• FTC Clarifies CAN-SPAM Rules
  • June 12, 2008 | Authors: Jon Frankel; Michael R. Romano
  • Law Firms: Bingham McCutchen LLP - Washington Office; Bingham McCutchen LLP - Boston Office
  • The FTC recently issued an order modifying several key definitions and regulations relating to the CAN-SPAM Act. CAN-SPAM is the law that establishes requirements for those who send commercial e-mail, spells out penalties for violating the law, and gives consumers the right to ask e-mailers to stop sending them commercial e-mail.

    These new rules will take effect 45 days after they are published in the Federal Register. If you use e-mails to communicate with customers or potential customers, these new requirements likely will affect how you communicate via e-mail, including your use of third parties that send e-mail for you and the agreements that govern those relationships.

    These modifications address several key CAN-SPAM regulations. First, the FTC clarified several definitions, including that of “persons,” thereby confirming that nonprofit associations are subject to the CAN-SPAM rules. Additionally, the FTC clarified how one person out of multiple advertisers in an e-mail may be designated as the “sender” for purposes of compliance with the opt-out rules. The FTC also strengthened the valid physical address requirements and indicated that it would evaluate “forward to a friend” type e-mails on a case-by-case basis. Finally, the FTC chose to maintain the ten business day opt-out grace period time limit and provided clarification on other opt-out procedures.

    FTC adopts modified definitions for “person” and “sender.”

    The new regulations adopt a definition of the term “person,” which although used throughout the CAN-SPAM Act, had not been previously defined. The term “person” will now apply to “an individual, group, unincorporated association, limited or general partnership, corporation or other business entity.” This new definition confirms that CAN-SPAM requirements apply to unincorporated nonprofit entities and other nonprofit organizations.

    The new rules also modify the definition of “sender” to provide guidance on the appropriate opt-out procedures and requirements when an e-mail contains messages from multiple entities. When multiple sellers join in the sending of an e-mail marketing message, they may now designate one of them to act as the “sender” for purposes of handling opt-out requests. If you join with others in the transmittal of e-mail advertisements, however, you still must ensure that both the designated sender and the e-mail that is ultimately sent comply with the CAN-SPAM Act and the FTC’s rules. Finally, the FTC considered the question of “affiliates” who are paid to send e-mails on a seller’s behalf. The FTC clarified that in such cases the affiliate is typically an “initiator” under the CAN-SPAM Act, whereas the seller would be considered the “sender.” If you use third parties to send e-mail on your behalf, you should carefully evaluate how the new rules will impact these activities, particularly your agreements with these third parties.

    FTC maintains current definition of “transactional or relationship message.”

    Although it originally considered modifying the definition of “transactional or relationship message” to expand the types of messages exempt from CAN-SPAM regulation, the FTC found no basis in the record to exempt certain types of messages, such as legally mandated notices, debt collection messages, copyright notices and other similar messages not already exempted under the rules.

    FTC clarifies “valid physical postal address” requirement.

    The CAN-SPAM Act requires that commercial e-mail messages include the sender’s “valid physical postal address.” The FTC has clarified that this requirement may be fulfilled by providing either the current street address of the sender or a P.O. Box or private mailbox address that is accurately registered with the U.S. Postal Service by the sender. The FTC expects that postal service registration should address concerns about identifying senders who do not comply with opt-out notifications sent via regular mail.

    “Forward to a friend” e-mails will be scrutinized by the FTC.

    The FTC considered whether “forward to a friend” e-mail messages — those originating from a commercial sender but which are then forwarded from one person to another, or those sent directly to the other by the commercial sender at the first person’s request — come under the jurisdiction of the CAN-SPAM Act. The FTC concluded that such analysis is highly fact specific, and that the use of inducements from the commercial sender, such as coupons or other awards, or express statements suggesting to forward the e-mail to a third party would be factors to consider. As part of this analysis, the FTC also will consider whether the forwarded message was sent using the seller’s own forwarding mechanism located on its Web site or if the e-mail is forwarded using the recipient’s own e-mail program.

    FTC maintains ten business day grace period for processing of opt-out requests.

    Businesses currently have ten business days following receipt of opt-out requests (i.e., a recipient’s request to not receive future e-mails) in which to effectuate such requests. After this period, businesses may be liable for continuing to send commercial e-mails to individuals that have requested to opt-out. The FTC originally suggested shortening that period from ten business days to three business days, but has concluded that there are legitimate business and operational reasons to maintain the current ten business day grace period.