New Prohibitions on Sending Commercial Electronic Messages to Canadians

January 05, 2015

Understand how Canada’s Anti-Spam Legislation works and how to comply with it.

By Larry Munn and John L. Rogers

On July 1, 2014, one of the world’s toughest anti-spam laws came into effect: Canada’s new Anti-Spam Legislation, commonly known as “CASL.” CASL prohibits the sending of a commercial electronic message to an electronic address, unless consent has been given by the intended recipient and certain legislated content has been included in the message. CASL regulates all commercial electronic messages accessed within Canada, and so will affect franchisees and franchisors equally. Its stated aim is to promote efficiency in commerce by regulating electronic communication, but it also significantly affects a business’ ability to send electronic messages to Canadians. With fines up to $10 million for an organization and $1 million for an individual for failure to comply, it’s very important to understand how CASL works and how to comply with it?

What is a “Commercial Electronic Message”?

CASL regulates “commercial electronic messages” or CEMs accessed in Canada. It only affects commercial messages, those which encourage participation in a commercial activity, such as the purchase of goods or services. CASL does not apply to faxes or broadcast messaging such as tweets and posts on social media, but rather email communications, particularly promotional emails seeking new business, are clearly at issue. If the message is accessed in Canada, even if sent by a business outside of Canada, CASL will apply.

How Can my Business Obtain Consent to Send CEMs?

CASL requires that consent be given by a person or entity, prior to a commercial electronic message being sent to that person or entity. For many businesses operating in North America, this will come as a surprise. CASL is quite different from similar legislation in the United States, commonly known as “CAN-SPAM.” In general, CAN-SPAM permits the sending of CEMs so long as the recipient has not opted out of receiving them. CASL, in contrast, demands that the sender opt in, by taking a step to consent to receiving CEMs. Such a step cannot be made a condition of buying of a product, and must be received prior to sending any CEM. Consent cannot be requested via an email seeking consent. When preparing a consent form, CASL requires that the consent sets out “clearly and simply” the purposes for which consent is being sought, information identifying the person seeking consent, including the name under which he carries on business if different from the legal name, along with the address and contact details. An entity obtaining consent must be the same one that will be sending the CEMs. An ideal method of obtaining consent by a franchisor or franchisee would be to post a link to a sign-up page on its webpage and in its social media. The onus is on the sender of a CEM to prove it had the consent of the recipient before the message was sent.

But We Already Have an E-Mailing List!

Unfortunately, mailing lists that include email addresses located in Canada are going to need to be updated for the consent requirement. Franchisors and franchisees looking to advertise and promote their franchised businesses by building databases through electronic means must be keenly aware of CASL’s provisions. Such database lists may be inadequate to prove that the sender of CEMs has consents of the intended recipients.

What About Existing Business Relationships?

In some limited circumstances, consent may be implied, including where there is an “existing business relationship” between the sender of a CEM and the intended recipient. Such a relationship is defined in CASL as any recipient who or which has, within the last two years, purchased or leased products, goods or services from the sender, has signed a written contract or has accepted an investment opportunity with the sender. If an existing business relationship does exist, then the intended recipient is deemed to have given implied consent to continue receiving CEMs from the sender, but limited in time as mentioned in the next paragraph. This is a very important exception for ongoing franchisor/franchisee relationships and established relationships between franchisees and their customers. As long as the relationship continues, there is implied consent to send CEMs, but only continuing for two years after the last contract for supply of goods and services ends. Once two years have passed, a sender cannot continue to send promotional or other information by CEM unless a new consent is obtained before or when the existing contractual relationship ends. Ascertaining when a “business relationship” based on implied consent expires can be tricky. To avoid any chance of liability under CASL, a sender’s best course is to obtain written consent complying with CASL from existing relationships with persons or entities when entering into new business relationships.

What Content Must be Included in a CEM under CASL?

A sender’s obligations under CASL do not stop once it has a written consent from an intended recipient of CEMs. Again, CASL requires that the sender identify itself and provide contact information. Further, all CEMs must include an “unsubscribe” mechanism. This must remain open for 60 days after the CEM is sent and once received, must be given effect without delay, at most within 10 business days. Franchisors and franchisees must ensure that all CEMs sent to Canadian persons or entities include this requisite information.

Is There a Defense?

CASL includes a potential defense to non-compliance of “due diligence” by the sender. To avail itself of such a defense, a franchisor or franchisee must show that it took all reasonable steps to comply with CASL, although consents were not obtained from all recipients of CEMs the sender sent. The sender will also need to demonstrate that it has taken corrective measures to comply fully with CASL in the future.

What is the Key Lesson for Franchisors and Franchisees?

Here are some guidelines for franchisors and franchisees to follow to comply with CASL.

Appoint a staff person to be in charge of compliance with CASL and establish formal policies and procedures for all staff, using the information below. Review your existing emailing lists and note which Canadians (persons and entities) listed have given express or implied consent to receive CEMs and the dates of their consents. Show two-year expiry dates of consents implied by “existing business relationships.”
Set up a binder with a current copy of your emailing list, copies of all express consents, plus notes of implied consents.
Seek fresh consents in person at your office or franchised business and by using a website or social media. Continue to update your binder with a record of the date and method of each new consent. For consents that are received by email, set up an automatic email reply to the recipient requesting confirmation. This way the consent will be verified and documented.
Ensure that your CEMs are only sent to intended recipients who have given consent and that the CEM includes your purpose in sending it, your contact information, including your legal name (and any business name you use), your complete street address and telephone number and your email address.
Include in each CEM you send an “unsubscribe” option for the recipient to complete and return by email if the recipient does not wish to receive some or all future CEMs from you (you may show a selection of categories of CEMs that recipients may choose to maintain or refuse). Update and test the “unsubscribe” mechanism regularly, to ensure it continues to operate effectively.
If a franchisor or franchisee is sending the CEM on behalf of each other, then this must be noted and the above contact information for both must be included. Also, the same contact information must be included for any affiliate involved in the CEM.
To obtain toolkit guidance directly from CASL, visit http://casltoolkit.com/. The Internet has several other sites searchable under “CASL.”

Larry Munn is a partner and John L. Rogers is associate counsel for the law firm Clark Wilson LLP. Find them at fransocial.franchise.org.