweise Ordnungshaft bis zu 6 Monaten, letztere zu vollziehen an ihrer Geschäftsführerin, zu unterlassen,

im geschäftlichen Verkehr zu Zwecken des Wettbewerbs in Jugendzeitschriften - wie nachfolgend abgebildet - für die Bestellung von Klingeltönen, Logos oder Sounds oder ähnlichem per Mehrwertdiensttelefonnummer (3,63 DM/min bzw. € 1,86/min) zu werben bzw. werben zu lassen, die der umworbene Anrufer durch einen Anruf auf sein Handy laden kann.

Die Beklagte hat beantragt, die Klage abzuweisen.

Sie hat vorgetragen, der Antrag, die streitgegenständliche Werbung in Jugendzeitschriften zu verbieten, sei zu weit gefasst. Es handele sich um eine konkrete Anzeige in der Zeitschrift „B G". Außerdem sei der Begriff „Jugendzeitschriften" unklar, weil nicht deutlich werde, was darunter zu verstehen sei. Im Falle einer behaupteten Verletzung des Tenors würden die Probleme in das Vollstreckungsverfahren verlagert.

In der Sache selbst sei die Werbung nicht zu beanstanden. Der Minutenpreis von DM 3,63 sei angemessen und entspreche dem üblicherweise für das Herunterladen von Klingeltönen verlangten Preis. Zu berücksichtigen sei, dass auf die Melodien Lizenzzahlungen zu leisten seien und Werbeaufwendungen entstünden. Im Durchschnitt dauere bei ihr, der Beklagten, das Herunterladen eines Klingeltons 110 Sekunden und koste DM 6,66 (€ 3,40). Hinsichtlich des Zeugen Jan Wilhelms werde bestritten, dass die behaupteten Kosten von DM 14,52 für das Herunterladen eines Klingeltons aus einem Angebot der Beklagten, das in der Zeitschrift „G" beworben worden sei, entstanden seien.

Im übrigen könnten Jugendliche das Angebot korrekt einschätzen. Regelmäßig werde ihnen das Handy von den Erziehungsberechtigten, die auch dem Abschluss des Kartenvertrages zustimmen müssten, zur Verfügung gestellt. In diesem Zusammenhang sei es deren Aufgabe, die Jugendlichen vor zu hohen Telefonkosten zu warnen. Wem dies nicht hinreichend sicher erscheine, müsse mit einer „Pre-Paid-Card" arbeiten. Dass die Abrechung monatlich erfolge, die konkreten Kosten also erst später bekannt würden, liege bei Telefonabrechnungen in der Natur der Sache. Dies sei bei jedem Telefongespräch so.

Die Angabe aus dem Verhaltenskodex der Freiwilligen Selbstkontrolle der Telefonmehrwertdienste e.V., dem sich ohnehin viele Telefonmehrwertdiensteanbieter noch nicht angeschlossen hätten und der deshalb auch nicht als allgemeiner Sittenkodex anzuerkennen sei, sei nicht mehr aktuell. Per 5.11.2001 sei der Betrag von DM 3 auf € 3 erhöht worden (Anl. B1). Außerdem gelte diese Regelung nur bei einer Werbung, deren Zielgruppe ausschließlich Kinder und Jugendliche seien. Nur 48,5% der Leser von B G seien jünger als 18 Jahre (Anl. B2).

Schließlich wüssten die Jugendlichen, was sie täten. Wer sein Handy mit Klingeltönen aufwerten wolle und in Jugendzeitschriften keine entsprechende Werbung finde, werde in die Tageszeitungen oder ins Internet schauen.

Das Landgericht hat mit Urteil vom 14. Mai 2002 die Beklagte aus § 1 UWG zur Unterlassung verurteilt.

