Canada: Canada's New Anti-Spam Law: How Toxic Is This Mushroom Cloud?

Last Updated: September 24 2014
Article by Wesley P. Brown

We all despise the proliferation of phishing, hacking, malware, spyware and data mining for personal information which has insidiously infected the indispensable electronic communications systems on which we depend. The mass emails in my Inbox are, in the main, an unwelcome annoyance. Last week, these unsolicited emails came from banks, magazine publishers, law firms, a few big box stores, mortgage brokers, camera companies, BBQ companies, drug companies and credit repair companies. But, I wonder, are they any less welcome than the 18 ozs of print flyers in my week-end newspapers? (I actually weighed them).

I don't know any phishers or hackers but I do know many who send "commercial electronic messages" which encourage or deal with the exchange of money. These perpetrators of "commercial electronic messages" are clients! They collect email addresses of old customers, new customers, former customers, potential customers and just about anyone else to send out email "blasts" to announce new products, weekly specials, new stores, new services, and the like. I even know lawyers who send out newsletters by email to inform their clients of new developments in the law and invite them to contact the lawyer for assistance and specific advice. Some even tweet, use Facebook or Linked-In.

Beginning July 1, 2014, Canada's Anti-Spam Law (CASL) comes into effect. Although many of its provisions will be phased in, anyone looking to send a "commercial electronic message" had better be careful. CASL puts the onus on the sender to prove that the recipient has given specific opt-in consent to receive the message. Also, sneaking consent language into the fine print of a contract will not pass muster, according to the CRTC – the consent cannot be co-mingled with other terms.

Although there is a phase-in period of three years on the requirement for express opt-in consents (during which time implied consent may be sufficient for certain existing relationships within the preceding two years), and there are some other exemptions to the requirements, compliance costs may be an expensive nightmare for companies that promote their goods and services on-line, or who are using or want to adopt digital flyers instead of print media. Also, the consequences are potentially severe:

  • Up to $10 million fines per occurrence for corporations, and up to $1 million per occurrence for individuals
  • potential personal liability for corporate directors and officers, which being a fine, is not covered by directors and officers insurance policies
  • vicarious corporate liability for conduct of employees in violation of CASL

As an adviser to business clients, and the occasional perpetrator of my own "electronic commercial messages", my main fear is not the regulators coming after me – what causes me shivers is Joe Q. Public who will have a private right of action for violations beginning in 2017, which will likely take the form of class actions.

The cost savings and other benefits for businesses moving to "digital flyers" from print media was the subject of the lead article in the Report on Business in the Globe & Mail on May 9, 2014. According to the article, the long range business plan of Canadian Tire is to transition 11 million weekly print flyers to digital flyers – an undertaking that seems herculean in terms of obtaining and tracking opt-in, unrevoked consents. Directors and officers of large Canadian companies may soon be wishing for the "good ole days" of the print flyer on the front porch.

Canada obviously needs laws to control nefarious conduct on the internet – and it was among the last of the G20 to do so. With the extremely wide blast radius of CASL, the potential for broad liability, heavy fines and public enforcement by class action, Canada is a laggard no more. Predictions abound as to the long range impact of CASL, and even whether the legislation will survive without significant dilutive amendments during the phase-in period. Time will tell.

Practice what you preach, my father says. At MBS, we are advising clients to take full advantage of the 3 year phase-in period to build their base of opt-in consents. In that vein, please click to link to our website page where you can complete your opt-in consent to receive digital content from MBS!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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