Earlier this year, the Australian Communications and Media Authority (ACMA) issued a record penalty of $2.5 million to Sportsbet for breaches of Australia’s Spam Act 2003.
This amount is the largest infringement notice penalty issued by ACMA. Further, Sportsbet is required to issue customer refunds which will total approximately $1.2 million for money lost on bets associated with the spam messages.
This enforcement action is a timely reminder to all direct selling companies to ensure that their electronic direct marketing processes and the messages themselves comply fully with the Spam Act.
Between January 2020 and March 2021, Sportsbet sent marketing texts and emails to consumers which included:
- incentives to place bets; and
- upcoming race alerts.
In an investigation conducted by ACMA, Sportsbet was found to have sent more than 150,000 text and email marketing messages to more than 37,000 consumers. Some of these customers had tried to unsubscribe from marketing campaigns but were not removed from marketing lists. Further, more than 3,000 marketing messages were sent without an unsubscribe function.
In addition to the payment of the $2.5 million penalty, Sportsbet has provided a three-year court-enforceable undertaking which requires it to:
- implement a compensation program to refund those customers who lost bets made in connection with the spam messages. The amount of refunds is estimated to be about $1.2 million; and
- review its policies, systems and training, with the review to be conducted by an independent consultant.
Does your business keep records of marketing consents?
The Spam Act requires that any electronic marketing messages are sent only with the recipient’s consent. Consent may be:
- express consent eg where a recipient ticks a box to subscribe to a newsletter or fills in a form; or
- implied consent eg where a person has an ongoing relationship with the business (which can be verified) and the marketing messages relate directly to the relationship (such as where the recipient has subscribed to a service and the relevant marketing message relates to the service).
It is important to keep a record of how and when a person provides their consent. Should your business be the subject of an ACMA investigation, details of records of consent may be requested by ACMA. Would your business be in a position to provide records of this nature?
Do your marketing messages comply with the unsubscribe requirements?
Electronic marketing messages must contain an unsubscribe option which is functional for at least 30 days after the message is sent. Unsubscribe instructions must be presented clearly. Exercising the unsubscribe option must not require the payment of a fee and cost no more than the usual cost of exercising the option (for example a standard text charge if texting STOP to op-out). Any unsubscribe requests must be actioned within 5 working days. Do your marketing messages comply with these requirements?
An expensive cautionary tale
Sending marketing materials without a recipient’s consent, or to someone who has unsubscribed, breaches the Spam Act. All direct selling business are strongly recommended to review their marketing programs and systems to ensure that they comply fully with their obligations under the Spam Act and, if they are a member of Direct Selling Australia (DSA), their obligations under DSA’s Code of Practice which apply to their marketing activities.
Electronic marketing messages must not be sent to recipients who have not provided consent or who have unsubscribed.
Getting it wrong can be very costly!