18 Jun 2014
Does your business send electronic messages to clients or prospective clients regarding sales, new products, services or general industry updates? If yes, you should be aware of a new federal Act that comes into force July 1, 2014. Its aim is to protect consumers from unwanted ‘spam’ emails – like the seemingly never-ending stream of Viagra and ‘can’t miss’ stock pick messages.
Canada’s Anti-Spam Legislation (“CASL”) could have a major impact on businesses that send legitimate electronic messages to customers. It is important that companies take some time to review email sending practices and ensure they adhere to the requirements under CASL. Here are some key points to be aware of:
- The legislation applies to businesses sending ‘commercial electronic messages’ (“CEMs”). A CEM encompasses any form of electronic communication that encourages participation in a commercial activity, regardless of whether there is an expectation of profit. The scope of electronic communication includes e-mails, text messaging, and social media.
- CEMs must contain an option to unsubscribe, as well as contact information identifying the sender.
- Recipients (customers) must give their consent to receiving CEMs. Consent to receiving CEMs can be implied or express. One example of implied consent is an existing business or non-business relationship within a prior two-year period. If there is no implied consent, then express consent is required. Because a request (sent electronically) for express consent will be considered a CEM once the legislation takes effect, it is wise to send such requests prior to July 1, 2014.
There are many exceptions to the above requirements. A CEM is not subject to CASL, for instance, if the recipient initiates an inquiry related to a commercial activity, or if the CEM is sent between two employees of an organization. There are also several circumstances where the consent requirement is waived – such as when the message concerns warranty or product recall information on a product or service the recipient has purchased, or when the message is facilitating a commercial transaction the recipient previously agreed to enter into.
There are other various nuances and exemptions under CASL, but the underlying principle is that recipients must provide consent to businesses who wish to send such messages.
CASL will affect the way in which many business organizations collect and maintain consent when sending marketing e-mails or maintaining e-mail lists. Start-up businesses may be disproportionately affected in their ability to reach new customers. Marketing practices that were valid before CASL may be prohibited after July 1, 2014. For example, if a customer has not purchased anything from your company within two years of the last marketing e-mail you have sent him or her, and hasn’t inquired about your products in the last six months, then your business may no longer have that customer’s implied consent under CASL because it is no longer considered an ‘existing business relationship’.
One particular challenge will be relying on implied consent. If you have no further contact with a client from whom you obtained implied consent prior to July 1, 2014, that implied consent will expire after a three year transition period – namely July 1, 2017. This may be challenging, as express consent will have to be obtained, but sending CEMs to recipients who have not provided consent will not be permitted under CASL.
Practical tips to consider
- Update your customer records. These records should include when consent was obtained and if it was implied or express. Determine how to collect express consent, and whether you can rely on implied consent or on one of the CASL exemptions. There are email marketing software tools that can aid in tracking customer consent as well as unsubscribe requests.
- Provide incentives for consent. This can be done by informing recipients of benefits for opting in to the subscription, such as special promotions or exclusive news. This is one possible way to deter potential consumers from clicking the unsubscribe option that senders will be required by CASL to provide.
- Educate all employees. As one CEM sent to someone who has not provided consent can be considered a CASL violation, it is essential that all employees understand the basic requirements of, and their obligations under, CASL.
An individual may be fined up to $1 million and corporations may be fined up to $10 million for non-compliance with CASL. Consumers and businesses will also have the right to bring a private right of action starting on July 1, 2017, with a penalty of $200 per infraction. Needless to say, the benefits of adjusting your business’ marketing practices to CASL requirements outweigh the costs of remaining idle.
Want to Learn More?
If you have any questions about this article or would like to discuss your company’s CASL compliance strategy, please contact Cameron Mitchell at email@example.com.
* * This article is intended only to inform or educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.
