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Ads that show ‘two price’ or ‘was / now’ pricing are common, effective and legal … provided they’re not misleading. There are special rules about how to get ‘was / now” pricing ads right. While care needs to be taken, getting it right is relatively easy.

Getting it wrong can be costly, as the former owners of the Zamel’s jewellery chain have found – the ACCC took them to court over allegedly misleading ‘was / now’ price ads in one of their catalogues. In January 2009, the court handed down a fine of $380,000.

So, what are the rules? Well, the ACCC has actually published guides on issues to be addressed before running a ‘was / now” price promotion. Here’s a summary:

You should ensure that:

• products were actually sold at the ‘was’ price for a period of at least 14 days before the advertisement (note that this is the suggested minimum – a longer period may be reasonable in the circumstances)
• at least 75% of the actual sales of the product before the promotion were at the ‘was’ or higher price
• the ‘was’ price is not simply the RRP if the products were not actually sold at that price in sufficient quantities
• the promotion is intended to end or the intention is to remove the ‘was’ price by a specified date
• the products were sold at the ‘was’ price for a longer period of time than the period of the promotion
• there are reasonable grounds to believe that there will be stock at the end of the promotion (i.e. this is not a stock run out)
• if the promotion is a stock run out sale, that must be made clear to customers.

Yesterday, the Federal Court largely rejected iiNet’s request, limiting the scope of the documents to be produced by AFACT to certain categories  relating to local infringement investigations.

At the same time, the Court ordered that iiNet discover the details of 20 anonymous customer accounts, well short of the 300 to 400 accounts reportedly sought by AFACT.

Both sides were quick to claim a minor victory – AFACT saying 20 accounts is sufficient for them to prove their case and iiNet saying they have effectively got the documents they asked for.

Back in November 2008 we reported that the ACCC were getting ‘very cranky’ about premium SMS. And in March this year, ACCC supremo, Graeme Samuel, gave a direct warning to the industry about premium SMS.

Well, the ACCC has stuck to its word and launched two separate actions in the Federal Court against AMV Holdings and Clarion Marketing Australia.

The ACCC alleges that AMV ran misleading ads that hid the true cost of premium services being offered and that Clarion signed customers up to a paid subscription service without their knowledge.

The ACCC is usually a very predictable regulator. They normally advertise which industries or which industry practice they will be targeting. Quite often, they make known what they consider acceptable and unacceptable practice. It’s part of their approach to enforcement.

And it pays to listen.

Compliance can be balancing act, especially for the small to medium-sized telco. But the cost of non-compliance can be significant – even terminal. It’s a no-brainer then to focus compliance efforts on areas that the chief regulator has said it’s focusing on.

So, what else is on the ACCC’s agenda at present?

Here’s a clue -

this is what the ACCC has said about the new component pricing law:

… the new component pricing provisions apply to all price representations made to consumers

… you should review your marketing across all media including television, radio, print, billboards, posters, websites et cetera

… there is no ‘grace period’ for compliance with the new provisions – they have been in effect since 25 May 2009.

Fair warning.

Online civil liberty group, Electronic Frontiers Australia, reports on a ‘remarkable victory’ by ISPs in New Zealand in relation to what EFA calls ‘guilt upon accusation’ laws.

Sounds promising, we thought, as we followed the link in our RSS reader.

Problem is, when we got there, we couldn’t figure out what was particularly remarkable or victorious.

Apparently, legislators across the Tasman have agreed to hold off implementing s. 92A of the NZ Copyright Act.  That section would have required ISPs to:

adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the account with that Internet service provider of a repeat infringer

Sound familiar? It’s almost identical to s. 116AH of the Australian Copyright Act which sets out the safe harbour regime.

The difference, it seems, is that where the words in the Australian legislation set out safe harbour conditions (i.e. conditions under which damages cannot be awarded against an ISP) which can be disregarded (at the ISPs peril of course), the words in the NZ legislation provide a positive duty requiring ISPs to ‘adopt and reasonably implement’ a repeat infringer termination policy.