Gegen dieses der Beklagten am 21. Mai 2002 zugestellte Urteil hat sie mit Schriftsatz vom 20. Juni 2002 Berufung eingelegt, die sie unter Vertiefung ihres erstinstanzlichen Vertrags wie folgt begründet:

Das streitgegenständliche Angebot richte sich weder ausschließlich noch auch nur überwiegend an Minderjährige, sondern an alle Erwachsene. Demgemäss schalte sie Anzeigen in zahlreichen Publikumszeitschriften, wobei es sich bei B G noch nicht einmal um eine Jugendzeitschrift handele, da deren Kernzielgruppe die 14 bis 19jährigen Frauen seien, die

41


aber auch von älteren Frauen (Twens) gelesen werde. Es handele sich also nicht um eine Jugend-, sondern um eine junge Frauenzeitschrift, die, wie die Anl. B2 zeige, auch von vielen Erwachsenen gelesen werde. Hinzu komme, dass die kognitive Wahrnehmungsfähigkeit von Jugendlichen mit 14 Jahren aus entwickelt sei und sie deshalb für Werbung in keiner Weise stärker anfällig seien, als Erwachsene (Anl. Kurzgutachten Anl. B6 und Beweis Sachverständigengutachten).

In dem FST - Kodex komme auch nicht eine allgemeine sittliche Verpflichtung zum Ausdruck. Zum einen hätten sich dem FST - Kodex längst nicht alle Telefonmehrwertdienst - Anbieter angeschlossen. Zum anderen sei die Bewerbung selbst nicht sittenwidrig und damit unzulässig, so dass es schon deshalb auf die Regelungen des Kodex nicht ankomme. Vor allem aber beziehe sich die Beschränkung auf Angebote, die sich ausschließlich an Kinder und Jugendliche richteten. Um ein solches Angebot handele es sich bei der Werbung in „B G" eben nicht. Schließlich .sei die Werbung selbst nach den strengen Regelungen des FTS - Kodex zulässig, weil seit dem Beschluss vom 5.11.2002 bei Angeboten, die zur Zielgruppe Minderjährige haben, der Höchstbetrag auf € 5 angehoben sei. Selbst bei Berücksichtigung der von dem Kläger zu Recht festgestellten falschen Berechnung des Durchschnittspreises, liege dieser jedenfalls deutlich unter € 5 pro heruntergeladenem Klingelton. Im übrigen folge aus diesem Kodex lediglich eine Betriebs- aber keine Werbebeschränkung.

Sie beantragt, unter Abänderung des Urteils des Landgerichts Hamburg vom 14. Mai 2002 (312 O 845/01) die Klage abzuweisen.

Der Kläger beantragt, die Berufung zurückzuweisen. Er trägt vor, dass es sich bei B G um eine Jugendzeitschrift handele, könne nicht ernsthaft in Abrede genommen werden. Diese Einordnung ergebe sich aus der Selbstdarstellung (Anl. B6) und aus dem Internetauftritt des Bauer -Verlages, in dem diese Zeitschrift unter den Jugendzeitschriften gelistet sei (z.B. K7). Auch nach der Verkehrsauffassung anderer im Presse- und Medienbereich tätiger Unternehmen richte sich B G an Jugendliche (Anl. K8, K9).

Lese man die Abrechnung der Beklagten Anl. B7 richtig, ergebe sich ein durchschnittlicher Preis von DM 9,03 (= € 4,62), der erheblich über der selbst gezogenen Grenze von ursprünglich € 3 liege.

Das vorgelegte Gutachten des Prof. N-B sei inhaltlich irrelevant, weil sich aus ihm nur ergebe, dass Jugendliche prinzipiell wüssten, warum Werbung überhaupt präsentiert werde, welche Form von Werbung praktiziert werde und wie Werbung produziert werde. Was das für die konkrete Werbung bedeute, bleibe unklar.

Schließlich müssten die konkreten Dienstleistungen und die Zahlungsmodalitäten beachtet werden. Während sonst regelmäßig Leistungen sofort bezahlt würden, würde der Preis für das Herunterladen von Klingeltönen zunächst kreditiert, so dass die Jugendlichen jeglichen Überblick über die tatsächlich entstandenen Kosten verlören und sich deren Höhe nicht bewusst seien. Hierin unterscheide sich auch maßgeblich die Werbung für Spielzeug, bei dessen Erwerb im Ladengeschäft sofort gezahlt werden müsse und dessen Preis den Minderjährigen schon deshalb bewusst sei. Gerade dieser besonderen Gefahr bei der Inanspruchnahme von Telefonmehrdienstleistungen habe auch der FST - Kodex Rechnung getragen, an den sich die Beklagte aber nicht halte.

