The Federal Trade Commission announced the release of a new Final Rule regarding the "Definitions and Implementation Under the CAN-SPAM Act" on May 12, 2008, which revises the Code of Federal Regulations implementing rules regarding CAN-SPAM, Part 316. While the Final Rule largely follows the positions of the Commission in its Notice of Proposed Rulemaking, the Commission adopted a few new interpretations of defined terms, and offered some insight regarding CAN-SPAM implementation.
Expanded Definition of Person
The Final Rule defines "person" to mean “an individual, group unincorporated association, limited or general partnership, corporation or other business entity.” This definition clarifies that CAN-SPAM obligations extend to more than just natural persons. The Commission clarified that CAN-SPAM applies to non-profit organizations that send e-mails whose primary purposes are to advertise or promote commercial products or services, even where the non-profit organization's activities are not overtly "commercial" in nature.
Modified Definition of "Sender"
Where a single e-mail message contains advertisements for the products, services, or Web sites of multiple entities, the Final Rule allows multiple marketers to designate as a single “sender” for purposes of compliance with CAN-SPAM. Under this scheme, only the designated sender is responsible for ensuring compliance with CAN-SPAM provided that: (1) the designated sender is the "sole" sender identified in the "from" line of the e-mail, (2) the e-mail offers the designated sender's own products/services as part of the e-mail, and (3) that the e-mail itself complies with the "initiator" requirements of CAN-SPAM (no false headers, misleading transmission information, or deceptive subject lines; valid postal address; working opt-out link; and proper identification of the messages commercial or sexually-explicit nature). If any of these conditions is not met, then all marketers in the message will be liable as "senders" (not just as "initiators") under CAN-SPAM. Note that if the designated sender receives a list of proposed e-mail addresses from a non-designated sender, the designated sender must scrub that list against its own opt-out list before sending the message.
Sellers and Affiliate Marketers Potentially Liable for E-Mails of their Affiliates
The Final Rule breaks new ground in its treatment of affiliate marketing schemes. Based on the concept of "procurement" or "inducement" of the sending of commercial e-mails, which trigger liability under CAN-SPAM, the Commission stated that "by agreeing in advance to pay an affiliate for sales to persons who come to a marketer's Web site as a result of an affiliate's referral, a seller or marketer creates an inducement for the affiliate to originate or transmit commercial e-mail messages to the public." Thus, according to the Final Rule, the seller is a "sender" that induces the affiliate to initiate messages on its behalf, which means that sellers could be held liable for the CAN-SPAM violations of their affiliate marketers to whom they pay consideration for referral Web traffic. In fact, unless the affiliate is offering its own products and services, it will only be an "initiator" of the commercial e-mails, while the seller will be held to the full responsibilities as a "sender" under CAN-SPAM.
It is not clear from the Final Rule how the Commission would view multi-tiered affiliate marketing schemes. For example, it is not clear whether a seller who pays an affiliate marketing company to promote its products would be responsible for violations of CAN-SPAM by a sub-affiliate of the affiliate marketing company.
Definition of "Valid Physical Postal Address"
The Final Rule clarifies that a sender may comply with section 7704(a)(5)(A)(iii) of the Act, which requires inclusion of the sender's "valid physical postal address" in any commercial e-mail message, by including the sender’s current street address, a Post Office box the sender has registered with the United States Postal Service, or a private mailbox the sender has registered with a commercial receiving agency that is established pursuant to United State Postal Service regulations. The use of a Post Office box or a private mailbox is permitted only if the sender "accurately" registers such mailboxes.
No Fees and No Personal Information for Opt-Out
The Final Rule clarifies that opt-out mechanisms cannot require requesters to pay a fee, provide information other than their e-mail addresses and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single page on an Internet Web site.
While the Commission did not specifically issue a rule on forward-to-a-friend schemes, it addressed the application of CAN-SPAM to forward-to-a-friend e-mails in its Statement of Basis and Purpose. The Commission stated that application of the Act to a forward-to-a-friend message usually turns on whether the seller offers to pay for or provide other consideration to the forwarder. If a seller offers consideration or other inducements for forwarding a commercial message, it must comply with CAN-SPAM’s requirements as a "sender." The Commission observed that even de minimus consideration, such as coupons, entry in a sweepstakes, or discounts on goods and/or services are considered consideration under the Act. However, merely "exhorting consumers to forward a message does not, absent more, subject the seller to "sender" liability under the Act."
The Commission addressed two methods of forwarding-to-friend programs. First, and most commonly, sellers include functionality on their Web site that permits site visitors to click on a button and initiate a message to an email recipient. The Commission stated that when a seller's Web site includes such functionality, it is engaged in the "routine conveyance" of the message, and is not subject to the Act. Second, when a seller sends a message to someone, and the recipient of that commercial e-mail use his or her own e-mail program to forward the commercial e-mail to others, CAN-SPAM will not hold the seller liable unless it induced or procured the forwarding of the email by offering some form of consideration as discussed above.
The provisions of the Final Rule will become effective 45 days after its publication in the Federal Register.