Canada: Getting Ready For Canada's Anti-Spam Legislation (CASL)

Try green regs and ham (even if you do not like them).

As outlined in our May 2011 bulletin "Are You Prepared for Canada's New Anti-Spam Law?", almost every business and organization in Canada will be affected by Canada's new anti-spam legislation¹ ("CASL"), and should be aware of its key components and have a plan for determining compliance requirements and implementing a compliance program, where appropriate.

At the time of our May 2011 bulletin, CASL was expected to take effect later in 2011. There have been many delays for the Federal Government in bringing CASL into effect, but we are slowly getting closer to implementation. At the Canadian Marketing Association's CASL update webinar on February 12, 2013, a senior official at Industry Canada suggested that CASL may not come into effect until at least Q3 2014. This tentative prediction was echoed by many stakeholders attending the Marketing Magazine "Understanding Privacy in 2013" conference in Toronto on February 28, 2013.

Whenever CASL comes into force, one thing is clear – now is the right time for those that will be affected to get up to speed with the requirements of CASL and make a plan for compliance, if this has not already occurred. Ignoring CASL is not a viable option - the offences in it are broad and the penalties for non-compliance² are significant (the maximum penalty for a violation is $1,000,000 for an individual and $10,000,000 for a business³). Moreover, directors or officers may be personally liable for their company's violations, and there is also a separate right for affected individuals to bring a claim for compensatory damages arising from the violation.

What is CASL all about?

In a nutshell, CASL prohibits:

On the anti-spam side, simply stated, CASL provides (in section 6) that CEMs must not be sent without: (a) the recipient's consent (express or implied) and (b) the inclusion of certain required elements (such as an unsubscribe mechanism), unless a specific exception applies. CASL further provides (in sections 7 and 8, respectively) that transmission data cannot be altered without authorization and that computer programs (which, for example, interfere with the user's control or with settings) cannot be installed on someone's computer system without their prior express consent, unless a specific exception applies or consent may be implied where permitted under CASL (collectively, the "prohibitions in sections 6-8").

What is the current status of CASL?

CASL was granted Royal Assent on December 15, 2010, but its key provisions have not yet been proclaimed into force. Industry Canada has said that those key provisions will not come into force until both the CRTC Regulations and the Industry Canada Regulations under CASL (known formally as the "Electronic Commerce Protection Regulations") have been finalized.

It is often said that "the devil is in the details" and these two sets of regulations provide important details about how key terms in CASL (such as "personal relationship" and "club, association or voluntary organization") will be interpreted and, thus, the circumstances in which the prohibitions in sections 6-8 will not apply at all or in which consent to receive a CEM will be implied.⁷

Similarly, CASL allows for further⁸ exceptions to the general consent requirement to be specified in the regulations, and for the details of the required elements of CEMs to be specified in the regulations (for example, the details of the required "unsubscribe mechanism").

The CRTC Regulations were finalized in March of 2012, following a lengthy consultation process.

The Industry Canada Regulations have not been finalized. Industry Canada went through an initial consultation period from July 9, 2011 to September 7, 2011 with its first draft of proposed regulations (during which it received 23 submissions from stakeholders who consented to having their submissions posted publicly). On January 5, 2013, Industry Canada published revised draft CASL regulations and invited comments with the consultation period ending February 4, 2013. During this second round of consultations, Industry Canada received over 250 submissions. On March 7, 2013, 119 of these submissions were, with submitters' consent, posted on the Government of Canada's CASL website. Two senior Industry Canada officials are now working through the submissions with the aspiration of getting the finalized Industry Canada Regulations under CASL ready for publication in the Canada Gazette around June 2013.

That said, it may be a tall order for Industry Canada to meet this aspirational timeline as, from the submissions made public thus far, there seem to be many serious concerns of business still left unaddressed which may have far reaching negative consequences for businesses, organizations and consumers which Parliament did not intend. For instance, there are several submissions to the effect that:

A flowchart depicting how CASL will operate, at least under the CASL regulations as currently published, appears at the end of this article.

The finalized Electronic Commerce Protection Regulations (CRTC) (the "CRTC CASL Regs")

The CRTC CASL Regs specify the following required elements for CEMs:

The CRTC CASL Regs allow items (a) to (d) above as well as the unsubscribe mechanism to be posted on a web page (readily accessible via a clear and prominent link), in circumstances where it is not practicable to include these items in the CEM itself. Section 11 of CASL requires that the web page be valid for a minimum of 60 days and that any unsubscribe request be honoured without delay and in any event within ten business days.

The CRTC CASL Regs also specify that the unsubscribe mechanism must be set out clearly and prominently and must be able to be readily performed.

