Social Media and Events: Possible Solutions to Cold Call Affected by GDPR

Recently, an insider informed Fazzaco that a well-known CySEC-licensed forex broker may face a penalty as the regulator received complaints over cold calls trying to persuade retail customers to make a deposit, claiming the broker's behavior goes against EU's General Data Protection Regulation ("GDPR").

GDPR

GDPR, agreed upon by the European Parliament and Council in April 2016, replaced the Data Protection Directive 95/46/ec and came into effect on May 25, 2018, as the primary law regulating companies that handled EU citizens' data.

GDPR's key content and data protection requirements include:

• Requiring the consent of subjects for data processing

• Anonymizing collected data to protect privacy

• Providing data breach notifications

• Safely handling the transfer of data across borders

• Requiring certain companies to appoint a data protection officer to oversee GDPR compliance

Obviously, the public lodged a complaint against the broker because it violates GDPR, which stipulates 6 lawful bases where a company is allowed to use and process personal data legally. 4 cases are for specific scenarios, and for most companies, only the remaining 2 cases can be used for commercial activities.

The first case is consent. "Consent should be given by a clear affirmative act establishing a freely given, specific, informed and unambiguous indication of the data subject's agreement to the processing of personal data relating to him or her, such as by a written statement, including by electronic means, or an oral statement."

The wording here clearly indicates that the data subject needs to express their intention to accept marketing materials and have the right to understand the certain marketing types. For instance, if a forex broker collects a trader's email address, with consent of course, then the platform can only contact the trader via email instead of via phone calls, as the trader may not expect a call from the broker.  

The second case is legitimate interest. "Processing is necessary for the purposes of the legitimate interests pursued by the controller or by a third party except where such interests are overridden by the interests or fundamental rights and freedoms of the data subject which require protection of personal data, in particular where the data subject is a child."

This case is more flexible, since it depends on the forex broker's actions. The Information Commission's Office ("ICO") suggests a three-part test, i.e.:

• Purpose test – is there a legitimate interest behind the processing?

• Necessity test – is the processing necessary for that purpose?

• Balancing test – is the legitimate interest overridden by the individual's interests, rights or freedoms?

No matter which case is, brokers need to keep record of it for review by regulatory bodies. One thing should be noted is that customers have the right to decline the marketing and also to withdraw a consent that they have explicitly expressed in the past, under which circumstance forex brokers should stop marketing immediately.

Stricter EU Market

Recent years has witnessed tightened regulation across the EU nations. Other than advertising, marketing, and data protection, EU regulator are enforcing more stringent laws to supervise financial activities.

ESMA announced to prohibit the sales, distribution, and marketing of binary options​ for 3 months in mid 2018. FCA decided to permanently prohibit selling, marketing or distributing binary options to retail consumers on April 2, 2019. CySEC banned binary options and related activities starting from July 10, 2019.

In terms of forex trading, ESMA limited the leverage to 30:1 at maximum in March 2019, followed by stricter moves by CySEC with lower leverage for each trading asset than ESMA.

EU is not as open to crypto assets as El Salvador. Regulatorrs there are seeking methods to supervise digital assets and try to maintain its financial attribute.

How Do Brokers Onboard Clients?

If forex brokers feel hard to cold call, they should figure out new way to establish ties with customers.

Fazzaco has summarized some common marketing​​ ways, such as google and sports sponsorship. This may be helpful for establishing reputation and increasing exposure, but it's not a good idea to directly contact customers.

Social media platforms seem to be a good solution. Forex brokers often gather their customers to a community for sharing trading knowledge and skills. Salespersons can easily access customers' contact info and would not cause aversion among traders.

Physical evens would be a better choice as visitors can directly have a face to face chat with employees of an exhibitor, which creates a sense of security and intimacy. Fazzaco is going to hold Expo in Dubai at Festival Arena on October 12-13​ with free tickets to local visitors, which is expected to bring higher traffic than normal events. Now exhibitors have amounted to over 50.

Fazzaco also offers banners, content marketing opportunities, email blast, paid ranking, and other customized marketing opportunities to our clients. For more information, please contact ad@fazzaco.com.