Experts warn brands to rethink email marketing as Optus cops $500k fine for spamming customers

Fine for breaching Australia's Spam Act is the second-largest ever handed out by the ACMA

The industry is warning brands to think twice about the way they approach digital marketing after Optus received Australia’s second-largest infringement notice for spamming customers with email and SMS marketing messaging.

The SingTel-owned telco has paid a $504,000 fine after an Australian Communications and Media Authority (ACMA) investigation found the company breached spam laws by sending customers email and SMS marketing after they had unsubscribed. The activity occurred between 1 June and 4 December 2018.

In addition, the ACMA found Optus had sent billing notices that did not include an unsubscribe facility.

ACMA chair, Nerida O’Loughlin, said the fine send a hefty warning to marketers to listen to consumers and respect their choices. The regulatory found about 2 million breaches over the six-month period.

The regulator has accepted a court enforceable undertaking from Optus to ensure its future compliance with Australia’s Spam Act, and the telco has also committed to appointing an independent consultant to review systems, policies and procedures for compliance with spam rules.

“This is the second-largest infringement notice that has ever been paid to the ACMA, and the largest paid for spamming,” she explained. “It reflects the seriousness of breaches made by Optus and its failure to honour its customers’ wishes to unsubscribe, in some cases on multiple occasions.

“Australians fine spam infuriating and as a regulator, it is something we are actively cracking down on.”

Optus vice-president regulatory and public affairs, Andrew Sheridan, said the telco acknowledged the ACMA’s action and apologised to customers who received messages in error.

“We have committed to putting in place enhanced practices and systems to tighten the management of our marketing communications and will continue to work constructively with the ACMA on this matter,” he stated.

O’Loughlin added the ACMA will be actively monitoring Optus’ progress.

“The undertaking should significantly reduce the risk of ongoing non-compliance, however, the ACMA will be actively monitoring Optus’ compliance with its commitments. If they are not met, the ACMA will consider court action.”

Commenting on the fine, Plexus senior solicitor, Sharmila Pamamull, said organisations all too often haven't put the precautionary measures in place necessary to ensure marketing messages are in compliance with the Spam Act.

“If a consumer chooses to ‘opt out’ of receipt of marketing messages, companies must have protocols in place so that further marketing messages are not sent to the consumer. Too often we find that non-functional unsubscribe facilities may be included in marketing messages and businesses will not have systems in place to track unsubscriptions," she told CMO.

Businesses also need to ensure they set up training for internal staff so they are aware of the main requirements of the Spam Act and have clear processes in place for compliance. The most notable requirements for compliance with the Spam Act include only sending marketing messages to consumers who consent; clearly identifying this in the messaging; and ensuring an unsubscribe facility that is clear, easy and functional.

Pamamull noted TPG was similarly required to pay a $360,000 infringement notice in 2017 for sending SMS messages to consumers who had withdrawn their consent by unsubscribing.

Dotdigital regional director for APAC, Rohan Lock, agreed customers are more aware of their rights than ever before. On top of this, businesses are responsible for the protection of customer data and need to ensure it's not being misused. Dotdigital provides an email marketing automation platform.

"They also need to inform consumers on how their personal information is going to be handled," he commented. "Email is an influential, personalised communication channel, and when utilised with verified permissions, it strengthens brand trust. Therefore, organisations need to make sure their email marketing strategies are compliant with privacy laws, with clear preferences for communication types and channels, and messages that are tailored as per customer consent."

According to the ACMA, businesses have paid more than $1.1 million in infringement notices for breaking spam and telemarketing laws in the past 18 months. Breaches of spam laws can result in penalties of up to $2.1 million a day.

The largest ACMA infringement notice of $510,000 was issued to Telstra in 2014 for failures to connect customers’ phone lines fast enough following an annual assessment of compliance with the Customer Service Guarantee benchmarks.

"There is a clear intention that the high penalty amount issued in this case will help deter other companies from continuing to send marketing messages to consumers who 'opt out'," Pamamull said. "Financial penalties don't stop at ACMA either. The reputational damage and customer churn associated with this type of behaviour is typically far more costly.”

Rocket agency co-founder and author of the book, Smarter Marketer, James Lawrence, also saw the fine reflecting how customers’ expectations about how companies use their data and the authenticity around marketing efforts have changed.    

“This signals the increasingly important need of brands to put customers first. This needs to apply whether compelled by regulation or not,” he commented. “Not supporting customers’ choice through including unsubscribe buttons into emails, will lose many prospects’ trust, which can have huge brand repercussions. The unsubscribe button signals the mutual trust and respect the brand shows to the customer. Without it, the brand is like an annoying door knocker who just won’t get off the front porch when asked nicely.”  

Lawrence also said marketers all too often get swept up in trying to reach the customer and forget that it’s a two-way street. To some extent, he attributed this to short-term pressure put onto marketing teams, which in turn drives poor outcomes.  

“There is no plan for offering value through email and instead brands can be reactive. They hear a member of the sales team say, ‘Sales aren’t going so well this month. Let’s try an email blast’,” he continued. “In turn, they send either an email that is not in line with where prospects are in the buying journey or an email with a discount resulting in an unnecessary reduction in profit margin.”  

Again, while sales emails can be effective, Lawrence said they should be part of a larger plan to build a customer relationship and not be reactionary in nature.  

Put yourself in your recipients’ shoes at every turn. Ask, ‘Are you nurturing them in a way you would want to be nurtured? Are you showing your community the respect they deserve?’” he advised. “You wouldn’t ignore a friend for two years and then call them asking for something. Don’t damage the relationship with your community by doing dodgy lock-in tactics or making a hard-sell promotional email the only communication you send them in many months.  

“To offer true value through email, start by asking what is appropriate for your community.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia.

 

 

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