The CRTC CASL Regs provide detail about how express consent must be sought – consent may be obtained orally or in writing and must be sought separately for each act described in sections 6 to 8 of CASL (for example, separate consent must be sought for sending CEMs and for installing a program on another person's computer system). The request for consent must also include information such as the name of the person seeking consent (or the name by which they carry on business), the name (business or actual) of the person on whose behalf a message is sent, a statement clarifying who is sending the CEM and who it is being sent for, contact information for the sender (or person it is sent for); namely, mailing address and either a telephone number (with voice mail), e-mail or web address, and a statement that consent may be withdrawn.

In circumstances where a computer program to be installed on a person's computer system performs certain specified functions (such as collecting personal information stored on the system or changing or interfering with settings or preferences), these facts must be separately and specifically brought to the attention of the person from whom consent is sought and a written acknowledgement is required from the person consenting, stating that they understand and agree that the program to be installed performs the specified functions.

The CRTC has also issued Guidelines (CRTC 2012-548 Guidelines on the interpretation of the Electronic Commerce Protection Regulations and CRTC 2012-549 Guidelines on the use of toggling as a means of obtaining express consent under Canada's anti-spam legislation) on how it intends to interpret the CRTC CASL Regs. For example, the CRTC has clarified that a person who may facilitate the distribution of a CEM, but who has no role in the CEM's content or the choice of the recipients (for example, an email service provider), need not be identified in a consent request. However, an organization which delivers advertising content to its own subscribers would need to identify itself as well as all advertisers when seeking consent.

The Guidelines also state that in order to comply with the express consent provisions in CASL, a user must be required to actively check a box or click an icon – pre-checked boxes will not be considered valid for obtaining express consent.

Consent requests cannot be subsumed in, or bundled with, requests for consent to the general terms and conditions of use or sale – a user must be able to consent to the general terms of use or sale while still being able to refuse consent to receiving CEMs.

The revised draft Electronic Commerce Protection Regulations (Industry Canada) (the "IC Draft CASL Regs")

The IC Draft CASL Regs set out several new proposed exceptions to the prohibitions in section 6. For example, an exception is proposed for any CEM sent in response to a request, inquiry, complaint or otherwise solicited by the person to whom the message is sent.⁹

An exception is also proposed for CEMs sent between employees, representatives, contractors or franchisees of an organization where the message concerns the affairs of the organization. In addition, CEMs sent by an employee (representative, etc.) of one organization to an employee (representative, etc.) of another organization in circumstances where the organizations have a business relationship and the message concerns the affairs of the organization or a person's role or duties within the organization would also be excepted. These proposed exceptions are meant to address the unintended application of CASL to ordinary, transactional business communications.

The IC Draft CASL Regs also except any CEMs sent to satisfy a legal obligation or enforce a legal right.

As well, the IC Draft CASL Regs allow for an individual to send a single CEM to someone without consent where this is based on a third party's referral, so long as the sender discloses the name of the person making the referral and so long as there is an existing business, non-business, personal or family relationship between the person making the referral and each of the sender and the recipient. So, for example, a friend (Susan) of an individual (Joe) could suggest to her accountant that the accountant send an e-mail to Joe offering the accountant's services. So long as the accountant sends one unsolicited e-mail only to Joe and states in the e-mail that Susan referred the accountant to Joe, the accountant will not have violated CASL in this situation.

The IC Draft CASL Regs also define "family relationship" and "personal relationship" – this is important because CEMs sent between persons who have a personal or family relationship are excepted from the section 6 prohibitions. Under the IC Draft CASL Regs, persons who have had a "direct, voluntary, two-way communication" will qualify as having a personal relationship where it is reasonable to conclude that the relationship is personal based on all relevant factors, including the sharing of interests, experiences and opinions (evidenced in the communications), the frequency of communications, the length of time since the parties communicated and whether the parties have met in person. This definition may allow some relationships formed solely on electronic communications (e.g., Facebook) to qualify for an exception to the section 6 prohibitions.

What can businesses and organizations do now to prepare?

Given that the IC Draft CASL Regs have not been finalized, we do not yet have a complete picture of CASL. And, we still do not know for sure when that picture will be completed. However, there are still several useful steps that can be taken now.

When in force, CASL and its regulations will create a complex web of requirements and exceptions, and it will be an onerous task to determine which exception might apply in what circumstances. However, CASL clearly allows CEMs to be sent with prior express consent. Given that CASL won't be in force for some time yet and given that CASL will allow a transition period for compliance once it is in force, businesses and organizations would seem to have ample time to seek and obtain express consents from those on its mailing lists for CEMs.

