Australia: Chalk and Cheese? Striking a balance between compliance and an effective social media presence – Part 1

Last Updated: 15 March 2017
Article by Dudley Kneller

Can it be done is the question! Establishing an effective social media presence is now such a crucial aspect of doing business in Australia. For those in the technology, media and communications industries it is almost a given that your presence online is cutting edge, pushing the boundaries and engaging customers and stakeholders alike. But how do you live at the social media coal-face constantly striving to innovate and promote your brand whilst also trying to comply with a myriad of Australian laws which may be holding you back?

How do you manage privacy risks as your customers become more savvy about how their personal information is used? The Privacy Commissioner has social media activities in his sights and the Privacy Act 1988 (Cth) (Privacy Act) has evolved at least in part to deal with personal information obligations online.

These are all questions and challenges facing many Australian businesses. The challenge is particularly acute for the technology sector as they are expected to lead from the front and in some ways face a stricter review process when it comes to their presence online.

This paper is the first part in a two part series and takes a look at two of the four of the key compliance challenges faced by those in the technology, media and communications (TMT) industries when engaging in social media activities – privacy and spam. We tackle ACCC compliance and intellectual property regulation in part two. The paper provides some observations on the increasing burden of regulatory compliance which all Australian organisations need to take on board. It also provides some insights on how some organisations are managing this burden yet still effectively competing online and using social media for the benefit of their customers and shareholders alike.

Australian regulatory framework

Australian businesses in the technology sector are required to comply with a number of laws which impact their activities online. The most obvious law and the one that tends to receive the most attention is the Privacy Act. However that is not the only one. The Spam Act 2003 (Cth) poses similar obligations in relation to electronic communications but is often left behind as organisations focus on meeting privacy obligations. Intellectual property laws have evolved in recent times too but rights holders still face an up-hill battle online. Not to be left behind the ACCC too has recently broken new ground under the Australian Consumer Law which we discuss in Part two.

Turning first to privacy compliance we will look at these broad compliance issues in turn.

Privacy Act

The Privacy Act applies to the handling of personal information by Australian Commonwealth government agencies, ACT government agencies and private sector organisations. Organisations will need to satisfy themselves that they are required to comply with the Privacy Act as there are some exceptions which do apply.

For those businesses which are required to comply, the Australian Privacy Principles (APPs) published in March 2014 comprehensively cover the typical lifecycle of personal information from when it is first collected by an organisation, to how it is managed and used within that organisation including any retention and disclosure activities, until it is finally destroyed. The APPs were brought into place in March 2014 and ushered in the single biggest change in privacy policy in Australia since the Privacy Act came into being back in 1988. The recent APPs emerged as a result of a 2008 privacy review by the Australian Law Reform Commission (ALRC). Six years is a long time in the technology world and many of the changes whilst broadly improving the rights of individuals in relation to their personal information, took little account of the technology changes occurring at the time and for which we now take for granted.

From a privacy perspective there are a number of compliance challenges for technology companies undertaking social media activities. These include managing consent issues when embarking upon big data projects which combine data from multiple sources to assist with market intelligence, spending habits or product preferences to name a few.

Privacy also raises its head when organisations use social signons or SSOs for their customers. Whilst increasingly common place, there are some known security risks with SSOs that have implications for compliance under the Privacy Act. APP 11 requires an APP Entity to take reasonable steps to protect personal information it holds from misuse, interference and loss and from unauthorised access, modification or disclosure.

Geo-targeting activities and services such as Facebook ad serving are "targeted" towards specific users and often amount to direct marketing activities. APP 8 imposes strict requirements in relation to consumer marketing activities which will be triggered by Facebook and other social media advertising campaigns.

These privacy issues apply broadly to all organisations in Australia which fall within the scope of the Privacy Act who are conducting social media activities. From a TMT industry perspective one recent case highlights the higher standard which arguably applies to those in the sector. Let's look at that case now.

Personal information which has been de-identified (or re-identified)?

There have been recent discussions in relation to the use of de-identified personal information in data analytics. If personal information is de-identified it does not fall within the scope of the Privacy Act and can therefore be used more flexibly.

These issues were considered in a May 2015 determination of the Australian Privacy Commissioner in Ben Grubb v. Telstra Corporation, which centred around journalist Ben Grubb's request to access telecommunications metadata held by Telstra Corporation Limited (Telstra) relating to Mr Grubb's use of Telstra mobile services.

Looking at the requirements under the Privacy Act prior to the 2014 amendments, to fall within the definition of personal information, the individual's identity must be "apparent" or "reasonably ascertained" from the information. As part of the Commissioner's investigations into the information held by Telstra in relation to Mr Grubb, he closely examined whether information held across multiple systems could amount to personal information when considered as a whole. The capacity of the organisation to access and extract this information across multiple systems was also carefully examined. The Commissioner specifically noted as follows:

Telstra's handling of tens of thousands of requests made by law enforcement bodies, together with its recent public statement affirming that customers may access their metadata on request, suggests instead that Telstra has the capacity through the use of its network and records management systems to ascertain the identity of an individual and this process of ascertaining an individual's identity does not exceed the bounds of what is reasonable.

The Privacy Commissioner found in the case of Mr Grubb that, while the process of information retrieval may be lengthy and/or complex, Telstra was not able to show that the process of cross-referencing different systems to provide the relevant information is beyond what is reasonable relative to its resources and existing operational capacities.

The Privacy Commissioner went on to find that a broad range of information collected and used by Australian businesses in anonymised form may be regarded as 'personal information' where a business has the ability to cross-link that information to an identifiable individual, even where that cross-linking is not a normal business activity or administratively impractical and burdensome.

