CANADIAN CASL (ANTI-SPAM LAW) PRECEDENTS
Do you need a precedent or checklist
to comply with CASL (Canadian anti-spam law)?
We offer Canadian anti-spam law (CASL) precedents and checklists to help electronic marketers comply with CASL. These include checklists and precedents for express consent requests (including on behalf of third parties), sender identification information, unsubscribe mechanisms, business related exemptions and types of implied consent and documenting consent and scrubbing distribution lists. We also offer a CASL corporate compliance program. For more information or to order, see: Anti-Spam (CASL) Precedents/Forms. If you would like to discuss CASL legal advice or for other advertising or marketing in Canada, including contests/sweepstakes, contact us: contact.
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On October 19, 2017, the Canadian Radio-television and Telecommunications Commission (CRTC) issued an important CASL (anti-spam law) related decision in Compliance and Enforcement Decision CRTC 2017-367 (CompuFinder).
In this case, CompuFinder had launched a constitutional challenge of CASL, relating to a notice of violation it received in 2015. The notice of violation alleged that CompuFinder had sent commercial electronic messages (CEMs) without recipients’ consent and had failed to include functioning unsubscribe mechanisms and imposed a $1.1 million administrative monetary penalty (AMP).
CompuFinder disputed the notice of violation before the Commission arguing, among other things, that CASL was not within federal Parliament’s power to enact (a division of powers constitutional argument) and that CASL violated CompuFinder’s freedom of expression under section 2(b) of the Canadian Charter of Rights and Freedoms (the Charter). It also argued that CASL violated sections 7, 8 and 11 of the Charter.
The CRTC dismissed CompuFinder’s challenge holding, on the substantive issues, that:
1. CASL is within federal Parliament’s legislative powers to enact and falls under its general federal trade and commerce head of power in section 91(2) of the Constitution. In coming to this decision, the CRTC reviewed the purpose clause of CASL, legislative definition of “commercial activity” and legislative history of the law (e.g., House debates for the protection of the e-economy). The CRTC rejected CompuFinder’s more narrow characterization of the nature of CASL that it merely regulates the sending of commercial information, finding that the overall nature of the legislation relates to electronic commerce: “CASL’s pith and substance is to implement a scheme to regulate certain conduct that could adversely affect the Canadian digital economy.”
2. The challenged provisions of CASL do indeed violate section 2(b) of the Charter (freedom of expression) but the infringement is justified under section 1 of the Charter. In this case, the Attorney General conceded that section 6 of CASL, which prohibits the sending of unsolicited CEMs, infringes section 2(b). The CRTC’s decision, therefore, focuses on whether this infringement is saved by section 1. In finding that it is, the CRTC held that CASL meets the 5-part test set out in R. v. Oakes, [1986] 1 S.C.R. 103. In this respect, the CRTC found that CASL is sufficiently clear to constitute a “limit prescribed by law”, the government’s regulatory objective is pressing and substantial (based on the potential threat to e-commerce) and that the challenged provisions do not impair free expression more than necessary to achieve CASL’s objectives. In finding that CASL was saved by section 1, it rejected extensive arguments made by CompuFinder relating to the significant restrictions imposed by CASL, overbroad reach, potential alternatives (e.g., the opt-out approach adopted in the United States) and vague and unclear exemptions and exclusions.
3. Violations of sections 7, 8 and 11 of the Charter had not been established. With respect to section 11 of the Charter in particular, there had been a significant amount of speculation since CASL came into force as to whether it could be challenged based on the penalties under the legislation (i.e., whether the significant potential AMPs – up to $10 million – are penal in nature, therefore triggering criminal procedural protections under section 11, such as the right to a hearing before an independent tribunal – i.e., not the CRTC, the body imposing the penalty – and presumption of innocence). The CRTC held that the challenged provisions were not criminal in nature. In coming to this conclusion, the CRTC characterized CASL as regulatory not penal in nature (based on CASL’s provisions and legislative history), reasoned that the adjudicative framework was regulatory not criminal and that significant potential AMPs alone are not necessarily sufficient to establish a statute as penal in nature.
Implications
Since CASL came into force in 2014, there has been a significant amount of commentary and speculation as to whether a successful constitutional challenge could be made to the law. The CompuFinder decision is clearly a significant setback for those seeking to have the law struck down or amended on constitutional grounds. While it is not yet clear whether this decision will be appealed, it is possible that the Federal Government may yet simplify and streamline the law following its current INDU Committee hearings studying CASL (see here).
In the meantime, there remains significant risk for marketers that send unsolicited CEMs without complying with the consent, ID and unsubscribe requirements of the law or relying on a category of implied consent or exemption.
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Tips For Complying With
CASL (Canadian Anti-Spam Law)
Canada’s federal anti-spam legislation (CASL) came into force in 2014. Since then, electronic marketers and their advisors have been working to comply with what remains a complex law with outstanding uncertainties in some key areas. Having said that, many of the core requirements of CASL are not overly difficult to comply with (though continue to be misunderstood in many cases).
The following are some key legal tips for complying with CASL:
Express Consent. If you cannot rely on any category of implied consent (e.g., an existing business relationship within two years of a purchase) or a CASL exemption, ensure that you have collected and documented express consent from recipients. Express consent requests must include all of the information set out in CASL and its regulations otherwise the consent will not be valid. Failure to correctly collect consent is the most common CASL compliance error we see and a key basis for CRTC enforcement. For more information, see: Anti-Spam Law (CASL), Anti-Spam Law (CASL) FAQs and Canadian Anti-Spam (CASL) Precedents.
