Service providers who contact existing customers to renew contracts or subscriptions risk breaking Hong Kong's personal data protection laws if these customers opt out of direct marketing, according to a landmark ruling on Wednesday.

Internet service provider Hong Kong Broadband Network (HKBN) has been fined HK$30,000 at the Tsuen Wan Magistrates' Court, following the city's first conviction under the new personal abuse rule that took effect on April 1, 2013 by an amendment to the Personal Data (Privacy) Ordinance.

Data compilers, under the new law, have to gain the consent of individuals providing personal data before using such data for direct marketing purposes.

A HKBN subscriber, surnamed Chan, wrote to the company in April 2013 saying he did not want his data to be used for direct marketing. Just a month later, a customer service executive contacted Chan and left a voice message. The message mentioned a special renewal offer ahead of a planned fee rise.

Chan's complaint made to the Office of the Privacy Commissioner for Personal Data two years ago became the first case involving the new personal abuse rule to be heard in the court. It is expected to set a precedent for other service providers. The company pleaded not guilty, arguing the call was merely a reminder that Chan's subscription had expired.

But Magistrate Debbie Ng Chung-yee, referring to the company's template conversation transcripts approved by its legal advisors, ruled that HKBN had instructed customer service executives to use subscription renewals as a "prologue" to pitch new services and contract renewal offers.

The judge arrived at this conclusion based on the flow of the phone conversations - in particular, HKBN callers were instructed to fix another time to call again. This was even after subscribers were informed of the deadline and had responded by saying they wanted to deal with expiry of the service later.

Chan still had more than six months before his contract expired when the call was made. A subscriber was expected to be aware of the terms of contract with or without a reminder, Ng noted.

Such a reminder could easily have been issued to the subscriber several weeks before the deadline.

She also deemed a conversation over the phone as unnecessary to make that reminder, noting a text message or a letter would have been more than enough.

The promotion of new contracts breached the direct marketing rule, Ng added, since it had not been included in the data usage clauses agreed to by subscribers.

HKBN had earlier defended itself saying that the caller, who has since resigned, was not following instructions. But Ng said there was no hard evidence that the company made efforts to prevent such breaches and, had the caller followed those scripts, her action would still likely have constituted an offense.

The company, in Ng's reasons given for the conviction, had used "expiration reminder" as an excuse and disregarded the subscriber's will to stay out of direct marketing. A HKBN spokesperson told media outside the court that they will study the reasons and file an appeal against the "disappointing" outcome.

But the spokesperson did not take questions, such as whether HKBN would change internal practices in light of the verdict.

Deputy Privacy Commissioner for Personal Data Fanny Wong Sam-hing commented that the verdict has drawn a clearer line between customer service and direct marketing for businesses that provide services through contract commitment. She hoped the sentence would act as a deterrent.

The maximum penalty for the offense for which HKBN has been convicted is a HK$500,000 fine.

The office received 509 complaints between April 2013 and August 2015, of which 45 cases were referred to the police. The court will hear another four cases soon, including that of a moving company which will stand trial next Monday. Other defendants include a beauty salon, a body check clinic and an insurance company.

kahon@chinadailyhk.com

(HK Edition 09/10/2015 page6)