United States: New Federal Anti-Spam Legislation Enacted

By Mary J. Hildebrand, P.C. and Jacqueline Klosek

On December 16, 2003 President Bush signed the CAN-SPAM Act of 2003 into force (the "CAN SPAM Act"). This legislation – fully titled, the "Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003" – is the first federal legislation to regulate the use of unsolicited commercial e-mail ("UCE" or "spam") in the United States. The legislation, which became effective on January 1, 2004, does not place an outright ban on UCE. It does, however, outline a series of practices that must be followed when sending UCE.

One of the most notable aspects of the new law is that it preempts most state laws regarding UCE. This means that companies will now have a uniform, federal standard with which to comply when sending UCE. It also means that it overrides major provisions of state anti-UCE legislation, such as a California law that would have placed more stringent restrictions on the transmission of UCE.

The CAN SPAM Act establishes a number of requirements and restrictions applicable to the creation and transmission of UCE. Key among the requirements and restrictions are the following:

Opt-out Instructions. The CAN SPAM Act mandates that all UCE must contain a clear and conspicuous notice of the recipient’s opportunity to "opt-out" from receiving future UCE. It also requires the inclusion of a mechanism that may be used or an e-mail address to which a recipient may send a message requesting not to receive any future UCEs from the sender. Entities wishing to send UCE must comply with all opt-out requests within 10 business days of their receipt thereof.

Labeling Requirements. In addition to inclusion of the opt-out language discussed above, the legislation mandates the inclusion of the following information on all UCEs:

• A legitimate return e-mail and physical postal address;

• A clear and conspicuous notice that the message is an advertisement or solicitation; and

• Clear notice in the subject heading if messages include pornographic or sexual content.

Additional Prohibitions. The CAN SPAM Act contains a number of additional restrictions. For instance, it prohibits senders of UCE from disguising themselves by using incorrect return e-mail addresses or misleading subject lines. The legislation also prohibits the harvesting of e-mail addresses, that is, acquiring e-mail addresses through Internet chat rooms, blogs and other sources without the permission of the Web site or its members/users.

The CAN SPAM Act allows, but does not require, the Federal Trade Commission (FTC) to investigate the creation of a "do not e-mail" registry similar to the recently created "do not call" registry. Under the terms of the legislation, the FTC must, within six months of the effective date of the legislation, prepare a report to Congress containing a plan and timetable for creating the "do not e-mail" registry and outlining the feasibility, problems and issues involved with the potential creation of such a registry.

Significantly, the CAN SPAM Act preempts state laws that require the use of labels on UCE or that prohibit the transmission of UCE. This is particularly significant given that 35 states have enacted laws concerning UCE and that many of the state laws concerning UCE contain more stringent restrictions on the creation and transmission of UCE.

The CAN SPAM Act provides for both civil and criminal penalties. The penalties depend on the nature of the particular violation. The legislation authorizes the collection of damages of up to $250 per UCE, with a cap of $2 million that could be tripled for aggravated violations. The cap would not apply to UCE transmitted with false or deceptive headers. The legislation also contains criminal provisions that would establish tiers of penalties, ranging up to five years in prison, for several common spamming practices.

The enactment of the CAN SPAM Act means that companies desiring to send UCE to recipients in the United States will now have a uniform, federal standard with which to comply. However, entities that wish to send UCE on a worldwide basis should note that a number of jurisdictions including, notably, the European Union, have adopted a much more stringent approach to UCE.

Goodwin Procter LLP is one of the nation's leading law firms, with a team of 650 attorneys and offices in Boston, New York and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.

This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. (c) 2004 Goodwin Procter LLP. All rights reserved.