Canada’s Anti-Spam Law (CASL) – Proposed New Regulations Would Soften Impact

by Dentons
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Draft Regulations recognize CASL should not apply to ”regular business communications” 

Industry Canada has published long-awaited draft Regulations that would lessen the impact of Canada’s Anti-Spam Law (CASL) on businesses.  Or in the words of the Regulatory Impact Analysis Statement, to: 

provide relief to businesses through targeted exemptions where the broad application of the Act would otherwise impede business activities that are not within the intended scope of the legislation.

Under the heading “Proposed exemptions to address stakeholder concerns”, the Statement explains:

Since it applies broadly to commercial electronic messages, the Act captures some regular business communications that are not the types of threats that were intended to be captured within the scope of the Act. To ensure these business communications are not regulated under the Act, the Regulations include business to business exemptions for commercial electronic messages that are sent within a business, or sent between businesses that are already in a business relationship, where the messages are sent by an employee, representative, contractor or franchisee and are relevant to the business, role, function or duties of the recipients. These proposed exemptions address many of the most serious concerns raised in the consultations about the unintended application of CASL to ordinary, transactional business communications.

The Canadian government has not issued a formal entry into force date for the Anti-Spam law, and the date has been a moving target since CASL was passed into law in December 2010.  Informally, CASL, the CRTC Regulations, and the proposed Industry Canada Regulations are expected to enter into force late in 2013.

Industry Canada’s Proposed Approach

Comments are due on February 4 on the proposed Regulations.  Here is a summary of Industry Canada’s proposed approach to clarify the application of the Act, and more importantly, to carve out “non-threatening” commercial electronic messaging.

1.  Limited Exemptions for Certain Types of Message

Exemptions are proposed for CEMs sent:

  • within a business;
  • between businesses already in a business relationship, sent by employee, representative, contractor or franchisee, where message is relevant to business, role, function or duties of recipient;
  • by foreign businesses and accessed by a visitor to Canada;
  • as a response to an inquiry; and
  • due to a legal obligation, or to enforce a legal right.

2.  Third-Party Referrals

Existing business relationship (also non-business, personal or family relationship) would permit third-party referral. 

Example:  Client of Company and Potential Client of Company have a business, non-business, personal or family relationship.  Client refers Potential Client to Company.  Company sends a single consent request message to Potential Client, including name of Client and identification and unsubscribe requirements set out in the Act and CRTC Regulations.

3.  Clarifying What is Required where Sender is an “Unknown Third Party”

CASL permits consent to be obtained to receive messages from a third party unknown to the recipient, in certain circumstances.  The proposed Regulations specify that the recipient must have the ability to unsubscribe and alert the “original requester” that he has withdrawn his consent.  That “original requester” must notify each third party sender that the recipient’s consent has been withdrawn.

4.  Membership in a Club, Association or Voluntary Organization

The proposed Regulations clarify the definition and scope of these “non-business relationships”, and include references to the purpose and not-for-profit status of these organizations.

5.  Limited Exemptions for Protecting, Upgrading and Updating Computer Networks

The proposed Regulations include new definitions for computer programs that are to be excluded from the “installation consent” requirements:  those installed (i) to prevent illegal activites that present an imminent risk to network security; and (ii) to update and upgrade an entire network.

Certain Questions Clarified

The Regulatory Impact Statement clarifies that not all messages sent “in a commercial context” are necessarily CEMs.  For example, Industry Canada notes that:

  • a CEM is a message that “encourages participation in a commercial activity”: therefore a message such as a courtesy SMS or an unsubscribe notification (without that encouragement) is not a CEM;
  • a CEM is a message sent to an electronic address:  “…[t]he publication of blog posts or other publications on microblogging and social media sites is not within the intended scope of the Act”.

What Industry Canada has Not Done

Industry Canada has rejected stakeholder requests to:

  • “grandfather” consents obtained under PIPEDA (rejected as the CASL consent requirements are much more stringent than PIPEDA’s);
  • send CEMs from Canada to recipients outside Canada on behalf of foreign companies (rejected as a potential loophole to be exploited by spammers);
  • permit manufacturers to send CEMs to end-users of their products (rejected as potentially too broad);
  • revise the “unknown third party” approach to make it less complex and burdensome (rejected as tracking and managing consents is not “unduly onerous”).

A growing number of businesses in Canada, the United States and elsewhere has become involved in weighing in on the proposed Regulations.  The outcome of the current regulatory review will be worth watching, for all those impacted by CASL.

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