By Alice Tseng
On December 4, 2013, the Government of Canada announced that most of Canada's Anti-Spam Legislation (CASL), including the provisions applicable to commercial electronic messages (CEMs), will come into force on July 1, 2014. Many had expected that the government would provide a longer grace period for businesses to develop compliance programs to comply with CASL once the Industry Canada Regulations were finalized. Instead, the government has balanced this shorter coming into force period with a delay as to when the private right of action provisions come into force (discussed at the end of this bulletin).
Considered one of the most stringent anti-spam regimes in the world given its breadth, scope and penalties, CASL will have a significant impact on the electronic communication practices of businesses operating in the Canadian marketplace. This bulletin focuses on what businesses need to know to comply with CASL's anti-spam provisions. CASL also contains provisions related to the unsolicited installation of computer programs or software but those provisions do not come into force until January 15, 2015, and are not addressed in this bulletin.
CASL was enacted in December 2010, but significant concerns raised by Canadian stakeholders regarding the potential impact of the legislation resulted in multiple rounds of public consultation and lengthy delays. The Canadian Radio-television and Telecommunications Commission's Electronic Commerce Protection Regulations (CRTC) (CRTC Regulations) were finalized in March 2012. Final Industry Canada Electronic Commerce Protection Regulations (IC Regulations) were announced on December 4, 2013, along with CASL's coming into force dates, but will not be officially published in the Canada Gazette until December 18.
Subject to limited exceptions, CASL prohibits the sending of a CEM to an electronic address unless: (1) the person to whom the message is sent has consented to receiving it; and (2) the message complies with prescribed form and content requirements. An electronic message that is sent for the purposes of obtaining consent to send CEMs is itself considered a CEM, which may not be sent without consent (subject to the exceptions discussed below). This is a significant distinction from the CAN-SPAM Act in the U.S.
A CEM is defined broadly as an electronic message (e.g., email, text message, social media message) that has as its purpose, or one of its purposes, to encourage participation in a commercial activity. Commercial activity includes any transaction, act or conduct or any regular course of conduct that is of a commercial character, whether or not the person who carries it out does so in the expectation of profit.
THE CONSENT REQUIREMENT
In general, consent to receive a CEM must be express. However, CASL also permits implied consent in certain limited circumstances, which are discussed in more detail below.
Guidance documents published by the CRTC have made it clear that "a positive or explicit indication of consent is required" to comply with the express consent requirements of CASL. This impacts a common industry practice of using an opt-out or negative option method of obtaining consent for marketing, such as a pre-checked consent box that a consumer has to un-check to signify they do not want to receive marketing messages. Instead, a consumer must take an active step (e.g., checking a box) to indicate his or her consent. The guidelines also state that requests for consent cannot be "subsumed in or bundled with requests for consent to the general terms and conditions of use or sale" but rather must be clearly and separately identified.
To be valid, a request for express consent under CASL must set out "clearly and simply":
- The purpose for which consent is being sought
- The name (or if different, business name) of the person seeking consent
- If the consent is sought on behalf of another person, the name (or if different, business name) of the person on whose behalf consent is sought and a statement indicating which person is seeking consent and which person on whose behalf consent is sought
- The mailing address, and one of a telephone number providing access to an agent or voice messaging system, an email address or a web address of the person seeking consent or, if different, the person on whose behalf consent is sought
- A statement that the person can withdraw their consent.
Although CASL generally requires express consent, consent will be implied in the following circumstances:
- Where the recipient and the sender have an "existing business relationship" or an "existing non-business relationship."
- An existing business relationship exists where the sender and recipient have engaged in certain specified types of business together in the two years preceding the date on which the CEM is sent (for example, a purchase or lease of a product, or entering into or continuing a written contract) or where the recipient of the CEM has made an inquiry to the sender in the previous six months.
- An existing non-business relationship exists where an individual has made a donation or gift in the last two years, or performed volunteer work in the last two years, to or for a registered charity or political party, organization or candidate or where the individual is a member of certain clubs, associations or voluntary organizations.
- Where a recipient has "conspicuously published" his or her electronic address, the publication is not accompanied by a statement that the recipient does not wish to receive unsolicited CEMs, and the CEM is relevant to the person's business, role, functions or duties in a business or official capacity.
- Where a recipient has disclosed his or her electronic address to the sender without indicating that the recipient does not wish to receive unsolicited CEMs and the CEM is relevant to the person's business, role, functions or duties in a business or official capacity. This is sometimes dubbed the "business card" exemption.
CASL exempts the following types of CEMs from its anti-spam prohibition altogether:
- CEMs sent by an individual to an individual recipient with whom the sender has a personal or family relationship ("personal relationship" and "family relationship" are specifically defined in the IC Regulations).
- CEMs sent to a person engaged in a commercial activity and consist solely of an inquiry or application related to that activity.
The IC Regulations also add the following exemptions from the anti-spam prohibition:
- CEMs sent by an employee, representative, consultant or franchisee of an organization to another employee, representative, consultant or franchisee of the same organization (i.e., intra-business) which concern the activities of the organization.
- CEMs sent by an employee, representative, consultant or franchisee of an organization to an employee, representative, consultant or franchisee of another organization (i.e., inter-business), as long as the organizations have a relationship and the message concerns the activities of the organization to which the message is sent.
- This exemption is intended to address concerns regarding the potential application of CASL to ordinary business-to-business communications, and has been slightly broadened from the last draft of the IC Regulations. In particular, the requirement in the last draft for a "business relationship" between the two organizations is now only a requirement for a "relationship".
