What is Canada’s Anti-Spam Legislation (“CASL”)?

CASL was passed into law on December 15, 2010, over vigorous objection by various business interests, and became effective on July 1, 2014.  CASL can best be understood as a draconian, Canadian hybrid of the U.S. Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”) and the Telephone Consumer Protection Act of 1991 (“TCPA”).  CASL prohibits all commercial electronic messages (“CEMs”) that are sent without proper consumer consent, including e-mail, text, social media and image messages.  As such, CASL has a strict “opt-in” framework.  By contrast, CAN-SPAM regulates the content and form of e-mail messages and does so through use of a much more liberal “opt-out” framework.

Who Can Be Sued Under CASL?

Any individual or business entity that sends, or assists in sending, a CEM to a consumer in Canada is subject to CASL.  Moreover, any CEM that is sent from, routed to or accessed from a device in Canada is subject to CASL regulations.   To reiterate, corporate officers, directors and agents may be held personally liable if they directed, authorized, acquiesced or participated in the commission of a CASL violation.

What are the Penalties for Failing to Comply with CASL?

CASL provides for either actual damages or statutory damages of $200.00 per each violation, up to a maximum of C$1 million/day for individuals and C$10 million/day for corporate entities.  In determining the final amount of statutory damages to award, courts analyze the personal/corporate history of the violator(s), the financial benefit obtained and the nature and scope of the violation(s).  Considering that marketing campaigns may involve millions of CEMs, potential damages under CASL may escalate very quickly.

What Agencies Can Enforce CASL?

The Canadian Radio-Television and Telecommunications Commission, the Canadian Competition Bureau and the Office of the Privacy Commissioner of Canada (“Enforcement Agencies”) are all empowered to enforce and issue administrative and monetary penalties for violations of CASL.  Although there has been an enormous outcry for the Enforcement Agencies to focus on educating businesses, rather than enforcement, for the first year after enactment, the Enforcement Agencies have given no indication that they intend to suspend enforcement efforts.

My Company is Located in the U.S., Can We Be Sued under CASL?

Yes, and as detailed above, so can the officers and directors of the company.  For the first three years following its effective date, enforcement will come exclusively through the efforts of the above-referenced Enforcement Agencies.  Such enforcement will most likely be in the form of injunctions, seizure of assets held in or passing through Canada, as well as joint efforts between the Federal Trade Commission and the Canadian Enforcement Agencies.   Of course, nothing prevents the Enforcement Agencies from filing suit in Canada against U.S. businesses that are directing CEMs into Canada, or otherwise doing business in Canada.

Is There a Private Right of Action Under CASL?

CASL will allow individuals to file private and class action lawsuits to collect statutory damages, beginning as of July 1, 2017.  Because the CASL requirements are so broad, so strict and so easily violated, we expect to see a flood of CASL-specific class action lawsuits.  In theory, Canadian plaintiffs can bring class action lawsuits in the state where the U.S. business is incorporated or has a principal place of business, or even in Canada, under the theory that the U.S. business purposely availed itself of jurisdiction in Canada by sending CEMs into Canada.

How To Defend A CASL Lawsuit?

If you are named in a CASL lawsuit, there are many factual and legal defenses that counsel knowledgeable and experienced in the nuances of CASL can help you identify and assert.   For example, business-to-business CEMs and those that are purely informational in nature are not subject to CASL regulations.  Moreover, no CASL liability should attach where the CEMs are: not intended to be accessed in Canada, and conform to the laws of the target country; sent within six (6) months of receiving a consumer’s request, inquiry or complaint; solely consist of political content; sent to consumers with whom the sender has an existing business relationship; sent to consumers with whom the sender has a familial, personal or other non-business relationship; sent on a one-time basis to consumers referred by a person that has an existing relationship with the sender; or sent to consumers based on the authorization of a third party that has already secured the consumers’ consent.

How To Avoid A CASL Lawsuit?

As always, a penny of prevention is worth a pound of cure. If you or your marketing partners utilize CEMs, you are at substantial risk that such messages could be routed to or accessed from a device in Canada, which would thereby subject you to CASL.  Retaining counsel that is knowledgeable and experienced in the nuances of CASL, Internet practices and online marketing, who know the red flags that enforcement agencies and class action law firms look for, could save you substantial time and money, as well as allow you to avoid the distraction of dealing with a regulatory inquiry or action.

This topic should be of interest to any company or individual engaging in online marketing.