Implied Consent. If you are relying on one or more categories of implied consent to send commercial electronic messages (CEMs) (e.g., an existing business relationship within two years of a purchase or six months of a product inquiry) ensure that all of the requirements of the particular type of implied consent are met. Remember that there is not a single blanket type of implied consent under CASL; rather, there are many different types of implied consent each with their own specific requirements. Also, as with express consent, CEMs that rely on implied consent must still include the prescribed sender identification information and unsubscribe mechanism. For more information, see: Anti-Spam Law (CASL), Anti-Spam Law (CASL) FAQs and Canadian Anti-Spam (CASL) Precedents.
Consent For Third Parties To Send CEMs. Under CASL, consent to send CEMs can be requested for a sender themselves, identified third parties (or multiple identified third parties) or unidentified third parties (i.e., entities whose identities are not yet known when consent is requested). Importantly, however, each type of consent request has specific requirements for the request and, in the case of consent requests on behalf of unidentified third parties, somewhat complex additional requirements. The failure of marketers to correctly request consent for third parties (e.g., partners, affiliates, co-sponsors in promotions, etc.) is another CASL-related error that we regularly see. For more information, see: Anti-Spam Law (CASL) FAQs and Canadian Anti-Spam (CASL) Precedents.
CASL Exemptions. Similar to implied consent, there is no single exemption from CASL but many types of exemptions. If you are relying on a particular exemption (e.g., the “business-to-business” exemption) it is important to ensure that all of the requirements of the exemption are met. Importantly, there is little or no case law interpreting many CASL exemptions. This means that there there may be more risk when relying on an exemption than express consent. Express consent is the strongest type of consent under CASL, considering that it does not expire unless a recipient unsubscribes.
Passive Consents. Remember that under CASL express consent or a category of implied consent is generally required to send CEMs unless a CASL exemption applies. As such, passive types of consents (e.g., language in general terms and conditions) will likely not be CASL compliant unless a sender does not need express consent (i.e., can rely on a category of implied consent or a CASL exemption).
Sharing Lists With Third Parties. Consider the potential risks of sharing e-mail or other electronic marketing lists with third parties. While this is certainly possible under CASL, marketers should be aware that there are specific requirements that must be met depending on who a list will be shared with (e.g., to expressly identify third parties with whom consent is being gathered on behalf of, including their contact information and other requirements for unidentified third parties). Marketers should also be aware that there is also potentially not only risk if they themselves violate CASL (e.g., send CEMs without consent), but also if they assist third parties that violate CASL. As such, it is often prudent for marketers that want to share electronic marketing lists with third parties to ensure that they have list sharing agreements in place with parties with whom they share e-mails. For more information, see: Anti-Spam Law (CASL) FAQs, Anti-Spam (CASL) Compliance Errors and Canadian Anti-Spam (CASL) Precedents. See also: Influencer, Co-Sponsor and List Sharing Agreements.
Sender Identification Information. Ensure that all CEMs include the prescribed sender identification information required by CASL unless an exemption applies. For more information, see: Anti-Spam Law (CASL) and Anti-Spam Law (CASL) FAQs.
Unsubscribe Mechanism. Ensure that all CEMs include a CASL-compliant unsubscribe mechanism. For more information, see: Anti-Spam Law (CASL) and Anti-Spam Law (CASL) FAQs.
Document Consent. Under CASL, the onus is on senders of CEMs to document consent. As such, it is important to document the type of consent (express or implied) or exemption being relied upon, evidence of consent (e.g., subscription logs, forms, dates and names/e-mail addresses), divide lists according to the type of consent or exemption being relied upon and to scrub lists after recipients have unsubscribed or the relevant time period for a category of implied consent has expired (e.g., two years after a purchase). Failure to adequately document consent is another CASL-related compliance error that we regularly see, including not documenting consent at all, not segregating distribution lists and inadequately documenting consents or types of implied consent. For more information, see: Anti-Spam Law (CASL), Anti-Spam Law (CASL) Compliance and Canadian Anti-Spam (CASL) Precedents.
CASL Compliance Program. Consider adopting a CASL compliance program, particularly if electronic marketing is a core aspect of your marketing strategy. The CRTC has issued guidance on CASL compliance programs including key recommended elements. For more information, see: Anti-Spam (CASL) Compliance and Canadian Anti-Spam (CASL) Precedents.
CASL and Specific Types of Promotions. Care should be taken in relation to specific types of promotions under CASL. Just one of many examples is friends and family type promotions (e.g., contests where entrants can gain more entries by sharing with or tagging a friend or family member). While there is an exception to the unsolicited CEMs section of CASL (section 6) for messages sent to a person with whom the sender has a personal or family relationship, these terms are narrowly defined. For example, “family relationship” is limited to spouses, common-law partners and parent-child relationships. “Personal relationship” is defined in a multi-factor and case-by-case fashion such that it is often impractical to rely on this exception for any broad “friends and family” type promotion. Marketers should also be aware that there is potential risk for both themselves and their clients in running friends and family type promotions if they cannot meet the specific definitions of “family relationship” and/or “personal relationship” under CASL for a promotion. For more information, see: Anti-Spam (CASL) Compliance Errors and Running a Friends-and-Family Promotion in Canada? Cruel, Cryptic CASL Strikes Again.
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SERVICES AND CONTACT
I am a Toronto competition/antitrust lawyer and advertising/marketing lawyer who helps clients in Toronto, Canada and the US practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
My Canadian advertising/marketing law services include advice in relation to: anti-spam legislation (CASL); Competition Bureau complaints; the general misleading advertising provisions of the federal Competition Act; Internet, new media and social media advertising and marketing; promotional contests (sweepstakes); and sales and promotions. I also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
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