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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.

Exceptions

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.

Effects

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.

Penalties

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 cmitchell@sorbaralaw.com.

Article Written by:  Cameron Mitchell
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* * 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.


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