AN OVERVIEW OF CANADA S ANTI-SPAM LEGISLATION

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1 AN OVERVIEW OF CANADA S ANTI-SPAM LEGISLATION These materials are provided for general information only and do not constitute legal advice. Readers are encouraged to seek legal advice for any particular situation. Robert Pakrul Direct Line:

2 AN OVERVIEW OF CANADA S ANTI-SPAM LEGISLATION Most of Canada s Anti-Spam Legislation ( CASL ) will come into force on July 1st, After that date, organizations will either have to have the prior consent of intended recipients of commercial electronic messages, or ensure that the messages being sent, or the recipients of those messages, are exempt from the requirements to get consent. Some technology-related provisions of CASL are deferred until 2015, with private rights of action only becoming available starting in The legislation, passed in 2010 and fully entitled An Act to promote the efficiency and adaptability of the Canadian economy by regulating certain activities that discourage reliance on electronic means of carrying out commercial activities, and to amend the Canadian Radio-television and Telecommunications Commission Act, the Competition Act, the Personal Information Protection and Electronic Documents Act and the Telecommunications Act, is designed to deter the most dangerous forms of spam in Canada. However, CASL will impact all organizations due to the broad scope of the regulatory program it introduces. The full text of CASL and its regulations can be found at the Industry Canada website eic/site/030.nsf/eng/h_00211.html. WHAT S COVERED? Commercial electronic messages (CEM), essentially, . All . The scope of CASL is far-reaching with significant implications for entities carrying on business in Canada and foreign entities that send CEMs into Canada. Malware, spyware, pretexting and the harvesting of electronic address and personal information will also be regulated under CASL. THE GENERAL PROHIBITION DON T SEND UNSOLICITED CEMS Under CASL, it is prohibited to send or cause or permit to be sent to an electronic address a commercial electronic message unless (a) the person to whom the message is sent has consented to receiving it, whether the consent is express or implied; and (b) the message complies with prescribed form and content requirements. GENERAL REQUIREMENT CONTENT OF MESSAGES CASL requires a CEM to be in a form that must: (a) set out prescribed information that identifies the person who sent the message and the person if different on whose behalf it is sent; (b) set out information enabling the recipient to readily contact one of the persons referred to in paragraph (a); and (c) set out an unsubscribe mechanism complying with CASL standards West Georgia Street, Vancouver B.C. Canada V7Y 1B8 Phone: Fax: ahbl.ca

3 Organizations will want to undertake a review of the content of all their CEMs to ensure they comply with these provisions. Existing unsubscribe mechanisms may not meet the new standards set out in the CASL. In addition, there is a duty to ensure that the contact information about the sender remains valid for at least 60 days. EXCEPTIONS Having cast a broad net of prohibition, CASL provides some relief by designating certain exceptions. Firstly, the general prohibition on sending CEMs does not apply to a CEM sent in a personal or family relationship or sent as an inquiry relating to the recipient s own commercial activity. In addition, the general prohibition does not apply to CEMs that solely: a) provide requested product/service quotes; b) further or complete an ongoing commercial transaction previously agreed to; c) provide product warranty, recall, upgrade or similar information; d) deal with ongoing subscriptions, memberships or similar relationships; or e) concern an employment relationship. The Regulations under CASL also exclude CEMs from all provisions of CASL if: they are sent within an organization; they are sent between organizations that already have a relationship, if the message concerns the activities of the organization to which the message was sent; they are sent on platforms where identification and unsubscribe information is conspicuously published and readily available to users, and where duplication of an unsubscribe or identification message would be repetitious; they are sent and received within limited access secure and confidential accounts (such as messages which a bank might send to an account holder); they are sent in response to a complaint, inquiry or request; they are sent on behalf of registered charities or political parties for fundraising purposes. CASL also prescribes rules permitting certain first-time contact by to referral prospects, but only if the detailed CASL rules are followed. OTHER PROHIBITIONS CASL also regulates the alteration of certain transmission data relating to a CEM, and prohibits the installation of computer programs such as cookies on recipient computers. Again, a prescribed form of consent would be needed, and certain exceptions are prescribed West Georgia Street, Vancouver B.C. Canada V7Y 1B8 Phone: Fax: ahbl.ca

