Canada: Canada's Anti-Spam Laws Have Teeth, With Significant Enforcement Against Businesses That Aren't Traditional Spammers

July 1, 2015 marked one-year of enforcement of most of Canada's anti-spam law, "CASL". Non-Canadian companies have been particularly alert to CASL given its stringent requirements, going beyond what is required in other jurisdictions, including the US. Many were surprised to see swift action taken against reputable businesses for non-compliance immediately after the anti-spam provisions in CASL came into force. The usual soft and cordial Canadian enforcement has given way to a far more aggressive approach. While enforcement agencies have stated that the focus of most enforcement has been against traditional spam, such action has been generally unreported, and the instances of aggressive action against reputable businesses having been highly publicized. The message from businesses that were "made an example of" appears clear – comply or face the consequences. The key "take homes" appear to be ensuring that companies have good records of consent, and ensuring that opt-outs are available and quickly acted upon. This is in addition to ensuring the more nuanced aspects of the law have been followed.

Action was taken not only against failure to obtain express consent (which was the focus of compliance efforts), but also against failure to comply with more nuanced aspects of the law, such as the "form and content" rules for commercial electronic messages or "CEMs", including failing to have a conspicuous and effective unsubscribe mechanism. Action also has been taken against CEMs containing false and misleading representations. Notably, offenders have faced penalties, not warnings, even when immediate steps were taken to fully comply with CASL.

CASL was designed to reduce spam, which is estimated to cost the Canadian economy more than $3 billion per year. CASL casts a wide net, and covers most CEMs (not just the emails in your junk folder offering herbal treatments for all that ails you or a great opportunity to make money). Emails, messages to social networking accounts, and text messages that encourage the recipient to participate in a commercial activity are all CEMs within the jurisdiction of CASL. Examples of commercial activities are broadly defined to include offers to purchase goods or services or offers of a business, investment or gaming opportunity.

For more than one year now, express consent has been required to send most CEMs. Consent is only valid if obtained in the prescribed format after making prescribed disclosures. Although there are circumstances where consent may be implied, or not required altogether, they are narrowly defined, and in some cases, time-limited. For this reason, many businesses have taken the default position of obtaining express consent.

Not only does CASL require consent, it also establishes "form and content" rules for CEMs, which must be followed in most instances. Even in those circumstances where consent is implied, senders must generally adhere to these "form and content" rules. For example, a CEM must contain prescribed information including the names of the sender and all persons on whose behalf the CEM is sent. This requires that all those involved in joint or cross-over promotions be named. The mailing address and either the telephone number, email address or website address of the sender or person on whose behalf the CEM is sent is also required. A CEM must also include a working unsubscribe mechanism that can be "readily performed" at no cost and that removes the recipients address from lists within 10 days. This means that it must be "accessed without difficulty or delay, and should be simple, quick and easy for the consumer to use".

CASL also contains prohibitions against harvesting electronic addresses, the use of spyware and the like, and CEMs containing false and misleading representations.

There are hefty 'fines', called "administrative monetary penalties" or "AMPs" for violating CASL: up to a maximum of $1 million per violation by an individual, and up to a maximum of $10 million per violation by a corporation. CASL lists factors to be considered when determining the amount of the AMP, including the nature and scope of the violation, the history of the offending party, and financial benefits obtained as a result of the violation. To date, penalties have ranged from $48,000 to $1.1 million for violations of the consent and form and content rules. These are significant amounts, particularly when considering the law was less than 1 year old when the fines were levied, and when comparing against AMPs under the more established Unsolicited Telecommunications Rules and Do–Not-Call-List. Also notable is that AMPs were against businesses that are not traditional spammers.

The Canadian Radio-television and Telecommunications Commission ("CRTC") is the Federal government agency responsible for enforcing the consent and form and content rules under CASL. CASL can be enforced by the CRTC issuing "Notices of Violations" setting out the alleged violations and the AMP, or by negotiating formal undertakings, which can include payment of AMPs and corrective measures. Notices of Violation can be issued when there are "reasonable grounds" to believe that entities have violated CASL. If a Notice of Violation is issued, the recipient generally has 30 days to respond in writing to the CRTC, or they will be deemed to have committed the violation, and the AMP will be imposed. If written representations are made, the CRTC must decide, on a balance of probabilities, whether the person committed the violation and, if so, it may impose the penalty set out in the Notice, reduce or waive the penalty, or suspend payment of the penalty subject to any conditions that the CRTC considers necessary to ensure compliance with CASL. The CRTC also has jurisdiction to discuss remedial measures with individuals and companies about the corrective actions they will take to comply with the law, as well as any AMPs that they will pay, which then form part of a formal undertaking.

