Spam

The Australian Communications and Media Authority (ACMA) has announced that dominant retailer Woolworths Group Limited has paid a $1,003,800 infringement notice and agreed to a court-enforceable undertaking in response to significant breaches of the Spam Act 2003 (Cth). The penalty is the largest issued by ACMA under that Act.

 ACMA found over five million breaches of the Act by Woolworths in marketing emails to consumers   between October 2018 and July 2019 after those people had unsubscribed from previous messages. 

ACMA states its investigation found Woolworths’ systems, processes and practices were inadequate to comply with spam rules, with ACMA executive Nerida O’Loughlin  commenting

The spam rules have been in place for seventeen years and Woolworths is a large and sophisticated organisation. The scale and prolonged nature of the non-compliance is inexcusable. Woolworths failed to act even after the ACMA had warned it of potential compliance issues after receiving consumer complaints. 

Consumers claimed that they had tried to unsubscribe on multiple occasions or for highly personal reasons, but their requests were not actioned by Woolworths because of its systems, processes, and practices.

 In its court-enforceable undertaking Woolworths has committed to appoint an independent consultant to review its systems, processes, and procedures, to implement improvements, and to report to ACMA. Woolworths has also committed to undertake training, and to report all non-compliance it identifies to ACMA for the term of the undertaking.

O'Loughlin comments

Our enforcement action, a substantial infringement notice and a comprehensive three-year court-enforceable undertaking, is commensurate to the nature of the conduct, number of consumers impacted and the lack of early and effective action by Woolworths.  CMA’s actions should serve as a reminder to others not to disregard customers’ wishes when it comes to unsubscribing from marketing material.

ACMA

The national Government has announced its response to the review of the Australian Communications and Media Authority (ACMA), which "found the ACMA has generally performed its regulatory role efficiently and well over the last ten years" but - cue the standard wording - "reform is needed to ensure the ACMA can respond effectively to the challenges of the future communications environment".

 That responsiveness unsurprisingly further aligns ACMA and its mission with dominant market players.

The review was

completed by the Department of Communications and the Arts and supported by a reference group of Australian and international communications and regulatory experts. 

The Government "supports or supports-in-principle all 27 of the recommendations of the review". The reforms will

redesign the governance arrangements for the regulator and provide for greater transparency, accountability and responsiveness of the regulator’s day-to-day and strategic activities. Implementation of these changes is already underway. A restructured governance model will provide for a minimum of five full-time members including the Chair and Deputy Chair, along with clear skill-set and expertise requirements. This will ensure that the ACMA is equipped for the complex task of regulating a dynamic and increasingly integrated communications sector. 

The Minister states

A Ministerial Statement of Expectations will address issues such as transparency, accountability and the nature of the relationship between the ACMA, the Government and industry operators. Providing the ACMA with a clearer description of performance expectations of its regulatory role will support better outcomes for industry and consumers. Regulator principles will also be incorporated in the Statement to provide guidance to the ACMA on how it should approach its regulatory role. 

Recommendations are as follows

 1 That the Australian Communications and Media Authority’s (ACMA) remit cover all the layers of the communications market, including infrastructure, transport, devices, content and applications. Supported

2 That the ACMA’s cybersecurity programs, where appropriate, be transferred, along with staff and funding to the Attorney‑General’s Department (AGD). Supported

3 That the Bureau of Communications and Arts Research assume the lead in taking forward research about the emerging environment and market trends, with the ACMA’s regulatory research program focusing on supporting the effectiveness of regulatory functions and harms that are affecting businesses and consumers. Supported

4 That the Department of Communications and the Arts be responsible for head of delegation roles to key international policy‑setting forums, including the World Radiocommunications Conference, and that clear guidance and negotiating parameters be provided by the Department to heads of delegation. Supported

5 That further work be undertaken to determine whether it may be more efficient for another body, such as the Australian Taxation Office, to undertake the revenue collection functions currently performed by the ACMA. Supported

6 That, within the next 12 months, the ACMA examine whether some or all of the following functions can be referred to industry for self‑regulation, in consultation with relevant industry bodies:

◾Technical Standards

◾Integrated Public Number Database (IPND)

◾Do Not Call Register (DNCR)

◾Action on unsolicited communications, including Spam. The ACMA regularly explore further opportunities for self‑regulation in consultation with industry. Supported

7 That the Department will undertake further work on the potential to expand the ACMA’s remit to include the functions of the Classification Board and Classification Review Board Scheme. Supported

8 That the Interactive Gambling Act 2001 (IG Act) be amended to require the ACMA to:

◾Handle all complaints relating to interactive gambling services and advertisements

◾Conduct the same investigation process irrespective of whether the content is hosted in Australia or overseas

◾Enforce civil penalties for breaches of the Act. Supported

9 That the current institutional arrangements for economic regulation of the communications sector be retained. Supported

10 That cross‑appointment arrangements between the ACMA and the Australian Competition and Consumer Commission (ACCC) be strengthened in order to benefit both ACMA and ACCC decision‑making. Supported

11 That the current institutional arrangements for communications consumer protections be retained. Supported

12 That as a priority as future reform is undertaken, the Government provide the ACMA with a clear set of overarching policy objectives to guide its decision-making. Supported

13 That the commission model of decision-making be retained. Supported

14 That the skill set to be collectively covered by Authority members be outlined in legislation to ensure an appropriate and diverse mix of abilities to respond to the future needs of the ACMA. Supported

15 That all members of the Authority be appointed on a full‑time basis and that the Authority consist of a Chair, a Deputy Chair and at least three other full‑time members. Supported in principle (Government supports full-time Chair, full-time Deputy Chair, three full-time members while retaining flexibility to appoint additional members on a part-time basis)

