United States: FTC Solicits Comments on CAN-SPAM Act

The Federal Trade Commission ("FTC") has issued an Advance Notice of Proposed Rulemaking (ANPR) requesting comments on issues relating to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM" or "the Act"), which took effect on January 1, 2004. 69 Fed. Reg. 11776 (March 11, 2004). The Commission’s press release and the text of the notice is available at http://www.ftc.gov/opa/2004/03/canspam.htm. CAN SPAM will potentially affect a vast number of e-mail communications, whether they are from for-profit or non-profit organizations, and whether they are business to consumer or business to business communications. The ANPR thus raises a number of important issues on which interested parties may wish to comment.

For purposes of the Act, a "commercial electronic mail message" is defined as "any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including content on an Internet website operated for a commercial purpose)." The Act directs the FTC to issue regulations within one year of enactment that provide relevant criteria for determining the "primary purpose" of an e-mail message. Accordingly, the FTC solicits comment on that issue.

Defining the "primary purpose" of a message for purpose of CAN SPAM is an issue of significant interest to publishers and to non-profits, as well as to commercial businesses. Indeed, the question of whether the "primary purpose" of a message is commercial takes on special importance in the post Nike v. Kasky era for all types of communications. The FTC’s ultimate definition thus could have far-reaching consequences, and the FTC is soliciting comments on criteria that should be used to assess an electronic message’s "primary purpose." The FTC asks whether the intent of the sender, the net impression of the message, the identity of the sender (for profit versus non-profit), the extent to which commercial advertisements in the message financially support the content, and/or other factors should be applied.

The FTC also seeks comment on the following definitions and provisions within the agency’s discretionary rulemaking authority:

1. the definition of "transaction or relationship messages," which are exempt from provisions of the Act,
2. the reasonableness of a ten-day period for processing opt-out requests,
3. what activities and practices, if any, should be deemed "aggravated violations" under the Act, and
4. implementation of the CAN-SPAM Act generally.

Under CAN SPAM, the FTC is required to provide Congress with several reports, and it solicits input for inclusion into these reports as follows:

1. establishing a national Do Not E-Mail registry (report due June 16, 2004);
2. establishing a system for rewarding those who report violations (due September 16, 2004);
3. a plan for requiring commercial e-mail to be identifiable from its subject line (due June 16, 2005); and
4. the effectiveness of CAN SPAM (due December 16, 2005).

With respect to the general implementation questions, the FTC has inquired whether it should clarify the obligations of initiators and recipients of commercial e-mail in various "refer a friend" situations commonly used by many organizations. It asks a series of specific questions about refer a friend campaigns. The FTC seeks comments on, among other things, whether different types of refer a friend campaigns should be treated differently, who should be required to provide an "opt-out" mechanism, whether the original sender is liable for compliance based on subsequent referrals, whether refer a friend messages should be distinguished from other e-mail messages. It also asks for information on the costs and benefits of forwarded commercial e-mail campaigns to consumers and businesses. Given the popularity of refer a friend campaigns with a variety of organizations, this will be a very important topic.

The Commission also invites comments on what types of "from" information should be disclosed, and whether several entities could be considered the "sender" of an e-mail message under the Act. This might occur when one company sends e-mail that includes advertisements for other companies. The FTC asks if it should clarify the obligations of multiple senders.

As noted above, the FTC seeks information to assist it in preparing four reports that it must submit to Congress. Those reports focus on establishing a national do-not-e-mail registry, establishing a system for rewarding suppliers of information on CAN-SPAM violations, establishing a plan for identifying spam in the subject line of an e-mail, and the effectiveness of the CAN-SPAM Act.

With respect to the do not e-mail registry, the Act requires the FTC to include in its report an explanation of any practical, technical, security, privacy, enforceability, or other concerns regarding such a registry and an explanation of how it would be applied to children with e-mail accounts. Bounty hunter" provisions are a distinguishing feature of some U.S. laws, and create unusual enforcement issues for businesses. Under many state laws now preempted by CAN SPAM, unsolicited commercial e-mail was required to include the designation "ADV" in the "re" line of the message. The FTC solicits comments on the effectiveness of labeling, how labeling might dovetail with technological tools and enforcement approaches to help control spam, and the costs and benefits of labeling. Finally, the FTC asks for input on the effectiveness of CAN SPAM in light of technological developments, and also asks for recommendations on how to address commercial e-mail originating outside the U.S., including what the U.S. government could do internationally to address the issue.

Comments relating to the national do-not-email registry are due March 31, 2004, and comments addressing other issues are due April 12, 2004. No doubt many organizations will wish to provide their views on what is now one of the most important vehicles of their communications and marketing strategies.