There are various ways to promote and market your business. However, if you intend to send electronic messages such as emails or text messages to promote your business, there are laws (such as the Spam Act) that regulate what you can and cannot send. This is relevant if you want to obtain the email addresses or contact details of your customers’ friends, known as refer-a-friend or ‘friend get friend’ marketing. This article will set out the relevant laws that you need to be aware of if you want to market your business through your customers’ friends.
Refer-a-friend marketing is when your customers promote your business to their friends or people they know. For example, you may have a promotion that says “provide us with five email addresses of your friends and we will credit your account with 500 points.”
If you obtain the contact details of these friends through your customers and then proceed to send electronic marketing material (i.e. emails or text messages) to these friends, then you need to follow certain rules. For example, you must:
- have the recipient’s consent to receive marketing material from you or your business; and
- be able to prove such consent.
There are different ways of gaining consent from your customers’ friends. You may ask your customers first to obtain consent from their friends. For example, you can put a statement on your website or advertisement that your customers must first obtain such consent before providing you with their friends’ contact details.
However, this is not necessarily enough to show that you have consent from the recipient to receive marketing material. Firstly, you need to make sure that the customer has actually obtained consent from their friends. Secondly, you must be able to prove the consent exists (i.e. by way of an email) from every friend who is a recipient. Therefore, asking your customer to obtain consent on your behalf or putting a blanket statement that automatically qualifies that consent has been obtained may not be sufficient to comply with the law. Furthermore, you might not know whether the consent has been withdrawn by the recipient.
The law allows for inferred consent. This is consent that you can obtain indirectly. However, this is usually only applicable between you and an existing customer based on both your conduct and business relationship. Accordingly, inferred consent is unlikely to exist between you and your customer’s friend, as you have not interacted with them before. Furthermore, you cannot assume that there has been inferred consent between your customer and their friend.
Additional requirements are that you must:
- identify your business in your messages, namely your business name and contact information; and
- add an option to unsubscribe from receiving the messages.
Who Regulates the Spam Act?
The Australian Communications and Media Authority (ACMA) regulates the Spam Act. A breach of the Spam Act may result in your business receiving a formal warning or infringement notice. There are also financial penalties if your business breaches the Spam Act. For example, a company with no previous record of spamming that has sent a commercial electronic message without consent may receive a maximum fine of 100 penalty units, which is equivalent to $21,000.
There are many ways for you to promote and market your business effectively. If you intend to use the refer-a-friend or ‘friend get friend’ marketing strategy, you will need to ensure that you have mechanisms to obtain the required consent to send marketing materials electronically to the recipients. You will also need to have records of such consent.
If you need assistance in determining whether your marketing strategies comply with the law, you can contact LegalVision’s advertising compliance lawyers on 1300 544 755 or fill out the form on this page.
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