16 That the existing arrangements are maintained where the Chair is the Accountable Authority with an ability to delegate powers, duties and functions, to the extent permitted by the PGPA Act, to a Chief Executive Officer (CEO). Supported

17 That provision be made in the ACMA Act for the Authority to establish sub‑boards consisting of experts who could provide advice to the Authority or a Division of the Authority on specific areas of activity. The Chair of any such sub‑boards be a member of the Authority but not be the Chair of the Authority. Supported

18 Legislate the following four regulator principles in the ACMA’s enabling legislation, proposed draft:

◾The ACMA have regard to the importance of promoting competition, innovation and efficient investment

◾The ACMA should apply a risk-based approach to regulation, compliance and enforcement activities. Regulatory intervention should be targeted, evidence-based and commensurate with risk

◾The ACMA should implement continuous review of regulation to reduce burden and streamline approaches where the benefits exceed the costs

◾The ACMA should be timely and transparent in its actions and clearly indicate the priorities and objectives which inform its decision-making to regulated entities and the broader public. Supported in principle (rather than legislation, action in Minister’s Statement of Expectations to ACMA)

19 That the Minister provide the ACMA with an annual Statement of Expectations and the ACMA respond by publishing a Statement of Intent outlining how it will seek to deliver on the Government’s expectations. Supported

20 That the Minister provide the ACCC with an annual Statement of Expectations and the ACCC respond by publishing a Statement of Intent outlining how it will seek to deliver on the Government’s expectations. Supported

21 That timeliness of decision‑making be established as a key area of focus and accountability for future cycles of the ACMA’s regulator performance framework and Government consider legislative amendment to support more timely decision-making, where necessary. Supported

22 That the ACMA publish information on the steps it takes to ensure stakeholders have a clear understanding of the relationship between its actions and its compliance and enforcement policy. Supported

23 That the ACMA publish a report to the Minister every two years on initiatives undertaken to identify and reduce regulatory burden on industry and individuals. Supported

24 That the ACMA produce a public report on steps taken to improve the transparency and consistency of its decision-making processes, and that implementation and stakeholder satisfaction be independently assessed by the end of 2017. Supported

25 That it would be timely to review the policy objectives of revenue collection from the communications sector and evaluate whether new business models and OTT services are contributing appropriately. Supported

26 That the ACMA should further analyse its cost base, in light of the proposed function changes, to ensure it is efficiently delivering on its responsibilities and minimising costs to industry. Supported

27 To enable the communications sector to reach its full potential as an enabler of innovation and productivity, the Government commence a coordinated program of regulatory reform to establish a contemporary communications regulatory framework. Supported

Spam

The Australian Communications & Media Authority (ACMA) has imposed a $165,000 infringement notice on Grays (NSW) Pty Limited, responsible for Australian GraysOnline shopping websites, for noncompliance with the Spam Act 2003 (Cth).

ACMA indicates that its

investigation found a decision by Grays that an email campaign introducing its GraysEscape website was not promotional, was incorrect. As a result of the decision, Grays sent messages without an opt-out facility and to some people who had previously withdrawn their consent to receiving marketing messages.

ACMA imposed a $15,500 infringement notice on Minardi Pty Ltd, owner of the Melbourne nightclub Brown Alley, for sending promotional SMS messages that did not comply with the Act. Its investigation found some of Minardi’s messages did not include contact details. Others were missing an opt-out facility. Some messages had neither of the requisite features.

The SMH states that Minardi

had already received five warnings about its text-message marketing over three years. But the authority lost patience and started a formal investigation after complaints spiked in December 2012. It found that of nine marketing messages sent in December, five did not include contact information and eight did not have opt-out information. This totalled more than 50,000 breaches of the act.

That's $0.30 per dud message.

Messaging

The Australian Communications & Media Authority (ACMA) has announced acceptance of an enforceable undertaking [PDF] from Vodafone Hutchison Australia (VHA) to "rein in wayward dealers telemarketing the products of Vodafone and 3 Mobile after receiving complaints about unsolicited calls from consumers on the Do Not Call Register". Those calls were in contravention of the Do Not Call Register Act 2006 (Cth).

The undertaking is a reminder that Vodafone, along with its peers, is still having trouble with the behaviour of its dealer network - evident in the data breach highlighted in past posts on this blog. ACMA Chair Chris Chapman stated that -

The cornerstone of the undertaking is that VHA will be auditing and reporting back to the ACMA on all its dealers’ telemarketing activities. If it finds any of its dealers potentially breaching the Do Not Call Register Act, it must report the dealer to the ACMA immediately

Given ACMA's past permissiveness Vodafone is presumably quivering in its Doc Martens.

Under the enforceable undertaking Vodafone has also committed to -

- require all its subsidiaries and dealers to keep comprehensive records of the telemarketing calls made
- implement robust procedures around recording VHA’s customers’ consent to be called by, or requests to opt out of receiving, telemarketing calls from VHA, its subsidiaries or any dealer.

ACMA has meanwhile announced acceptance of an enforceable undertaking, including correctional measures, from Nokia.

ACMA commenced an investigation into the Finnish company’s SMS marketing activity after complaints that customers could not work out how to unsubscribe from ‘tips’ sent by Nokia. In particular, the messages did not include details of how Nokia could be contacted, as required by the Spam Act 2003.

The investigation found that while a number of the ‘tips’ provided customers with factual information about their mobile phone handsets, some of them amounted to promotion of Nokia’s products and services, including mobile phone accessories, and that the messages therefore needed to include an unsubscribe facility.

