CAN-SPAM Act : When Do Corporate Marketing Activities Become SPAM
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CAN-SPAM Act : When Do Corporate Marketing Activities Become SPAM

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Since its inception, the use of unsolicited e-mail, known as spam, has grown exponentially. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”)......

Since its inception, the use of unsolicited e-mail, known as spam, has grown exponentially. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) generally regulates the transmission of unsolicited commercial electronic mail messages. All businesses that send commercial e-mail must now comply with the new federal requirements of the CAN-SPAM Act.

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  • 1. CAN-SPAM ActWhen Do Corporate Activities Become Spam Karl Larson June 10, 2005
  • 2. Overview• Background• Overview of the CAN-SPAM Act• Why Corporate Emails May Be SPAM – Commercial Electronic Mail Messages – Transactional or Relationship Messages – What Does Primary Purpose Mean• Tips for Complying with the CAN-SPAM Act
  • 3. Background• Since its inception, spam has grown exponentially – 76 percent all e-mail traffic and may cost U.S. companies $17 billion or more to fight this year alone• Many legal and technical attempts to control spam – blocking and filtering by both recipients and ISPs – numerous state anti-spam laws with different standards and requirements
  • 4. Background• Effective January 1, 2004, all businesses that send electronic mail messages must now comply with the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”) – CAN-SPAM Act does not preempt all state laws • preempts state laws that expressly regulate the use of electronic mail to send commercial messages • except to the extent the state law prohibits falsity or deception in the message or attachment thereto • does not apply to state laws that are not specific to electronic mail – there is no bright line between mass e-mails from large companies to their customers and spam
  • 5. CAN-SPAM ActOverview• Signed into law December 16, 2003 – civil enforcement by FTC and other agencies – state attorneys general may enforce for residents – criminal penalties for certain forms of spam – creates private right of action ISPs – generally capped statutory damages• Regulates all unsolicited commercial electronic mail messages• Regulates some transactional or relationship messages
  • 6. CAN-SPAM Act 15 U.S.C. § 7704(a)(1)Overview• Commercial electronic mail messages and transactional or relationship messages are prohibited from containing materially false or materially misleading header information – must have sufficient information to allow an ISP, a person alleging a violation, or law enforcement to “identify, locate, or respond to” the sender – “from” line must identify the sender – must identify the initiating computer
  • 7. CAN-SPAM Act 15 U.S.C. § 7704(a)(2)Overview• Commercial electronic mail messages must not include deceptive subject lines – deceptive if the sender knows or should have known that a recipient, acting reasonably under the circumstances, would be misled by the subject heading about a material fact regarding the content of the message
  • 8. CAN-SPAM Act 15 U.S.C. §§ 7704(a)(3), 7704(a)(4)Overview• Commercial electronic mail messages must include a functioning return e-mail address or other Internet-based mechanism – clearly and conspicuously displayed – provide the recipient the opportunity to opt-out• After opt-out by recipient – sender and agents or other third parties acting on behalf of sender are prohibited from sending messages after 10 business days – FTC is seeking comment on 3 business day grace period – prohibited from selling, leasing, exchanging, or otherwise transferring or releasing the electronic mail address of an opt-out recipient
  • 9. CAN-SPAM Act 15 U.S.C. §§ 7704(d), 7704(a)(5)Overview• Commercial electronic mail messages containing sexually- oriented materials without the prior consent of the recipient must include a warning label – “SEXUALLY EXPLICIT:”• Commercial electronic mail messages must include – clear and conspicuous identification that the message is an advertisement or solicitation – clear and conspicuous notice of the opportunity to opt-out – postal address of the sender