Hinsichtlich der weiteren Einzelheiten des Sach- und Streitstandes wird auf die Schriftsätze der Parteien nebst Anlagen Bezug genommen.

42

Judgement of the District Court of Munich .

Judgement of the District Court of Munich, 17th of May 2003 – (Az: 22 O 9966/03)

hatte folgenden Fall zu beurteilen:

Ein Hamburger SMS-Chat-Dienst wirbt in Zeitungsanzeigen neben dem Bild einer attraktiven Frau mit der Vermittlung von SMS-Dates für nur 80 Cent pro SMS. Wenn Kunden auf eine derartige Anzeige reagieren, erhalten sie eine Antwort-SMS mit vorformulierten Texten aus einem Call-Center. Womit die Kunden nicht rechnen: Allein die erste Kontaktaufnahme über die in der Anzeige angegebene Mobilfunknummer löst eine Rechnung über 49,95 Euro aus. 40 Euro werden für die Mindest- abnahme von 50 SMS verlangt – 9,95 Euro beträgt die Freischaltgebühr.

Der Vertrag mit dem Kunden hierüber kommt nach Meinung des Chat-Dienstes über einen winzigen, am rechten Rand der Anzeige angebrachten Hinweis zustande.

Zur Abwicklung der Chat-Geschäfte werden drei Mobilfunknummern eines großen Netzbetreibers benutzt. Dieser kündigte den Vertrag mit dem Anbieter der zweifelhaften Chat-Dienstleistung fristlos und schaltete die gebuchten Nummern ab. Hiergegen wandte sich der Telefondienstanbieter mit dem Antrag auf Erlass einer einstweiligen Verfügung.

Das Landgericht München I lehnte diesen Antrag ab und gab dem Netzbetreiber recht. Niemand könne verpflichtet werden, sich an strafbaren Handlungen eines anderen zu beteiligen, lautete die Begründung.

Richter Franz-Benno Delonge beanstandete die Werbeanzeigen des Chat-Dienstes als planmäßige Irreführung über die Preisgestaltung und als unlauteren Wettbewerb. Der Richter hält das Angebot des Chat-Dienstes außerdem für Betrug zum Nachteil des Kunden. Dem Kunden werde durch die Werbung für ein "SMS-Date" vorgespiegelt, er könne auf diese Weise eine attraktive Frau näher kennen lernen.

In Wirklichkeit werden die Antwort-SMS jedoch nicht von potentiellen Interessentinnen, sondern von bezahlten Mitarbeitern aus Call-Centern verschickt, die überhaupt nicht daran interessiert sind, Telefonkunden näher kennen zu lernen. Für den Richter stellt sich die Geschäftstätigkeit des Chat-Dienstes als Versuch dar, aus der Einsamkeit oder Kontaktarmut anderer Menschen in irreführender, unlauterer Weise Kapital zu schlagen

Quelle: Pressemitteilung des LG München I v. 17.09.2003

43

Judgement of the German Federal Court of Justice .

Judgement of the German Federal Court of Justice, 5th of May 2004 (I ZR 87/02)

BUNDESGERICHTSHOF

IM NAMEN DES VOLKES

URTEIL

I ZR 87/02

Verkündet am:

5. Februar 2004

in dem Rechtsstreit

Telefonwerbung für Zusatzeintrag

Der I. Zivilsenat des Bundesgerichtshofs hat auf die mündliche Verhandlung vom 5. Februar 2004 durch den Vorsitzenden Richter Prof. Dr. Ullmann und die Richter

Pokrant, Dr. Büscher, Dr. Schaffert und Dr. Bergmann

für Recht erkannt:

Tenor:

Auf die Revision der Beklagten wird das Urteil des 6. Zivilsenats des Oberlandesgerichts Köln vom 8. März 2002 aufgehoben.

Auf die Berufung der Beklagten wird das Urteil der 31. Zivilkammer des Landgerichts Köln vom 5. Juli 2001 abgeändert.

Die Klage wird abgewiesen.

Die Kosten des Rechtsstreits trägt die Klägerin.

