A recent ruling by the United States District Court for the District of Utah points towards a nationwide shift in the interpretation of the Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”). The Court ruled that where an unsolicited marketing email message contains a generic proxy registration name (where the registrant’s true identifying information is “cloaked”), such email violates the CAN-SPAM Act and subjects the sender to statutory penalties. In fact, the Court determined that proxy registrations may violate two provisions of the CAN-SPAM Act. The Court relied on a California State court ruling concerning a substantially similar set of facts as persuasive authority in reaching its decision.
The Court’s Reasoning
The Court first concluded that “where an email contains a generic ‘from’ name and is sent from a privacy-protected domain name, such that the recipient cannot identify the sender from the ‘from’ name or the publicly available WHOIS information, such is ‘materially misleading’ and is a violation of 15 U.S.C. § 7704(a)(1)(C).” The Court reasoned that the sending of email via a proxy registered domain name prevents the recipient from determining who sent the email in question, thus frustrating Congress’ intent in passing the CAN-SPAM Act.
Additionally, the Court found that unsolicited email messages sent employing cloaked uniform resource locator (“URL”) registrations violate Section 7704(a)(1)(A) of the CAN-SPAM Act. Specifically, the Court found that “[u]nder 15 U.S.C. § 7704(a)(1)(A), even header information that is technically accurate violates the CAN-SPAM Act when the email ‘includes an originating electronic mail address, domain name, or Internet Protocol address the access to which for purposes of initiating the message was obtained by means of false or fraudulent pretenses or representations.” The Court noted that, when a party registers a domain with an ICANN-compliant registrar, the domain registration agreement itself prohibits the use of the registered domain to send unsolicited commercial email. Therefore, if a marketer intends to use the domain for “prohibited purposes”, the marketer will have obtained the URL under false pretenses and any email that is eventually sent through the use of such URL will be in violation of the CAN-SPAM Act.
Consequences of CAN-SPAM Violation
Under the CAN-SPAM Act, a successful plaintiff may recover monetary damages equal to the actual losses suffered or statutory damages of $100 per header violation, whichever is greater. In addition, a court may award triple damages where a marketer uses an automated process to create proxy registered email addresses. In the Utah action, the Court awarded $1,608,360.00 in damages for the sending of 13,453 email messages. Although this “anti-cloaking” decision has been reached in only two jurisdictions, it indicates a growing trend that marketers should be aware of and use as guidance in deciding whether or not to use proxy registration in connection with sending commercial email messages.