  • 10. CAN-SPAM Act 15 U.S.C. § 7704(b)Overview• Prohibited from knowingly collecting e-mail addresses using automated means from websites or proprietary online servers (“Harvesting”) that have posted a notice prohibiting such collecting – the website or service will not give, sell, or otherwise transfer addresses maintained by such site or service to any party for the purpose of sending electronic mail messages• Prohibited from knowingly obtaining e-mail addresses using an automated means that generates possible e-mail addresses using a Dictionary Attack
  • 11. CAN-SPAM Act 15 U.S.C. § 7704(b)Overview• Prohibited from the automated creation of multiple e-mail accounts used to send electronic mail messages in violation of the CAN-SPAM Act• Prohibited from the knowing relay or transmission of a commercial electronic mail message without authorization
  • 12. CAN-SPAM Act 15 U.S.C. § 7706(f)Overview – Civil Actions• Enforcement by States on behalf of residents – enjoin further violations – actual monetary loss suffered by residents; or – statutory damages • $250 per violation • up to $2 million • court may treble or reduce damages • court may award attorneys’ fees
  • 13. CAN-SPAM Act 15 U.S.C. § 7706(g)Overview – Civil Actions• Action by ISPs – enjoin further violations – actual monetary loss incurred by the ISP; or – statutory damages • $100 per violation of 7704(a)(1) • $25 per violation otherwise • up to $1 million • court may treble or reduce damages • court may award attorneys’ fees
  • 14. CAN-SPAM Act 18 U.S.C. § 1037Overview – Criminal Actions• fine and/or imprisonment of 1-5 years• forfeiture – any real or personal property constituting or traceable to gross proceeds obtained from the offense – any equipment, software, or other technology used or intended to be used to commit or to facilitate the commission of the offense
  • 15. CAN-SPAM ActWhy corporate emails may be spam• Definition of Commercial Electronic Mail Message is Broad• Definition of Transactional or Relationship Message is Limited• Depends on the Primary Purpose• Mixed Message Content
  • 16. CAN-SPAM Act 15 U.S.C. §§ 7702(2)(A), 7702(2)(B)Definition of Commercial Electronic Mail Messageany electronic mail message the primarypurpose of which is the commercialadvertisement or promotion of a commercialproduct or service (including content on anInternet website operated for a commercialpurpose)does not include a transaction or relationshipmessage
  • 17. CAN-SPAM ActTransactional or Relationship Messages – Generally• Existing relationship between the sender and recipient (e.g., an existing customer)• Does not cover all electronic mail messages between the sender and recipient – limited to five types of messages – otherwise may fall under the definition of a commercial electronic mail message
  • 18. CAN-SPAM Act 15 U.S.C. § 7702(17)(A)Definition of Transactional or Relationship Messagean electronic mail message the primary purpose ofwhich is –(i) to facilitate, complete, or confirm a commercialtransaction that the recipient has previously agreedto enter into with the sender;(ii) to provide warranty information, productrecall information, or safety or securityinformation with respect to a commercial product orservice used or purchased by the recipient; ●●●
  • 19. CAN-SPAM Act 15 U.S.C. § 7702(17)(A)Definition of Transactional or Relationship Message(iii) to provide – (I) notification concerning a change in the terms orfeatures of; (II) notification of a change in the recipient’s standing orstatus with respect to; or (III) at regular periodic intervals, account balanceinformation or other type of account statement with respectto,a subscription, membership, account, loan, or comparableongoing commercial relationship involving the ongoingpurchase or use by the recipient of products or services offeredby the sender; ●●●
  • 20. CAN-SPAM Act 15 U.S.C. § 7702(17)(A)Definition of Transactional or Relationship Message(iv) to provide information directly related to anemployment relationship or related benefit plan inwhich the recipient is currently involved,participating, or enrolled; or(v) to deliver goods or services, including productupdates or upgrades, that the recipient is entitled toreceive under the terms of a transaction that therecipient has previously agreed to enter into with thesender.
