Canada's Anti-Spam Legislation
("CASL"), which came into force on July
1, 2014, is considered to be the toughest commercial electronic
messaging ("CEM") legislation in the
world, with substantial fines for violations (including fines up to
$10 million for organizations).
While CASL's prohibition on sending CEMs (without adhering
to prescribed consent, form and unsubscribe requirements) applies
to all organizations, the regulations exempt CEMs sent by a
registered charity (as defined under Canada's federal Income
Tax Act) where the primary purpose of the CEM is to raise funds for
Registered charities making efforts to comply with CASL have had
difficulty determining the scope of the fundraising exemption
because of ambiguity with respect to the meaning of the words
"primary purpose" and the fundraising activities untended
to be covered by the exemption.
Imagine Canada, a national charitable organization whose cause
is Canada's charities, provided some clarity in a set of
unofficial FAQs released on June 5, 2014, which indicated
that the CASL fundraising exemption would be interpreted broadly.
These FAQs were notable as Industry Canada provided commentary on
the issues to Imagine Canada. However, the Canadian
Radio-television and Telecommunications Commission (the
"CRTC"), which has assumed primary
enforcement responsibility with respect to CASL, had not yet
provided any official guidance.
In order to clarify the scope of the fundraising exemption, the
CRTC released a new set of FAQs on July 4, 2014. Significantly, the CRTC
noted that it intends to construe the fundraising exemption broadly
and focus its primary enforcement efforts on organizations that
attempt to circumvent CASL requirements under the guise of a
registered charity. While the guidance in the CRTC's FAQs are
helpful, they do not have the force of law, so organizations should
rely on the guidance with caution.
"Primary Purpose" and "Raising Funds"
According to the CRTC's FAQ's, the "primary
purpose" of a CEM means the main reason or main purpose of the
CEM. When relying on the fundraising exemption, there may be a
secondary or additional purpose to the message, but the principal
purpose of the message must be to raise funds for the charity. For
example, the exemption would likely apply to:
a CEM sent by a charity which promotes or sells tickets to a
fundraising event, such as a dinner, golf tournament or concert,
where the proceeds from the event flow to the charity; and
an email newsletter that contains a section soliciting
donations. Corporate sponsors of the charity may be mentioned, but
the recipient must not be encouraged to participate in a commercial
activity with a sponsor.
In contrast, the CRTC states that an email newsletter that
provides information about the charity's activities, if the
email also advertises the charity's corporate sponsors and
encourages the recipient to participate in a commercial activity
with a sponsor, would likely fall outside the exemption.
The CRTC FAQs do not directly address the scope of activities
considered to fall under the category of "raising funds".
As a result, it remains unclear whether the exemption covers only
the limited activities considered to be fundraising activities
under the federal Income Tax Act, or a different scope of
activities (as suggested by Imagine Canada in its FAQs).
The CRTC FAQs also confirm that a registered charity can rely on
the implied consent of a recipient if it has an existing
non-business relationship ("ENBR") with
the recipient. An ENBR is established when a person makes a
donation or gift to a registered charity, performs volunteer work
for the charity or attends a meeting organized by the charity. The
registered charity may rely on that person's implied consent
due to the ENBR for a two-year period from the date of the event
that established the relationship.
Registered charities also benefit from the CASL transitional
provisions, which provide that ENBR implied consent obtained and
still in effect as of July 1, 2014 will continue until July 1,
2017, regardless of the usual limitation period, if that ENBR
included the communication of CEMs between the registered charity
and the recipient. However, as with all consents, this implied
consent will end in the event that the recipient withdraws
Other Not For Profit Organizations
It is important to note that not for profit organizations that
are not registered charities will not benefit from the CASL
fundraising exemption. Any fundraising emails sent by not for
profits will be considered CEMs.
Software license agreements generally require the customer to pay fees for the software license and related services, which fees are usually based upon the duration of the license and the manner in which the customer is allowed to use the software, together with applicable taxes and withholdings.
In less than nine months, on July 1, 2017, persons affected by a contravention of Canada's anti-spam legislation will be able to invoke a private right of action to sue for compensation and potentially substantial statutory damages.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).