The fast-food chain Pizza Hut has recently been hit with a $2.5 million fine for contravening laws that regulate how marketing material can be sent, along with an undertaking that their marketing be independently reviewed for compliance for the next three years. They join many other businesses who over the past 18 months have together paid a total of $18 million in fines for similar infringements. This most recent penalty is a reminder of the importance of businesses to ensure that their marketing complies with regulations.
The use of marketing emails, texts and other electronic methods has been regulated in Australia for over two decades by the Spam Act 2003. Broadly speaking, it prohibits the sending of marketing material electronically without consent (be it express or implied through conduct) and also sets out the requirements of such marketing, including clearly identifying the sender and requiring the ability to unsubscribe from future marketing.
The investigation by the Australian Communications and Media Authority (ACMA) found that Pizza Hut had committed 10,306,180 contraventions of the Act affecting 116,110 people. ACMA sent 15 compliance alerts to Pizza Hut prior to its investigation. The nature of the contraventions included:
- Emails being sent to individuals who had only consented to SMS messages;
- Emails and texts being sent without a functional unsubscribe option; and
- Texts sent without accurate information of the sender (including how to contact that organisation).
The report of ACMA's findings, including the submissions made by Pizza Hut, show a number of root causes for these contraventions, including:
- Messages being sent more than 5 business days after the recipient had unsubscribed from marketing emails;
- A templating error causing messages to be sent with a faulty hyperlink to unsubscribe;
- Misuse of filters used with marketing tools;
- Errors from third-party service providers; and
- Procedural breakdowns, including insufficient approval processes.
The fines for contravening the Act can be significant, with Pizza Hut's $2.5 million fine only relating to approximately 10% of the total contraventions identified in ACMA's report.
This penalty is a reminder to businesses that marketing compliance should be more than just keeping a subscriber list. Businesses need to make sure:
- That unsubscribe features are available and fully functional;
- That hyperlinks provided in emails and SMS texts are functional and templates well maintained;
- That they have sufficient oversight of any third-party providers to ensure they are complying with any relevant regulations; and
- There is oversight of marketing material to ensure compliance and early identification of errors.
Carroll & O'Dea Lawyers have extensive history assisting businesses with regulations relating to marketing from emails to trade promotions and are happy to help businesses navigate the many regulations involved in modern marketing.
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.