Most of Canada's Anti-Spam Legislation ("CASL") will come into force on July 1st, 2014. After that date, organizations will either have to have the prior consent of intended recipients of commercial electronic messages, or ensure that the messages being sent, or the recipients of those messages, are exempt from the requirements to get consent. Some technology-related provisions of CASL are deferred until 2015, with private rights of action only becoming available starting in 2017.
The legislation, passed in 2010 and fully entitled "An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act", is designed to deter the most dangerous forms of spam in Canada. However, CASL will impact all organizations due to the broad scope of the regulatory program it introduces.
The full text of CASL and its regulations can be found here on the Industry Canada website.
Commercial electronic messages (CEM), essentially, email. All email. The scope of CASL is far-reaching with significant implications for entities carrying on business in Canada and foreign entities that send CEMs into Canada. Malware, spyware, pretexting and the harvesting of electronic address and personal information will also be regulated under CASL.
THE GENERAL PROHIBITION – DON'T SEND UNSOLICITED CEMS
Under CASL, it is prohibited to send or cause or permit to be sent to an electronic address a commercial electronic message unless (a) the person to whom the message is sent has consented to receiving it, whether the consent is express or implied; and (b) the message complies with prescribed form and content requirements.
GENERAL REQUIREMENT – CONTENT OF MESSAGES
CASL requires a CEM to be in a form that must: (a) set out prescribed information that identifies the person who sent the message and the person — if different — on whose behalf it is sent; (b) set out information enabling the recipient to readily contact one of the persons referred to in paragraph (a); and (c) set out an unsubscribe mechanism complying with CASL standards. Organizations will want to undertake a review of the content of all their CEMs to ensure they comply with these provisions. Existing unsubscribe mechanisms may not meet the new standards set out in the CASL. In addition, there is a duty to ensure that the contact information about the sender remains valid for at least 60 days.
Having cast a broad net of prohibition, CASL provides some relief by designating certain exceptions. Firstly, the consent requirement does not apply to a CEM sent in a personal or family relationship or sent as an inquiry relating to the recipient's own commercial activity. In addition, the consent requirement does not apply to CEMs that solely:
- provide requested product/service quotes;
- further or complete an ongoing commercial transaction previously agreed to;
- provide product warranty, recall, upgrade or similar information;
- deal with ongoing subscriptions, memberships or similar relationships; or
- concern an existing employment relationship.
The Regulations under CASL also exclude CEMs from all provisions of CASL if:
- they are sent within an organization;
- they are sent between organizations that already have a relationship, if the message concerns the activities of the organization to which the message was sent;
- they are sent on platforms where identification and unsubscribe information is conspicuously published and readily available to users, and where duplication of an unsubscribe or identification message would be repetitious;
- they are sent and received within limited access secure and confidential accounts (such as messages which a bank might send to an account holder);
- they are sent in response to a complaint, inquiry or request;
- they are sent on behalf of registered charities or political parties for fundraising purposes.
CASL also prescribes rules permitting certain first-time contact by email to referral prospects, but only if the detailed CASL rules are followed.
CASL also regulates the alteration of certain transmission data relating to a CEM, and prohibits the installation of computer programs such as cookies on recipient computers. Again, a prescribed form of consent would be needed, and certain exceptions are prescribed.
As noted above, with consent, CEMs can be sent. CASL sets out guidelines for obtaining consent, either express or implied. Consent can be oral, but a record of the consent needs to be retained. A person seeking consent must provide to the recipient certain information regarding the purpose for which consent is sought.
Further, prescribed information identifying the person seeking consent must be disclosed to recipients. Therefore, consents previously obtained and relied on to populate existing email databases might not continue to be valid.
Organizations will have to ensure on an ongoing basis that the purposes for which consent was originally obtained continue to apply to the substance of all the CEMs subsequently sent. This may limit the ability to use database lists in the future for a secondary use, and when subsequently modifying CEMs a check-back may be required to the scope of the initial consent obtained. CASL also contains some fairly complex rules if the intent is to have consent be available to future unknown third parties who may conduct co-marketing or similar arrangements.
Consent will be implied in certain circumstances, for:
- "existing business relationships", as defined;
- "existing non-business relationships", as defined;
- certain circumstances where the email address of the recipient was made publicly available or voluntarily provided.
Commercial organizations will need to focus on the definition of "existing business relationship" set out in CASL. That definition relies on relationships which are "current", defined as being within the past two years (or an inquiry or application made in the last six months). As a result, "stale" entries on customer mailing lists may need to be purged unless another exemption or consent provision can be relied on. The definition of "existing non-business relationship" deals with memberships, volunteers, and donations. It establishes a similar two-year purge rule.
For existing relationships involving CEMs, CASL will provide for a three-year transition period under which consent can continue to be implied (unless expressly revoked).
WHY SHOULD I CARE? – PENALTIES
Violators of CASL can be liable to onerous administrative monetary penalties of up to $10 million per organization and up to $1 million per individual. Directors and officers of organizations will want to inform themselves of the potential risks for vicarious liability. Certain conduct also constitutes a statutory offence and, commencing in 2017, private rights of action and potential class actions will be possible.
Enforcement of CASL and its administrative monetary penalties has been delegated to the Canadian Radio- Telecommunication Commission ("CRTC"), the Competition Bureau, and the federal Privacy Commissioner. In light of its expanded authority and mandate, the CRTC has published regulations and guidance outlining the form and content to be included in messages and setting out other requirements on the alteration of transmission data in electronic messages, and the installation of computer programs on recipient computers. These regulations will come into force together with the CASL.
START PLANNING NOW
It is important to understand the CASL rules and verify that email practices are harmonized with those rules. Many organizations in Canada are now considering whether to use the CASL transition period for a campaign of seeking express opt-in consent from existing entries on distribution lists in order to confidently maintain them on email distribution lists into the future. The act of requesting consent is itself potentially a "spam" event, so the exemptions and the transition period take on added importance.
Organizations that purchase email lists may not be able to ensure that the vendor has been in compliance. This will be a new area of risk analysis to be considered on a case by case basis. It may be necessary to start including CASL compliance as a representation and warranty of the vendor in certain transactions.
CASL provides that on the sale of a business, previously obtained consents can pass to the new owner of the business.
FOREIGN ORGANIZATIONS – YOU TOO...
Once in force, the CASL will regulate anyone sending CEMs to Canadian recipients. Entities outside of Canada, such as U.S. businesses, could be susceptible to penalties under this legislation. There is nothing in the CASL which limits its effect to domestic senders of CEMs. Many American companies may be unaware that compliance with Canadian "Do Not Call" rules and existing US anti-spam rules does not necessarily make them automatically compliant with the new CASL rules. While Canada is following other OECD countries by finally implementing its own anti-spam regulation, CASL goes further than many other OECD initiatives by generally requiring a separate and express "opt-in" consent, rather than an "opt-out" regime.