Introduction

In the first case of its kind, the High Court has imposed a penalty of $100,000 on an individual for being an accessory to the sending of "spam" emails in breach of the Unsolicited Electronic Messages Act 2007.

top

The Act

The Unsolicited Electronic Messages Act 2007 prohibits the sending of unsolicited commercial electronic messages that have a New Zealand link. It also prohibits commercial electronic messages with a New Zealand link from being sent unless they clearly and accurately identify the sender and have a functional unsubscribe facility. Breach of any of these prohibitions amounts to a civil liability event. The Act also prohibits the aiding, abetting, counseling, procuring, inducing, being in any way knowingly concerned in or conspiring to effect a civil liability event.
The sending of a commercial electronic message that the recipient has not earlier agreed to receive will contravene the Act if it has a New Zealand link. This link will exist if:• the message originates in New Zealand; or

• the person who sent the message is an individual who is physically present in New Zealand or an organisation whose central management is in New Zealand when the message was sent; or
• the computer, server, or device used to access the message is located in New Zealand; or 
• the recipient is an individual who is physically present in New Zealand or an organisation that carries on business in New Zealand when the message is accessed; or
• the message is sent to an electronic address that ends with ".nz" or begins with an international access code followed by "64".

If a message is sent that contravenes the Act, a Court can impose penalties of up to $200,000 on an individual and $500,000 on an organisation. The penalty is to be set in each case taking into account: the number of messages sent; the number of addresses to which those messages were sent; and whether or not the perpetrator has committed any prior civil liability events.

top

The case

The first proceeding brought for breaches of the Act sought a pecuniary penalty following an investigation into more than two million unsolicited electronic messages sent between 5 September 2007 and 31 December 2007. The defendant, an individual, admitted liability.
He admitted that he had agreed to market products on the internet for a company incorporated in Mauritius in exchange for a commission of 50% on sales achieved. The defendant recruited a number of other persons to market the products by sending unsolicited electronic messages, known as "spam" emails. In a three month period, the defendant's recruits sent over 2 million of these spam emails to computers located in New Zealand for which the defendant received commission. In the same period, the defendant received commission payments of $1.6 million.
The messages contravened the Act as they were unsolicited, did not include accurate sender information, and did not contain an unsubscribe facility. The defendant was knowingly concerned with the sending of these messages as he had recruited the senders and entered into agreements with them for the payment of commission and had provided them with the facilities to generate the spam emails.
As the Court considered that the offence was one of the largest commercial-spamming operations in the history of New Zealand and that the impact on New Zealand was proportionately large, the starting point was at the top of the available range of penalties. There were, however, two mitigating factors, the first that the activity began when it was not illegal to send unsolicited electronic messages and the second that the defendant had cooperated with candor at an early stage and had given an undertaking that he would comply with the Act in future. In light of these factors, a penalty of $100,000 was imposed.

top

Comment

While the first case brought under the new legislation resulted in a substantial penalty, it seems doubtful that the available penalties will be a sufficient deterrent if the commercial rewards of spamming are as great as indicated by the facts of this case.

top

Extra-territorial Application

The Act explicitly sets out that it applies only to conduct occurring outside New Zealand where that conduct is performed by an individual who is a resident of New Zealand or an organisation that carries on business or activities in New Zealand and the conduct results in a civil liability event occurring. The scope of the extraterritorial application of the Act in practice is likely to be potentially wider than the section indicates on its face if the Courts interpret the provision as they have an identical provision in the Commerce Act 1986. The approach taken by the Courts under the latter Act captures foreign individuals who act overseas in conjunction with parties acting in New Zealand or as part of a conspiracy in which other parties to the conspiracy acted in New Zealand. This means that the Act will capture a foreign entity (such as the Mauritius company in this case) which engages a New Zealander to send spam in New Zealand on its behalf. The Act does not apply to foreign entities acting entirely outside New Zealand that send spam email into New Zealand but do not act in conjunction with any New Zealand parties.

top

NEXT »