‘SMS allows businesses to reach their customers no matter where they are or what they are doing,’ said ACMA Acting Chairman, Richard Bean. ‘But with that opportunity come responsibilities under the Spam Act, including the obligation to include an unsubscribe facility in marketing messages.’

Nokia has undertaken to -

- appoint an independent consultant to audit its systems and processes
- develop a plan to carry out the independent consultant’s recommendations
- train its employees engaged in SMS marketing about complying with the requirements of the Spam Act
- make a payment of $55,000.

Pirates of the ISPs

From Noah Shachtman's 51 page Pirates of the ISPs: Tactics for Turning Online Crooks Into International Pariahs (Brookings Institute) [PDF] -

At the beginning of the 19th century, piracy was an ongoing threat and an accepted military tactic. By the end of the century, it was taboo, occurring solely off the shores of failed states and minor powers. The practice of hijacking did not vanish entirely, of course; it is flourishing now on the world’s computer networks, costing companies and consumers countless billions of dollars.

Cybercrime today seems like a nearly insoluble problem, much like piracy was centuries ago. There are steps, however, that can be taken to curb cybercrime’s growth — and perhaps begin to marginalize the people behind it. Some of the methods used to sideline piracy provide a useful, if incomplete, template for how to get it done.

Shutting down the markets for stolen treasure cut off the pirates’ financial lifeblood; similar pushes could be made against the companies that support online criminals. Piracy was eventually brought to heel when nations took responsibility for what went on within its borders. Based on this precedent, cybercrime will only begin to be curbed when greater authority — and accountability — is exercised over the networks that form the sea on which these modern pirates sail.

In this new campaign, however, private companies, not governments, will have to play the central role, as Harvard’s Tyler Moore and others have suggested. After all, the Internet is not a network of governments; it is mostly an amalgam of businesses that rely almost exclusively on handshake agreements to carry data from one side of the planet to another. The vast majority of the Internet’s infrastructure is in the hands of these 5,000 or so Internet Service Providers (ISPs) and carrier networks, as is the ability to keep crooks off that infrastructure. If this relatively small group can be persuaded to move against online criminals, it will represent an enormous step towards turning these crooks into global pariahs.

The most productive thing ISPs can do to curb crime is put pressure on the companies that support and abet these underground enterprises. Currently, registration companies sell criminals their domain names, like "thief.com". Hosting firms provide the server space and Internet Protocol addresses needed to make malicious content online accessible. But without ISPs, no business, straight or crooked, gets online. A simple statistic underscores the ISPs’ role as a critical intermediary: just ten ISPs account for around 30% of all the spam-spewing machines on the planet.

ISPs are well aware of which hosting companies, for example, are the most friendly to criminals; lists of these firms are published constantly. But, currently, ISPs have little motivation to cut these criminal havens off from the rest of the Internet. There is no penalty for allowing illicit traffic to transit over their networks. If anything, there is a strong incentive for maintaining business-as-usual: the hosting company that caters to crooks also has legitimate customers, and both pay for Internet access. So ISPs often turn a blind eye, even though the worst criminal havens are well-known.

That is where government could help. It could introduce new mechanisms to hold hosting companies liable for the damage done by their criminal clientele. It could allow ISPs to be held liable for their criminal hosts. It could encourage and regulate ISPs to share more information on the threats they find. Government could also encourage more private businesses to come clean when they are victimized. Today, just three in ten organizations surveyed by the security firm McAfee report all of their data breaches. That not only obscures the true scope of cybercrime; it prevents criminals and criminal trends from being caught earlier.

Government can alter that equation by expanding the requirements to report data breaches. It could require its contractors to purchase network security insurance, forcing companies to take these breaches more seriously. And it can pour new resources into and craft new strategies for disrupting criminals’ support networks.
These steps will serve as important signals that America will no longer tolerate thieves and con artists operating on its networks. After all, 20 of the 50 most crime-friendly hosts in the world are American, according to the security researchers at HostExploit.

As the United States gets serious in curbing these criminals, it can ask more from — and work more closely with — other countries. China, for instance, sees itself as the world’s biggest victim of cybercrime, even as it remains a hotbed for illicit activity.

Not coincidentally, China is also only partially connected to the global community of ISPs. Dialogues to bring the Chinese closer into the fold will not only make it easier to marginalize cybercriminals; it will build momentum for broader negotiations on all sorts of Internet security issues.

In a recent item in The Conversation I pointed to research by Levchenko et al arguing that around "95% of spam-advertised pharmaceutical, replica and software products are monetised using merchant services" from a handful of financial institutions such as the Latvijas Pasta Banka, State Bank of Mauritius, St. Kitts & Nevis Anguilla National Bank and Azerigazbank. There is scope for crimping the pirates' sails - and sales!

Shachtman offers 13 recommendations -

1: Begin US-China Talks, Centered around cybercrime (It’s not just the most pressing issue; it’s the one with the most common ground)

2: Draw the Chinese into the larger community of ISPs and network carriers (It should speed the resolution of major network issues — and encourage China to become a more responsible actor on the global network stage)

3: Avoid national retaliation as a cybercrime solution (It is too blunt an instrument for the nuanced issue of cybersecurity; besides, many of the worst criminals set up shop in the United States)

4: Lean on the criminal support networks (Online crooks depend on these businesses. That makes them nodes of pressure and of vulnerability)

5: Motivate ISPs to pressure the criminal ecosystem (They are perfectly placed to interrupt illicit traffic)

6: Hold the worst hosting companies liable for their criminal clients and the worst ISPs liable for their criminal hosts (This will provide financial incentives to turn against the criminals, instead of profiting from their traffic)