More specifically, with respect to CEMs, the most useful steps that a business or organization can take now in anticipation of CASL are:

• Taking Inventory of Existing CEM-Recipients Databases - identifying what kinds of CEMs are currently being sent, what form these CEMs take, to whom they are sent, and why are they sent;

• Confirming Consents - checking existing consent mechanisms and consent wording in relation to these CEMs to determine where under CASL the consent that has been obtained is express or where it may be implied (e.g., in the case of an existing business relationship, an existing non-business relationship or where the intended CEM recipient has conspicuously disclosed or published their electronic address without indicating that they do not wish to receive unsolicited CEMs);

• Identifying Exceptions - categorizing (with appropriate supporting information) CEM recipients who fall under one or more of the exceptions to CASL such as where the sender (a) has a family or personal relationship with the recipient, (b) is responding to the recipient's request, inquiry or complaint, (c) is enforcing a legal right, (d) is sending a business-to-business CEM (within and between firms) in the context of an ongoing business relationship, or (e) is a foreign business sending a CEM to a foreign recipient who accesses the CEM while roaming in Canada;
• Establishing Robust Data Management - ensuring, where consents to receive CEMs may only be implied, the system for managing all of the data for CASL compliance has the capability to manage the pertinent two-year and six-month time limits under CASL going forward - for instance, unless upgraded to express consent, for each implied-consent recipient, there will need to be a "stop send" date in the system;
• Upgrading to Express Consents - sending out CASL-compliant requests for opt-in express consents where the consents are only implied or otherwise don't meet CASL's express consent requirements;
• Ensuring CASL-Compliant Unsubscribes - making sure working unsubscribe mechanisms and notices are in place and meet all existing CASL requirements (i.e., that the mechanism is functional for at least 60 days, is available at no cost to the recipient, uses the same means as the original CEM unless impracticable, includes either an electronic address or a link to which the unsubscribe may be sent, and is processed without delay and, in any event, within ten business days); and
• Auditing Social Media Messages - reviewing all social media communications (including the functionalities of all messaging and where messages are sent) to determine when such communications are not caught by CASL and when they are caught what is required for compliance.

If we can assist your business or organization in understanding and applying the "green Regs and (anti) spam" to your particular situation, we would be pleased to do so.

How CASL Will Operate

Footnotes

^{1. S.C. 2010, c. 23. With no official short title, CASL is formally known only by its inelegant full title: An Act to promote the 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.}

^{2. The administrative monetary penalties ("AMPs") may be levied by the CRTC by way of a "notice of violation" which sets forth the amount of the AMP. The notice recipient may then make representations as to whether a violation occurred and/or challenge the amount of the AMP.}

^{3. These AMPs are per violation, and the CRTC has the authority to make regulations designating violations as being separate for each day of non-compliance.}

^{4. "Phishing" is attempting to acquire sensitive information (passwords, credit card numbers, etc.) by masquerading as a trustworthy entity in an electronic communication.}

^{5. "Pharming" involves a technological attack meant to redirect a person from an intended website to a fraudulent version of that website.}

^{6. "Spyware" is software that surreptitiously gathers information about someone and relays that information to someone else, or that takes control over a computer, without knowledge or consent.}

^{7. It is important to note that "implied consent" is not an open concept under CASL and is only recognized in certain specified situations. Section 10(9) of CASL sets out the only circumstances where consent for receipt of a CEM will be implied. For example, consent will be implied where the sender and recipient have an "existing business relationship" or an "existing non-business relationship". For example, implied consent will exist when there is a business relationship arising from the purchase of a good or service within the two-year period immediately before the day on which the message is sent.}

^{8. That is, exceptions which are additional to the exceptions set out in section 6 of CASL itself. The exceptions set out in CASL include exceptions to the consent requirement where a CEM solely (a) provides a requested quote or estimate for the supply of goods or services, (b) facilitates or confirms a previously agreed to commercial transaction, (c) provides warranty, product recall or safety information about a purchased product or service, (d) provides factual information about a subscription, membership, account, or similar relationship, (e) provides information directly related to an employment relationship or related benefit plan, or (f) delivers a product, including updates or upgrades pursuant to a transaction. The exceptions set out in CASL also include exceptions to the prohibitions in sections 6-8 where the CEM is sent to an individual with whom the sender has a "personal or family relationship" or to a person engaged in a commercial activity and consists solely of an inquiry or application related to that activity.}

^{9. If brought into force, this would be a broader exception than the existing implied consent provision in CASL which is connected to "existing business relationships".}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.