Preparing for Canada's Anti-Spam Law

Canada’s anti-spam legislation was introduced in 2010, but its commencement date has been delayed while the Regulations under the Act are being finalized. The official title of the Act is “An Act to promote 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“. It is more commonly known as – “Canada’s Anti-Spam Law” (or CASL).

CASL is now expected to come into force in late 2013 or early 2014.

Since the Act applies to various forms of electronic communications sent for commercial purposes, such as email, text messages and electronic messages sent to social media accounts, the Act’s provisions will affect many individuals and businesses in Canada, as well as those located outside Canada and sending messages that are received in Canada.

The Act provides for significant fines for individuals (up to $1 million) and businesses (up to $10 million) who violate the provisions of the Act. It is, therefore, prudent for individuals and businesses to familiarize themselves with the provisions of the Act, and their obligations under it, in anticipation of its entry into force.

The following provides a brief overview of CASL, as well as tips for compliance. Readers wishing for an in-depth review of CASL should refer to Maggie Cavallin’s detailed article, on Clark Wilson’s website.

CASL is sweeping new legislation that seeks to create a more secure online environment as a means of increasing consumer confidence in electronic commerce in Canada. In general terms, CASL will prohibit:

sending commercial electronic messages (“CEMs”) without the recipient’s consent, including CEMs sent to email addresses and social networking accounts, such as Facebook, Twitter or LinkedIn, and text messages sent to cellular phones or other mobile devices;
altering transmission data in electronic messages, which results in messages being delivered to different or additional destinations without express consent;
installing computer programs (such as spyware and malware, in addition to computer programs with a legitimate business purpose) without the express consent of the owner of the computer or an authorized user;
using false or misleading representations online (including websites) in the promotion of products or services; and
collecting electronic addresses by the use of computer programs or the use of such addresses without consent (address harvesting, scraping or hacking).

Brief CASL Overview

CASL defines “commercial activity” broadly as including “any particular transaction, act or conduct or any regular course of conduct that is of a commercial character, whether or not the person who carries it out does so in the expectation of profit…” and “commercial electronic message (CEM)” in a similarly broad manner, such that virtually all types of electronic communications sent for a commercial purpose will fall within the scope of the legislation.
CASL creates a permission-based or “opt-in” regime, under which prior express consent must be obtained from a recipient before a CEM may be delivered, before transmission data may be altered and before a computer program may be installed. While there are a number of exceptions under which consent may be implied or is not required, the default position under CASL is that consent must be obtained before any actions that would otherwise be prohibited under the Act are taken. Because any person alleging to have obtained consent bears the evidentiary burden of proving such consent, it will be important for companies to implement clear policies that provide for the proper documentation of consent and the continuous updating of customer email lists and databases. In many cases, companies will need to obtain “fresh” consent from their customers to ensure that they are CASL-compliant.
Where express consent is required, a person seeking such consent must set out “clearly and simply”: (a) the purpose(s) for which consent is being sought; (b) information identifying the person seeking consent (and if the consent is being sought on behalf of another person, prescribed information that identifies the other person); (c) if the person carries on business under a different name, the name under which they carry on business; (d) the mailing address and either a telephone number (providing access to an agent or a voice messaging system), an email address or a web address of the person seeking consent and, if different, the person on whose behalf consent is being sought. Note that there are additional information disclosure requirements where consent is being sought for the installation of computer programs.
In addition to requiring prior express consent, CASL states that senders of CEMs must also comply with a number of other formalities when sending CEMs, including providing: (a) prescribed information identifying the sender of the CEM; (b) contact information of the sender; and (c) an “unsubscribe mechanism” by which recipients may indicate that they no longer wish to receive further CEMs.
Consent may be implied in certain circumstances, including where there is an “existing business relationship” or an “existing non-business relationship”, both as defined in the Act (note, however, that such implied consent applies to active relationships only and expires after two years or six months, depending on the circumstances). Consent may also be implied where the recipient has “conspicuously published” or disclosed an email address without indicating a preference to not receive unsolicited CEMs and the CEM being sent is relevant to the recipient’s business, role, function or duties in a business or official capacity.
Express consent is not required prior to sending CEMs where there is a “family relationship” or “personal relationship” between the sender and recipient. According to the most recent draft Regulations, a “family relationship” exists where individuals are connected by a blood relationship, marriage, common-law partnership or adoption.A “personal relationship” exists where two individuals have had direct, voluntary, two-way communications and it would be reasonable to conclude that the relationship is personal, taking into account a number of non-exhaustive factors, including the sharing of interests and experiences, provided that the recipient has not indicated to the sender a preference not to receive CEMs (or any specified class of CEMs) from the sender.
Express consent is also not required prior to sending CEMs where the electronic message is the first CEM sent to an individual on a third party-referral basis, provided that: (a) the individual sending the CEM has an existing business relationship, an existing non-business relationship, a personal relationship or a family relationship with the individual providing the referral; and (b) the individual to whom the CEM is sent has an existing business relationship, an existing non-business relationship, a personal relationship or a family relationship with the individual providing the referral; and (c) the individual sending the CEM discloses the full name of the individual who made the referral and the CEM states that the message is being sent as a result of a referral.
In addition, the most recent draft Regulations exempt certain types of CEMs from the anti-spam requirements of CASL, including CEMs that are sent:
1. by an employee, representative, contractor or franchisee of an organization to another employee, representative, contractor or franchisee of the organization that concerns the affairs of the organization (i.e. intra-business CEMs);
2. by an employee, representative, contractor or franchisee of an organization to an employee, representative, contractor or franchisee of another organization if the organizations have a business relationship at the time the CEM is sent and the CEM concerns the affairs of the organization or the recipient’s role, functions or duties within or on behalf of the organization (i.e. inter-business CEMs);
3. in response to a request, inquiry or complaint of an individual, or that are otherwise solicited by the recipient;
4. by a person located outside Canada or from a computer system located outside Canada and relate to a product, good, service or organization located or provided outside Canada that are accessed using a computer system in Canada if the person sending the CEM did not know and could not reasonably be expected to know that the message would be accessed by a computer system located in Canada; or
5. to satisfy a legal or juridical obligation, such as a court order, or tariff, or to enforce a right arising under a law of Canada, a province, a municipality or a foreign state.
Penalties for non-compliance with CASL can be severe and include: (a) administrative monetary penalties imposed by the Canadian Radio-television Telecommunications Commission (CRTC) of up to $1 million (for individuals) and $10 million (for other entities); (b) a private right of action for persons (individuals or companies) affected by a contravention of the Act; (c) vicarious liability for employers where employees acting within the scope of their employment contravene CASL; and (d) possible personal liability for directors, officers, or agents of companies where they have directed, assented to, acquiesced in or participated in the commission of the violation.

