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SMS Marketing: A Valuable Advertising Tool Or An Expensive Mistake?

The idea of marketing your business directly to the mobile phones of potential customers is very appealing. It provides a direct line to the consumer and is more likely to be read than some other forms of advertising. However, it is important when considering the value of SMS marketing to also consider the associated risks. As Nokia recently discovered, failure to comply with the Australian Spam Act 2003 (Cth) (the Spam Act) when sending commercial electronic messages to consumers can be an expensive mistake to make.

The Spam Act regulates the sending of commercial messages via email, SMS, MMS and instant messages. Generally, you must take the following steps to ensure that you comply with the Spam Act:

  1. First obtain recipient consent;
  2. Identify yourself as the sender; and
  3. Provide a functional unsubscribe facility.

A sender of commercial electronic messages will have obtained recipient consent where:

  • the message recipient has ticked a box on a website or form, expressly consenting to receive marketing messages;
  • the message recipient has provided an email address or mobile phone number on a competition form and agreed to receive business updates, etc; or
  • a business relationship exists that suggests that the message recipient is interested in receiving commercial electronic messages relating to products or services, similar to those previously purchased.

The message must clearly identify the sender, along with its contact details.
Unsubscribe facility
All commercial electronic messages must contain a facility enabling the recipient to opt out of receiving future messages and provide message recipients with the option of withdrawing previous consent. Unsubscribe facilities come in a number of forms, including:

  • a direction in a text message to reply with ‘stop’ or another keyword;
    • a direction in an email to reply with ‘unsubscribe’ (or a similar word) in the subject line; and
    • a clickable link providing notification to the message sender.

Nokia’s Non-compliance
Nokia sent a number of SMS messages to its customers. Some messages contained factual information about the operation of mobile phones, while others promoted Nokia’s products and services, specifically mobile phone accessories. It was the latter that triggered customer complaints and an investigation by the Australian Communications and Media Authority (the ACMA). Consequently, the ACMA determined that while Nokia had received consent from customers to send the messages, it did not:

  • provide information about their identity and how the recipients could contact Nokia; or
  • provide the recipients with a facility to unsubscribe from the commercial electronic messages.

The ACMA fined Nokia $55,000 for failure to comply with the rules under the Spam Act.
Final word
Avoiding breaches under the Spam Act is relatively simple. Obtain recipient consent, identify yourself as the message sender and provide a functional unsubscribe facility. Taking these steps prior to sending commercial electronic messages will assist to ensure that your business receives the most out of your marketing activities, while avoiding potential financial penalty, which could cripple your business.