7: Encourage ISPs to notify customers of infections (It is easy for the providers to tell which clients have been compromised, and it is better for everyone if those breaches get fixed)

8: Amend the laws to allow ISPs to share attack data (Spotting criminal trends early requires more information)

9: Push companies to expand reporting of network breaches (It is good for consumers; it may shame some firms into shoring up their networks; and it provides more data for cybercrime detection)

10: Require government contractors to carry cybersecurity insurance (It builds the market for insurance, which encourages companies to get more serious about network protection)

11: Expand and improve training for cybercrime specialists in law enforcement ("The FBI is underinvesting in cyberthreats right now in the same way that it underinvested in
counterterrorism in the 1990s")

12: Pursue Civil Strategies to disrupt criminal networks (The crooks move fast – and are often beyond American jurisdiction. Civil courts may be the only way to fracture their support system)

13: Avoid Schemes to strip away internet anonymity; continue to promote freedom of online expression (Corralling cybercrime does not mean curbing our ideals)

Virtual economies

Knowledge Map of the Virtual Economy: Converting The Virtual Economy Into Development Potential, a 75 page report by Vili Lehdonvirta & Mirko Ernkvist for the World Bank regarding virtual economies [PDF] has been promoted by that organisation under the heading ''3 Billion Virtual Economy Provides Jobs in Developing Countries". The Bank proclaims that -

A new study by the World Bank Group’s infoDev program shows that virtual online currencies and digital work now provide real income opportunities to poor and unskilled workers in developing countries.

infoDev is a global technology and innovation-led development finance program of the World Bank and IFC. The new study, Knowledge Map of the Virtual Economy, finds that more than 100,000 people in countries such as China and India earn a living through online games and websites disseminating micro-tasks.

Jobs in the virtual economy include micro-tasks like categorizing products in online shops, moderating content posted to social media sites, or even playing online games on behalf of wealthier players who are too busy to tend to their characters themselves. The study estimates that the market for such gaming-for-hire services was worth $3 billion in 2009, and it suggests that with suitable mobile technologies even the least-developed countries could benefit from this emerging virtual economy.

Goldfarming for bored Manhattan sophisticates and geeks at ANU is better than starving but we might wonder about the ultimate usefulness of proxy 'micro-tasking' for economic development.

The Bank claims that

Some of the poorest people in the world are already connected to digital networks through their mobile phones. The study shows that there are real earning opportunities in the virtual economy that will become accessible as mobile technology develops. This could significantly boost local economies and support further development of digital infrastructure in regions such as Africa and southeast Asia.

It does acknowledge some disquiet, stating that -

While the virtual economy unlocks a plethora of business opportunities, it should be noted that not all these activities are viewed positively. According to the infoDev study, certain business ventures and services offered may actually detract from the experience of other Internet users. For example, harvesting and selling online gaming currencies or mass clicking "Like" on corporate Facebook pages can create an unfair environment where legitimate game play and user opinion loses value and is represented inaccurately.

Its response is an exhortation to be good -

“Entrepreneurs should focus on digital micro-work that benefits society. Examples include transcribing books, translating documents, and improving search-engine results,” said Dr. Vili Lehdonvirta

Quite. In practice the binary peasants - for peasants many of them will be, rather than members of a politically engaged, self-conscious and vigorous binary proletariat - are more likely to be engaged in "unethical" practices such as "cherry-blossoming" in social network services, on search engines and presumably via spam. The toxic blossom is a neologism derived from the Japanese term for paid fans or spectators -

Since cherry blossoming involves users recommending brands or products for money, it decreases the information value of recommendation engines and rating systems. It may not be illegal, but it certainly goes against the intentions of the designers of the systems, and provides no added value to any of the other users. Thus, although cherry blossoming is in many ways similar to microwork, the crucial difference is that it is directed towards overcoming artificial as opposed to natural scarcities.

Spam and Fax DNC

The Australian Communications and Media Authority (ACMA) has accepted an 11 page enforceable undertaking [PDF] from Virgin Blue Airlines under the Spam Act 2003 (Cth).

The undertaking follows an ACMA investigation into complaints alleging that the airline continued to send commercial email despite multiple attempts by recipients to unsubscribe from its mailing list. The Act, as noted in past posts on this blogs, requires commercial email to include a functional unsubscribe facility. Undertakings have been received in the past by enterprises such as Virgin Mobile (Australia) Pty Ltd, Commonwealth Securities Ltd and Vodafone Hutchison Australia Pty Ltd. They are a gentler regulatory mechanism than the penalties imposed by the Federal Court under the Spam Act, eg the $22 million penalties noted in December and August last year over egregious misbehaviour.

The enforceable undertaking - which includes payment of $110,000 - commits Virgin Blue to "a thorough overhaul and independent assessment of its email marketing practices". Virgin Blue acknowledged that it had "experienced problems" with its email marketing systems, leading to receipt by some previously unsubscribed consumers of new (and undesired) email.

ACMA Chair Chris Chapman commented that -

Businesses which market by email need to regularly test that the unsubscribe function in their messages is working properly. The Spam Act requires that a request from a consumer to be unsubscribed from commercial emails must be addressed. No further commercial electronic messages are allowed to be sent to the consumer five working days after an unsubscribe request is made.

Announcement - sound the trumpets, beat the drums - aside, the undertaking does not provide much to write home about (ACMA's guide to undertakings is online [PDF]). It was more than a year in the making. It features standard wording in 'sorry but no admission' mode and promises to try harder in future. Virgin Blue will engage an independent third party to "thoroughly assess its email marketing processes" and to implement any recommended changes. It will also provide training to relevant employees, establish a complaints handling policy, and audit 10 per cent of its email marketing campaigns monthly for a year.

