From Ronnie London in our DC office, a summary of the new FTC Rulemaking on CAN-SPAM
Three years to the day later, the FTC yesterday brought home its long-pending rulemaking that proposed to amend its regulations implementing the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act with respect to, among other things, the definition of who is a "sender" for emails containing multiple parties' ads, and whether to shorten the time companies have to honor opt-out requests. Release of the new regulations and associated commentary provides closure on a set of proposed rules, some of which the FTC first sought input on in 2004, and others it put out for comment (along with some of the 2004 proposals) on May 12, 2005. The final rule adopts some relief for contributors to "multimarketer" emails (i.e., those which advertise or promote several companies’ goods or services), by allowing one of them, if certain circumstances are met, to be the "designated sender" of the email, but does not reduce from ten to three days the amount of time by which senders of commercial emails (all of them, not just those with multiple senders or initiators). The rule changes will be effective 45 days after they appear in the Federal Register.
While the FTC opted not to adopt its proposal to require honoring opt-outs in three days rather than ten days, it adopted new rule provisions on several critical points:
- There is now a more nuanced definition of "sender" for purposes of determining which of multiple parties advertising in a single email are responsible for complying with CAN-SPAM opt-outs. Specifically, under a slightly different configuration from what it initially proposed, the FTC's new rule is that multiple marketers can designate as a single "sender" for purposes of CAN-SPAM compliance a person who: (A) meets the Act’s definition of "sender," i.e., initiates a commercial email in which it advertises or promotes its own goods, services, or Internet website; (B) is identified uniquely in the "from" line of the message; and (C) is in compliance with CAN-SPAM requirements for no false or misleading header info and/or deceptive subject lines, a functioning reply email address or Internet-based opt-out mechanism, honoring opt-outs, and the new rule (described below) that opt-outs cannot be subject to a fee or provision of other info other than email address and opt-out preference. If no single entity satisfies these criteria, then
- Email recipients cannot be required to pay a fee, provide information other than their email addresses and opt-out preferences, or take any steps other than sending a reply email message or visiting a single Internet Web page to opt out of receiving future email from a sender.
- The FTC adopted its proposed rule clarification that, to comply with the CAN-SPAM requirement of including a sender’s "valid physical postal address" in each email, a sender may use its current street address, a P.O. Box it has registered with the U.S. Postal Service, or a private mailbox registered with a commercial mail receiving agency established under U.S. Postal Service regs, provided that in the case of the latter two options, the sender "accurately" registers its P.O. Box or private mailbox under the postal regulations to be considered "valid."
- The FTC adopted a definition of the term "person" to clarify that CAN-SPAM obligations are not limited to natural persons. In doing so, it rejected requests that there should be a blanket exception for emails sent by unincorporated nonprofit entities. However, the FTC noted (i) most emails from nonprofit associations to their members will be transactional or relationships messages that do not trigger CAN-SPAM, and (ii) it lacks jurisdiction to enforce CAN-SPAM against nonprofits (their inclusion in the definition of "person" is thus significant only insofar as it allows state regulators and, more importantly, providers of Internet access service who tend to be plaintiffs in CAN-SPAM suits, to seek relief against nonprofits under CAN-SPAM).
rejection of the proposal to change the opt-out period from ten days to three days. These explanations and clarifications also include: i.e In its 2005 rulemaking notice, the FTC clarified that "forward-to-a-friend" email marketing must comply with CAN-SPAMopt-out and disclosures if the entity whose email is forwarded pays, or provides consideration, for the forwarding of the email, but that absent such efforts to procure or induce forwarding, the rules do not apply. In the current commentary, the FTC reaffirms this framework, but notes each forward-to-a-friend scheme presents a fact-specific inquiry to be carefully considered on a case-by-case basis. provided unsolicited newsletter or other periodical via email, and there is no subscription, the situation is materially different than when such content is delivered with the consent of the recipient, such that the emails "likely would not be 'transactional or relationship messages'" in the FTC's view. the periodical consists exclusively of informational content or combines informational and commercial content. If such an email consists only of commercial content (such as a catalog or other content that is purely advertisement or promotion), it is a single-purpose commercial message, because it does not fall within the language quoted above. Similarly, when a sender delivers an., there is no generic carve-out based on the notion that the employer, rather than the employee, receives an email because it is the former that maintains the email account). - Under this new rule, the FTC rejected the idea of giving marketers a chance to show an ad or other incentive to remind the party desiring to opt out of the value of the staying on the seller’s emailing list, noting that "subjecting a recipient who wishes to opt out to sales pitches before the opt-out request is completed is an unacceptable encumbrance on a consumer’s ability to opt out of receiving unwanted commercial email."
Along with these rule changes, the FTC's commentary addresses several other points that, while not resulting in rule changes, are significant -- not the least of which is the above-mentioned
- The commentary clarifies that certain types of messages generally tend to be "transactional and relationship" rather than "primarily commercial" and thus do not trigger CAN-SPAM. For example, the FTC states that legally mandated notices such as those under Gramm-Leach Bliley, Truth-in-Lending, etc., likely would be categorized as transactional or relationship. The same would go for debt collection messages (including those sent by a third party on behalf of the creditor), copyright infringement notices (so long as the email does not also contain information on how to obtain a licensed version), and emails containing opinion and research surveys unless the message seeks to advertise or promote a brand, company or product or service.