4 CONSENT As noted above, with consent, CEMs can be sent. CASL sets out guidelines for obtaining consent, either express or implied. Consent can be oral, but a record of the consent needs to be retained. A person seeking consent must provide to the recipient certain information regarding the purpose for which consent is sought. Further, prescribed information identifying the person seeking consent must be disclosed to recipients. Therefore, consents previously obtained and relied on to populate existing databases might not continue to be valid. Organizations will have to ensure on an ongoing basis that the purposes for which consent was originally obtained continue to apply to the substance of all the CEMs subsequently sent. This may limit the ability to use database lists in the future for a secondary use, and when subsequently modifying CEMs a check-back may be required to the scope of the initial consent obtained. CASL also contains some fairly complex rules if the intent is to have consent be available to future unknown third parties who may conduct co-marketing or similar arrangements. Consent will be implied in certain circumstances, creating further de facto exemptions for: a) existing business relationships, as defined; b) existing non-business relationships, as defined; c) certain circumstances where the address of the recipient was made publicly available or voluntarily provided. Commercial organizations will need to focus on the definition of existing business relationship set out in CASL. That definition relies on relationships which are current, defined as being within the past two years (or an inquiry or application made in the last six months). As a result, stale entries on customer mailing lists may need to be purged unless another exemption or consent provision can be relied on. The definition of existing non-business relationship deals with memberships, volunteers, and donations. It establishes a similar two-year purge rule. TRANSITION PERIOD For existing relationships involving CEMs, CASL will provide for a three-year transition period under which consent can continue to be implied (unless expressly revoked). WHY SHOULD I CARE? PENALTIES Violators of CASL can be liable to onerous administrative monetary penalties of up to $10 million per organization and up to $1 million per individual. Directors and officers of organizations will want to inform themselves of the potential risks for vicarious liability. Certain conduct also constitutes a statutory offence and, commencing in 2017, private rights of action and potential class actions will be possible West Georgia Street, Vancouver B.C. Canada V7Y 1B8 Phone: Fax: ahbl.ca

5 Enforcement of CASL and its administrative monetary penalties has been delegated to the Canadian Radio- Telecommunication Commission ( CRTC ), the Competition Bureau, and the federal Privacy Commissioner. In light of its expanded authority and mandate, the CRTC has published regulations and guidance outlining the form and content to be included in messages and setting out other requirements on the alteration of transmission data in electronic messages, and the installation of computer programs on recipient computers. These regulations will come into force together with the CASL. START PLANNING NOW It is important to understand the CASL rules and verify that practices are harmonized with those rules. Many organizations in Canada are now considering whether to use the CASL transition period for a campaign of seeking express opt-in consent from existing entries on distribution lists in order to confidently maintain them on distribution lists into the future. The act of requesting consent is itself potentially a spam event, so the exemptions and the transition period take on added importance. Organizations that purchase lists may not be able to ensure that the vendor has been in compliance. This will be a new area of risk analysis to be considered on a case by case basis. It may be necessary to start including CASL compliance as a representation and warranty of the vendor in certain transactions. CASL provides that on the sale of a business, previously obtained consents can pass to the new owner of the business. FOREIGN ORGANIZATIONS YOU TOO Once in force, the CASL will regulate anyone sending CEMs to Canadian recipients. Entities outside of Canada, such as U.S. businesses, could be susceptible to penalties under this legislation. There is nothing in the CASL which limits its effect to domestic senders of CEMs. Many American companies may be unaware that compliance with Canadian Do Not Call rules and existing US anti-spam rules does not necessarily make them automatically compliant with the new CASL rules. While Canada is following other OECD countries by finally implementing its own anti-spam regulation, CASL goes further than many other OECD initiatives by generally requiring a separate and express opt-in consent, rather than an opt-out regime. FOR MORE INFORMATION These materials are provided for general information only and do not constitute legal advice. Readers are encouraged to seek legal advice for any particular situation. Please contact Bob Pakrul, a member of the Alexander Holburn Information and Privacy Practice Group listed below for assistance: Robert Pakrul West Georgia Street, Vancouver B.C. Canada V7Y 1B8 Phone: Fax: ahbl.ca