Readers are reminded that closing date for submissions in response to ACMA's call for comment on the draft national standard for the fax marketing industry is 4 February 2011.

ACMA is seeking views on the proposal to require a destination sending number (a 'header line') on all marketing faxes as part of the fax marketing industry standard. Submissions in previous consultations proposed inclusion of the additional information to assist in reducing the number of complaints arising from faxes that were originally sent to numbers not on the Do Not Call Register being redirected automatically to numbers that are on the register.

SMS Spam penalty

Australian telecommunications regulator ACMA has noted the $2 million penalty under the Spam Act 2003 (Cth) for the last respondent in Safedivert SMS spam scheme.

The Federal Court has today imposed $2 million in penalties against Scott Gregory Phillips in proceedings brought by ACMA regarding SMS spam, aka speam. That penalty is in addition to $22.25m imposed on seven other respondents last year in Australian Communications & Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 2) [2009] FCA 887, bringing the total penalties to $24.25m.

Phillips, along with the other respondents, was involved in a complicated scheme involving creation of established fake dating website profiles to obtain the mobile phone numbers of genuine dating website users. Those numbers were then sent messages from people pretending to want to chat via a 'Safedivert' service about meeting and forming a relationship. Users who were unfortunate enough to be tricked by that identity scam were charged approximately $5 per message, with ACMA alleging that the scheme cost Australian mobile users over $4m from late 2005 until November 2008.

Logan J, in delivering judgment, indicated that -

The conduct was undoubtedly deliberate. IMP and its agent Jobspy, which employed IMP's modus of operation, engaged in concerted deception. Mr Phillips' involvement in the deception was at the most senior level. He was the controller of IMP.

ACMA chair Chris Chapman commented that -

The size of the penalties awarded in this case are an indication of how seriously the courts treat breaches of the Spam Act, which is very encouraging.

In cases such as this where the conduct was calculated, deceptive and had a detrimental effect on Australian phone users, the ACMA will not hesitate to use every available avenue to protect the consumer. This prosecution again demonstrates the commitment of the ACMA to ensure that individuals and companies comply with the Spam Act.

Psychics

In my spare time I've been looking at action by consumer protection agencies against psychics.

Here's a 2007 announcement by the UK Office of Fair Trading -

As part of its Scams Awareness Month, the OFT is warning consumers not to fall for bogus clairvoyant mailings sent out to thousands of people in the UK every year.

Letters from so called psychics or clairvoyants offer predictions or promise healing properties for a small fee. Often these mailings are aggressive in tone, predicting that something bad will happen if the recipient does not send them money. Although they are sent out in their thousands, the mailings are personalised to make recipients look as if they have been specially chosen and those who respond can be repeatedly targeted.

In one example uncovered by the OFT a mailing told consumers that the place they were living in was 'a zone which has been 'booby trapped' by negative waves', and it offered a solution for a payment of £29.

Extravagant and potentially misleading claims are also made about rituals the psychic will undertake or items, such as jewellery, that the psychic will provide and which it is claimed will bring the recipient good luck and will ward off evil forces.

'Lucky' items include Esmerelda's 'Money creating Scarab of the Pharoes', Gabriel d'Angelo's 'Happiness Beamer, Serena's 'Parchment of the Sacred Olive Branch' , Maria Rosa's 'Bracelet of Ameno' Lise and Rose's 'Gold Card' and Marie Desperance's 'Golden Thread'.

Recent OFT commissioned research into the impact of mass marketed scams indicated that more that 170,000 consumers fall victim to clairvoyant scams every year, losing around £40 million.

The OFT's Scambusters team has written to the following 'clairvoyants' about the potentially misleading content of their mailings: Chris, Esmeralda, Gabriel d'Angelo, Lisa and Rose, Maria Rosa, Marie Desperance, Pia Anderson, Rachel, Serena. None have responded. As a result the OFT is publicising its actions to allow consumers to make informed choices about 'clairvoyants' who are using PO Boxes as return addresses for their mailings. It will also be contacting overseas counterparts to ask them to shut down any post boxes used by those named.

Claims made by those named by the OFT include:

* 'Maria Rosa' who claimed 'in the next few days you will have the very tidy sum of £169,000 in your possession'
* 'Gabriel d'Angelo' claimed 'You have to trust me ... BECAUSE YOUR FUTURE AND YOUR HAPPINESS DEPEND ON IT'
* 'Lise and Rose' claim that 'there is, in your home, in the very place where you are living, a zone which had been booby trapped'
* 'Serena' claimed that 'Your life will be beautiful and you deserve it, thanks to the Parchment of the Sacred Olive Branch which will protect you and bring you happiness'.

Their supposed psychic gifts apparently failed to predict action by the OFT.

In the US the Federal Trade Commission in 2002, under the heading 'FTC Charges "Miss Cleo" with Deceptive Advertising, Billing and Collection Practices', announced that -

"Free Readings" Result in Large Phone Bill Charges

"Miss Cleo," the purportedly "renowned psychic" whose ads promote "free" readings to callers seeking advice, is the subject of a federal district court complaint filed today by the Federal Trade Commission. The complaint charges two Florida corporations, Access Resource Services, Inc. (ARS), and Psychic Readers Network (PRN), with deceptive advertising, billing and collection practices.

"You don't need a crystal ball to know that the FTC will continue to stop unfair and deceptive trade practices," said J. Howard Beales III, Director of the FTC's Bureau of Consumer Protection. "We want consumers to know that when companies make a promise in an ad, they need to deliver."