EFA correctly points out that a NZ ISPs would need some guidance on what such a policy should look like and how to determine who a ‘repeat infringer’ is. It’s just as well then that a draft code of practice has been released. The draft code essentially provides for a ’3 strikes’ policy where:

• copyright owners can serve copyright notices on ISPs where a user is infringing
• provided the notice satisfies the requirements of the code, it is taken as evidence of infringement
• the ISP then notifies the user that a copyright notice has been received
• if the user replies and denies infringement, the user is taken not to have infringed (for the purposes of s.92A)
• if the user doesn’t respond or doesn’t deny infringement and this happens 3 times in 18 months, the ISP should terminate the account

Seems fair enough.  Copyright owners may think that it’s too easy for users to escape termination by simply denying infringement but that’s not really the issue. The issue isn’t how best to enforce copyright – that’s already sufficiently covered by the law. The issue is: what does an ISP have to do to comply with the law and to avoid liability – and is this realistic?

In other words, is a requirement to ‘adopt and reasonably implement a policy that provides for termination, in appropriate circumstances, of the account with that Internet service provider of a repeat infringer’ an unrealistic burden on ISPs?  Does it, as EFA suggests, impose a law of ‘guilt upon accusation’?

The answer, clearly, is no.

The requirement to ‘adopt and reasonably implement a policy’ is achievable. Remember, we’re not talking about a requirement to implement a reasonable policy, or to implement a policy that determines if infringement occurred, or to penalise an ISP for not terminating an account. The requirement is to reasonably implement a policy. We know this is achievable because the draft code provides such a policy. Adopt and follow it and you’ve adopted and reasonably implemented a policy.

What internet-shattering law were they fighting against in NZ again?

Turning to the Australian context, the EFA has this rather interesting thing to say:

The delay in the NZ law is a good sign, but there are still many more problems. The current case before the Federal Court between AFACT and iiNet will examine what responsibility ISPs have under Australian law, which already includes a provision requiring termination of repeat infringers.

The text in bold is pretty close but does not reflect the key point of the safe harbour provisions.

There is no direct requirement for an Australian ISP to terminate repeat infringers. There is no requirement in Australia for ISPs to even adopt and reasonably implement a repeat infringer termination policy. ISPs do so to bring themselves into safe harbour.

We think an ISP who doesn’t do so is crazy – it’s an insurance policy that limits the damage if things go wrong. But taking out such insurance isn’t mandatory.

In a sign that things are going to stay hot (and probably get hotter) for premium mobile service providers, ACMA has now launched Federal Court proceedings against Mobilegate Ltd (a Hong Kong company), Jobspy Pty Ltd, Winning Bid Pty Ltd and individuals associated with those companies for breaches of the Spam Act and Trade Practices Act.

According to ACMA’s media release, those companies allegedly sent unsolicited SMS messages (which fall under the ambit of the Spam Act) through a premium rate shortcode advertising a premium mobile service.  They are also alleged to have obtained contact details of users of dating websites by deception and tricked users into replying to SMS messages at a cost of up to $5 per message.

ACMA is asking the court to impose declarations, injunctions and penalties.  The maximum penalties for breaches of the Spam Act and Trade Practices Act are substantial, running into the millions.

We’ll keep an eye on this and keep you posted.

The Federal Court yesterday made declarations that Clarus Telecom breached the Trade Practices Act by misrepresenting (through their telemarketers) that their services were affiliated with or provided on behalf of Telstra.

The declarations, which were made by consent, came about after the ACCC issued proceedings against Clarus at the start of September over the conduct of its telemarketers.

In addition to the declarations, Clarus was ordered (by consent) to:

• publish corrective notices on their website
• publish an article educating the industry about compliance with the Act
• pay the ACCC’s costs of the court proceedings
• implement a Trade Practices compliance program

The ACCC media release is available here.

