Introduction

On May 12, 2008, the Federal Trade Commission (“FTC” or the "Commission") released final rule provisions ("Final Rules") under the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 ("CAN-SPAM" or "the Act"). The provisions are intended to clarify the Act's requirements and will become effective 45 days after published in the Federal Register.

I. Modified Definition of "Sender" of Commercial Email

The Act originally defined "sender" as "a person that both initiates a commercial electronic email message and whose product, service or Internet website is advertised or promoted by the message. In response to Commission concerns regarding multi-marketer e-mails, the definition of “sender” has now been modified to make it easier for the Commission to determine which of multiple marketers that utilize a single e-mail message is responsible for complying with the Act’s opt-out requirements. 1

The definition of the term "sender" is the same as the definition of that term in the Act, provided that, when multiple senders products, services or Internet website are advertised or promoted in a single electronic mail message, each such person that is within the Act's definition will be deemed to be a "sender" of that message if such person (a) is within the Act's definition of "sender," (b) is identified in the "from" line as the sole sender of the message, and (c) is in compliance with provisions of the Act pertaining to "initiators"2 of commercial e-mails. Thus, the designated sender, but not the other marketers using the same e-mail message, must honor opt-out requests made by recipients of the message and include its physical postal address in the message.

The modified definition of "sender" comports with consumer expectations and provides marketers flexibility to structure their messages in a way that alleviates redundant obligations for the various marketers in a single e-mail, while ensuring that recipients of such messages receive the benefit of the Act's core opt-out protections. The operative consideration is in the "from" line of the message,3 which objectively establishes a single designated "sender," thereby reducing the Act's compliance burdens. 4

A designated "sender," for purposes of a multi-marketer e-mail, must, in addition to identifying itself as the sole sender of the message, include its non-deceptive name, trade name, product or service name in the "from" line of the e-mail. If the designated sender is not in compliance with these provisions, then all marketers in the message will be liable as sender, and must comply with all of the Act's provisions.

The Final Rule issued by the FTC also establishes that a “sender” of commercial e-mail must include its current street address, a Post Office box that the sender has registered with the United States Postal Service, or a private mailbox that the sender has registered with a commercial mail receiving agency that is established pursuant to United States Postal Service Regulations. In short, a "sender" can include an accurately-registered post office box or private mailbox established under United States Postal Service regulations to be considered a "valid physical postal address" under the Act. 5

A. Third-Party List Providers

Third-party list providers, who do nothing more than provide a list of names to whom others send commercial e-mails are not required to honor opt-out requests. Due to the variety of situations in which a list owner might be involved in a commercial e-mail, a list owner must honor opt-out requests only if it qualifies as the "sender" of a commercial e-mail (i.e., it is an "initiator" and its product, service, or Internet website are "advertised or promoted" in the e-mail). If it does not qualify as a "sender" under the Act, a third-party list provider may also avail itself of the multi-marketer, single "sender" designation, discussed in the previous section.

B. No Safe Harbor for E-mail Messages Sent by Affiliates

As a result of constantly evolving e-mail marketing models, the Commission has decided against creation of a "safe harbor" for those companies whose products, services or websites are advertised by affiliates or other third parties.

In a typical affiliate marketing scenario, the affiliate originates and transmits the e-mail message and is, therefore, an "initiator." The marketer, however, does not originate or transmit the message, but does "procure" the origination of the message.6 Under the Act, by agreeing in advance to pay an affiliate for sales to persons that come to a marketer's website as a result of an affiliate's referral, a seller or marketer creates an inducement for the affiliate to initiate or transmit commercial e-mail messages to the public on its behalf. Further, in the typical affiliate program, the marketer is a "sender" because it product, service, or website is promoted in the e-mail message, and the affiliate is only the "initiator."

It is only when an affiliate promotes its own product, service, or website along with that of the marketer that the affiliate is also a "sender" under the Act. In such a case, under the Final Rule, the affiliate may serve as the "designated sender," provided that it is listed in the "from" line of the message and is in compliance with the provisions relating to designated senders. If, however, the affiliate promotes its own product, service, or website in addition to that of the marketer, but does not comply with the designated sender requirements, then both the affiliate and the marketer are liable as "senders."

In short, the modified definition of "sender" gives marketers the necessary flexibility to market their products using e-mail on their own or in conjunction with other parties, while at the same time preserving the protections afforded to recipient consumers by CAN-SPAM.

