The CAN-SPAM Act of 2003 D E C E M B E R 2 0 0 3 THE CAN-SPAM ACT OF 2003 Status of Legislation When Congress returns from recess on December 8, 2003, it will finish its work on the CAN-SPAM Act of 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003). The Senate passed its version of the CAN-SPAM Act (S. 877) on October 22, 2003 (Senate Bill). The U.S. House of Representatives passed a modified version of the Act on November 22, 2003 (House Bill). On November 25, 2003, the Senate passed the House-modified version of S. 877 by voice vote; however, the Senate made some “technical changes” to the bill, and the House will need to reconsider and clear the bill when it returns from recess before it can go to the President. While the press has portrayed the legislation primarily as an anti-pornography measure, it goes much farther and will affect all businesses that use email as a means of communicating with their customers and clients. As an interim step, this memorandum summarizes the major House changes that were made to the Senate Bill. Generally, the House modifications provide broader restrictions for senders of commercial email, which are no longer differentiated from senders of “unsolicited” commercial email. The House Bill also directs the Federal Communications Commission (FCC) to regulate commercial messages sent to wireless communications devices, including cell phones. Except for provisions related to the Do-Not-Email registry, the CAN-SPAM Act would take effect on January 1, 2004 and have the effect of preempting all state laws that directly regulate commercial email. The specific changes between the House and Senate Bills are summarized below. Categories of Email Commercial v. Unsolicited Commercial email : The House Bill no longer differentiates between commercial email and unsolicited commercial email. 1 Restrictions that applied only to unsolicited commercial email messages in the Senate Bill would now apply to all commercial email messages. Such restrictions include, among others: • sending email to a consumer more than 10 days after an opt-out request; • sending email without identifying that the message is an advertisement; • sending email without notice of an opportunity to opt-out; including the sender’s physical postal address; and • using “harvesting” or “dictionary attacks” to collect addresses for sending commercial email. Transactional or Relationship Messages : Although the House version eliminates the distinction between “unsolicited” commercial email and other commercial email, it does modify the definition of “commercial electronic mail message” to exclude transactional or relationship messages. The definition of transactional or relationship message remains the same. 1 The Senate Bill defined “commercial electronic mail message” as one that has the primary purpose of delivering a commercial advertisement or promotion of a commercial product or service. The House Bill retains that definition. The Senate Bill defined “unsolicited commercial mail message” as any commercial email message that is (a) not a transactional or relationship message; and (b) sent to a recipient without the recipient’s prior affirmative or implied consent. V A L U E A D D E D , V A L U E S D R I V E N. SM
T H E C A N - S P A M A C T O F 2 0 0 3 D E C E M B E R 2 0 0 3 2 A transactional or relationship message presupposes an existing relationship between the sender and the recipient and has the primary purpose of communicating membership, subscription, account, or other such information. The Senate Bill did not explain how certain messages that had both transactional or relationship and commercial characteristics should be treated, such as a monthly mileage club statement that contained advertisements for sale airfares. The House Bill orders the Federal Trade Commission (FTC), within 12 months after enactment of CAN-SPAM, to issue regulations defining the criteria that should be used in determining the primary purpose of an electronic mail message. The House Bill also authorizes the FTC to modify the definition of “transactional or relationship message” as needed to accommodate technological changes or marketing practices. Elimination of the “Implied Consent” exception : The House Bill also eliminated the “implied consent” exception that would have allowed marketers to send commercial email when there has been a business transaction between the marketer and the recipient within the 3-year period before receipt of the commercial email. This change could be particularly important for marketers that rely on telemarketing and in-person sales. Affiliates and Separate Lines of Business The House Bill retained a Senate provision allowing the affirmative consent of a recipient to receive messages from a sender to cover messages from the sender’s affiliate, if the recipient was given notice that his or her email address could be transferred to the affiliate for the purpose of sending commercial email. The House Bill clarified the definition of “sender” to specify that if an entity operates through separate lines of business or divisions and holds itself out as a particular line of business or division (rather than as the entity of which the line of business or division is a part), then the line of business or division will be treated as the sender. Section 4: Prohibition Against Predatory and Abusive Commercial Email 2 In setting forth acts that would warrant criminal penalties under Title 18 of the United States Code, the House Bill added a “materiality” standard to certain prohibitions. Anyone that “materially” falsifies header information or registers for an email address from which to send commercial email using information that “materially” falsifies the identity of the actual registrant will be subject to the penalties. Header information or registration information is materially misleading if it is altered or concealed in a way that impairs the ability of the recipient, an Internet access service provider, or anyone enforcing the law to determine the identify of the sender. Section 5: Other Protections for User of Commercial Electronic Mail This section deleted any references to “unsolicited commercial electronic mail” and replaced that term with “commercial electronic mail.” The following activities, which the Senate Bill prohibited only for senders of unsolicited commercial email messages, would now be illegal for senders of any commercial email: • sending email to a consumer more than 10 days after an opt-out request; • sending email without identification that the message is an advertisement or solicitation; • sending email without notice of the opportunity to opt-out; including the sender’s physical postal address; • using “harvesting” or “dictionary attacks” to collect email addresses, and • failing to include warning labels on messages that include sexually oriented material. Safe Harbor Elimination : The House Bill has eliminated a Senate Bill safe harbor for certain Section 5 violations. Under the Senate Bill, if an email marketer could prove that it had established and implemented reasonable practices and procedures to prevent certain violations, and a violation occurred despite good faith efforts to comply, then actions against the marketer could not proceed. The violations covered by the safe harbor were: sending deceptive subject headings; 2 The House Bill has re-numbered the Sections. Section 104 in the Senate Bill is Section 4 in the House Bill, etc. V A L U E A D D E D , V A L U E S D R I V E N. SM
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