Legal dos and don’ts for growing your email database

LegalVision

25th Feb 2016

Tom Kaldor from Legal Vision answers the question, can online retailers use a pre-ticked box to grow their customer database?

Digital marketing has been a game-changer for the retail industry. Targeting customers online offers benefits that were unfathomable in the days when brick and mortar retailers and print advertising reigned supreme.

A consequence of digital marketing’s rise is that a retailer’s customer database is now one of its most valuable assets. This database is an essential ingredient in the retailer’s online marketing and sales strategy. Which of course means that retailers are constantly on the hunt for new ways to sign up customers for their email distribution lists.

But online retailers need to be aware that any efforts to expand their contact list must comply with regulatory requirements. In Australia, consumers are protected from unwanted emails that advertise and promote the supply of goods (known as “commercial electronic messages”). The important issue is knowing when your emails might be considered unwanted.

Spam Act basics
If your business sends emails to a customer database, you should be familiar with the Spam Act 2003. This piece of legislation is federal, so it applies across Australia.

You don’t need to be a legal expert to understand your obligations under the Spam Act. There are just three basic rules you need to know if you are sending emails promoting your products:

1. You must have the recipient’s consent.
2. You must identify yourself and explain how you can be contacted.
3. Your email must have an unsubscribe facility so that the recipient can elect not to receive emails from you in the future.

It is relatively straightforward to add identifying information and an unsubscribe function to your emails. But knowing whether you have consent to send an email can be a bit more difficult.

There are two types of consent for the purposes of the Spam Act. Express consent is where a person has done some act that clearly shows they are happy to receive correspondence. Classic examples of express consent include ticking a click box, exchanging business cards or completing an online form.

Inferred consent is a bit trickier. It does not involve a deliberate act giving permission to be sent emails. Rather, it is where permission can be inferred from the conduct or relationship of the sender and the recipient.

Opting in or opting out
With those legal basics in mind, think about this common scenario in the world of online retailing. A customer purchases a product from a website. During the shopping cart check-out process, there is a sentence saying “Click here to receive newsletters and promotions”, followed by an empty click box. If the customer clicks the box, it is pretty clear that they have given their express consent to receive emails from the retailer.

But, as most businesses know, it isn’t always easy to encourage people to sign up to your database – particularly in this age of cluttered inboxes and a highly competitive online retail space. It is then tempting to save the customer the hassle and pre-fill the box asking for their permission.

But is this allowed under the Spam Act? Can a retailer use a pre-filled tick box to grow their customer database?

The simple answer is “no”, according to the Australian Communications and Media Authority (ACMA), the government body responsible for enforcing the Spam Act. The ACMA’s position is that pre-checked tick boxes are not an acceptable way of gaining a customer’s consent to send advertising materials.

What options do retailers have?
So, in most cases, an opt-out strategy will not be a legitimate way to build your email distribution list. Worse still, this type of strategy could land you in trouble under the Spam Act.

In some situations, it is possible that consent to send emails may be inferred from an ongoing relationship between a retailer and existing customers.

However, it is always safer to have the express consent of the recipient. A better approach is for retailers to show value to customers in marketing emails. If you build a reputation for interesting copy and exclusive promotions, it is more likely that potential customers will flock to your database. By contrast, if you are known for clogging customers’ inboxes with unwanted emails, you might have a hard time growing this important asset.

Retailers should also make sure they draw attention to any opt-in tick boxes. You might not be able to pre-fill the box, but you should make sure your customers are aware of what you are offering and don’t miss a chance to sign up for your newsletter.

Tom Kaldor is a lawyer specialising in business and commercial law at Legal Vision.