II. Prohibition Against Failure to Effectuate an Opt-Out Request Within Ten Business Days

Despite various proposals to shorten the time period for honoring an opt-out request, the Commission has retained the general prohibition against senders initiating the transmission of a commercial message to a recipient more than ten (10) business days after the senders have received the recipient’s opt-out request. To date, there is no time limit imposed for how long an opt-out request will remain in effect.

The Commission has also stated a clear prohibition on charging a fee or imposing other requirements on recipients that wish to opt-out from the receipt of future commercial e-mail. In addition to proscribing payment of a fee to opt-out, an e-mail recipient cannot be required to provide information other than his or her e-mail address and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single Internet web page to opt-out of receiving future e-mail from a sender.

III. Definition of "Transactional or Relationship Message"

CAN-SPAM designates numerous categories of e-mails as "transactional or relationship messages" and excludes these messages from its definition of "commercial electronic mail messages,"7 thus relieving them from most of the Act's requirements and prohibitions.8

A. Transactions That do Not Involve an Exchange of Consideration

Many services are undoubtedly engaged in commerce and offer consumers goods or services that are "commercial" in nature, whether or not they involve an exchange of consideration. Messages sent pursuant to a relationship in which no consideration passes generally fall into two (2) categories.

First, messages with a primary purpose of "facilitating, completing, or confirming a commercial transaction that the recipient has previously agreed to enter into with the sender." Second, an e-mail, the primary purpose of which is "to deliver goods or services, including product updates or upgrades, that the recipient is entitled to receive under the terms of a transaction that the recipient has previously entered into with the sender."

The term "commercial transaction" encompasses situations in which there has been no exchange of consideration between the sender and the recipient. In fact, the term "commercial electronic message," as defined by the Act, includes an e-mail the primary purpose of which is the advertisement or promotion of a commercial product or service that is free and does not involve the exchange of consideration, so long as it is a "commercial product or service" (including content on an Internet website operated for a commercial purpose).

B. Messages Sent to Effectuate or Complete a Negotiation

Electronic messages sent to effectuate or complete a negotiation are considered "transactional or relationship messages". To the extent that negotiation is considered a "commercial transaction" that a recipient has previously agreed to enter into, such messages are considered transaction or relationship if they were sent to facilitate or complete the negotiation. However, the term "transactional or relationship message" does not include an initial unsolicited message that proposes a transaction and attempts to launch a negotiation by offering goods or services. Likewise, after a party has terminated a negotiation, an e-mail from the other party seeking to restart the negotiations would not be a "transactional or relationship message."

C. Electronic Newsletter Subscriptions and Other Content That a Recipient is Entitled to Receive as a Result of a Prior Transaction With the Sender

Where a recipient has entered into a transaction with the sender that entitles the recipient to receive future newsletters or other electronically delivered content, e-mail messages with a primary purpose to deliver such products or services are deemed transactional or relationship messages. When a recipient subscribes to a periodical delivered via e-mail, transmission of that periodical to that recipient falls into the category of a "transactional or relationship message," which includes good or services that the recipient is entitled to receive under the terms of a transaction that the recipient has previously agreed to enter into with the sender, provided the periodical consists exclusively of informational content or combines informational and commercial content.

IV. Applicability of the Act to "Forward-to-a-Friend" Email Marketing Campaigns

"Forward-to-a-friend” e-mail is a type of commercial e-mail that can take a variety of forms. In its most basic form, a person (the "forwarder") receives a commercial e-mail message from a seller and forwards the e-mail message to another person (the "recipient"). Other scenarios include the use of a web-based mechanism, in which a seller's web page enables visitors to the seller's website to provide the e-mail address of a person to whom the seller should send a commercial e-mail.

Generally, if the seller "procures" the origination or transmission of the forwarded message, or offers something of value in exchange for forwarding a commercial message, the seller must comply with the Act’s requirements, such as honoring opt-out requests.9 A seller that offers a web-based "click-here-to-forward" mechanism, but does not encourage visitors to forward a message or offer to pay or provide other consideration in exchange for forwarding the message, would be engaged in the "routine conveyance" of the message and, therefore, not be an "initiator" of the message. 10

Whether a seller or forwarder is a "sender" or "initiator" is a highly fact specific inquiry. The application of the Act to a "forward-to-a-friend" message likely often will turn on whether the seller has offered to pay or provide other consideration to the forwarder.

For further information on the Final Rules, and CAN-SPAM Act questions generally, contact Klein Zelman Rothermel LLP.