The defendants' entire operation is alleged to be permeated with fraud. According to the complaint, the defendants misrepresent the cost of services both in advertising and during the provision of the services; bill for services that were never purchased; and engage in deceptive collection practices. The defendants also harass consumers with repeated, unwanted, and unavoidable telemarketing calls that consumers cannot stop. The FTC also alleges that the defendants often respond to consumers' inquiries with abusive, threatening, and vulgar language.

The FTC's complaint names ARS, doing business as Aura Communications; Circle of Light; Mind and Spirit; and PRN, doing business as Psychic Readers Network, Inc., and their officers, Steven Feder and Peter Stolz. ARS and PRN, both located at the same address in Fort Lauderdale, Florida, operate as a common enterprise to induce consumers to buy their audiotext services -- information or entertainment programs provided over the telephone lines. The defendants purportedly are the largest providers of "psychic" audiotext services in the United States, and use a variety of marketing tools to attract consumers to their services, including TV, print media, the Internet, and direct mail. The defendants make their services available to consumers via 900 telephone numbers and bill for each minute spent on the line at a per-minute rate. They use a national network of "psychic readers" to provide "readings" to the consumer who calls the 900 number.

Specifically, the FTC's complaint alleges that the defendants:

* Deceptively misrepresent, in their advertising, that a "reading" will be provided at no cost;
* Through their agents, misrepresent the cost of the calls by claiming that consumers' free minutes have not expired, that the consumer had been awarded additional free time, or that the consumer will not be charged while on hold;
* Falsely represent that consumers are legally required to pay for services even though, in many instances, no such legal obligation exists; and
* Engages in unfair practices by frequently and repeatedly calling consumers, including consumers who had previously indicated they did not wish to receive such calls, and by failing to provide consumers with a reasonable method to stop such calls.

In addition, the complaint alleges that the defendants violated the FTC's 900 Number Rule by:

* Failing to make required cost disclosures in their advertisements, and diluting the disclosures that they do make with contradictory information; and
* Threatening to report adverse information to credit reporting bureaus without first conducting an investigation of billing errors.

The FTC is seeking a temporary restraining order against the defendants.

Miss Cleo & Co apparently dealt with the FTC by agreeing to a multimillion dollar settlement, rather than consigning them all to the devil. The FTC announced that -

In a landmark settlement, Access Resource Services, Inc. (ARS) and Psychic Readers Network, Inc. (PRN) have agreed to a stipulated court order stopping all collection efforts on accounts or claims from consumers who purchased or purportedly purchased their pay-per-call or audiotext services and forgiving an estimated $500 million in outstanding consumer charges as part of a settlement with the Federal Trade Commission. The Florida-based companies and their officers operated a massive 900 number scheme known to the public as the "Miss Cleo" psychic lines. The FTC alleged that the defendants engaged in deceptive advertising, billing, and collection practices. The settlement also requires the defendants to pay $5 million to the FTC.

"The lesson in this case is that companies that make a promise in an ad need to deliver on it - whether it's about availability, performance, or cost," said J. Howard Beales III, Director of the FTC's Bureau of Consumer Protection. "I'm no psychic, but I can foresee this: If you make deceptive claims, there is an FTC action in your future."

The FTC's complaint [PDF] and settlement [PDF] are online

Fax Spam Standard

ACMA has released the 42 page draft Fax Marketing Industry Standard discussion paper [PDF], drawing on responses to its June 2010 discussion paper Developing an industry standard for the fax marketing industry.

The national telecommunications regulator is now seeking public comment on a draft national standard within that new discussion paper, which is "intended to provide the community with greater certainty regarding the minimum level of behaviour they can expect from fax marketers".

The Standard reflects the Do Not Call Register Legislation Amendment Act 2010 (Cth), in effect from 30 May this year, which amended the Do Not Call Register Act 2006 (Cth) - a statute that some marketers decried as the end of civilisation as we know it but welcomed by consumers (a welcome signalled by large-scale registration of private numbers to escape interference by telepests).

The 2010 amendments -

* extend the eligibility requirements to allow the inclusion of fax numbers on the Do Not Call Register (the Register)

* establish a general prohibition against sending of marketing faxes to numbers on the Register

* insert a new provision into the Telecommunications Act 1997 (Cth) (s.125B) requiring ACMA to "determine certain standards relating to the fax marketing industry".

The new document provides a summary of the feedback received and background information to assist people in considering the draft standard and invites comment from industry and other interested parties.

From the perspective of community engagement it is a depressing document. A mere 17 responses (including one [PDF] by the author of this blog) were received in relation to the June discussion paper, with comments as follows -

Prohibited times for the sending of faxes
Ten submissions addressed this issue, most favouring clear and enforceable rules on restricting the hours during which fax marketers can contact consumers. Those submissions included the following comments:
+ marketing faxes should be permitted to be sent Monday through to Friday, with suggested permitted times on weekdays ranging from 8.00 am to 9.00 pm
+ marketing faxes should be permitted to be sent Saturdays, between 8.00 am and 9.00 pm — with five submissions supporting reduced hours on Saturday (e.g. between 8.00 am to 6.00 pm)
+ no fax marketing to occur on Sundays and national public holidays (seven submissions). One submission supported allowing fax marketing between 9.00 am and 5.00 pm on such days
+ the prohibited faxing times should be defined in the standard so that they relate to the time zone of the receiver
+ there should be an exception to the prohibition where the receiver has provided consent to receive a marketing fax at a time which would otherwise be a prohibited time.