- With respect to each of the above, senders should nonetheless consider them on a case-by-case basis to ensure there is nothing in the email that might tip it toward being primarily commercial.
- In addition, emails offering employee discounts from employers to email accounts the employer has provided its employees were deemed "transactional and relationship" and thus exempt from CAN-SPAM (though employees are "recipients" under CAN-SPAM and the Act and rules apply the same way to them other than with regard to employee discount emails, notwithstanding that the employer provided the email account,
- The commentary also reinforces the FTC's view on how CAN-SPAM applies to "forward-to-a-friend" email marketing campaigns, in which someone either receives a commercial email message and forwards it to another person, or uses a Web-based mechanism to forward a link to or copy of a web page to another person.
- For purposes of this rule clarification, "consideration" is anything of value such as money, coupons, discounts, awards, additional entries in a sweepstakes, etc., or anything else of worth. However, simply making available the means for forwarding the email such as web-based "click-here-to-forward'' mechanism ordinarily would not rise to the level of procuring or inducing' if it is not also coupled with an offer of payment or other consideration to use the forwarding mechanism.
- Under the web-based scenario, a seller that transmits a message through an automatic technical process to an email address provided by a forwarder (i.e., a form at the seller’s website that allows visitors to forward information to any third party’s email address(es) from the website), absent more, is exempt from CAN-SPAM under the exception provided for such "routine conveyances" in the Act. A company's use of language exhorting consumers to forward a message does not, absent more, trigger CAN-SPAM obligations for the seller. However, if consideration is provided for such use of the website, including even "things of minimal value" or "de minimis" consideration, as well as paying (either directly or indirectly) for driving traffic to a website, CAN-SPAM rules apply.
- The same consideration-based approach applies to email (i.e., non-web) forward-to-a-friend activity, including the same treatment of "things of minimal value," de minimis consideration, and payment for driving traffic to a site.
- The FTC clarifies (for the first time here – it overlooked this when proposing the rules) that the consumer forwarder in the above circumstances, while as a strictly technical matter could be viewed as a sender under CAN-SPAM, is not who the statute and rules were intended to regulate, and accordingly does not become subject to the rules for such forwarding, even if compensated.
- The commentary also attempts to bring some clarity to when "sender" information in an email header is deceptive. Specifically, whereas the statute simply states that "a ‘from’ line … that accurately identifies any person who initiated the message [is not] materially false or misleading," the FTC states "this does not mean that the ‘from’ line necessarily must contain the initiator’s formal or full legal name, but it does mean that it must give the recipient enough information to know who is sending the message," and that emails must be considered "from the[ ] recipients’ perspective" so that if a "reasonable recipient" would be "confused" by the from line, "the sender is not providing sufficient information." However, this "clarification" is not materially different from what the FTC has offered in the past.
Regarding electronic newsletters, when a recipient subscribes to a periodical delivered via email, it is transactional or relationship under the accommodation for "goods or services … the recipient is entitled to receive under the terms of a transaction that the recipient has previously agreed to enter into with the sender,"
all Thus, under the new rule, only the "designated sender" meeting the above criteria - Conversely, the new rule does not eliminate the possibility that an email can have more than one "sender," so that if marketers fail to use (or to use properly) the above criteria to establish a single sender, each of the multiple senders is obligated to comply with CAN-SPAM, including providing a physical postal address and honoring any opt-out requests. Example The designated "sender" for purposes of a multi-marketer email must (in addition to meeting the other requirements) include its non-deceptive name, trade name, product, or service in the "from" line (see below for clarification of "non-deceptive" sender names). Also, designated senders must be identified in the "from" line as the sole sender of the email -- if two or more senders appear in the from line, this "multimarketer" relief is unavailable. Further, in such multimarketer email scenarios, if the designated "sender" receives proposed email addresses from the non-designated sender(s), i.e ., other advertisers included in the email, the designated sender must scrub that list against its own opt-out list before sending the message to the addresses on that list. (The FTC does not say whether non-designated senders must scrub against their own opt-out lists before providing email addresses to the designated sender, but the safe course would appear to be for the non-designated sender to do so, content in the knowledge that, if done properly, if the multi-marketer email draws opt-outs, at least they will bind only the designated sender). : Where A, B, and C advertise in a single email message (and each is an "initiator" under the Act), if A’s name appears in the "from" line, A is considered the "sender" even though B and C promote their goods, services, or Internet website in the email, may control portions of or all of its content, and may supply email addresses for A to use to send the message. In such a scenario, neither B nor C are "senders," unless A did not comply with the false/misleading/deceptive header/subject and opt-out rules. but not the other marketers using the same email message - is required to facilitate and honor opt-out requests made by recipients of the email, and to post a valid physical postal address. entities who satisfy the statutory definition will be considered senders for purposes of the email.
Lawrence Lessig is thinking about taking a run at Congress, it seems, hoping to fill the House seat of Tom Lantos (D-CA), who recently passed away. In 