Corporate Commercial – Slonee Malhotra
We are all aware of the existence of SPAM and the need to curtail these messages. Canada’s Anti-Spam Law, (“CASL”) will be in force beginning on July 1, 2014. CASL will be one of the strictest anti-spam regimes in the world. However CASL will impact both illegitimate and legitimate commercial electronic messages. Businesses must therefore appreciate the impact of CASL on the ability to communicate with customers and clients via electronic messaging.
SPAM refers to bulk messages of an unsolicited nature which often promote products or services through electronic mail, text messages, or video messages. SPAM can be used for ill purposes by those aimed at misappropriating personal data, banking information, or credit card numbers, luring individuals into scams including identity theft schemes, or defrauding consumers via counterfeit business websites.
SPAM messages are a nuisance, a drag on online commerce, and a menace for consumers. These messages have become a vehicle for a wide range of threats related to online commerce which affect both individuals and businesses.
CASL will affect individuals, businesses, and organizations by imposing regulations aimed at limiting and controlling the messages that are distributed. It is purposed to address three broad areas:
(1) commercial electronic messages (CEMs);
(2) alteration of transmission data; and
(3) the production or installation of computer programs.
The central feature and unifying purpose of CASL is to create an opt-in, consent-based regime to the receipt of these types of messages. Essentially, if a Canadian wishes to send an electronic message to a recipient that encourages the recipient to buy, sell, or lease a product or offers to provide certain opportunities, that recipient must first provide the sender with consent.
Most businesses will be largely impacted by the provisions and regulations restricting CEMs. Generally speaking, CASL requires that consent to receive CEMs must be “express consent”. In other words, the recipient of the message must have expressly agreed to receive such a message.
Under CASL, “express consent” can be oral or written. A person who seeks express consent from a recipient must meet certain prescribed criteria. Before a sender gets consent, he must, in a clear and simple manner:
identify himself by setting out prescribed information and providing contact information which must remain valid for 60 days;
outline the purpose(s) for which the consent is being sought; and
provide a free and electronic mechanism to permit recipients to indicate a desire to stop receiving the messages.
There are a few exceptions to this requirement and there are a number of situations where consent need only be implied. Express consent is not required for personal relationships, existing business relationships that involve communications via electronic messages, or for non-business relationships (i.e. messages sent by charities).
Importantly, if a business is sold, the new owner can continue sending CEMs to existing customers who have previously given express consent.
Moreover, implied consent from the receiver will be sufficient to meet the requirements of CASL where:
there is an existing business or non-business relationship between the sender and receiver;
the receiver has published or disclosed (to the sender) the address to which the message is sent without publishing or indicating that the receiver does not wish to receive unsolicited e-mails; or the message is sent according to the Regulations.
With more and more businesses sending out electronic messages to customers and potential customers, for marketing and other purposes, the impact of CASL on these legitimate business activities must be monitored. Businesses need to ensure that CEMs are delivered in accordance with the new regulations. Failing to do so could expose the company to far reaching and significant penalties under CASL. Individuals and businesses can be fined per violation, face civil and/or criminal charges, and be subject to private actions. Where compensatory damages are not awarded, recent case law has indicated that punitive damages may be warranted.
All businesses should take steps to do the following now:
Review organizational practices to determine what existing CEMs do not fall under one of the exceptions
Consider whether consent may be implied for the messages that are sent out
If consent cannot be implied, develop a system to obtain express consent. Make sure to follow the requirements under both the Act and Regulations when sending out requests for express consent
Ensure the existence of a system to reliably record the express consents gathered
Develop another system to track messages that fit under implied consent and make certain that each consent remains valid
Implement an “unsubscribe” policy and ensure requests to unsubscribe are complied with according to the time periods outlined under the Act
Will your business be prepared once the Act comes into force? To learn more about how the new Act will impact your workplace, please contact our office to schedule a meeting with a member of our Corporate-Commercial Group.
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* * This article is intended only to inform and educate. It is not legal advice. Be sure to contact a lawyer to obtain legal advice on any specific matter.