6 Canada s Anti-Spam Legislation (CASL) What do you need to know? Canada's new Anti-Spam Legislation, or CASL for short, was passed in December and will come into force on July 1, Originally conceived primarily as a law to counter spam, CASL will have a major impact on how Canadian businesses conduct operations and market their products. Almost all organizations will need to make changes to their practices for sending commercial electronic messaging, or they will face significant new penalties. CASL will be enforced primarily by Industry Canada and the Canadian Radio-television Telecommunications Commission ( CRTC ). This flow sheet is intended to assist you with addressing and identifying where your current business practices may not be compliant with this new legislation. Overview of CASL The general rule is that express consent must be obtained from intended recipients, subject to a proviso that implied consent may be used within specifically defined circumstances such as a contractual relationship with a recipient. The basic prohibition contained in CASL is against sending "commercial electronic messages" unless the recipient has consented to receiving the message and the message contains certain prescribed information, including the identity of the sender and the sender's contact information, as well as the unsubscribe mechanism. Several broad categories of messages are excluded entirely from the prohibition or, while governed by it, will have no consent requirement. When does CASL apply? The legislation will apply to your electronic message if its content (including the website to which it refers and the contact information it provides) encourages participation in a commercial activity, even if it is a non-profit activity. CASL will apply if the message contains or promotes an offer to purchase, sell, barter, or lease a product, goods, a service or an interest in land. If the message announces or offers a business investment or gaming opportunity or if it promotes a person (even their personal image), as being a person offering goods, services or gaming, investment or business opportunities, CASL will apply.

7 Page 2 DISCLAIMER This document contains general information about certain elements of Canada s Anti- Spam Legislation only. It is not legal advice. The application of Canada s Anti-Spam Legislation to specific factual circumstances can be complex. If you have a specific legal issue or question, you are encouraged to contact legal counsel.

8 Page 3 Express Consent Have you asked for the express consent of the recipient, verbally or in writing (by prior to July 1st, but NOT by after July 1st message)? (Section 1(3) and CRTC Regulation 4) If yes, did your request indicate the purpose for which the consent was sought? (Section 10(1)(a)) If you do not have express consent or have not indicated the purpose for which consent was sought then consider whether your communication falls under the implied consent exceptions. If yes, then include the contact information and the unsubscribe mechanism before sending your message and you are likely in compliance with CASL.

9 Page 4 Implied Consent: Existing Business Relationship Have you sent an electronic message to the recipient, in respect of a purchase, sale, a lease of goods, services, land or an interest in land, a written contract or the acceptance of a business investment or gaming opportunity? (A three-year grandfather period begins July 1, 2014; after it ends the dealings must have occurred within two years of the message.) (Sections 10(9)(a) and 10(10)) If yes, then include the contact information and unsubscribe mechanism before sending your message. If no, is the message sent to a person from whom an application or enquiry was received? (A three-year grandfather period begins July 1, 2014; after it elapses one of the dealings must have occurred within 6 months of the message.) (Sections 10(9) and 10(10)(e)). If yes, the message is to a person from whom an application or enquiry was received then include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, was the address of this person conspicuously published, and does your message relate to the recipient s function or activities? (Section 10(9)(b)). If yes, has the recipient ever indicated they did not want to receive your messages? (Section 10(9)(b)(c)) If no, has the recipient given you their address, and is your message related to the recipient s function or activity? Section 10(9)(c) If yes, then you probably cannot send your message unless another exception is applicable. If no, include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, consider the next exception.

10 Page 5.Implied Consent: Existing Non-Business Relationships Does the message arise from a recipient s gift/donation to a registered charity? (Section 10(13)(a). A three-year grandfather period begins July 1, 2014; after it ends the dealing must have occurred within 2 years.) If yes, include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, does the message arise from a gift/donation to a prescribed political party/candidate made by the recipient? (Section 10(13)(a). A three-year grandfather period begins July 1, 2014; after it ends, this must have been received within the past 6 months) If yes, include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, does it arise from the recipient s volunteer work in relation to either of these activities? (Section 10(13)(b). A three-year grandfather period begins July 1, 2014; after it ends, this must have occurred within two years of the message.) If yes, include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, does it arise from the recipient s membership (as defined) in a prescribed club, association or voluntary organization? (Section 10(13)(c). A three-year grandfather period begins July 1, 2014; after it ends one of the dealings must have occurred within two years of the message.) If yes, include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, consider the exceptions on pages 6-9.

