The Secure Times

An online forum of the ABA Section of Antitrust Law's Privacy and Information Security Committee

New CAN-SPAM Rule Gives Long-Awaited Answers

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On May 12, 2008 the Federal Trade Commission issued its long awaited final set of rules under the CAN-SPAM Act of 2003 (the “Act”). The rule:

•    Modifies the term “sender” with respect to multi-advertiser e-mails;
•    Clarifies the opt-out request process;
•    Defines the term “person”; and
•    Clarifies the meaning of “valid physical postal address” of the sender

This rule will take effect on July 7, 2008. 

Multi-advertiser E-mails

    The FTC’s modification of the term “sender” addresses the situation in which there is more than one advertiser in a commercial e-mail.  Previous to this rule’s enactment, the Act, strictly read, required that each advertiser in a commercial e-mail was responsible for complying with the Act’s requirements.  In other words, each advertiser was required to provide an opt-out mechanism, display a valid physical postal address, honor opt-out requests, and otherwise comply with the Act’s requirements.

    This new rule allows one of the advertisers to assume the role of “sender” as defined by the Act.  This sole advertiser would then have the responsibility of honoring opt out requests, etc., and only the opt-out mechanism and “physical address” of the designated sender would have to be included in the e-mail in order to comply with the Act.

    In order for one advertiser to become the designated sender with respect to the Act, the advertiser must meet three requirements:

1.  the person must be a “sender” as defined by the Act – simply put, this person must induce the e-mail to be sent and have their product, service, or web site advertised or promoted in the e-mail;

2.  the person must be identified as the sole sender in the “from” line of the e-mail message; and

3.  the person must be in compliance with the following five sections of the Act:

  • the header information must not be materially false or misleading and it must accurately identify the sending computer (15 U.S.C. 7704(a)(1))
  • the subject heading cannot mislead a reasonable recipient as to a material fact about the contents of the e-mail (15 U.S.C. 7704(a)(2))
  • the e-mail must include a valid opt-out mechanism (15 U.S.C. 7704(a)(3)(A)(i))
  • the e-mail must include a clear commercial identifier, opt-out notice, and physical address (15 U.S.C. 7704(a)(5)(A)); and
  • a sexually oriented e-mail must have the appropriate disclaimer and be formatted correctly (16 CFR 316.4)

    As an example of how the FTC’s new rule would be implicated, take the situation in which a travel agency sends out a commercial e-mail that includes advertisements from the travel agency, a car rental shop, and a hotel chain. In this case, each of these three entities would be advertisers in the e-mail, but if they collectively designate the travel agency to be the “sender” of the e-mail under the Act, and if the travel agency meets the three requirements above, then only the travel agency would be considered the sender, and all sender responsibility under the Act would fall on the travel agency, not the hotel chain or the car rental shop.

    This new definition clarifies the responsibility of each advertiser and alleviates redundant obligations for the various advertisers in a single e-mail while still providing recipients with the benefits of the CAN-SPAM Act.  However, while all sender responsibility is shifted to one advertiser, all advertisers are still responsible as initiators under the Act and must still comply with the provisions that apply to initiators. (That is, they are all responsible for ensuring that the header information in the e-mail is not false or deceptive.)  Also, if the designated sender fails to comply with its obligations, the other advertisers can be held accountable.  For this reason, from the perspective of the other advertisers, it is imperative that they secure a written agreement with the designated sender that includes a strong indemnification provision protecting the other advertisers who are counting on the designated sender’s compliance with the Act.

Opt-out Requests

    This rule requires senders to allow recipients to opt-out of subsequent commercial e-mails in at least one of two ways. The recipients should be able to opt-out by (1) replying to a specified e-mail address or (2) visiting a single web page and selecting their opt-out preferences. Recipients cannot be required to pay a fee or provide any other information besides their e-mail address and opt-out preferences.  For example, the recipient can be asked to indicate which kind of e-mails, if any, she would like to receive, but can not be required to log into her account or to submit her name, address, or any form of payment in order to opt-out.  This new rule could prove burdensome on companies that currently rely on recipients to log into an account in order to opt out, or to click through to more than one web page.

    The FTC declined to shorten or lengthen the amount of time senders have to process opt-out requests. The final rule maintains the original ten business day opt-out request processing period (or, for wireless e-mail addresses, ten days).  After the applicable time period from receipt of an opt-out request, senders are prohibited from initiating commercial e-mail messages to the recipient.

Definition of Person

    The FTC added a definition of “person” to clarify that the CAN-SPAM Act applies to more than just natural persons. As defined by the rule, person includes:

•    individuals,
•    groups,
•    unincorporated associations,
•    limited or general partnerships,
•    corporations; and
•    other business entities.

Valid Physical Postal Address

    Since the Act was enacted, legitimate e-mailers (in particular small businesses) have been asking whether they can use a P.O. Box to meet the requirement that a physical postal address be included in commercial e-mails. The final rule adds a definition of “Valid physical postal address” to clarify its meaning. Under the definition, the sender may use his current street address, a Post Office box the sender has accurately registered with the United States Postal Service, or a private mailbox the sender has accurately registered with a commercial mail receiving agency that is established pursuant to United States Postal Services regulations.

Author: ABA Antitrust

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