Sending marketing emails to customers is an effective digital marketing strategy.
Attracting new subscribers and keeping existing subscribers is the key to business success when selling products and services online. Email lists are a valuable part of business goodwill.
While making it hard for subscribers to unsubscribe might make business sense, it needs to be legally compliant under the Spam Act.
Kogan.com made it hard to unsubscribe from its emails, but went too far and was fined.
This legal analysis explains the legal issues, followed by a marketing commentary.
Kogan’s ‘unsubscribe’ facility
Kogan is a leading Australia-based online retailer / shopping destination. It only sells online. Kogan.com has almost 2.2 million active subscribers.
It’s simple and easy to set up a subscription with Kogan.com to receive marketing emails. Customers are encouraged to ask for personalized offers and alerts on ‘items and brands we think you’ll love’.
But when the ‘love’ grows cold, and the customer wants to unsubscribe, it is not so simple and easy with Kogan.com. The unsubscribe process had two parts:
1. At the bottom of the ‘Kogan Subscriber Preference Centre’ web page, after offering a range of other alternatives, was this section:
2. When the consumer clicked the ‘Unsubscribe’ button, instead of a message such as ‘unsubscribe successful’, Kogan required customers to take additional steps. These were setting a password and logging into a Kogan account before the subscription was cancelled.
The ACMA findings and actions
According to the Authority that regulates marketing/spam emails, the Australian Communications and Media Authority (ACMA):
ACMA found that it was too hard for a consumer to unsubscribe to Kogan.com emails after the ‘Unsubscribe’ button was clicked.
These are extracts from the ACMA media release (MR 1/2021) Kogan breaches Australian spam laws (20 January 2021) which explains the findings and actions:
“An ACMA investigation found Kogan sent more than 42 million marketing emails to consumers from which they could not easily unsubscribe.
The ACMA found Kogan’s conduct breached the Spam Act, which requires commercial electronic messages to contain a functional unsubscribe facility.
“Kogan’s breaches have affected millions of consumers. The ACMA received complaints from a number of recipients of Kogan’s email expressing their frustration and concern with Kogan’s practices,” ACMA Chair Nerida O’Loughlin said.
“Businesses must comply with the unsubscribe requirements in the spam rules. This investigation makes clear that businesses can’t force consumers to set a password and login to unsubscribe from receiving commercial messages.
“The ACMA sent Kogan multiple compliance alerts before commencing this investigation. These notifications are designed to alert businesses of potential non-compliance with the Spam Act.
“We acknowledge that Kogan fully cooperated with the ACMA in our investigation and took actions to update their unsubscribe facilities prior to its completion,” Ms O’Loughlin said.
Kogan Australia Pty Ltd has agreed to a court-enforceable undertaking and paid a $310,800 infringement notice for breaches of Australian spam laws.
The ACMA has accepted a three-year court-enforceable undertaking from Kogan, requiring it to appoint an independent consultant to review its systems, processes and procedures, and to implement any recommendations from the review.
The undertaking also requires Kogan to train staff responsible for sending marketing messages and to regularly report back to the ACMA on actions taken in relation to consumer complaints.
“This substantial infringement notice and a comprehensive three-year court-enforceable undertaking sends a message to Kogan and other businesses that the ACMA will take strong action for breaches of the spam rules,” Ms O’Loughlin said.
What ‘unsubscribe’ facility will satisfy the ACMA and the Spam Act?
The ACMA provides this advice on its Avoid Sending Spam webpage:
₪ Make it easy to unsubscribe
You need to make it easy for people to unsubscribe from your electronic mailing lists.
Under the Spam Act, every commercial message must contain an ‘unsubscribe’ option that:
- presents unsubscribe instructions clearly
- honours a request to unsubscribe within 5 working days
- does not require the payment of a fee
- does not cost more than the usual amount for using the address (such as a standard text charge)
- is functional for at least 30 days after you sent the message
Unsubscribe examples that are clearly worded
Email:
To stop receiving messages from us, simply reply to this email with ‘unsubscribe’ in the subject line.
Or
If you no longer wish to receive these messages, please click on the ‘unsubscribe’ button below.
SMS:
Reply STOP
Unsub: (1800-number) ₪
The ACMA advice is drawn from section 18 of the Spam Act 2003 (Cth) which provides:
18. Commercial electronic messages must contain a functional unsubscribe facility
-
A person must not send, or cause to be sent, a commercial electronic message
…
unless:
(c) the message includes:
(i) a statement to the effect that the recipient may use an electronic address set out in the message to send an unsubscribe message to the individual or organisation who authorised the sending of the first‑mentioned message; … and
(d) the statement is presented in a clear and conspicuous manner; …
Conclusions
Kogan’s requirement that customers set a password and log into a Kogan account when unsubscribing was not expressly prohibited under the ACMA advice or the Spam Act.
The ‘unsubscribe’ facility was functional in the sense that if the additional steps were followed, the customer could unsubscribe.
Kogan justified its requirement as being to protect customer security against unsubscribe requests not authorised by the customer. The ACMA rejected this justification.
The ACMA decided it was not functional – it was not simple and easy to unsubscribe.
Kogan made a costly error of judgement in failing to change the ‘unsubscribe’ facility immediately after the ACMA had sent Kogan compliance alerts. This which might have avoided the investigation and fine.
The lesson for digital marketers is that all emails must contain an ‘unsubscribe’ facility which is functional in the sense that it is simple and easy to use.
A common problem is that a business continues to send emails even after a customer has unsubscribed. The ACMA fined Woolworth $1,003,800 in July 2020 for sending more than five million emails to customers after they had unsubscribed. For more see my article Woolworths spam email fails on legal and marketing levels.
Marketing commentary by Michael Field from EvettField Partners
One of the keys to successful online retailing is to make the online purchase process for the consumer as ‘frictionless’ as possible. Reducing the number of clicks and steps a consumer must take flows through to increased conversion rates, lower customer acquisition costs and less abandoned ‘shopping carts’ or ‘trolleys’.
The ACMA investigation found Kogan.com sent more than 42 million marketing emails to consumers which inserted additional steps into their unsubscribe process. The process would deter customers who had unsubscribed to resubscribe.
Given the sheer volume of emails sent, and the likely revenue generated from the campaigns, I question whether the Australian Communications and Media Authority (ACMA) penalty is sufficient to deter other online retailers from sailing close to the wind when it comes to compliance with the Spam Act?