Von Rechts wegen

Tatbestand:

Die Beklagte gibt gemeinsam mit der DeTeMedien GmbH, einer 100 %igen Tochtergesellschaft der Deutschen Telekom AG, im Großraum Köln deren Telefonbuch und ein unter der Bezeichnung "Gelbe Seiten" vertriebenes Branchenfernsprechbuch heraus. In die Telefonverzeichnisse werden neben Kunden der Deutschen Telekom AG auch Kunden anderer Telefongesellschaften aufgenommen, die entsprechende Vereinbarungen mit der Deutschen Telekom AG geschlossen haben. Die Kunden erteilen dabei jeweils ihrer Telefongesellschaft den Auftrag zur Aufnahme eines Eintrags in die genannten Telefonverzeichnisse. Die Aufnahme eines sog. Grund- bzw. Standardeintrags in das Telefonbuch und/oder die "Gelben Seiten" erfolgt unentgeltlich. Für die Telefonkunden besteht die Möglichkeit, den kostenlosen Grund- bzw. Standardeintrag um entgeltpflichtige Zusätze, Ergänzungen oder Anzeigen zu erweitern. Die Beklagte nimmt zu diesem Zweck telefonischen Kontakt mit gewerblichen Kunden der Deutschen Telekom AG sowie der sonstigen Telefongesellschaften auf und bietet ihnen derartige kostenpflichtige Erweiterungen des Grund- bzw. Standardeintrags an.

Die Klägerin, die sich ebenfalls mit der Herausgabe eines auf den Kölner Raum bezogenen Branchenfernsprechverzeichnisses (" ") befasst, beanstandet dies als unter dem Gesichtspunkt der Belästigung unlauteres Wettbewerbsverhalten i.S. von § 1 UWG.

Die Klägerin hat vor dem Landgericht beantragt, die Beklagte zu verurteilen, es unter Androhung bestimmter Ordnungsmittel zu unterlassen, im geschäftlichen Verkehr zu Wettbewerbszwecken zur Förderung eines Abschlusses eines Auftrages zur Veröffentlichung einer Anzeige in einem Branchenfernsprechverzeichnis außerhalb bestehender Geschäftsbeziehungen unaufgefordert telefonischen Kontakt zu gewerblichen und/oder selbständigen Interessenten oder deren Angestellten aufzunehmen und/oder aufnehmen zu lassen, es sei denn, dass der Angerufene zuvor ausdrücklich oder konkludent sein Einverständnis mit derartigen Anrufen erklärt hat oder aber aufgrund eines tatsächlichen Umstandes ein sachliches Interesse des Angerufenen an einem solchen Anruf vermutet werden kann.

Die Beklagte ist der Klage entgegengetreten. Sie hat geltend gemacht, sie bewege sich innerhalb einer zwischen den angerufenen Telefonkunden und den Telefongesellschaften bestehenden Vertragsbeziehung, die den Unlauterkeitstatbestand der "Belästigung"

44

Judgement of the German Federal Court of Justice .

ausschließe. Die erwähnte Vertragsbeziehung werde ihr im Rahmen der bestehenden Verleger- und Herausgebergemeinschaft mit der DeTeMedien GmbH vermittelt, deren sich die Deutsche Telekom AG zur Erfüllung des Auftrags, Kundeneinträge in Teilnehmerverzeichnissen zu veröffentlichen, bediene. Sie bezwecke mit dem Telefonkontakt im Rahmen dieser Geschäftsverbindung vornehmlich die Kontrolle und Aktualisierung der Datensätze der angerufenen Telefonkunden. Erst im Zusammenhang mit dieser "Datenpflege" würden Erweiterungen und Zusätze des Standardeintrags oder Anzeigen angeboten.

