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Commercial and Corporate update: Don’t get canned for Spam!

Oct 15, 2013

GraysOnline cops massive fine for breaching Spam Act.

The Australian-based online retailer ‘GraysOnline’ has been fined a record $165,000 by the Australian Communications and Media Authority (ACMA) for breaching the Spam Act.

Spam is the common term for electronic ‘junk mail’. The legislation covers the sending of unsolicited commercial electronic messages, whether by e-mail or by text messages. (It does not include phone calls or mail-outs, which may be subject to other regulations).

The Spam Act requires that commercial electronic messages, whether sent by electronic mail or text, must only be sent with the consent of the recipient. This consent may be implied or express. It can also be withdrawn. The legislation requires that all such messages include a functional unsubscribe or opt-out mechanism.

Grays’ conduct

Grays was alleged to have sent around 700,000 emails to subscribers to promote its ‘GraysEscape’ website. These emails did not include the opt-out function required under the legislation. Further, approximately 300,000 of the email recipients had previously opted out of receiving further communications from Grays, yet received them nevertheless.

Grays argued that the emails sent were not promotional in nature and, as such, that the messages were not commercial messages for which consent was required. This argument was rejected.

Record-breaking fine

The $165,000 fine was the largest imposed by ACMA in the 12 year history of the legislation, although courts have handed out larger penalties in rare circumstances.

ACMA’s deputy chairman, Richard Bean, said “This case demonstrates the domino effect one wrong decision can have…Businesses take a huge risk if they decide an email doesn’t need to comply with the Spam Act.”

Fines for unsolicited SMS messages

In a further recent development, a nightclub in Melbourne, The Brown Alley has just been fined $15,000 for sending more than 50,000 text messages without an opt-out function.

What you need to know

A surprising number of businesses are unaware of their obligations under the Spam Act. One of the difficulties in complying with it lies in determining whether given individuals have consented to receiving emails, especially as the law allows consent to be implied in some circumstances in light of the relationship between the parties.

Other difficulties arise in determining whether any consent given by a proposed recipient is broad enough to encompass the subject matter of the proposed communication.

We regularly advise clients on their obligations under this, and other, related regimes, such as privacy, door-to-door marketing regulation under the Australian Consumer Law and the Do Not Call Register.

More information

For more information, please contact Jeremy Goldman, Principal Lawyer, on (03) 8600 8886 or jgoldman@kcllaw.com.au or Daniel Kovacs, Special Counsel on (03) 8600 8859 or dkovacs@kcllaw.com.au.

Note: This update is a guide only and is not intended to constitute legal advice.