Provision of information within a fax
The ten submissions which addressed this issue supported a requirement upon fax marketers to provide contact information and suggested that:
+ contact details should be required to easily identify the originator (the person who authorised the sending of the marketing fax, or the advertiser)
+ the contact details required should include standard business details such as company name, phone number, email address and ABN (or similar)
+ contact details should be set out on the first page of the marketing fax
+ the minimum required font size should be stipulated in the standard.

Volume and frequency of marketing faxes to a number
Only one submission supported the introduction of volume and frequency restrictions on the number of marketing faxes that may be sent in a particular period. Several submitters suggested that regard should be had to the existing Handling of Life Threatening and Unwelcome Communications Industry Code, which currently provides some regulation in relation to ‘unwelcome’ communications.

Seven submitters indicated this type of limitation would be difficult to comply with for a variety of reasons. The submissions provided the following comments:
+ if would be technically difficult, time consuming and expensive to implement a solution for compliance
+ no other standard in the world currently includes these type of restrictions
+ the inclusion of this type of restriction could be considered a ‘restraint of trade’
+ he fax marketer has little or no control over the actual number of times a number has been ‘attempted’ (for example, when the first attempt is not successful) as the telecommunications provider is the ‘actual’ dialler
+ large organisations often have only one fax number as a point of entry, which distributes faxes automatically to recipients throughout the organisation via other channels (for example, email). This would mean the fax marketer’s fax communication frequency with a particular organisation (as opposed to an individual) would be limited.

Opt-out functionality
All fourteen submissions which addressed this area supported the inclusion of a requirement to provide opt-out functionality in marketing faxes and many noted that this is already a standard industry practice.

Many submissions favoured a requirement to provide a web based option as an easy and cost effective opt-out mechanism for fax recipients. However, other submissions proposed that a variety of contact options should be required to ensure consumers are not prevented from opting out due to lack of access to particular forms of technology. Many of the submissions suggested the information should be available on the first page of the fax and the minimum font size be prescribed in the standard.

What has been included in the draft standard (which regrettably enshrines Sunday but disregards the sensitivities of people for whom Saturday is a day on which not to be disturbed) -

Prohibited times for the sending of faxes
Under the draft standard, a sender must not send a fax, or cause a fax to be sent, on:
+ a weekday before 9.00 am or after 8.00 pm or
+ a Saturday before 9.00 am or after 5.00 pm or
+ a Sunday or
+ a national public holiday.
A reference to time is the time at the place that is the usual address of the relevant account holder.

An exemption has been provided where the relevant account holder, or nominee of the relevant account holder, has consented in advance to receiving the fax at that time.

Provision of information within a fax
Under the draft standard, a marketing fax must include the following information:
+ the name of the person who authorised the sending of the fax
+ the Australian Business Number (ABN) of the person who authorised the sending of the fax, or equivalent business number identification if the person who authorised the sending of the fax is a foreign company
+ the contact details of the person who authorised the sending of the fax (telephone or fax number, street address, postal or business address and email address)
+ the details of how the recipient can send an opt-out message including:
+ a statement to the effect that the fax recipient may opt-out of receiving any future faxes from the person who authorised the sending of the fax by conveying an opt-out message to an opt-out address and
+ an opt-out address to which fax recipients can communicate an opt-out message.

The information required must be:
+ displayed in a clear and conspicuous manner
+ included on the first page of the fax at a minimum
+ displayed using a minimum size 10 font.

Limit on number of faxes to be sent to a recipient in a period
A person who sends faxes must make reasonable efforts to ensure it does not send more than 10 faxes, which are authorised to be sent by the same fax advertiser, to a particular Australian number in any single 24 hour period.

Opt-out functionality
Under the draft standard a person who sends a fax must have in place processes to ensure that:
+ the opt-out address provided in the fax is capable of receiving opt-out messages 24 hours a day, seven days a week
+ as soon as possible, and no later than seven days, after the fax recipient has opted-out of receiving fax messages, the fax recipient’s number is removed from any list of Australian numbers used by the sender to arrange for the sending of faxes on behalf of the fax advertiser.

Operation of state and territory laws
The draft standard is not intended to exclude the operation of a law of a state or territory to the extent that the law is capable of operating concurrently with the standard.

For example, if a state/territory law prohibits a fax marketer from sending a fax on a day or at a time, other than a day or time restricted in the standard, then the more stringent state or territory law would apply.

ACMA has sought comment by early November on draft standard, particularly -

a. four areas required to be addressed in the draft standard by the Telecommunications Act
b. limit on number of faxes to be sent to a recipient in a period (should the number remain at 10 in a 24 hour period or should it be increased or decreased? should the period in which a number of faxes may be sent to a recipient remain at 24 hours or should it be increased or decreased?)
c. interpretation of words used in the draft standard.

Moles and rats

No, not Wind in the Willows. The Australian Communications & Media Authority (ACMA), the national telecommunications regulator, reports that the Federal Court in Brisbane today imposed $6.5m in penalties against Scott Moles and Jobspy - two further respondents in proceedings brought by ACMA against SMS spammers.

Those penalties are in addition to $15.75m imposed on five other respondents earlier this year, notably Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 2) [2009] FCA 887 (highlighted here and here), bringing aggregate penalties to $22.25m. The hearing in relation to Scott Gregory Phillips, the final respondent, is due to resume on 8 February next year.

In today's judgement the Federal Court hit Jobspy Pty Ltd with a $4m penalty; Scott Mark Moles received a $2.5m penalty.

ACMA had alleged that Jobspy and Moles were involved in a complicated scheme that featured creation of fake dating website profiles to obtain the mobile numbers of genuine dating site users. Those mobiles were then sent messages from people pretending an interest in meeting and forming a relationship. Users who responded to the messages were charged approximately $5 per message, rather than the usual opportunities of heartfelt love and undying emotion. ACMA alleged that the scheme cost Australian mobile users more than $4m since late 2005.

