High Court Applies Anti-spam Law (published on 10 March 2009)
In Chief Executive Department of Internal Affairs v Atkinson,(1) the first case of its kind, the High Court imposed a penalty of NZ$100,000 on an individual for being an accessory to the sending of spam emails in breach of the Unsolicited Electronic Messages Act 2007.
The act prohibits the sending of unsolicited commercial electronic messages that are linked to New Zealand. 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. A breach of one or more of these prohibitions amounts to a civil liability event. The act also prohibits aiding, abetting, counselling, 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 previously agreed to receive contravenes the act if it has a link with New Zealand. This link will exist if:
- the message originates in New Zealand;
- the party that sent the message is an individual who is physically present in New Zealand or an organization whose central management is in New Zealand at the time the message is sent;
- the computer, server or device used to access the message is located in New Zealand;
- the recipient is an individual who is physically present in New Zealand or an organization that carries on business in New Zealand at the time the message is accessed; or
- the message is sent to an electronic address that ends in '.nz' or begins with an international access code followed by '64'.
If a message is sent in contravention of the act, a court can impose penalties of up to NZ$200,000 on an individual and NZ$500,000 on an organization. The penalty is set in light of:
- the number of messages sent;
- the number of addresses to which the messages were sent; and
- whether the perpetrator has committed previous civil liability events.
In the first proceedings brought for breach of the act the plaintiff sought a pecuniary penalty following an investigation into more than 2 million unsolicited electronic messages sent between September 5 2007 and December 31 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 persons to market the products by sending unsolicited electronic messages. In a three-month period the defendant's recruits sent over 2 million such emails to computers in New Zealand, for which the defendant received commission payments. The defendant was paid NZ$1.6 million in commission during this period.
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 their sending, as he had recruited the senders, entered into agreements with them for the payment of commission and provided them with facilities to generate the emails.
As the court considered that the offence was one of the largest commercial spamming operations in New Zealand history and that the impact on New Zealand was proportionately large, the starting point was at the top of the available range of penalties. However, in mitigation, the court considered that the activity had begun before it was illegal to send unsolicited electronic messages, and that the defendant had cooperated with candour at an early stage and had given an undertaking that he would comply with the act in future. In light of these factors, the court fined the defendant NZ$100,000.
Although the first case brought under the legislation resulted in a substantial penalty, it seems unlikely that the available penalties will be a sufficient deterrent if the commercial rewards of spamming are as great as the facts of this case indicate.
The act explicitly states that it applies only to conduct occurring outside New Zealand where (i) that conduct is performed by an individual who is a New Zealand resident or an organization that carries on business or activities in New Zealand, and (ii) the conduct results in a civil liability event. The scope of the extraterritorial application of the act in practice could be wider than it appears on its face if the courts interpret its terms as they have an identical provision in the Commerce Act 1986. The approach taken 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. The Unsolicited Electronic Messages 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 New Zealand parties.
(1) Christchurch High Court, December 19 2008.