11 Page 6 Exceptions: Organizations Is the message exchanged between two employees of the same organization? Industry Canada Regulation 3(a) If yes, you can send your message. If no, is the message an inquiry related to the recipient s commercial activities? Section6(5)(b) If yes, you can send your message. If no, does the message provide employees with information on their employment? Section 6(6)(e) If yes, include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, consider the next exception.

12 Page 7 Exceptions: Products and Services Does the message answer an information request (for example, a request for a price, quote, estimate, etc.)? Section 6(6)(a) If yes, then include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, does it facilitate, complete, or confirm an already concluded commercial transaction? Section 6(6)(b) If yes, then include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, does it provide information on warranties, product recalls or safety information for a product already bought by the recipient? Section 6(6)(c) If yes, then include the contact information and unsubscribe mechanism before sending your message in order to comply with CASL. If no, does it provide information concerning the use of a product bought by the recipient subject to a subscription, membership or loan? Section 6(6)(d) If yes, then include the contact information and unsubscribe mechanism before sending your message. If no, does it deliver a product, goods or a service, including product updates or upgrades, that the recipient is entitled to receive under the terms of a transaction that they had previously entered into with the sender of the message? Section 6(6)(f)

13 Page 8 Exceptions: Business to Business, Charities and Political Parties Is the message sent to an employee, representative, consultant, or franchisee of your organization s activities? Industry Canada Regulation 3(a)(i) If yes, you can send your message. If no, is the message sent to an employee, representative, consultants or franchisee of another organization which your organization has a relationship with, concerning the recipient s activities? Industry Canada Regulation 3 (a)(ii) If yes, you can send your message. If no, is the primary purpose of the message to solicit funds for a registered charity or recognized political party or candidates? Industry Canada Regulation 3(g)(h) If yes, you can send your message. If no, consider the next exception.

14 Page 9 Exceptions: General Is the message sent pursuant to your legal obligations or the enforcement of a right of yours? Industry Canada Regulation 3(c) If yes, you can send your message. If no, is the message sent and received by an electronic messaging service with consent and the prescribed unsubscribe mechanism? Industry Canada Regulation 3(d) If yes, you can send your message If no, is the message sent to a limited-access, secure, confidential account? Industry Canada Regulation 3(e) If yes, you can send your message If no, does the message comply with a foreign law that contains similar prohibitions against unsolicited electronic messages as prescribed in the regulations? Industry Canada Regulation 3(f) If yes, you can send your message If no, is the message a referral * within the meaning of the regulations? Industry Canada Regulation 4(1) * A referral by any individual who has an existing business or non-business relationship, a family or a personal relationship with the sender and recipient of the message. A referral message must contain the full name of the individual(s) who made the referral and state that the message was sent as the result of the referral. If no, consider if it is a personal message under the requirements for sending personal messages on page 10.

15 Page 10 Personal Messages Are you sending this message under your personal name? Section 6(5)(a) If yes, are you linked to the person by a family relationship? Industry Canada Regulation 2(a) If no, you cannot send your message unless a prior exception applies or you have express consent. If yes, you can send your message If no, is it reasonable to conclude that you are in a personal relationship with that person based on factors such as the sharing of interests, experiences, opinions, information, frequency of communication and having met in person? Industry Canada Regulation 2(b) If no, you cannot send your message unless a prior exception applies or you have express consent.

16 Page 11 Content of Message Unsubscribing Mechanism Is the name under which you do business, your mailing address and either a phone number to an agent or message service or your web or address included? Section 10(1)(b) and CRTC Regulation 4. If yes, if this message was sent on behalf of another person or organization, did you also identify that person or organization and indicate which of you is sending the message? CRTC Regulation 4. If yes, instead of indicating your contact information, did you indicate the contact information of the ultimate sender? CRTC Regulation 4 If yes, did you provide an electronic unsubscribe mechanism that includes an address or link to a website for the recipient to use? Section 6(2)(c) and 11(1). If yes, will this mechanism be available for 60 days and will the unsubscribe request be acted upon within 10 days after a request? Section 11(2) and 11(3) If yes, your unsubscribe mechanism is compliant

17 Page 12 For More Information These materials are provided for general information only and do not constitute legal advice. Readers are encouraged to seek legal advice for any particular situation. For assistance, please contact: Robert W. Pakrul Alexander Holburn Beaudin + Lang LLP

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