  • 21. CAN-SPAM ActWhat Does Primary Purpose Mean?• Both commercial electronic mail messages, and transactional or relationship messages use the term “primary purpose”
  • 22. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)Primary Purpose – Commercial Electronic Mail Messagethe “primary purpose” of an electronic mail messageshall be deemed to be commercial . . .(1) if an electronic mail message consists exclusively ofthe commercial advertisement or promotion of acommercial product or service . . .;(2) if an electronic mail message contains both thecommercial advertisement or promotion of acommercial product or service as well as transactionalor relationship content . . . then the “primary purpose”of the message shall be deemed to be commercial if: ●●●
  • 23. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)Primary Purpose – Commercial Electronic Mail Message (i) a recipient reasonably interpreting the subjectline of the electronic mail message would likelyconclude that the message contains the commercialadvertisement or promotion of a commercial productor service; or (ii) the electronic mail message’s transactional orrelationship content . . . does not appear, in wholeor in part, at the beginning of the body of themessage. ●●●
  • 24. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)Primary Purpose – Commercial Electronic Mail Message(3) if an electronic mail message contains both thecommercial advertisement or promotion of acommercial product or service as well as othercontent that is not transactional or relationshipcontent . . . then the “primary purpose” of themessage shall be deemed to be commercial if: (i) a recipient reasonably interpreting thesubject line of the electronic mail message wouldlikely conclude that the message contains thecommercial advertisement or promotion of acommercial product or service; or ●●●
  • 25. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)Primary Purpose – Commercial Electronic Mail Message (ii) a recipient reasonably interpreting the body ofthe message would likely conclude that the primarypurpose of the message is the commercial advertisementor promotion of a commercial product or service.Factors illustrative of those relevant to this interpretationinclude the placement of content that is the commercialadvertisement or promotion of a commercial product orservice, in whole or in substantial part, at the beginning ofthe body of the message; the proportion of the messagededicated to such content; and how color, graphics,type size, and style are used to highlight commercialcontent.
  • 26. CAN-SPAM Act 70 Fed. Reg. 3,110 (January 19, 2005)Primary Purpose – Transactional or Relationship Messagethe “primary purpose” of an electronic mail messageshall be deemed to be transactional or relationship if theelectronic mail message consists exclusively oftransactional or relationship content as set forth in [15U.S.C. § 7702(17)(A)].
  • 27. CAN-SPAM Act 15 U.S.C. § 7705(a)Agents and Other Third-Parties• CAN-SPAM Act imposes liability on any person whose trade or business is promoted, if – promoted in a commercial electronic mail message containing materially false or misleading transmission information; and – that person: • knows or should have known that the trade or business was being promoted in the message • benefits or expects to benefit economically from the promotion • fails to prevent the transmission or report the transmission to the FTC
  • 28. CAN-SPAM ActMass Email Considerations• Primary Purpose – promotion of a commercial product or service• Mixed Message Content – the message content – the content placement and overall impression – the subject line• Limited Transactional or Relationship Message• Agents and Other Third-Parties
  • 29. The CAN-SPAM ActCompliance Tips• Include a clear and conspicuous opt-out notice and mechanism – operable to allow the recipient to opt-out of receiving future commercial electronic mail messages• Periodically test the opt-out mechanism• Maintain and manage records of those recipients who opt-out – stop sending commercial electronic mail messages to any opt- out recipients within 10 business days – do not provide mailing lists to third-parties containing opt-opt recipients – notify agents and other third-parties acting on behalf of the company
  • 30. The CAN-SPAM ActCompliance Tips• Identify your company as the sender – a “from” line that accurately identifies the sender – valid return e-mail address – header information that accurately identifies the computer that initiated the transmission – mailing address of the company• Advertisements or promotions are clearly and conspicuously identified• Accurately identify the content of the message body in the subject line – avoid anything that could be considered misleading
  • 31. The CAN-SPAM ActCompliance Tips• For e-mails that contain sexually oriented material, include the phrase “SEXUALLY-EXPLICIT:” as the first nineteen characters of the subject line• Avoid using any non-compliant mailing lists – e.g., those that have been obtained by automated means by harvesting or dictionary attacks in violation of the Act• Require that agents/third-parties that send commercial electronic mail messages on behalf of your company adhere to the CAN-SPAM Act – e.g., marketing companies and/or distributors• Establish and implement a CAN-SPAM Act compliance plan
  • 32. Useful Resources• www.gigalaw.com – GigaLaw.com® provides an electronic CAN-SPAM Act Library• www.ftc.gov – Federal Trade Commission website• www.spamhaus.org – This website provides the Spamhous Block List (SBL), a free real-time DNS-based database of IP addresses of verified spammers• www.spamlaws.com/us.html – This website provides pending federal and state legislations against spam
  • 33. Gardere Wynne Sewell LLP Karl Larson 3000 Thanksgiving Tower 1601 Elm Street Dallas, TX 75201-4761Phone: 214.999.4582 Fax: 214.999.3582 klarson@gardere.com