The CAN-SPAM Act: A Compliance Guide for Businesses
Thursday, January 26, 2012
Do you use e-mail in your business? The CAN-SPAM Act, a law that sets the rules for commercial e-mail, establishes requirements for commercial messages, gives recipients the right to have you stop e-mailing them, and spells out tough penalties for violations. The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, also known as the CAN-SPAM Act, became effective Jan. 1, 2004.
Despite its name, the CAN-SPAM Act doesn’t apply just to bulk e-mail. It covers all commercial messages, which the law defines as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service,” including e-mail that promotes content on commercial Web sites. The law makes no exception for business-to-business e-mail. That means all commercial e-mail – for example, a message to former customers announcing a new product line – must comply with the law.
This issue of the H.G.I.D., Inc. t/a Horst Insurance Legislative Brief will provide you with an overview of requirements contained within the CAN-SPAM Act and how it affects your business.
CAN-SPAM Compliance
Each separate e-mail in violation of the CAN-SPAM Act is subject to penalties of up to $16,000, so non-compliance can be costly. But following the law isn’t complicated. Here’s a rundown of CAN-SPAM’s main requirements:
- Don’t use false or misleading header information. Your “From,” “To,” “Reply-To,” and routing information – including the originating domain name and e-mail address – must be accurate and identify the person or business who initiated the message.
- Don’t use deceptive subject lines. The subject line must accurately reflect the content of the message.
- Identify the message as an ad. The law gives you a lot of leeway in how to do this, but you must disclose clearly and conspicuously that your message is an advertisement.
- Tell recipients where you’re located. Your message must include your valid physical postal address. This can be your current street address, a post office box you’ve registered with the U.S. Postal Service, or a private mailbox you’ve registered with a commercial mail receiving agency established under Postal Service regulations.
- Tell recipients how to opt out of receiving future e-mail from you. Your message must include a clear and conspicuous explanation of how the recipient can opt out of getting e-mail from you in the future. Craft the notice in a way that’s easy for an ordinary person to recognize, read, and understand. Creative use of type size, color, and location can improve clarity. Give a return e-mail address or another easy Internet-based way to allow people to communicate their choice to you. You may create a menu to allow a recipient to opt out of certain types of messages, but you must include the option to stop all commercial messages from you. Make sure your spam filter doesn’t block these opt-out requests.
- Honor opt-out requests promptly. Any opt-out mechanism you offer must be able to process opt-out requests for at least 30 days after you send your message. You must honor a recipient’s opt-out request within 10 business days. You can’t charge a fee, require the recipient to give you any personally identifying information beyond an e-mail address, or make the recipient take any step other than sending a reply e-mail or visiting a single page on an Internet Web site as a condition for honoring an opt-out request. Once people have told you they don’t want to receive more messages from you, you cannot sell or transfer their e-mail addresses, even in the form of a mailing list. The only exception is that you may transfer the addresses to a company you’ve hired to help you comply with the CAN-SPAM Act.
- Monitor what others are doing on your behalf. The law makes clear that even if you hire another company to handle your e-mail marketing, you can’t contract away your legal responsibility to comply with the law. Both the company whose product is promoted in the message and the company that actually sends the message may be held legally responsible.
Need more information?
Here are the answers to some questions businesses have had about complying with the CAN-SPAM Act.
How do I know if the CAN-SPAM Act covers e-mail my business is sending?
What matters is the “primary purpose” of the message. To determine the primary purpose, remember that an e-mail can contain three different types of information:
- Commercial content – which advertises or promotes a commercial product or service, including content on a Web site operated for a commercial purpose;
- Transactional or relationship content – which facilitates an already agreed-upon transaction or updates a customer about an ongoing transaction; and
- Other content – which is neither commercial nor transactional or relationship.
If the message contains only commercial content, its primary purpose is commercial and it must comply with the requirements of CAM-SPAM. If it contains only transactional or relationship content, its primary purpose is transactional or relationship. In that case, it may not contain false or misleading routing information, but is otherwise exempt from most provisions of the CAN-SPAM Act.
