Australia: SPAM A LOT - SMS Marketing, SPAM And Recent ACMA Activity

Last Updated: 20 April 2009
Article by Matthew Hall

The popularity of SMS (or texting) continues to grow. With that, many businesses are using SMS to send regular communications to their customers, including account balance updates, appointment reminders and alerts about new products or services. However, while businesses may be aware of the potential benefits that SMS can deliver, they may not be so certain about the legal regulation surrounding commercial SMS communications.

Many businesses are aware of their obligations under the Spam Act 2003 (Act) in relation to emails, but do not appreciate that the Act applies to all commercial electronic messages, including SMS. Many businesses are not aware of what they must do to satisfy their legal obligations when sending commercial SMS messages.

Recently, the issue of SMS marketing and SPAM has been brought into the spotlight following the Australian Communications and Media Authority's (ACMA) crackdown on SMS marketing and spam, during which ACMA has issued significant fines and instituted Federal Court proceedings. The consequences of fines, court actions and penalties can be significant, from a monetary, regulatory and reputational point of view. ACMA's powers are broad, and the fines and penalties that can be imposed are significant.

ACMA's recent activities

In January 2009, Optus received the second largest fine issued since the introduction of the Act (and the largest issued in respect of SMS marketing) for sending 20,000 commercial SMS messages to its mobile customers. The messages contained promotional material relating to the OptusZoo mobile entertainment service.

While the messages identified the sender as '966' (which can equate to 'ZOO' when typed into a mobile phone keypad), ACMA considered that this was inadequate identification of the sender, as '966' could represent a number of different letter combinations on a mobile phone keypad. Optus was offered the opportunity to provide an enforceable undertaking to resolve ACMA's claim, but the terms of an undertaking could not be agreed. Subsequently, ACMA issued Optus with an infringement notice and $110,000 fine. Optus has paid the fine and implemented new compliance procedures to prevent future contraventions.

Small media business EMX recently agreed to provide ACMA with enforceable undertakings, which included a payment of $10,000 to ACMA, for allegedly sending 26,834 commercial electronic messages via SMS where the sender of the SMS was not clearly identified. In addition to the $10,000 fine, EMX gave a number of undertakings including undertakings to develop and implement a training program about the requirements of the Act and to conduct a quarterly audit of all commercial electronic messages sent and provide a copy report to ACMA.;

In a first for spamming using SMS technology, ACMA also instituted proceedings in the Federal Court against Mobilegate Ltd, Winning Bid Pty Ltd and Jobspy Pty Ltd (and associated individuals) for multiple contraventions of the Act, as well for misleading and deceptive conduct under the Trade Practices Act 1974. ACMA alleges that the companies sent or caused to be sent, unsolicited SMS messages to Australian mobile phone numbers via premium shortcodes, which:

  • advertised, promoted or offered to supply a test relay message service called 'Safe Divert';
  • offered to supply "fantasy" chat services at a cost of up to $5 per message; and
  • in conjunction with the use of fictional dating website profiles, attempted to dishonestly obtain a financial advantage or gain from Australian mobile users.

ACMA is seeking a number of remedies, including injunctions and penalties. If successful, any penalties will be set by the Court, to a maximum of $1,100,000 for each day for the companies and $220,000 for individuals. In proceedings against Clarity1 Pty Ltd for email spam activity, ACMA was successful in obtaining orders from the Federal Court requiring the company to pay a $4.5 million penalty, and requiring the sole director, Wayne Mansfield, to pay an additional penalty of $1 million, for contraventions of the Act.

From this recent activity it is clear that the issue is high on ACMA's radar, and every business that uses electronic messaging, including SMS, needs to be aware of that the laws that apply to SMS communications with customers, ACMA's recent approach to SMS marketing and spam and what businesses need to do to ensure SMS compliance.

The Spam Act 2003

'Spam' is a term that is generally associated with the distribution of thousands of emails to unsuspecting recipients. However, the definition of spam under the Act is not limited to emails, and spam does not have to be mass distributed - a single electronic communication that is a "commercial electronic message" that is sent without consent is spam under the Act.

Commercial electronic messages

An 'electronic message' includes emails, SMS, MMS and instant messaging. Voice telephone calls and facsimile communications are exempt from the Act.

An electronic message is a 'commercial electronic message' if the:

  • content of the message;
  • presentation of the message; and
  • linked content, telephone numbers and contact information contained in the message,

would cause a person to conclude that one of the purposes of the message was to offer or advertise goods or services, or to advertise or promote a supplier or prospective supplier of goods or services. Examples of commercial SMS may include messages promoting a warehouse sale, an 'alert' about a new product being released or an invitation to chat with another person for a fee.