The Office of the Privacy Commissioner of Canada ("OPC") is responsible for enforcing violations related to harvesting of electronic addresses, and the collection of personal information through spyware and similar means. The OPC has announced that investigations are underway, but no investigations have concluded to date. The Competition Bureau is responsible for enforcing the CASL provisions related to false or misleading representations and deceptive marketing practices in the electronic marketplace. For its part, the Competition Bureau brought its first enforcement action under CASL in March 2015. The Bureau is seeking $30 million in AMPs against a car rental company as a result of price representations made in CEMs. The CEMs disclosed a rental price that the Bureau concluded was not attainable owing to all of the additional fees imposed during the rental process. The practice of "drip pricing" is a hot enforcement issue right with another high profile case by the Bureau under the Competition Act rather than CASL against two home furnishings retailers.

To facilitate investigations of violations of CASL, the federal government created the Spam Reporting Centre, which is an online system to report violations of CASL. At the 6 month mark, over 200,000 complaints had already been reported to the Centre.

The CRTC recently reported that it is investigating a number of complaints submitted to the Spam Reporting Centre, and four such investigations have concluded and are summarized here.

1. On March 5, 2015, the CRTC issued a Notice of Violation to Quebec company Compu-Finder for four violations of CASL. The Notice included a $1.1 million penalty. Following numerous complaints to the Spam Reporting Centre, the CRTC conducted an investigation into Compu-Finder's email activities within the first three months after CASL came into force (i.e. between July 2, 2014 and September 16, 2014). The CRTC found that during this period Compu-Finder sent emails promoting training courses to businesses without the consent of the recipients and without a proper functioning unsubscribe mechanism. Manon Bombardier, the Chief Compliance and Enforcement Officer at the CRTC described Compu-Finder as "flagrantly [violating] the basic principles of the law by continuing to send unsolicited commercial electronic messages after the law came into force to email addresses it found by scouring websites." The CRTC reports that complaints about Compu-Finder accounted for 26% of all complaints submitted to the Spam Reporting Centre.
2. On March 25, 2015, the CRTC obtained an undertaking from the online dating site, Plenty of Fish, following complaints from its registered users about commercial emails received between July 1, 2014 and October 8, 2014. The users alleged that the emails failed to include a clear and prominent opt-out mechanism that could be readily performed, which is required by CASL. The operators of the dating site remedied the situation upon learning of the investigation, a fact noted by CRTC in its press release about the resolution of its investigation. The operators of the dating site agreed to pay $48,000 for the alleged violation, and develop and implement a compliance program, including staff training, to ensure compliance with CASL.
3. On June 29, 2015, Porter Airlines agreed to pay a $150,000 fine as part of an undertaking to settle all outstanding allegations against it for violating CASL. Specifically, the CRTC alleged that between July 1, 2014 and February 23, 2015, (1) Porter did not have proof that it had the consent of every recipient of CEMs; (2) some CEMs did not comply with the "form and content" rules by lacking complete contact information, by having either no unsubscribe mechanism, or by presenting two unsubscribe links, one of which did not function properly, leaving it unclear as to which one worked; and (3) an unsubscribe request was not given effect within 10 business days in at least one instance. Porter took corrective measures as soon as it became aware of the investigation, and entered into an undertaking for the alleged violations. In addition to the $150,000 AMP, Porter undertook to ensure that any third party vendor authorized to send CEMs on its behalf complies with CASL, and update and implement a compliance program, with increased staff training and education, and improved policies and procedures.
4. More recently, on November 20, 2015, it was announced that Rogers Media Inc. agree to pay a $200,000 fine as part of an undertaking against it for violating CASL. The CRTC alleged that between July 2014 to July 2015: (1) Rogers sent CEMs to consumers without a properly functioning unsubscribe mechanism or one that could not be readily performed; (2) with some CEMs, the electronic address used to unsubscribe was not valid for the required minimum of 60 days after the CEMs were sent; and (3) Rogers failed to implement unsubscribe requests within 10 business days. As part of the undertaking, Rogers will improve its CASL compliance program.

What do these investigations tell us? For one thing, the importance of having demonstrable proof that you have consent to send CEMs to every electronic address on your mailing / messaging list. As stated by Mr. Bombardier in the Porter press release:

The investigations highlight the risks of not having workable unsubscribe mechanisms that are clearly and prominently presented to CEM recipients. It is also important to ensure that any third party vendor hired for CRM programs must be CASL compliant and it may be prudent for any service contract to include an indemnity for failure to comply, keeping in mind the prohibitions against harvesting email addresses that are enforced by the OPC. Finally, in addition to ensuring CEMs contain the prescribed information, caution should be exercised to ensure content is not false and misleading.

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