How do I know if what I’m sending is a transactional or relationship message?
The primary purpose of an e-mail is transactional or relationship if it consists only of content that:
- Facilitates or confirms a commercial transaction that the recipient already has agreed to;
- Gives warranty, recall, safety, or security information about a product or service;
- Gives information about a change in terms or features or account balance information regarding a membership, subscription, account, loan or other ongoing commercial relationship;
- Provides information about an employment relationship or employee benefits; or
- Delivers goods or services as part of a transaction that the recipient already has agreed to.
What if the message combines commercial content and transactional or relationship content?
It’s common for e-mail sent by businesses to mix commercial content and transactional or relationship content. When an e-mail contains both kinds of content, the primary purpose of the message is the deciding factor. Here’s how to make that determination: If a recipient reasonably interpreting the subject line would likely conclude that the message contains an advertisement or promotion for a commercial product or service or if the message’s transactional or relationship content does not appear mainly at the beginning of the message, the primary purpose of the message is commercial. So, when a message contains both kinds of content – commercial and transactional or relationship – if the subject line would lead the recipient to think it’s a commercial message, it’s a commercial message for CAN-SPAM purposes. Similarly, if the bulk of the transactional or relationship part of the message doesn’t appear at the beginning, it’s a commercial message under the CAN-SPAM Act. See the examples, below.
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MESSAGE A: |
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TO: Jane Smith |
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FR: XYZ Distributing |
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RE: Your Account Statement |
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We shipped your order of 25,000 deluxe widgets to your Springfield warehouse on June 1st. We hope you received them in good working order. Please call our Customer Service Office at (877) 555-7726 if any widgets were damaged in transit. Per our contract, we must receive your payment of $1,000 by June 30th. If not, we will impose a 10% surcharge for late payment. If you have any questions, please contact our Accounts Receivable Department. |
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Visit our Web site for our exciting new line of mini-widgets! |
MESSAGE A is most likely a transactional or relationship message subject only to CAN-SPAM’s requirement of truthful routing information. One important factor is that information about the customer’s account is at the beginning of the message and the brief commercial portion of the message is at the end.
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MESSAGE B: |
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TO: Jane Smith |
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FR: XYZ Distributing |
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RE: Your Account Statement |
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We offer a wide variety of widgets in the most popular designer colors and styles – all at low, low discount prices. Visit our Web site for our exciting new line of mini-widgets! |
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Sizzling Summer Special: Order by June 30th and all waterproof commercial-grade super-widgets are 20% off. Show us a bid from one of our competitors and we’ll match it. XYZ Distributing will not be undersold. |
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Your order has been filled and will be delivered on Friday, June 1st. |
MESSAGE B is most likely a commercial message subject to all CAN-SPAM's requirements. Although the subject line is “Your Account Statement” – generally a sign of a transactional or relationship message – the information at the beginning of the message is commercial in nature and the brief transactional or relationship portion of the message is at the end.
What if the message combines elements of both a commercial message and a message with content defined as "other"?
In that case, the primary purpose of the message is commercial and the provisions of the CAN-SPAM Act apply if:
- A recipient reasonably interpreting the subject line would likely conclude that the message advertises or promotes a commercial product or service; and
- A recipient reasonably interpreting the body of the message would likely conclude that the primary purpose of the message is to advertise or promote a product or service.
Factors relevant to that interpretation include the location of the commercial content (for example, is it at the beginning of the message?); how much of the message is dedicated to commercial content; and how color, graphics, type size, style, etc., are used to highlight the commercial content.
What if the e-mail includes information from more than one company? Who is the “sender” responsible for CAN-SPAM compliance?
