In a previous post, “Spam and the Canadian Legal System,” I looked at existing government regulation of spam in Canada and noted that those bodies are not primarily designed, employed or equipped to tackle spam in a comprehensive manner. In this post, I look at private avenues and contractual mechanisms that currently exist and compare them with CASL.
The following clause would be typical in a contract with an ISP: “Customer must not distribute or publish unsolicited promotions, advertising or solicitations for funds, goods or services, including junk mail and spam.” It’s worth noting that the words in the sample clause have pejorative connotations – the messages must be “unsolicited”, “junk mail” or even the undefined (yet instantly recognizable) “spam.”
How Does CASL Compare?
CASL takes the opposite approach – it applies to all commercial electronic messages, without any qualification or normative element (e.g., that the messages must be “unsolicited”, “bulk”, “unwanted”) or any of the other negative connotations that people commonly associate with spam. Under CASL, transmitting any commercial electronic message is illegal unless there is express or implied consent or it is in an excluded category, and the message is in a prescribed form.
Courts have also heard private lawsuits over spam. In 1267623 Ontario Inc. v. Nexx Online Inc., a business applied to the court to get an ISP to reactivitate the business’s website. Using a third party service provider, the business had sent out unsolicited emails at the rate of 200,000 per day to promote its website. After receiving numerous complaints, the ISP disconnected the business’s website for violating the ISP’s terms and conditions. Those terms and conditions required its customers to follow the generally accepted terms of “netiquette” when sending e-mails.
The court, based on a review of the literature surrounding netiquette, the attitudes of users receiving spam, and American case law, concluded that sending spam was a breach of netiquette, unless the contract with the ISP specifically permits the distribution of unsolicited e-mails.
One of the American decisions reviewed in Nexx Online was CompuServe Incorporated v. Cyber Promotions, Inc. In that case, the court granted CompuServe, an online computer service, an injunction against an advertising agency sending mass unsolicited advertising e-mails on behalf of itself and its clients to CompuServe’s subscribers. The basis for the injunction was trespass — the ad agency used CompuServe’s property (its computer system) to send electronic signals (e-mails). CompuServe successfully argued that the effort of processing the ad agency’s spam placed a tremendous burden on CompuServe’s equipment in terms of consuming processing power and storage space. CompuServe also proved that subscribers had terminated their accounts specifically because of spam. So, lawsuits over spam have occurred without government legislation on the subject.
How Does CASL Compare?
One would expect spam-related lawsuits to continue and, in all likelihood, increase under CASL, since CASL creates a private right of action by anyone affected by a prohibited act under CASL. Violators of CASL will be liable to pay:
- compensation for loss, damages and expenses; and
- extensive awards that are capped at $1 million per day for breach of the anti-spam provisions, as well as $1 million for each act of aiding, inducing, or procuring a breach of the spam provisions.
CASL’s private right of action would also be available for use in class action lawsuits against persons contravening CASL.
Associative Rules and Guidelines
Industry associations may also have forms of self-regulation concerning spam. An example would be the Canadian Marketing Association, which is the largest marketing association in Canada with 800 corporate members. The CMA’s Code of Ethics and Standards of Practice contain a number of provisions applicable to email advertising or spam. These include article I1 dealing with the accuracy of representations, article I5 prohibiting the disguising of the intent of the communication, and article N5 outlining how marketers should operate on the Internet, including: “N5.3 Email Consent: Marketers must not send email marketing communications without the consent of the recipient, except where there is an existing business relationship. In cases where a consumer has provided his or her email address to a marketer, the marketer has implied consent to email that consumer. … N5.5 Email Marketing Opt-Out: Every email message must clearly identify the marketer and source of the email and provide the recipient with a simple and easy-to-use click through means to opt-out from receiving further email marketing communications from the marketer.
N5.6 Email Disclosure: Marketers must not misrepresent the source of any message or use false or misleading “subject” lines in email marketing communications. The subject line and body text in email marketing communications must accurately reflect the content, origin and purpose of the communications.”
If the CMA receives a complaint regarding a violation of the Code of Ethics, it will contact that organization and attempt to resolve the issue, regardless of whether the organization is a member or not. If the CMA is not satisfied that a member has made best efforts to comply, the case can be referred to an independent party for mediation and a hearing. If a member continues to ignore the process, the CMA can expel the organization and make a public announcement about the incident. However, the CMA does not have the authority to impose fines or restrictions.
How Does CASL Compare?
CASL contains similar, but greater and more prescriptive, prohibitions. But importantly, CASL also includes major sanctions for its breach. In addition to the private right of action mentioned above, administrative monetary penalties (fines) exist for contravening CASL – up to $1 million for an individual and $10 million for anyone else. In the case of contravening the Competition Act portions of CASL, fines can be up to $10 million for corporations for a first offence and up to $15 million for subsequent offences.
As is apparent, the prevalence and negative aspects of spam have led to private organizations to take steps to regulate or prohibit spam. If CASL proceeds to come into force, the legal landscape in Canada concerning spam would be greatly altered by government regulation through the terms and enforcement (both government and private) of CASL.