Das Landgericht hat die Beklagte antragsgemäß zur Unterlassung verurteilt. Im Berufungsverfahren hat die Klägerin beantragt, die Berufung der Beklagten mit der Maßgabe zurückzuweisen, dass es im Klageantrag wie folgt heißt:

Die Beklagte wird bei Androhung der bereits in den erstinstanzlich formulierten Unterlassungsantrag aufgenommenen Ordnungsmittel verurteilt, es zu unterlassen, zu Gewerbetreibenden, die mit einer Telefongesellschaft einen der nachfolgend beispielhaft wiedergegebenen Verträge über die Aufnahme in ein Branchenverzeichnis geschlossen haben:

- es folgen nunmehr Fotokopien zweier unterschiedlicher Antragsformulare zweier Telefongesellschaften

- ohne deren vorher erklärtes Einverständnis telefonischen Kontakt aufzunehmen, um diesen den Abschluss eines Auftrags über entgeltpflichtige Zusätze und/oder Erweiterungen des Grundeintrags und/oder Anzeigen anzubieten.

Das Berufungsgericht hat die Berufung der Beklagten unter Anpassung des Unterlassungsausspruchs an den in der Berufungsinstanz gestellten Antrag der Klägerin zurückgewiesen (OLG Köln GRUR-RR 2002, 237). Mit ihrer (zugelassenen) Revision verfolgt die Beklagte ihr auf Klageabweisung gerichtetes Begehren weiter. Die Klägerin beantragt, die Revision zurückzuweisen.

45

Judgement of the Danish Maritime and Commercial Court Copenhagen .

Judgement of the Danish Maritime and Commercial Court Copenhagen, 14th of March 2005

M0001000 - HAF

UDSKRIFT AF SØ- & HANDELSRETTENS DOMBOG

____________

Afsagt den 14. marts 2005

M-1-04 Anklagemyndigheden

(fuldmægtig Jane Frederikke Land)

mod

Debitel Danmark A/S

(Advokat Christian Levin Nielsen)

D O M:

Under denne sag har anklagemyndigheden ved politimesteren i Glostrup ved anklageskrift af 24. juni 2004 som berigtiget under domsforhandlingen rejst tiltale mod Debitel Danmark A/S for overtrædelse af:

1.

Markedsføringslovens § 22, stk. 6, jf. stk. 3, jf. § 6 a, stk. 1, ved i perioden fra omkring den 10. april 2003 til den 14. april 2003 som erhvervsdrivende fra adressen Kanalgaden 3, 2620 Albertslund, at have fremsendt ca. 12.000 SMS-beskeder med henblik på afsætning af varer, arbejdseller tjenesteydelser, uagtet modtagerne ikke forudgående havde anmodet om det, idet indholdet af SMS-beskeden lød således:

”Er du glad for at Telmore er blevet til TDCmore? Klik ind på smarttalk.dk. Du får 100 kr.FRI taletid, hvis du skifter til smarttalk inden 1/5-2003!”

2.

Markedsføringslovens § 22, stk. 6, jf. stk. 3, jf. § 6 a, stk. 1, ved i perioden fra omkring den 9. april 2003 til den 14. april 2003 som erhvervsdrivende fra adressen Kanalgaden 3, 2620 Albertslund, at have fremsendt ca. 40.000 e-mails med henblik på afsætning af varer, arbejdseller tjenesteydelser, uagtet modtagerne ikke forudgående havde anmodet om det, idet indholdet af e-mail lød således:

”Information fra debitel.

Du har tidligere kontaktet os via e-mail. Derfor vil vi gerne høre, om du er interesseret i løbende at få information og deltage i spændende konkurrencer fra debitel.

Konkurrence

Klik på et af linkene og udfyld formularen, så deltager du i konkurrencen om en lækker Nokia 3650. Vi trækker lod den 30. april 2003. Vinderen får direkte besked og bliver offentliggjort på: www.debitel.dk.

Er du kunde hos debitel klik her. http://www.debitel.dk/email_kunde Er du ikke kunde hos debitel, klik her. http://www.debitel.dk/email_form

Tilmelder du dig ikke, sletter vi din e-mail efter 8 dage, og sender dig ikke flere e-mails.

Med venlig hilsen Debitel Danmark a/s Carsten Boldt Markedschef”

3.

Markedsføringslovens § 22, stk. 6, jf. stk. 3, jf. § 2, stk. 2, jf. § 2 a, stk. 2, nr. 5, ved i perioden fra omkring den 10. april 2003 som erhvervsdrivende, på hjemmesiden www.smarttalk.dk, at have anvendt følgende angivelser, idet de på grund af deres form, eller fordi de angår uvedkommende forhold, er utilbørlige overfor andre erhvervsdrivende eller forbrugere:

46

Judgement of the Danish Maritime and Commercial Court Copenhagen .