Because the scope of the new legislation is far-reaching and the express consent (“opt-in”) regime imposed under CASL applies to virtually all emails and other electronic messages that are sent for a commercial purpose, subject to limited exclusions, it is advisable that companies and individuals begin to review and carefully consider their current email marketing practices now and, in many instances, obtain fresh consents to qualify their email and customer lists to ensure that they are CASL-compliant prior to the coming into force of the new legislation.

Tips for Compliance with CASL

Review and revise your marketing, advertising and external electronic mailing communication practices to ensure they comply with CASL and the CASL-amended PIPEDA and Competition Act.
Review and update your customer lists and document whether you have obtained express consent or if implied consent exists (noting when consent was obtained). Remove recipients who have not expressly consented to receiving CEMs and those whose implied consent has expired (i.e. after six months or two years, as the case may be). Obtain “fresh” consents, as applicable.
Review and update your customer email lists and databases frequently and implement procedures for recording consents that have been obtained (i.e. retain details and evidence of consent, such as the date, time, purpose and manner in which consent was obtained).
Do not use computer programs designed to generate, search for or collect electronic addresses.
Review and revise processes for obtaining express consent to send CEMs, including company newsletters and installing software programs. Ensure prescribed information is provided when seeking express consent.
Where oral consent has been provided, such consent should be verifiable by an independent third party or a complete unedited audio recording of the consent should be retained.
Consent “in writing” includes both paper and electronic forms of writing (i.e. physically filling out a consent form or proactively checking a tick box or an icon on a web page). Ensure that you maintain a database which includes the date, time, purpose and method of consent obtained.
Once express consent has been obtained, send an email message asking the recipient to confirm or activate his or her subscription so that consent is verified and documented.
Ensure that all CEMs sent comply with all formalities required under CASL:
1. CEMs must include all prescribed information and clearly identify the sender and the name of the person or company on whose behalf a CEM is being sent (ensure that the sender information, subject line, locator and content of the CEM do not contain any misleading information);
2. CEMs must contain the sender’s mailing address and either a telephone number (which provides access to an agent or voice messaging system), an email address or a web address of the sender and, if different, the person on whose behalf the CEM was sent (note that this information must remain active for at least 60 days after the CEM is transmitted so that recipients can contact the sender); and
3. CEMs must include a functional unsubscribe mechanism that is set out clearly and prominently in the body of the CEM or in a link to the website that allows a recipient to readily unsubscribe from receiving further CEMs at no cost to the recipient. Ensure that the mechanism is tested to ensure functionality each time that CEMs are sent out to those on your customer and email lists.
Institute procedures and policies to ensure that CEMs sent are not misleading in any way (i.e. sender information, URL, subject line, and content).
When a recipient expresses a desire to unsubscribe and not receive further CEMs or withdraws express consent in relation to the installation of computer programs or alteration of transmission data, ensure that such a request is acted on within ten business days.
When seeking consent where software installation is concerned, provide the prescribed information and ensure that you also provide information about the function and purpose of the software prior to its installation and have the recipient acknowledge in writing that he or she understands and agrees that the program performs these functions.
If the software to be installed performs a function such as collecting personal information stored on the computer, interfering with the owner’s control of the computer, changing or interfering with settings or data stored on the computer or causing the computer to communicate with or be activated by a third party, ensure that you also describe the material elements of the software (including its nature and purpose) and the foreseeable impact of such functions.
Ensure that separate consents are sought and obtained for the sending of CEMs, the alteration of transmission data and the installation of computer programs.
Implement due diligence practices to reduce the risk of liability for directors and officers.
Establish policies and guidelines for employees to ensure compliance with CASL and its Regulations.