The Legalities of Advertising and Marketing Tech Startups

As a tech startup, advertising and marketing is likely a big part of your business strategy, which is to be expected, with innovation and new technology constantly being developed. It is so important to bring awareness to your brand, and a lack of marketing has been found as one of the top reasons startup businesses fail.

It may be surprising to you just how many areas of marketing are regulated in Australia, and there may be significant consequences for not executing your strategies correctly. 

This is a guide to the types of marketing and advertising you may use, particularly as a technology business, and the possible issues that need to be addressed by yourself or by utilising legal services. 

What is the Spam Act?

Email and SMS marketing campaigns are very common these days, I’m sure you have been on the receiving end of this marketing yourself. However, if not executed correctly you could find yourself in breach of the Spam Act. This could potentially result in a loss of current or prospective customers and could damage your reputation - definitely not something you want to do, particularly as a startup!

The Spam Act regulates commercial electronic messages and has made it illegal to send unsolicited commercial electronic messages which include an Australian link. It is enforced by the Australian Communications and Media Authority (ACMA). 

To clarify, a ‘link’ means something that originated either in Australia or overseas and was sent to an Australian address.

What types of messages are regulated by the Spam Act?

• Email
• SMS
• MMS
• Instant messaging

Messages must be for...

• The offer to supply goods/services
• Advertising or promoting goods/services
• Offering to supply land 
• Business/investment opportunities

Therefore, you can see that by sending out electronic advertising and marketing for your tech startup, you would be required to comply with the Spam Act. 

What are the requirements of the Spam Act?

You will be required to comply with the following when sending out commercial electronic messages:

Must have the consent of the recipient

• This can either be express or implied
• Express consent is explicitly (directly) given 
• Implied consent exists where it may reasonably inferred that you would be interested in receiving electronic messages, e.g. you may be able to infer that an existing customer would like to receive consequent offers from you. 

Must include a functional unsubscribe facility

This means that the receiver must receive instructions on how to unsubscribe from the service.

The recipient must be able to identify the sender

There must be clear identification of the sender and how you may contact them if required.

Also prohibited is the use of address-harvesting software, which is used to search the internet for electronic addresses with the purpose being to send out spam messages. 

What are the consequences of breaching the Spam Act? 

The ACMA has the ability to do the following if the Spam Act is not followed by your business:

• Issue a formal warning or infringement notice
• Search your premises & seize equipment 
• Require an enforceable undertaking 
• Apply for an injunction to stop the alleged breach 
• Commence federal court proceedings seeking remedies including compensation for victims. 

What is the Do Not Call Register (DNCR)?

The DNCR needs to be considered if you are planning on making telephone calls to promote your technology business. 

It is a system for consumers where a person can register their landline, mobile and fax numbers, to prevent most unwanted telemarketing calls from coming through. The DNCR is also enforced by ACMA. 

There are some circumstances in which telemarketers are permitted to call consumers or businesses even if they have registered with the DNCR:

• The recipient has expressly consented 
• Consent can be reasonably inferred 
• The purpose of the call is in the public interest (e.g. the call is coming from a government body)

What is considered a telemarketing call under the DNCR?

Telemarketing calls are defined as voice calls to an Australian number that are of a commercial nature, as with electronic messages covered under the Spam Act. 

How do you ensure you are not breaching the DNCR?

The term for checking your calling lists against the DNCR is called ‘washing’. This will check your lists against the register, ensuring that registered numbers are removed. This process is completed directly through the DNCR, and you must buy a subscription. 

What happens if there is a breach of the DNCR Act?

The ACMA has the power to conduct the following in the event of a breach or suspected breach:

• Issue a formal warning 
• Issue an infringement notice 
• Accept an enforceable undertaking 
• Commence court proceedings where they may seek a range of remedies such as injunctions or compensation for victims.

The penalties for a breach of this Act can prove very serious for businesses.

In the situation that there is found to be two or more contraventions of the DNCR Act, the court is able to award penalties of up to $1.8 million per day against corporations, or $360,000 against individuals. 

This has the potential to be extremely damaging to a tech startup. 

The Telecommunications (Telemarketing and Research Calls) Industry standard (TTRC), regulates how and when telemarketing or research calls are permitted.

Even if you are permitted to make calls under the DNCR Act (e.g. through implied or express consent), you are required to meet the relevant industry standards.

The TTRC Standard applies to all calls to Australian numbers that are of a commercial nature, or are for conducting opinion polls or questionnaire-based research. 

This industry standard specifies: 

• The time of days calls may be made
• Information that must be provided to the recipient 
• When the calls must be terminated 

When can calls be made?

Telemarketing

• 9am-8pm on weekdays 
• 9am-5pm on Saturdays
• On national public holidays and Sundays no telemarketing calls are permitted.

Research calls

• 9am-8:30pm of weekday
• 9am-5pm on Saturday and Sunday
• No calls are permitted on public holidays

Calling line identification (CLI) must be enabled at the time of the call by the caller.

What must be disclosed to the recipient? 

Telemarketing

• The employer of the person who made the call
• The purpose of the call 
• Who required the call to be made

Research

• The name of the employer of the caller
• The purpose of said call

When must calls be terminated? 

• Immediately, if the caller asks you to do so
• If you become aware that the recipient is not at their usual address, their current time zone is outside the permitted calling times, and the person does not state that they would like you to continue with the call.

What if I outsource my marketing and advertising? 

Outsourcing marketing calls is very common these days due to costs, especially for tech startups. It’s important to remember that you are still responsible for ensuring that the DNCR legislation is followed. It needs to be specified in the provider’s contract that they will comply with this legislation. 

What is Search Marketing?

Search marketing is a strategy used to increase your online presence and gain online traffic for your business. The two main tactics used are search engine marketing (SEM), and search engine optimisation (SEO). 

SEM

This involves gaining visibility and traffic through search engines by paying the operator to display advertisements when key search terms are used. 

SEO

SEO consists of adapting website underlying code and content to feature key words, that will consequently increase the business’ ranking in search engine results, and drive traffic and online presence. 

What are the possible legal implications?  

• SEM - where a person uses keywords that relate to a competitor, it could be alleged that this is infringing the competitors trade marks, or misleading users to believe there is a relationship between the advertiser and competitor. 
• SEO - Where the business uses words relating to a competitor in its website content or underlying codes, there is a risk of infringing trade marks or misleading consumers. For example, a business may choose to use a competitor’s name in their metatags.

Therefore, there could be possible breaches under the Trade Marks Act and the Australian Consumer Law.

What is behavioural advertising? 

As its name suggests, this targets consumers based on their behaviour such as website searches, information they have provided including age and location, the consumer’s use of email and social media, among other things. Leveraging consumer data has shown to be very important to businesses and has led to organisations outperforming their competitors. 

If this marketing strategy leads to the collection and storage of personal information, the Australian Privacy Principles (APP) must be complied with (if the user can be identified by this information), unless the business is considered a small business and has a turnover of $3 million or less.

Final note

You want your business to be seen in a positive light by potential customers, employees and investors. You also want to build a positive brand image. Media interviews and publications are definitely a way in which to do this. Remember to never say anything to a journalist that you don’t want to see in print, and just assume that anything you say will be published and traced back to you!

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