A.

”Vi synes det er synd for Telmores kunder!

Telmore bliver en del af TDC - det er synd for kunderne. Hvem mon skal betale for den høje pris for Telmore som TDC har måtte hoste op med? Kunderne i sidste ende. Derfor har smarttalk et særligt tilbud til Telmores kunder, der ikke vil være TDC kunder i fremtiden.”

B.

”Vi synes det er synd for Telmores kunder!

TDC har betalt i omegnen af 1.800 kr. pr. Telmore kunde - disse penge skal tjenes hjem igen i de kommende år - og de kan kun hentes et sted, nemlig ved Telmores kunder, som dermed vil komme til at betale mere for taletid og SMS.”

4.

Markedsføringslovens§ 22, stk. 6, jf. stk. 3, jf. § 2, stk. 2, jf. § 2 a, stk. 2, nr. 5, ved i perioden fra omkring den 10. april 2003 som erhvervsdrivende fra adressen Kanalgaden 3, 2620 Albertslund, på hjemmesiden www.smarttalk.dk, at have udbudt en konkurrence, med følgende angivelser idet de på grund af deres form, eller fordi de angår uvedkommende forhold, er utilbørlige overfor andre erhvervsdrivende eller forbrugere:

”Hvad tror du, Telmore bliver kaldt efter TDC har opkøbt dem? TDCmore? Eller Paymore? Deltag i konkurrencen om 10.000 gratis SMS’er hos smarttalk - Send en SMS med dit bedste forslag på et nyt navn til nummer 2184 5000 skriv smarttalk ditforslag - det bedste forslag afgøres den 1. maj 2003”

5.

markedsføringslovens § 22, stk. 6, jf. stk. 3, jf. § 2, stk. 2, jf. § 2 a, stk. 2, nr. 5, ved den 10. april 2003 som erhvervsdrivende fra adressen Kanalgaden 3, 2620 Albertslund, at have udsendt pressemeddelelse med bl.a. følgende angivelser idet de på grund af deres form, eller fordi de angår uvedkommende forhold, er utilbørlige overfor andre erhvervsdrivende eller forbrugere:

”Tak for kampen og tak for de nye kunder!

Smarttalk byder TDC velkommen som minoritetsaktionær I Telmore, og forventer at Telmore snarest bliver en del af TDC - på samme måde som man har set det med TeleFona, som efter TDCs overtagelse er visnet og har haft negativ vækst.”

”TDC har betalt I omegnen af 1.800 kr. pr Telmore kunde - og disse penge skal tjenes hjem igen i de kommende år - og de kan kun hentes et sted, nemlig ved Telmores kunder, som dermed vil komme til at betale mere for taletid og SMS.”

”Siden det blev det kendt, at TDC og Telmore førte forhandlinger om salg af selskabet til TDC, er smarttalk blevet kontaktet af mange kunder, som ikke ønskede at være kunde i det tidligere monopol TDC.”

Anklagemyndigheden har oplyst, at der ikke foreligger nogen påtalebegæring fra de forurettede, men at tiltalen for forhold 3-5 er rejst, fordi almene hensyn efter anklagemyndighedens opfattelse kræver offentlig påtale af disse 3-5 forhold. Anklagemyndigheden har nedlagt påstand om straf af bøde. Tiltalte har erkendt de faktiske forhold, der er beskrevet i anklageskriftet, dog at tiltalte har haft samtykke fra modtagerne til at udsende ca. 10 % af de e-mails, der er omtalt i forhold 2, men tiltalte påstår sig frifundet under henvisning til, at tiltalte ikke havde forsæt til, at forhold 1-2 var strafbare, og at de forhold, der er beskrevet i forhold 3-5, ikke er utilbørlige og derfor ikke indebærer nogen overtrædelse af markedsføringsloven.

47

MASTER THESIS Mobile Advertising A Comparative Regulatory...

Documents

Transcript of MASTER THESIS Mobile Advertising A Comparative Regulatory...