The use of SMS for marketing communications is gathering pace. But, like other forms of electronic marketing, it is heavily regulated.

The first thing to think about with e-marketing is the Data Protection Act. This says that electronic marketing is unlawful unless it is carried out “fairly and lawfully”.

To meet this requirement, the recipient must have been informed about the purpose for which his or her contact details may be used and consented to that use. Under the DPA, this consent may be implied where an opt-out approach has been adopted.

Remember that, under the DPA, a consumer can always require you to stop sending direct marketing communications. When this happens, you should promptly comply with the opt-out request. It is best practice to suppress the individual or company details rather than deleting them. This way you will have a record of who not to contact.

You also need to think about the E-commerce Regulations. If the e-marketing communication (email or text) is unsolicited, then it must be clearly and unambiguously identifiable as an unsolicited marketing communication. In effect this means that there must be some indication in the subject line so that the recipient can detect that it is unsolicited.

These regulations create a more onerous requirement in relation to e-marketing than under the DPA. Under these regulations, e-marketing can no longer rely on the opt-out approach of the DPA. Instead, there is a ‘soft opt-in’ requirement.

This involves an opt-in approach, with a “soft” exemption where there is an “existing commercial relationship” and where each communication offers a chance to “opt out”.

There are a number of detailed issues, some problematic, with regard to this requirement.

The soft opt-in aspect of the regulations only applies to e-marketing to “individual subscribers” as distinct from “corporate subscribers”. This can create practical problems as it may be hard to identify whether a particular email / mobile number is that of a corporate subscriber or of an individual subscriber.

Under the “soft” exemption, you can send an unsolicited email / text for the purposes of direct marketing where three conditions are satisfied: if the sender obtained the contact details of the recipient in the course of the sale or negotiations for the sale of a product or service; the sender is marketing its own similar products and services; the addressee is always able to opt out of future marketing free of charge.

It also seems that the exemption is not transferable within the supply chain. Thus, a manufacturer could not email / text a customer who had purchased the manufacturer’s products from the manufacturer’s dealer.

In any event, even where the “soft” exemption applies, there still needs to be compliance with the DPA and the E-commerce Regulations.

An opt-out option should allow the individual to reply directly to the message. In the case of text messages, an individual could opt out by sending a stop message to a short code number, for example, text ‘STOP’ to 12345.

The regulations give a person who suffers damage because of a contravention of the regulations the right to bring proceedings for compensation. The regulations also give the Information Commissioner the right to take action for a breach of the regulations either in response to a complaint or on his own initiative.

Under the DPA, the Information Commissioner can issue enforcement notices; failure to comply with such a notice is a criminal offence which can attract a fine of up to £5,000.

Nigel Miller is a commerce and technology partner at City law firm Fox Williams, and joint-chair of the Society for Computers & Law

Computers provided to employees

Following the Budget, from April 6, 2006 a computer made available to an employee for at least in part private use, will give rise to a taxable benefit, unless the computer was supplied before April 6. Where computers are provided and private use is not merely incidental and the transitional rules are not applicable, it will be necessary to show on the P11D the gross annual benefit of the computer and to account for Class 1A National Insurance Contributions. The employee can claim relief for the business proportion of use, but there is no reduction in NIC payable by the employer. To avoid adverse reactions from staff, one solution available to employers would be to reach agreement with HMRC for any taxable benefits to be absorbed as part of an annual PAYE settlement agreement. Alternatively, a policy of requiring reimbursement of the cost of private use could be introduced.

http://www.hmrc.gov.uk/news/home-computer.htm

British workers concerned about work-related stress

A report published by the Health and Safety Executive shows that just over a fifth of British workers are concerned about work-related stress. Figures from the Labour Force Survey in 2004/05 indicate that around 13 million working days were lost due to work-related stress in this year. Stress along with Musculoskeletal Disorders accounted for around 70 per cent of all work-related working days lost. Around 40 per cent thought that the risk of stress in the workplace could be realistically reduced and less than a third said that their employers had taken preventative action to reduce stress levels in the workplace. When employees were also asked which risks they thought could realistically be reduced, slips and trips topped the list.

www.hse.gov.uk/statistics/books.htm#whass

£40 million enterprise capital funds

Two new Enterprise Capital Funds are to be created under a multi-million pound Government scheme for small businesses. Enterprise Capital Funds invest a combination of private and public money in small high-growth businesses seeking up to £2 million of equity finance. The ECFs announced are: The Seraphim Capital Fund - a £30m generalist co-investment fund that will invest alongside leading business angels and other private investors drawing on the deal flow and investment experience afforded by the funds’ diverse investor base. The Amadeus Enterprise Capital Fund - a £10m fund that will focus on seed technology investments. www.dti.gov.uk

Company law reform puts small businesses first

The Company Law Reform Bill will make sweeping changes and simplify company law, bringing an estimated £250m of savings for business, including an annual benefit of £100m benefits for small companies. The changes include restructuring those parts of company law most relevant to small businesses to make it easier for them to understand; simpler rules for forming a company; abolition of the requirement for a company secretary; making agm opt in rather than opt out; and new model articles for private companies. http://www.dti.gov.uk/bbf/co-law-reform-bill/index.html