Review of the MCCA Direct Marketing Model Code of Practice - Report

Introduction

In November 1997, the Ministerial Council on Consumer Affairs (MCCA) released the Model Code. The Code was developed to deal with problems associated with direct marketing. MCCA recognised that direct marketing leading to distance selling has many specific characteristics that cause it to differ from shop front retailing. These include the consumer's lack of opportunity to inspect goods prior to entering into purchase contracts, that transactions are often initiated by the distance seller without the consumer’s consent and that consumers may not have sufficient opportunity to research the goods and services that have been offered or compare their quality or performance against similar products.

These characteristics pose specific risks for consumers, given the opportunity that exists for distance sellers to engage in inappropriate practices. In an effort to limit these practices, MCCA released the Model Code to offer best practice guidance for businesses operating within the direct marketing industry.

Adopting the provisions of the Model Code is voluntary for organisations engaged in direct marketing. While the Model Code is not itself enforceable, it fits within a consumer protection safety net comprised of the Trade Practices Act 1974 (the TPA) and the various State and Territory Fair Trading Acts. Additionally, MCCA continues to monitor and review the Model Code on a regular basis.

Government consumer protection policy supports the use of self-regulatory approaches, where possible, before consideration is given to more direct forms of government regulation. Indeed, the Government encourages industry groups to develop their own codes based upon the provisions of the Model Code.

The Model Code currently provides that it is to be reviewed three years after release and at periodic intervals thereafter. MCCA, at its meeting on 21 July 2000, agreed to commence the review of the Model Code in 2001. At its meeting on 2 August 2002, MCCA agreed to commence public consultation on the Review, with written submissions closing on 11 October 2002.

The objective of the Review was to determine whether the Model Code has achieved its specified objectives. More specifically, throughout the Review process, the Working Party sought to determine the Model Code’s effectiveness in protecting consumers, to ensure its requirements satisfied fair trading and consumer protection needs in a changing environment and to ensure its provisions continued to be relevant.

The Review was conducted by a Working Party of Australian Government, State and Territory fair trading agencies. The Working Party consists of representatives from the Australian Government Department of Treasury (Chair), the Australian Competition and Consumer Commission (ACCC), the NSW Department of Fair Trading and the Victorian Department of Consumer Affairs.

The Review considered six written submissions. These were from the Australian Direct Marketing Association (ADMA), the Australian Privacy Foundation (APF), the Consumer’s Federation of Australia (CFA), the Office of the Federal Privacy Commissioner (OFPC), the Office of the New South Wales Privacy Commissioner (NSWPC) and the Office of the Victorian Privacy Commissioner (VICPC).

The Working Group also consulted with the Australian Consumers Association (ACA), the Internet Industry Association (IIA) and the National Office for the Information Economy (NOIE).

The Review submissions, the Model Code and the Discussion Paper for the Review are available online at http://www.consumer.gov.au/html/direct_marketing/index.html.

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