REPORT Manufactured Consent: Stopping the harm from manipulative lead generation
Lead generation – the process of identifying people as potential sales targets and harvesting their contact details for future sales pitches – has become a significant source of consumer harm. Lead generation activity is commonplace in Australia’s digital economy and occurs at arm’s length from businesses making a sale. It can serve to manufacture consent to an ‘unsolicited’ sale and avoid the limited protections in the Australian Consumer Law and anti-hawking protections in financial services laws.
Manipulative lead generation is the collection and sale of consumers’ personal information for marketing – but without people understanding what contact they’ve ’consented’ to and which companies can access their information.
Lead Generation is not “just advertising” and does not provide consumers with genuine choice between competing offers. Instead, lead generation sorts and steers consumers through systems designed to manipulate them towards decisions they may not otherwise have made. The potential for harm has been made abundantly clear from the recent collapse of the First Guardian and Shield Master Funds. Around 11,000 Australians lost more than $1 billion, after lead generators referred victims to financial advisors who convinced investors to move their retirement savings into the high-risk funds.
While lead generation is not a new practice, the explosion of digital marketing has allowed lead generators to significantly grow their reach. As we increasingly conduct much of our lives online, lead generation has become a problem we need to grapple with – including banning it where the risks are too high.
From what we see on our frontlines, lead generation is often involved in aggressive, high-pressure sales of unaffordable or poor-quality products and services. People’s personal data is also exposed to risk of leaks and misuse as a result. Lead generation activity cuts across marketing, privacy, and consumer law, creating a high-stakes regulatory challenge that needs coordinated action from agencies and legislators.
In this paper, we examine how to effectively reduce the harm caused by lead generation. Drawing on casework from Consumer Action Law Centre (Consumer Action) and other community legal centres, as well as input from stakeholder consultation, we outline the harms caused by manipulative lead generation, identify gaps in Australia’s current regulatory approach, and present proposed reforms.
We propose a comprehensive approach to regulating lead generation, including:
- banning lead generation in high-risk sectors;
- expanding the Unfair Trading Practices (UTP) ban to cover financial products and services and explicitly name lead generation in the ‘grey’ list
- regulating lead generation advertising on digital platforms; and
- strengthening consent and disclosure requirements.
Implementing these reforms will require coordinated regulatory responses, legislative change, and increased resourcing of the Australian Competition and Consumer Commission (ACCC) and other regulators for compliance and enforcement.
Read the full submission (PDF).
Manufactured Consent – stopping the harm from manipulative lead generation PDF