Responses to DNC and Speam

Direct marketing industry advocates and some pessimists argued several years ago that establishment of an Australian Do Not Call (DNC) regime was unviable because there would be no community support ... variously because consumers wouldn't bother to list their numbers on the national DNC register or that most people welcomed unsolicited contact from telemarketers.

That claim was belied by the growth of the register (over one million people signed up within a short time) and community endorsement of DNC litigation. It is also belied by comments in a 77 page report commissioned by ACMA, the national telecommunications regulator.

Community attitudes to unsolicited communications [PDF] "explores community attitudes to unsolicited telemarketing calls and electronic communications, and the awareness and effectiveness of the regimes that regulate these communications".

The report notes that around one in three Australian adults (32%) have registered a number on the DNC Register. Although all of those people have their home number on the Register, only six per cent of all adults have registered their mobile phone numbers. Arguably that is because most people are not yet aware that mobile numbers can be listed and have not become sensitised to inappropriate telemarketing (including speam) involving mobile numbers. "Awareness and knowledge of aspects of the Do Not Call Register Act and the registration process itself are generally low."

The report comments that the Register "appears to have been very effective, particularly for those who have their home phone number registered".

It also suggests that awareness and understanding of spam is "generally high, as is use of spam filters", although email users are typically receiving 23 spam emails per week despite such filtering. SMS or MMS spam is less prevalent, with personal mobile phone users receiving an average of two spam messages per month. Awareness of Australia's anti-spam regime is low, according to ACMA.

The report indicates that

People are generally unsure who they would complain to about unsolicited telemarketing calls. Complaining about unsolicited spam messages, however, is a little clearer, with many opting to contact the telephone or internet service provider. Supporting this, nearly one in four have considered making a complaint, but have not gone through with it (mainly because they didn't know how to).

Justice Logan of the Federal Court this week imposed an aggregate $15.75 million in fines under the anti-spam regime on operators of the 'Mobilegate' speam scam noted here in August.

Mobilegate Ltd, Winning Bid Pty Ltd and three individuals were penalised for a scheme involving premium-priced SMS 'adult chat services' that leveraged numbers garnered through fake personal profiles on dating web sites. In August ACMA gained injunctions and declarations against the two companies and Simon Owen, Tarek Salcedo and Glenn Maughan for breaches of the Spam Act 2003 (Cth) and the Trade Practices Act 1974 (Cth).

Mobilegate and Winning Bid were fined $5m and $3.5m respectively, with fines of $3m imposed on Owen, $3m on Salcedo and $1.25m on Maughan. ACMA has announced that it will continue to pursue a further three respondents.

Federal Court speam decision and DNC

National telecommunications regulator the Australian Communications & Media Authority (ACMA) has obtained injunctions and declarations against several parties involved in its first SMS spam ('speam') case before the Federal Court. The matter relates to the sending of unsolicited commercial SMS messages, with the Court noting that the alleged conduct disclosed "sustained and systemic violation of statutory prohibitions rather than a mere isolated aberration".

The default judgment by Logan J on 14 August in Australian Communications and Media Authority v Mobilegate Ltd A Company Incorporated in Hong Kong (No 2) [2009] FCA 887 concerned breaches of the Spam Act 2003 (Cth) [here], the centrepiece of Australia's anti-spam regime. The Court ruled against Hong Kong-based Mobilegate Ltd, Winning Bid Pty Ltd, Simon Owen, Tarek Salcedo and Glenn Maughan in litigation launched by ACMA during December 2008 over alleged contravention of the Spam Act 2003 and the Trade Practices Act 1974 (Cth) in relation to premium SMS chat services..

ACMA chair Chris Chapman said that "This is the first SMS spam case that the ACMA has brought before the courts. The significant resources that the ACMA has put into this matter, again demonstrates our commitment to protecting Australians against illegal conduct."

ACMA had alleged that the five respondents were engaged in a scheme to obtain mobile phone numbers from members of dating websites, using fake member profiles, in order to send commercial SMS. Recipients of the messages were invited to chat via SMS using what were promoted as 'Maybemeet' or 'Safe Divert' services, with that chat involving Mobilegate and Winning Bid employees rather than by "genuine members of dating websites" and consumers being charged up to $5 per message.

ACMA has meanwhile announced that Telstra, the dominant Australian telco, has been fined $101,200 over breaches of the Do Not Call regime, centred on the Do Not Call Register Act 2006 (Cth) [here] and enshrining a register of 3.5 million phone numbers for people who have requested not to receive marketing calls.

People on that register continued to receive telemarketing calls from Telstra's agent despite Telstra being alerted that there was a problem and warned by ACMA. The regulator concluded that Telstra had inadequate compliance systems, procedures and supervision.

Readers might question whether public shaming is effective and question the deterent value of the penalty. Telstra has revenue of over $25.5 billion, EBITDA of $10.9 billion, profits of over $4 billion in the latest FY and probably spends more than the $101K fine in advertising each weekend. ACMA's Chris Chapman complained that Telstra had failed to show leadership - an underwhelming discovery given the corporation's bloodymindedness in recent years - and stated that ACMA "expects large businesses like Telstra to be leading the way and setting an example when it comes to compliance with the Do Not Call register - not falling behind".

A Telstra spokesperson said the company was sorry for the repeated breaches: "It shouldn't have happened, we're sorry it happened, and we have worked co-operatively with ACMA to put in place a range of measures to stop it happening again". Contrition, it seems is the new black.