The recently passed s. 28 (3b) of the federal German Data Protection Act appears to endanger promotion entry mechanics that offer a chance to win to entrants who opt-in to receive marketing comms. Is this the likely impact of this tough new legislation? Christina Schulte-Braucks of Osborne Clarke Cologne opts in.
Topic: Promotion marketing
Who: German legislators
When: February 2012
Law stated as at: 26 January 2012
In 2009, an amendment of the German Federal Data Protection Act (“BDSG”) introduced new provisions that strengthened the formal requirements for the validity of individuals’ consent to the use of their data for advertising purposes.
Sec. 28 BDSG regards the collection and storage of data for a company’s own commercial purposes. Whilst Sec. 28 (1) stipulates that the collection, storage, alteration or transfer of personal data or their use as a means to pursue own commercial purposes shall be lawful if, inter alia, this is necessary to create, perform or terminate a legal obligation with the data subject, Sec. 28 (3) concerns the use of personal data for advertising purposes.
According to Sec. 28 (3), the processing or use of personal data for purposes of advertising or trading in addresses shall only be lawful if the data subject has given his or her consent.
As regards the conditions under which consent may be demanded, the newly introduced Sec. 28 (3b) states that
“the responsible body may not make the conclusion of a contract dependent on the data subject’s consent under subsection 3, if access to equivalent contractual benefits is impossible or unreasonable without providing consent. Consent pro-vided under such circumstances shall be invalid.”
This could imply that prize promotion entry mechanics that require participants to opt-in to re-ceiving advertising material and marketing communications are not a permissible way of collecting personal data.
Although the provision’s wording does not expressly cover promotions, “contractual benefits” may be interpreted so as to include the participation in a prize promotion (i.e. the chance of winning a prize), after having entered into a contractual relationship by accepting the promo-tion’s terms and conditions. The further condition that “access to equivalent contractual benefits” should not be “impossible or unreasonable without providing consent” implies that consent may not be required in order to gain access to goods and services that are not otherwise available.
With respect to an older provision with similar wording, this has been taken to mean that the company in question must have a monopoly or dominant position on the market for the goods or services in question. It however remains unclear under what circumstances a company organising a prize promotion will be considered to have a monopoly or dominant position with regard to the promotion’s “contractual benefits.”
It should also be noted that under German data protection and unfair competition laws, provi-sions used in general T&Cs according to which the other party consents to the use of its per-sonal data will be void, unless the consent wording is noticeable, typographically accentuated, and separated from other provisions, e.g. in the form of a distinct “opt-in” tick box (cf. Judg-ment of the German Federal High Court BGH of 16 July 2008, VIII ZR 348/06 – "Payback").
Why this matters:
The newly introduced prohibition of Sec. 28 (3b) BDSG affects businesses with a market-dominating position as they may not make entering into a contract conditional upon the customer's consent to the promotional use of its data.
Although reliable precedents are lacking, this provision could be interpreted to cover exclusive prize promotions without an alternative means of entry. In consequence, the use of promotion terms containing such a requirement may render the participant’s consent invalid and make the use of data collected in such a way significantly more difficult. Furthermore, in order to obtain valid consent to the use of data for advertising purposes, a clear and separated opt-in provision will always be required.
Christina Schulte- Braucks
Osborne Clarke, Cologne