Defining an SMS as being 'commercial' is not always clear cut - for example, is an SMS to a person reminding of an appointment a 'commercial electronic message'? The appointment reminder has a 'commercial purpose', as it directly relates to the provision of a product or service by a business, and depending on the content and presentation of the SMS, it may serve to 'promote' the product or service for which the appointment was made. Interestingly, if the appointment reminder is made by a voice call, that call is exempted from the Do Not Call Register. The situation exists where a business is permitted to make an "unsolicited" phone call to remind a customer about an appointment, but may spam the same customer by sending an SMS for the same purpose, if the message does not comply with the Act.

Unsolicited commercial SMS

The Act forbids the sending of unsolicited commercial SMS. A commercial SMS can only be sent when the intended recipient has consented to receiving that message. Consent can be express or inferred.

A person can expressly consent to receiving messages in a number of ways, including ticking a box on a form stating that they agree to receive promotional material from you in the future, or actively subscribing to a mailing list for your messages.

Alternatively, a person's consent can be inferred from their conduct, and any business or other relationships of the recipient and your business. Consent may be inferred in situations where, for example, a person has provided their mobile phone number when regularly purchasing a product or service with the general expectation of receiving subsequent messages, or where a person has 'conspicuously published' their mobile phone number on a website or in some other publicly accessible place (however, this inferred consent only extends to messages that relate to the person's business, functions, duties or role).

To avoid contravening the Act, any commercial electronic message must:

  • Identify the sender; and
  • Provide a functional unsubscribe facility.

Accurate identification of the sender

Sender identification must include accurate information about how a person can contact the business.

The extent to which this requirement applies to SMS communications is not entirely certain - since an SMS can have a maximum of 160 characters, it is unreasonable to require a business to include detailed contact information. However, as seen in the Optus matter, merely including part of the phone number or 'code' of the sender does not satisfy the identification requirement.

Functional unsubscribe facility

A functional unsubscribe facility consists of:

  • a clear and conspicuous statement to the effect that a person can use an electronic address contained in the message to unsubscribe from any further commercial SMS from your business; and
  • an electronic address that is capable of receiving unsubscribe messages for a period of at least 30 days after the commercial SMS is sent.

You must action an unsubscribe request within five working days of the unsubscribe message being sent.

An acceptable unsubscribe facility for a commercial SMS may take the form of a sentence at the end of the message reading: 'To opt out, sms 'STOP' to [unsubscribe telephone number]'.

There are limits on the fees that can be charged to send an unsubscribe message. If the message is a premium message service, additional rules apply.

Penalties and enforcement

The Act is administered by ACMA, and there are a number of enforcement options available when a breach or potential breach of the Act has been identified. These enforcement options include:

  • issuing a formal warning - issued for minor or unintentional breaches of the Act, and may include suggested remedial action to address ACMA's concerns;
  • issuing an infringement notice - which outlines the alleged breaches of the Act and may be accompanied by a fine for the alleged offence. The recipient of an infringement notice can contest the notice, or it can pay the fine. If the fine is paid within 28 days, the matter is resolved without an admission of guilt or conviction being recorded;
  • requiring the provision of enforceable undertakings - ACMA may accept enforceable undertakings in relation to an alleged contravention of the Act. The undertakings may require the individual or business to:
  • pay a fine to ACMA;
  • implement staff training programs on the requirements of the Act;
  • carry out regular audits of all electronic messages sent to clients or customers; and
  • undertake that it will not send any further electronic communications which contravene the provisions of the Act;
  • instituting proceedings in the Federal Court - ACMA can bring proceedings in the Federal Court against an individual or business for breaches of the Act, and can seek a number of orders including the payment of fines, compensation, injunctions and declarations.

Fines for contraventions of the Act can be significant - businesses may be liable to fines of up to $1.1 million per day, and up to $220,000 per day for individuals while the contravening activity continues.

The implications of ACMA's recent activity - do you have an SMS checklist?

While ACMA has demonstrated a preference to resolve breaches of the Act by issuing infringement notices and accepting enforceable undertakings, it will commence litigation where it considers the contraventions of the Act to be particularly serious, or where a party has engaged in infringing activities over a substantial period of time.

To avoid contravening the Act, and becoming the subject of an ACMA investigation, a business needs to ensure that all of its employees understand the obligations which exist when SMS communications are sent to customers or clients. To this end, a business can establish an SMS policy, containing clear guidelines on acceptable formatting and content for SMS communications sent to customers, as well as instituting staff training programs on the requirements and obligations owed by the business under the Act. Any business that uses SMS or other technology as part of its communications with customers also must have a process for ensuring that all commercial electronic messages clearly comply with the Act.

Swaab was recently named winner 'Best Law Firm in Australia (Revenue < $20m)' and 'Attribute Award for Exceptional Service (Australia Wide)' and at the 2008 BRW- Client Choice Awards.

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.

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