- CEMs sent in response to an individual's request, inquiry or complaint or where the CEM was otherwise solicited by the person to whom the CEM is sent.
- CEMs sent to satisfy a legal obligation or to enforce or provide notice of existing or pending legal rights or actions.
- CEMs sent and received on an electronic messaging service, such as one provided through a social media platform, if the information and unsubscribe mechanism that are required under CASL are conspicuously published and readily available on the user interface through which the message is accessed, and the person to whom the message is sent consents to receive it either expressly or by implication.
- CEMs sent to a limited-access secure and confidential account, such as a message centre in an online banking account, to which messages can only be sent by the person who provides the account to the person who receives the message.
- CEMs sent by a person who reasonably believes the message will be accessed in a foreign state that is listed in the schedule to the IC Regulations and the message conforms to the law of the foreign state that addresses conduct that is substantially similar to conduct prohibited under CASL's anti-spam prohibition.
- CEMs sent by or on behalf of a registered charity as defined in the Income Tax Act and the message has as its primary purpose raising funds for the charity.
- CEMs sent by or on behalf of a political party or organization, or a person who is a candidate for publicly elected office, and the message has as its primary purpose soliciting a contribution as defined in the Canada Elections Act.
CASL also exempts the following CEMs from the consent requirement (though these CEMs must still comply with CASL's form and content requirements), if the CEM solely:
- Provides a quote or estimate for the supply of a product, good or service, if the quote or estimate was requested by the recipient
- Facilitates, completes or confirms a commercial transaction between the parties where the recipient previously agreed to enter into such a transaction
- Provides warranty, product recall, safety or security information about a product, good or service that the recipient uses, has used or has purchased
- Provides notification of factual information about the ongoing use or purchase by the recipient of a product, good or service offered under a subscription, membership, account, loan or similar relationship
- Provides notification of factual information about an ongoing subscription, membership, account or loan
- Provides information directly related to an employment relationship or benefit plan in which the recipient is currently involved, participating or enrolled, or
- Delivers a product, good or service, including updates or upgrades further to a transaction that has been previously entered into.
The IC Regulations also set out an additional exemption that applies only to the first CEM sent to an individual following a referral, provided the referral is from an individual who has an existing business, non-business, personal or family relationship with both the recipient and the sender. The CEM must disclose the full name of the referring party and state that the CEM is sent as a result of the referral.
CONDITIONS FOR USE OF CONSENT OBTAINED ON BEHALF OF A PERSON WHOSE IDENTITY WAS UNKNOWN
CASL provides that a person may, on behalf of an unknown third party, obtain the express consent of another person to receive CEMs from the third party, as long as certain conditions set out in CASL and the IC Regulations are met. The IC Regulations set out somewhat burdensome conditions for the use of this type of consent by third parties.
FORM AND CONTENT REQUIREMENTS
In addition to the consent requirement, CASL sets out specific form and content requirements for CEMs. In particular, each CEM must identify the sender, provide prescribed contact information for the sender, and set out an "unsubscribe" mechanism. The prescribed contact information includes:
- The name of the person sending the message
- If the message is being sent on behalf of another person, the name of the person on whose behalf the message is being sent
- A statement indicating which person is sending the message and which person on whose behalf the message is being sent
- The mailing address and one of a telephone number providing access to an agent or voice message system, or an email address, or a web address of the person sending the message or the person on whose behalf the message is sent.
The unsubscribe mechanism that must be included in each CEM must enable the recipient to indicate, at no cost to them, that they no longer wish to receive CEMs from the sender. The unsubscribe mechanism must be valid for at least 60 days after the CEM is sent, and effect must be given to the unsubscribe mechanism without delay, and without limitation in no more than 10 business days.
AIDING AND ABETTING CLAUSE
Under CASL, it is an offence "to aid, induce, procure or cause to be procured the doing of any act contrary to" certain sections, including the provisions relating to sending CEMs. Accordingly, refer-a-friend promotions must be carefully structured to take into account requirements under CASL.
The potential penalties for non-compliance under CASL are significant and include administrative monetary penalties of up to C$1-million for individuals and C$10-million for corporations.
CASL also creates a private right of action for persons who have been affected by a contravention of any number of CASL's provisions, including the anti-spam provisions. The provisions of the statute providing for a private right of action will not come into effect until July 1, 2017. This three-year delay is welcome news for industry, which has been very concerned about class action lawsuits being instituted while both industry and the regulators are trying to navigate the new regime. Despite the private right of action not coming into force for another three years, industry should be aware that risks of claims nonetheless exist and should strive to achieve compliance with the statute.
Given the shorter-than-expected grace period, organizations will need to act swiftly to build and implement compliance programs that meet the strict standards of CASL. In order to get onside with the law, organizations should:
- Identify their current practices for sending electronic messages and assess which ones will be covered by CASL.
- Seek express consents in accordance with CASL's requirements. Since requests for consent will constitute CEMs after the law comes into force, requests for consent should be sent out before July 1, 2014.
- Track and document implied consents and ensure there are systems in place to identify when an implied consent expires. Consider requesting express consent, which is not time limited and remains valid until consent is withdrawn.
- Render fully operational unsubscribe mechanisms that meet the requirements of the legislation.
- Develop and implement policies and procedures for compliance with CASL.
- Train employees on applicable CASL policies and procedures.
- Review contracts with vendors and service providers that send CEMs on behalf of the organization to ensure they are contractually obligated to comply with CASL.