The case has received mixed responses and immediately following the decision, Telstra appealed to the Administrative Appeals Tribunal (AAT). The AAT took an opposing view to the Privacy Commissioner and found that the information was not personal information for the purposes of the Privacy Act.

Not to be outdone the Privacy Commissioner appealed the AAT decision in January 2016, arguing that the interpretation of personal information by the AAT was too "narrow" in the circumstances. The appeal by the Privacy Commissioner was quite specific in this regard and centred on the relevance of the phrase "about an individual" within the definition of "personal information". The Privacy Commissioner was of the view that this phrase was redundant within the broader definition and that the definition of personal information was to be regarded as more expansive.

A year has now passed since the appeal was made and the Full Court of the Federal Court has only recently brought down its decision on January 19 2017. Unanimously dismissing the appeal by the Privacy Commissioner, the Court held that the phrase "about an individual" was important after all. The decision by the Federal Court supports the position that not all information relating to an individual will necessarily be considered "personal information". It needs to be "about an individual" to fall within the requirements.

With the decision only very recent it is still a little early to say what impact it will have for technology companies managing privacy risks in a social media context and more broadly for that matter. In some ways there is now a slightly reduced risk for those in the TMT sector. Technology companies running multiple systems which integrate with and support one another across the organisation were until this decision likely to find that when undertaking such data cross-referencing activities there was an increased risk that previously unidentified information may be regarded as personal information.

The Federal Court decision appears to have given the TMT sector some respite from the the Privacy Commissioner who had at first instance clearly been prepared to impose a higher standard on sophisticated organisations with the capability and resources from a technology infrastructure perspective.

Spam Act, 2003

With compliance with the Privacy Act often taking centre stage, the Spam Act 2003(Spam Act) is often overlooked by organisations which focus on ensuring they comply with APP 8 under the Privacy Act. Penalties for breaching the Spam Act are up to $1.1 million per day, in respect of all the messages sent in breach of the Spam Act on that day. There are a raft of other remedies including enforceable undertakings which the Australian Communications and Media Authority (ACMA) can impose.

So what is spam?

Spam is any Commercial Electronic message (CEM) that breaches the Spam Act. Spam does not just include the mass distribution of electronic messages – a single electronic communication may also be considered spam. Electronic messaging includes email, instant messaging, short message service (SMS) and multi message services (MMS). For a message to be spam it must be commercial in nature. That is it must contain a commercial offer, advertisement or promotion. The message may offer, advertise or promote goods or services or direct a person to a location (for example a website) where goods and services are being promoted. The goods or services could be those belonging to the organisation or to a third party.

Some messages will obviously be commercial in nature. For example, messages promoting an organisation's goods or services or a campaign to launch a new product line. An electronic message can still be commercial even if it does not refer to any particular goods or services. A general brand awareness campaign is a possible example of this. Purely factual messages are not considered spam. These include customer notices advising scheduled maintenance activities or monthly service reports etc. It is important to note however that an organisation cannot "dress up" a commercial message with a factual element and hope it doesn't contravene the Spam Act.

The Spam Act prohibits sending unsolicited CEMs with an Australian link, unless the recipient has consented to receiving the message.

CEMs must also contain clear and accurate information identifying the sender of the message and a functional unsubscribe facility for recipients to opt out of receiving such messages in future.

Functional unsubscribe requirements can pose risk

From a TMT sector perspective it is the functional unsubscribe requirement that often poses risk.

The basic rule is that organisations should effectively ensure that all CEMs include a functional unsubscribe or opt out facility allowing recipients to indicate that they do not wish to receive CEMs in future.

An unsubscribe facility must be clearly presented and easy to use. It should include a clear and conspicuous statement that a person can use an electronic process contained in the message to unsubscribe for any future CEMs. The address must be capable of receiving unsubscribe messages for at least 30 days after the CEM was sent.

Organisations are required to comply with an unsubscribe request within 5 working days after the unsubscribe message was sent (for electronic unsubscribe requests) or delivered (for unsubscribe requests sent by post or other means). Any CEM sent after this 5 working day period may be in breach of the Spam Act.

The technology sector sees its ongoing fair share of consolidation and restructuring activities whether through merger and acquisition, divestment or broader restructuring. The requirement to effectively integrate new companies or business units into a group structure can often pose a compliance challenge. Many Australian companies have experienced compliance issues in this context with functional unsubscribe capabilities. Companies are encouraged to carefully "wash" through marketing databases following any restructure including an acquisition to ensure that previously unsubscribed users are not inadvertently caught up.

Managing the social media compliance challenge – wrap up

An effective and successful social media presence boosts brand awareness, reinforces customer engagement and adds to the bottom line. The ability to engage with users online in real time via Twitter, Facebook or LinkedIn cannot be replicated in the offline world. However, social media activities present some compliance risks. We have briefly looked at the challenges presented by privacy and spam compliance.

In Part two we will look at the regulatory oversight now increasingly occurring via the ACCC and other regulators as well. Part two also looks at an evolving common law in relation to intellectual property rights holders. Whilst there are compliance challenges faced broadly by all Australian business, what we are seeing however is that the TMT sector is being held to a higher standard of compliance. Whether it is because the industry has been an early adopter of social media activities or because regulators or the Courts themselves expect more, it is not clear. What is clear is that those operating in the sector can continue to expect an increased level of scrutiny. Having this awareness and a willingness to ensure any social media activities are properly undertaken with regard to compliance obligations will go a long way to ensuring those companies continue to compete successfully in an online world and that those activities do not attract the undue interest of the Courts or regulators.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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