The operative parts of the Spam Act 2003 (Cth) came into effect on 10 April 2004. Almost exactly 2 years later, the Federal Court in Perth has handed down the first judgement arising from substantive proceedings under the Act.
In the case of Australian Communications and Media Authority v Clarity1 Pty Ltd and Mansfield  FCA 410, the respondents were a company which traded as "Business Seminars Australia" and its sole director, Wayne Mansfield, who represented himself and the company at trial.
The ACMA commenced proceedings in 2005 alleging that the respondents had sent in excess of 200 million unsolicited emails in contravention of the Act. The messages had been sent to addresses obtained with address harvesting software, which is a separate breach of the Act. It was not suggested that the messages themselves were misleading or deceptive.
Clarity1 and Mansfield are not the first Australians to be prosecuted for spamming. The Federal Trade Commission has pursued Australian companies for contraventions of the USA’s CAN SPAM Act, which came into effect in January 2004. However the Clarity1 case provides us with the first judgement to consider in detail, the operation of Australian anti spamming laws.
How The Spam Act Works
The Spam Act regulates "Commercial Electronic Messages" (CEMs), namely emails promoting the sale of goods or services or the suppliers of goods and services. Section 16 prohibits the sending of a CEM that has an "Australian link" (eg. it is sent from Australia, or by an individual or organisation located in Australia, or received in Australia) unless the recipient has consented to the sending of the message.
The prohibition does not apply to a "designated Commercial Electronic Message". These include CEMs from charitable or religious bodies, and CEMs sent by an educational institution to current and former students in relation to goods and services supplied by the institution.
These parts of the Act are central to its operation and were the subject of various arguments by the respondents, many of which turned on the issue of recipient’s consent.
Some of the respondents’ arguments were quickly disposed of by the presiding judge, Nicholson J. The respondents claimed that the messages were sent on behalf of charitable institutions, and were therefore designated CEMs. Unfortunately, Mr Mansfield had given contrary evidence in an interview conducted in an investigation pursuant to s522 of the Telecommunications Act, which could be admitted into evidence because, pursuant to s524 of that Act, Charity1 could not claim privilege against self incrimination.
Another unsuccessful argument involved unsubscribe facilities. Section 17 of the Spam Act requires all CEMs to contain such a facility, which enables recipients to send a return message to indicate they do not wish to receive further emails. The respondents were able to show that they had included these facilities in their emails and had meticulously complied with 166,000 unsubscribe requests. They submitted that everyone who didn’t make such a request had implicitly consented to the receipt of further messages.
One of the many reasons given by Nicholson J for rejecting this implied consent argument was that using an unsubscribe facility confirms to a spammer that the email address exists. This can result in the recipient becoming a target for more spam and is a very good reason not to use such a facility.
The respondents had a small win when arguing that they had a business relationship with the recipients of their emails, from which consent could be inferred in accordance with Schedule 2 of the Act.
Their most ambitious submission appeared to be that because some of the recipients had been receiving spam from them for years, they must be consenting to receiving more. This argument did not get up. But the judge did accept that it could be inferred that 182 people who had actually placed orders with Business Seminars Australia had, in the absence of any contrary indication, thereby consented to receiving further CEMs from the respondents.
This seems to have been the extent of the respondents’ success at trial. Due to their failure to respond to a notice to admit facts issued by the applicant, the judge found that they had sent over 40 million CEMs between April 2004 and April 2005. He also rejected their argument that their use of address harvesting software was not illegal because much of it had occurred before the enactment of the legislation. The Judge found that the provisions of section 22 depend on the date of use of harvested addresses, not the date of harvesting.
At the time of writing the Judge was considering submissions as to penalty. When that decision is made it will, no doubt, be trumpeted as a victory in the war against spam, which may provide a small measure of comfort next Monday morning as you clear the weekend’s crop of CEMs from your inbox.
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