Latitude recent case study: A good reminder to understand when the SPAM Act applies

What is a CEM and why do I care? 

A commercial electronic message (CEM) is a substantive tool of direct marketing. What defines a CEM from a purely factual message is its commercial purpose. That is, the purpose to either offer to supply, promote, or advertise a good or service.

CEMs are governed by the Spam Act 2003 (Spam Act) and have three required elements (1) consent of the recipient, (2) information about the sender, and (3) a valid unsubscribe function.

It is important to understand what is considered a CEM, and how to properly follow the policies in the Spam Act, as the consequences can be expensive.

As discussed below, the Latitude Case is a clear example of the Australian Communications and Media Authority (ACMA)’s position on companies that mischaracterise what a CEM is and is not.

The Latitude Case: A Warning

Latitude Finance Australia’s (Latitude) inability to correctly identify over three million emails and texts as commercial messages, resulted in the payment of a $1.55 million infringement notice to ACMA, which was issued on the 25th of July 2022.

An electronic message is commercial when its purpose is to offer to supply, advertise or promote goods and services, defined under section 6 of the Spam Act 2003 (Spam Act). ACMA’s investigation found that at least one purpose of each message sent by Latitude was to promote either their credit cards, or other products and services.

As discussed above, unlike factual statements, commercial electronic messages (CEMs) are only able to be sent with the consent of the receiver (16(2)), and all CEMs must contain a functional unsubscribe facility (18(1)).

As Latitude failed to recognise the electronic messages as commercial, they neither had the consent of the recipients, nor did the messages include an electronic address in which recipients could unsubscribe. Thus, ACMA found Latitude in breach of the Spam Act, resulting in the penalty, and a three-year court-enforceable undertaking in which Latitude must appoint an independent consultant.

ACMA Cracking Down

One of the seven ACMA 2022-23 compliance priorities is the enforcement of SMS and email unsubscribe rules. This is putting companies who are not effectively identifying and regulating CEMs into focus. Just within 2022, ACMA has found, along with Latitude, The Wine Group, Pineapple Funding Pty Ltd, and Sportsbet in breach of spam laws. With penalties for breaching spam laws in 2022 totalling to over $5 million.

Thus, it is very important to understand whether the emails your sending are commercial, and if they are, whether you are complying with all the laws and regulations. With ACMA Chair Nerida O’Loughlin warning, “All businesses are on notice that they must take their marketing compliance very seriously or we will take action.”

Want to know more?

If you are interested in the difference between factual statements and commercial electronic messages or want to understand whether you are adhering to spam laws, read ADMA’s Spam Toolkit: Direct Marketing and the Laws Around Spam. This toolkit is available to ADMA members-only.