The Federal Court has fined Clarity1 Pty Ltd and its managing director a total of $5.5 million for breaches of the Spam Act 2003 (Cth) (the Act).This penalty represents the first successful prosecution by the Australian Communications and Media Authority (ACMA) under the Act since it commenced in April 2004.

Justice Nicholson found that during a three-day period, Clarity1 sent more than 270 million illegal Commercial Electronic Messages (CEMs) to more than seven million unique electronic addresses. It was also revealed that Clarity1 continued to dispatch CEMs at the same rate for over a year. Because each CEM was sent without the consent of the recipient, the court held that each CEM was a contravention of the Act.

In addition, the court found that the majority of unique addresses kept by Clarity1 were obtained by using address harvesting software or by obtaining harvested address lists from external parties. This was also a contravention of the Act.

The maximum penalty that could have been imposed was $99 million in the case of Clarity1 and $19.8 million in the case of its managing director. Justice Nicholson took into account a number of factors in deciding on the appropriate penalty, which included:

(a) the nature and extent of the contraventions of the Act
(b) the nuisance and inconvenience caused by the spam generated by Clarity1, and
(c) the financial capacity of the respondents to pay the penalty.

The Court also took into account the fact that, prior to the commencement of the Act, ACMA had undertaken a significant education campaign, and that Clarity1 ought to have been aware that their conduct could have amounted to a contravention of the Act. Ultimately, Clarity1 was ordered to pay a penalty of $4.5 million to the Commonwealth. Clarity1's managing director was ordered to pay a penalty of $1 million.

Take out: Lessons learnt

This case sends a strong message to organisations and individuals who spam that substantial penalties can be awarded against them.

Businesses and individuals who do receive unsolicited CEMS, including in the form of emails, mobile phone text messages, multimedia messaging and instant messaging which:

(a) have not been sent with the consent of the recipient;
(b) do not contain accurate information about the person or organisation that authorised the sending of the message; and
(c) do not contain a functional unsubscribe facility

can lodge submissions to ACMA, at www.acma.gov.au. The website also contains information on how to avoid sending and receiving CEMs.