Introduction

It is very common for service providers to communicate directly to customers through a variety of media including calling, cell phone text messaging, emailing, etc. to promote their products and services.  Service providers (data users) often make use of the personal data of their customers (data subjects) in direct marketing.  Under the Personal Data (Privacy) Ordinance (Cap. 486) (the “PDPO”), these service providers are required to notify their customers and obtain their consent before using their personal data in any direct marketing activities.  Section 35G of the PDPO (“Section 35G”) provides that a data subject may require a data user to cease to use the data subject’s personal data in direct marketing.  Section 35G(3) provides that a data user who receives such a request from the data subject must, without charge to the data subject, comply with the request.  Failure to do so commits an offence under section 35G(4) and, upon conviction, the data user is liable to a maximum fine of HK$500,000 and imprisonment for 3 years.

Can a data user, after having received a data subject’s request, remind the data subject that the service contract between them is coming to an end and, as part of the after-sale service, inform the data subject of special offer for renewing existing service?   The recent High Court case of 香港特別行政區 v 香港寬頻網絡有限公司 [2017] HKCU 238 sheds some light on this.

The HKBN Case

Background

In April 2013, a customer of the Hong Kong Broadband Network Limited (“HKBN”) sent an opt-out request to HKBN by email and by mail, requesting HKBN to stop using his personal data for direct marketing (the “Request”). HKBN acknowledged the Request in writing. Later, the customer received a voice message on his mobile from HKBN’s employee in May 2013 as follows (the “Voice Message”):

 “Hello, Mr Chan, my name is Wong from Hong Kong Broadband. Mr Chan, you have been using our company’s broadband service at… your home and the contract will expire soon. As [we] were notified by the company that the price for contracts renewed from June onwards will be increased, it will become more expensive by that time. We do not hope that you could not enjoy a low price after the price increase. So, [I] would like to notify you that, if you are satisfied with our 1000M service, an internal special offer is available to you, Mr Chan, within this month to ensure that [you] will not be affected by the price increase. Mr Chan, if you receive this voice message, please call me back at XXXXXXXX. My name is Wong. Thank you. Bye.”[1]

The customer then filed a complaint with the Office of the Privacy Commissioner for Personal Data and, as a result, a summons was issued against HKBN under Section 35G, which was heard in the Magistrate Court.  The Magistrate found HKBN guilty and fined HKBN for HK$30,000.  HKBN appealed.

The Appeal

At the appeal, Counsel for HKBN submitted that in deciding whether a data user has violated Section 35G, the Court must strike a proper balance between safeguarding personal data privacy and facilitating business operations of the direct marketing trade.  HKBN’s Counsel argued that the Voice Message was not a direct marketing communication and it was merely part of the after-sale services provided by HKBN’s employee to notify the customer that his service contract was coming to end and that he might be charged higher fees upon expiration of his contract.

The Court clarified that as a matter of law, the offence under Section 35G is a “strict liability offence”.  Liability under Section 35G can arise without fault and/or criminal intent on the part of the data user (i.e. HKBN). In other words, a person will be found liable under Section 35G if the Court is satisfied beyond reasonable doubt that (1) a request has been made by a data subject (i.e. the customer) to the data user to cease using his personal data; (2) the request was received by a data user; and (3) the data user failed to comply with that request. 

In the HKBN Case, it was not disputed that the customer had made the Request and the Request was received by HKBN.  The only question left was whether HKBN’s use of the customer’s personal data was for the purpose of “direct marketing”.  In this regard, the Court rejected HKBN’s argument and found that the true purpose of the Voice Message was to promote HKBN’s services and to solicit contract renewals.  The so-called “reminder” to the customer about the expiry of his contract was merely an “opening line” to direct marketing. In reaching such decision, the Judge noted that HKBN had instructed its employees to keep trying to contact customers who did not answer these calls, and pointed out that a written notice or text message would have sufficed if HKBN’s only purpose was to remind the customer of the expiration date.  The appeal was dismissed.

 Takeaway Points

Whilst it is common for service providers to remind their customers that services under existing contracts are about to expire, the HKBN Case serves as a timely reminder that a service provider engaging in direct marketing must take all reasonable measures and precautions to comply with its customers’ opt-out requests and the relevant provisions under the PDPO.  As the Court has suggested, in circumstances similar to the HKBN Case, the better way to remind customers of expiration dates of existing contracts might be by writing to the customers and inform them that higher fees would be charged upon expiry of their contracts.

Service providers engaging in direct marketing activities should ensure compliance of the PDPO.  They should also regularly update their lists of customers to ensure that direct marketing will only be conducted on customers who have provided consent and have not require the service providers to cease to use their personal data.

 

For enquiries, please contact our Litigation & Dispute Resolution Department:

E: employment@onc.hk                               T: (852) 2810 1212 W: www.onc.hk                                             F: (852) 2804 6311 19th Floor, Three Exchange Square, 8 Connaught Place, Central, Hong Kong

Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2017