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Number
32: December 10, 2003
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This week in Katydid:
The
CAN-SPAM Act of 2003
Congress this week passed Senate
Bill 877, the "Controlling the Assault of Non-Solicited
Pornography and Marketing Act of 2003," known as the CAN-SPAM Act.
At press time, the President has not signed it into law, but no one
anticipates a veto. Since it goes into effect the first of the year, you
might want to know if there's anything you have to do.
Why Can Spam?
Congress' findings are that e-mail is valuable but more than half of all
e-mail is unsolicited commercial e-mail and much of that is rife with
fraud, or is vulgar in nature. The volume of unwanted messages swamps
out legitimate e-mail and you can't reliably refuse to accept e-mail
from some senders.
Technology has made the problem worse by allowing abusers to become
more prolific, abusive, and elusive. The burden of the cost of e-mail is
on the recipient, which creates incentives for abusers to continue.
Many states are developing their own laws, which will create even
more problems for enforcement. Therefore, the law creates a national
standard that will regulate commercial e-mail, hold senders accountable
for their messages and identity, and allow recipients to refuse e-mail
they don't want.
Commercial Electronic Mail
If there are loopholes, the definition of commercial e-mail is a good
place to find them. The law defines commercial e-mail as anything
"the primary purpose of which is the commercial advertisement or
promotion of a commercial product or service."
I foresee the development of many spam varieties that do not
primarily market a product, but that contain advertising.
A newsletter such as the one you're reading now does not fall into
this classification. One wonders how much advertising one could include
in a newsletter before it became primarily commercial. The FTC has one
year to come up with criteria.
The law allows e-mails to include corporate branding elements without
being considered commercial. Additionally, you can send 'transactional
or relationship' messages - the normal confirmations of business
exchange. It has always made sense to include cross-sell and up-sell
promotions in these kinds of e-mails, but soon you will see advertising
in every type of 'transactional' e-mail.
How Far Will 'Relationship' Go?
My reading is that the term 'relationship' in the act applies
exclusively to a commercial relationship. I can send e-mail related to a
purchase. I can provide safety and warranty notifications. I can update
you with changes in features or policy. I can communicate information
vital to an ongoing commercial relationship.
However, I don't see a provision for relationships providing service
after the sale. For example, a doctor could confirm payment for their
services, but that relationship seems to end there by the act's
definition. There is language that refers to communication regarding the
ongoing use of a product or service and it is possible some marketers
will try to stretch that meaning.
As another example, you can send e-mail unsolicited to deliver a
software upgrade, but you can't send an unsolicited e-mail letting the
customer know that there is an upgrade available. However, if the
software were licensed on a recurring basis, you could send upgrade
advertisements (disguised as product notifications) until the expiration
of the license.
'Affirmative Consent'
Your recipient needs to take positive action in response to a 'clear and
conspicuous' request to send them e-mail. This applies whether they sign
up with you directly or through a third party. If you want to transfer
the e-mail address to another party, you have to ask for explicit
permission.
We commonly call this the double opt-in. If there's a check box to
receive e-mail, it can't be pre-selected, and it can't be buried in fine
print. You can't slip tacit permission into a privacy policy and if you
change your policy for dealing with e-mail, you still need to get
explicit permission for commercial e-mail.
Of course, you must prove that you have permission, and this could
get sticky. You should archive all your printed requests for e-mail, and
it wouldn't hurt to start getting signatures on manual forms that
include permission for e-mail marketing. Web forms should log the IP
address of the client's computer and time-stamp the request.
To be on the safe side, I'd implement a process where you verify the
recipient's request by sending an e-mail confirming permission. If they
don't verify or reply, you should remove them from your marketing. This
is similar to the process used by online newsgroups such as Yahoo.
For large companies, you may want to implement policies for handing
remove requests that don't come through normal channels. For example, a
customer service agent may receive an angry e-mail asking you to stop
sending e-mail. You'll want to develop a process to prevent those kinds
of requests from slipping through the cracks. Use a centralized
exclusion list to filter all bulk e-mail communications.
Who Sent That?
You're responsible for sending e-mail whether you do it yourself of pay
someone to do it. Also, the liability extends to anyone who takes part
in sending the e-mail. So, service providers can't say they were just
doing what they were told. Further, the law applies to anyone outside
the United States as long as the e-mail recipient is within the United
States. There's no word yet, or whether other nations will honor
extradition.
The same liability looks to be true for co-branded e-mail. Each brand
represented in the content would be considered liable for any violation
of the act. Conversely, a line of business or a division of a larger
company would not transfer liability to the parent company as long as
the division did not include the branding of the parent company.
The law forbids modifying the headers (spoofing) of e-mails, and
anything that might mislead the recipient about the identity of the
sender. If you couple this with the requirement for explicit permission
to send unsolicited e-mail, it seems to forbid sending e-mail to your
own list that primarily advertises for another company. For example, a
bank could not send e-mail to their opt-in list on behalf of an
insurance company.
Crime and Punishment
The law also forbids common tactics spammers employ to hide their
identity or send mass transmissions. The matrix is complicated but the
punishment for abuse ranges from one to five years in jail, a fine of up
to $250 per e-mail (with a $2M cap), and forfeiture of any property used
in the violation.
Even though this law nullifies any state law that regulates spam, it
allows states to file class action suits against violators.
Additionally, it allows internet service providers (ISPs) to sue
spammers that misuse their services for damages up to $1M.
Do Not Spam Registry
The Act gives the Senate Commerce Committee six months to come up with a
plan to establish a registry similar to the telemarketing Do Not Call
Registry. They're going to need all that time to figure out how it will
work technically. This section gives nightmares to most service
providers. Not only will you have to worry about your own exclusion
list, buy you'll need to filter against a national list. Unless the list
operates on the infrastructure level of the Internet (routers and
servers), or is free to all participants, it may pose an onerous burden
on small businesses. But don't fret; Congress has two years to study the
impact the act will have on e-mail.
No Jacket Required
Your subject line does not have to include any kind of code, such as
ADV, that labels the communication as commercial e-mail. Earlier
versions of the bill required such a code. That requirement would have
effectively killed commercial e-mail because everybody would filter out
e-mail with that term. It would also have unfortunate side effects such
as filtering any e-mail with words such as 'adventure,' advice', or
'advance.'
Wireless Access
At some point, somebody said, "What about wireless?" Now that
phones, blackberries, and other devices support simple message services,
there is concern that SMS might soon stand for 'Send More Spam;' so, the
act gives the FTC about nine months to come up with rules that will
protect wireless users from unsolicited advertising.
My Predictions
This act heralds the birth of the age of the newsletter. It is the
perfect vehicle for connecting with prospects with whom you do not have
a transactional relationship. Advertising and sponsorships will become
more commonplace as newsletters deliver captive audiences who share
common interests and values.
For a while, companies may find themselves frantic to obtain proof of
permission with their own base. I recommend sending a one-time e-mail to
your house list requesting explicit permission if you are at all in
doubt. However, after cleaning house, companies will begin to market
more confidently to their opt-in list, and will develop long tern
strategies to limit churn.
Once systems are in place, marketers will like having the ability to
track the interest level of prospects. There will be more emphasis on
testing content on small samples in order to maximize the impact of
campaigns.
There will be a highly publicized arrest within the next three
months. Within the next year, there will also be an egregious case where
the law seems to go beyond its intended reach. Possibly, it will be the
same high-profile case.
Finally, I'm going to go out on a limb and predict that despite the
CAN-SPAM Act of 2003, spam will be with us for a long time to come.
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Kind regards,
Kevin Troy Darling
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