New regulations governing the use of customer data for marketing are still widely misunderstood across the automotive retail and finance sector, experts claim.
The EU’s General Data Protection Regulation was introduced in May 2018 and has strengthened data protection regulations for all individuals within the EU, with the aim of give control of personal data back to consumers.
While there are currently data protection laws in place, the new legislation increases the level of compliance needed by companies and also introduces tougher penalties for data breaches and service failures.
However, executives at customer retention specialist Chrysalis Loyalty say there is still confusion about how GDPR affects customer renewal and retention marketing across the industry.
The main area of uncertainty is around reconciling direct marketing activity with the principle enshrined in GDPR of ‘legitimate interest’.
Chrysalis is encountering a widespread misconception that ‘legitimate interest’ is a one-sided principle relating to the data subject’s interests, when in fact GDPR guidelines specifically provide for the supplier’s right to conduct direct marketing activity in given circumstances.
In some cases, communication activities have been suspended unnecessarily.
Chrysalis believes that a crucial message has been lost in the legal interpretations of many businesses; that in almost all scenarios where a finance agreement already exists there is a legal basis for maintaining ongoing customer contact – often even in the case of ‘lapsed customers’.
Mark Fretwell, Chrysalis Loyalty product and marketing director, said: “It appears that many businesses have been reacting to GDPR as if the new rules infer that direct marketing does not fall under the banner of ‘legitimate interest’, when in fact it is clearly provided for in the regulations.
“It is perhaps no surprise that confusion has led to an over-cautious approach in some quarters because of conflicting legal opinion over what constitutes an ongoing right to remain in contact with a customer.”
UK information commissioner Elizabeth Denham has sought to provide clarity on the issue with recent statements.
Officials say they are focused on businesses that “deliberately, persistently or negligently misuse data”.
She added: “Some people are so concerned about being caught out by the new rules that they appear to be assuming marketing directly to consumers is no longer a lawful activity without specific permission. The reality is that what matters is providing a clear opportunity to opt out of such communications and then respecting that decision.”
Advice received by Chysalis Loyalty from a leading legal expert highlights that in most scenarios, where a finance agreement exists, there is a legitimate basis for maintaining ongoing customer contact – even with ‘lapsed customers’.
Fretwell added: “Under Financial Conduct Authority guidelines lenders have a duty to act in the best interests of their borrowers.
“It is clear that informing a customer where they are in their trade cycle; in some cases, having to inform them of pending excess mileage charges – or more often, what beneficial opportunities they have to renew their current car – falls under such a responsibility.”