Although the order to pay the ACCC’s costs is the only direct financial hit against Clarus, the requirement to implement a Trade Practices compliance program could be one that ends up having the most financial sting.

Compliance programs, especially those based on the ACCC’s ‘standard’ requirements, are not easy or cheap to implement. It’s not merely a case of writing an internal policy and a implementing a cookie-cutter TPA manual. There’s also ongoing training, monitoring and auditing involved. Having an offshore call centre with a high turnover of agents can pose additional difficulties.

In a previous article, Peter Moon wrote about the potential cost blowout of implementing a TPA compliance program and how it could be managed on a budget.

The studios are claiming that iiNet infringed copyright by not stopping iiNet customers from using BitTorrent to infringe the studios’ copyright in their respective films.

Under Australian law, a person can be liable for infringement if he or she ‘authorises’ another person to infringe copyright.

Whether or not a person ‘authorised’ another will depend on:

• the extent of the person’s power to prevent the other from infringing,
• the nature of the relationship between the person and the infringer, and
• whether the person took reasonable steps to prevent or avoid the infringement

The list of litigants reads like a who’s who of Hollywood heavyweights along with Channel 7.  They include:

• Roadshow Films
• Paramount Pictures
• Sony Pictures
• Twentieth Century Fox
• Unversal Pictures
• Universal Stuidos
• Village Roadshow
• Warner Brothers
• Buena Vista
• Columbia Pictures
• Dream Works
• Disney Enterprises

The proceedings are unprecedented in Australia and could have serious ramifications for ISPs.  We’ll be monitoring it closely and providing updates as they come to hand.

A directions hearing before Justice Cowdroy is scheduled for 17 December.

But competitions, where they involve an element of chance, are often regulated as a type of ‘lottery’. In this spot check we’ll look at how a little forward planning can save some unwanted pain down the track.

Permits

The first point to make about competitions, is that you’ll generally need at least one permit. You won’t always need one (we’ll explain why below) but as a regulated gaming activity, competitions generally require at least one permit. Why at least one? Well that brings us to the second important point …

State’s rules

Competitions are regulated on a State by State basis. This means that if your competition is open to people in Victoria, NSW and Queensland, you’ll need a permit from the Victorian, NSW and Queensland gaming authorities.

Permits take time

It can take up to 28 days to process permit applications in some States. This is where a bit of forward planning is essential – you’ll need to know which States your competition is being run in and apply early for permits. We seen plenty of marketing plans frustrated because the marketing department didn’t realise permits were needed or how long they would take.

Trade promotion lotteries

Remember how we said you won’t always need a permit? If your competition fits within the exception of a ‘trade promotion lottery’ and has a total prize pool below the statutory cap, you won’t need a permit.

A trade promotion lottery is one which is aimed at promoting a business and which fits the specific definitions set out in gaming laws. But remember also how each State has its own gaming laws? This means you’ll need to check that your competition fits the definition of a trade promotion lottery under the laws of each State that you’ll be running it in.  You’ll also have to check what the statutory cap for the total prize pool is under the relevant State law.

In Victoria, you won’t need a permit for a trade promotion lottery if:

• the total prize pool is less than the statutory cap of $5,000,
• the entry fee is no more than the prescribed amount (currently the cost of a premium SMS), and
• the promotor meets other prescribed conditions.

The ‘other prescribed conditions’ deal with providing certain information (closing date, eligibility, etc), publishing winners’ details and record keeping. People often forget about these additional obligations but if you don’t do them, you won’t fit under the exception and your competition will be illegal.

Conclusion

• Don’t forget that competitions that involve an element of chance are often a regulated activity. And don’t forget each State has different regulations.
• Chances are you’ll need a permit. Make sure to apply early.
• If you don’t have a permit, make sure your competition fits into the definition(s) of a trade promotion lottery with a total prize pool below the statutory cap.
• Don’t forget that while a trade promotion lottery won’t need a permit, there are still particular obligations that you must comply with.