Don't go breaking our hearts: Federal Court issues Spammers fine of over $15 million Australian Communications and Media Authority v Mobilegate Ltd (No 4) [2009] FCA 1225

The Federal Court of Australia recently fined two companies and three individuals a total of $15.75 million dollars for contraventions of the Spam Act 2003 (Cth) (Act). The proceedings were commenced by the Australian Communications and Media Authority (ACMA), the statutory body charged with administrating and enforcing the Act. This decision serves as a serious warning to potential spammers.

The Act regulates unsolicited commercial electronic messages in Australia. Commercial electronic messages can be emails, SMS messages, instant messaging messages or any other similar messages. As is evident from this case, there are serious penalties for contravening the provisions of the Act.

In this case, the respondents contravened the Act by sending unsolicited SMS messages to mobile phone users and charging those users a fee for those messages.

The companies procured people to set up fake profiles on dating websites and to communicate with users of those dating websites to entice them to hand over their mobile phone number. Website users were deceived into providing their mobile phone numbers to the representatives of the companies, believing that they were corresponding with individuals who were seeking to meet them and form genuine relationships through a dating website.

The companies’ representatives would then send SMS messages to those users by a particular premium number service and then encourage them to interact by way of SMS messages, as if with a potential dating partner. 

The companies’ representatives extended the deception of users by pretending that this premium number service was being used as a ‘safe divert’ service to enable the sender and receiver to communicate without the other party disclosing their mobile phone number as a matter of caution.

Revenue was collected from the sending or receipt of SMS messages via the premium number service as a result of fees charged to the user of each message. The mobile phone users were charged up to $5 a message.

The manner in which the scheme was orchestrated meant that there was no need for the companies to directly bill the user of each message. Instead, mobile phone users faced the obstacle of having to deal with their mobile phone service provider to identify what they had been charged, by whom and for what purported service. In the event of non-payment, users were in jeopardy of disconnection of their mobile phone service, or at least of an adverse noting being made about them by that mobile phone service provider, and perhaps more widely in terms of credit.

It was alleged that the respondents obtained more than $2,000,000 from their scheme.

The Court found that this conduct contravened section 16 of the Act, which prohibits the sending of, or causing to be sent, commercial electronic messages that have an Australian link and that are, in effect, unsolicited.

In finding that there had been a contravention of the Act, the Court observed that:

‘The use of trickery to prey for reward upon the lusts or emotional vulnerabilities of others is hardly a vice confined to modern times.  What modern times do offer, for those disposed to such a vice, are new means of prey, the internet and mobile phone.’

Section 24(2) of the Act sets out a number of matters to which the Court should have regard when determining the extent of the penalty for contraventions of the Act. They include:

  1. the size of the contravening company;

  2. the deliberateness of the contravention and the period over which it occurred;

  3. whether conduct arose out of the conduct of senior management in a corporation or at a lower level;

  4. whether the company has a corporate culture conducive to compliance with the Act;

  5. whether the respondent has shown a disposition to cooperate with the authorities responsible for the enforcement of the Act in relation to the contravention;

  6. the financial position of the contravening party and capacity to pay;

  7. the deterrent effect of the proposed penalty; and

  8. the parity and relativity of penalty, with other respondents, having regard to individual circumstances of involvement of a contravention.

In this case, the Court said that the contravening conduct was systematic, deliberate and covert. Given this, it stated that the penalties imposed ought to be of a level that would make it ‘commercial suicide’ to set up a business with the contravention of the Act as its aim.

Although this case was an extreme example, it illustrates that spamming is taken seriously by the ACMA and that it will avail itself of the remedies under the Act to eliminate conduct aimed at deceiving the public.

This case is an example of a deliberate attempt to mislead a particular group of individuals, however, the Act can be breached inadvertently without there being any intention to mislead.

It is therefore imperative that organisations are familiar with the prohibitions in the Act relating to unsolicited emails to ensure there is no inadvertent breach.

For further information, please contact Wayne Zappia on 9288 6931 or or Cinzia Donald on 9288 6755 or