If an e-mail advertises or promotes the goods, services, or Web sites of more than one marketer, there’s a straightforward method for determining who’s responsible for the duties the CAN-SPAM Act imposes on “senders” of commercial e-mail. Marketers whose goods, services, or Web sites are advertised or promoted in a message can designate one of the marketers as the “sender” for purposes of CAN-SPAM compliance as long as the designated sender:
- Meets the CAN-SPAM Act’s definition of “sender,” meaning that they initiate a commercial message advertising or promoting their own goods, services, or Web site;
- Is specifically identified in the “from” line of the message; and
- Complies with the “initiator” provisions of the Act – for example, making sure the e-mail does not contain deceptive transmission information or a deceptive subject heading, and ensuring that the e-mail includes a valid postal address, a working opt-out link, and proper identification of the message’s commercial or sexually explicit nature.
If the designated sender doesn’t comply with the responsibilities the law gives to initiators, all marketers in the message may be held liable as senders.
My company sends e-mail with a link so that recipients can forward the message to others. Who is responsible for CAN-SPAM compliance for these “Forward to a Friend” messages?
Whether a seller or forwarder is a “sender” or “initiator” depends on the facts. So deciding if the CAN-SPAM Act applies to a commercial “forward-to-a-friend” message often depends on whether the seller has offered to pay the forwarder or give the forwarder some other benefit. For example, if the seller offers money, coupons, discounts, awards, additional entries in a sweepstakes, or the like in exchange for forwarding a message, the seller may be responsible for compliance. Or if a seller pays or gives a benefit to someone in exchange for generating traffic to a Web site or for any form of referral, the seller is likely to have compliance obligations under the CAN-SPAM Act.
What are the penalties for violating the CAN-SPAM Act?
Each separate e-mail in violation of the law is subject to penalties of up to $16,000, and more than one person may be held responsible for violations. For example, both the company whose product is promoted in the message and the company that originated the message may be legally responsible. E-mail that makes misleading claims about products or services also may be subject to laws outlawing deceptive advertising, like Section 5 of the FTC Act. The CAN-SPAM Act has certain aggravated violations that may give rise to additional fines. The law provides for criminal penalties – including imprisonment – for:
- Accessing someone else’s computer to send spam without permission,
- Using false information to register for multiple e-mail accounts or domain names,
- Relaying or retransmitting multiple spam messages through a computer to mislead others about the origin of the message,
- Harvesting e-mail addresses or generating them through a dictionary attack (the practice of sending e-mail to addresses made up of random letters and numbers in the hope of reaching valid ones), and
- Taking advantage of open relays or open proxies without permission.
Are there separate rules that apply to sexually explicit e-mail?
Yes, and the FTC has issued a rule under the CAN-SPAM Act that governs these messages. Messages with sexually oriented material must include the warning “SEXUALLY-EXPLICIT:” at the beginning of the subject line. In addition, the rule requires the electronic equivalent of a “brown paper wrapper” in the body of the message. When a recipient opens the message, the only things that may be viewable on the recipient’s screen are:
- The words “SEXUALLY-EXPLICIT:”; and
- The same information required in any other commercial e-mail: a disclosure that the message is an ad, the sender’s physical postal address, and the procedure for how recipients can opt out of receiving messages from this sender in the future.
No graphics are allowed on the “brown paper wrapper.” This provision makes sure that recipients cannot view sexually explicit content without an affirmative act on their part – for example, scrolling down or clicking on a link. However, this requirement does not apply if the person receiving the message has already given affirmative consent to receive the sender’s sexually oriented messages.
How can I comment about the effect of the CAN-SPAM Act on my business?
The National Small Business Ombudsman collects comments from small businesses about federal compliance and enforcement activities. To comment, call (888)-REG-FAIR (1-888-734-3247) or visit http://www.sba.gov/ombudsman.
Source: Federal Trade Commission, September 2009
Please contact your H.G.I.D., Inc. t/a Horst Insurance representative for more information on the CAN-SPAM Act.
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This H.G.I.D., Inc. t/a Horst Insurance Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
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