FCC and FTC CAN-SPAM Rules
The Federal Trade Commission’s new rules for determining whether the primary purpose of an email message is commercial in nature became effective on March 28, 2005. The Federal Communications Commission also recently issued an order adopting the FTC’s criteria for determining, under the FCC’s wireless spam rules, whether the primary purpose of a message is commercial. We previously issued a series of news updates containing information about the CAN-SPAM Act of 2003 (“CAN-SPAM Act”) requirements generally (Updates dated Dec. 2, 2003, and Dec. 17, 2003), and about specific actions and proposals by the FCC and FTC (Updates dated March 30, 2004, and April 15, 2004).
I. FTC rules for determining when the primary purpose of an email message is commercial are now effective
The CAN-SPAM Act distinguishes “commercial electronic mail messages” from “transactional or relationship messages”. A commercial electronic mail message is “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service.” (emphasis added). “Transactional or relationship messages” include messages that: (1) facilitate a commercial transaction that the recipient has already agreed to; (2) provide warranty information; (3) provide account information; (4) provide information related to an employment relationship or related benefit plan; or (5) deliver goods or services and related updates or upgrades that the recipient is entitled to receive. The distinction is important because “commercial electronic mail messages” are required to have: (a) non-misleading subject headings and transmission information; (b) an opt-out mechanism so that a recipient can request not to receive any further e-mails at that address; (c) the physical address of the sender; (d) clear identification that the message is an advertisement or solicitation; and (e) certain labels for sexually oriented materials. “Transactional or relationship messages” may not contain false or misleading transmission information, but are otherwise exempt from most of the provisions of the CAN-SPAM Act.
The FTC has established three categories of messages, and criteria for each category, to determine whether an email message has a commercial primary purpose:
(1) Commercial only messages: If an email message is exclusively commercial, then the message is classified as having a commercial primary purpose.
(2) Messages having both “commercial content” and “transactional or relationship content”: The primary purpose of the message is commercial if either (a) a recipient reasonably interpreting the subject line of the message would likely conclude that the message contains a commercial advertisement or promotion of a commercial product or service; or (b) the message’s “transactional or relationship” content does not appear, in whole or in substantial part, at the beginning of the body of the message.1 In this context, “substantial” does not refer to volume, but rather to the nature of the content.
(3) Messages that have both commercial content and content that is neither commercial nor transactional or relationship: The primary purpose of the message is commercial if either: (a) a recipient reasonably interpreting the subject line of the message likely would conclude that the message contains the commercial advertisement or promotion of a commercial product or service; or (b) a recipient reasonably interpreting the body of the message likely would conclude that the primary purpose of the message is the commercial advertisement or promotion of a commercial product or service. Factors illustrative of this “net impression” approach include the placement of commercial content at the beginning of the body of the message; the proportion of the message dedicated to commercial content; and how color, graphics, type size, and style are used to highlight commercial content.
The FTC has also clarified that the primary purpose of an email message is “transactional or relationship” if the message consists exclusively of transactional or relationship content.
These classifications, particularly the “dual-purpose” messages, are not wholly objective and therefore make it difficult to predict liability for any given message that does not follow the CAN-SPAM Act disclosure requirements. Accordingly, you should carefully consider the classification of email messages that potentially contain both commercial and “transactional or relationship” elements to determine whether they would be deemed “commercial” under the FTC’s rules and, in appropriate circumstances, seek prior legal review of such messages.
II. FCC adopts FTC “commercial-purpose” criteria for wireless spam rules
Last summer, the FCC, pursuant to the CAN-SPAM Act, adopted rules prohibiting marketers from sending “mobile service commercial messages” (“MSCMs”), which are a subset of commercial electronic mail messages, to wireless devices without first obtaining express prior authorization from the recipient. On March 24, 2005, the FCC adopted the FTC’s rules (discussed above) for determining whether the primary purpose of an electronic mail message is commercial in nature.
The rules adopted last summer by the FCC apply to all MSCMs regardless of the sender. The FCC refused to exempt wireless carriers that send MSCMs to their subscribers. The definition of MSCM is limited to commercial messages sent to domain names designated by the wireless carriers specifically for mobile service messaging (e.g., firstname.lastname@example.org). Messages sent from a phone to a wireless phone (e.g., (202) 555-1212) and messages forwarded from a traditional email address to a wireless device are not included in the definition. However, the FCC noted that messages sent to a phone number are still subject to the requirements of the TCPA, such as the auto-dialer prohibition. To assist marketers in distinguishing a mobile address from a traditional email address, the FCC requires wireless carriers to submit all domain names (e.g., carrier.com) used to transmit mobile service messages to be included in a public wireless domain directory. The FCC urges marketers to check their databases against this directory prior to sending commercial messages on a monthly basis. There is a “safe harbor” defense for marketers that send an MSCM to a domain name that was not listed on the directory for at least 30 days prior to the initiation of the message. The directory is available at http://www.fcc.gov/cgb/policy/DomainNameDownload.html.
The express prior authorization to receive MSCMs may be oral, or in electronic or written form. At the time consent is obtained, the marketer must disclose: (1) that the subscriber is agreeing to receive commercial messages sent to a wireless device from a particular sender; (2) the identity of the entity whose product is advertised, if different from the sender; (3) that the subscriber may be charged for receiving the messages; and (4) that the subscriber may revoke consent at any time. The disclosure must also be separate from any other authorizations.
MSCMs also must satisfy all of the disclosure requirements of the CAN-SPAM Act that are applicable to “commercial electronic mail messages” (see discussion of disclosure requirements above). An additional requirement for MSCMs is that one of the opt-out mechanisms available be through the same method by which consent was obtained. For example, if the recipient was provided a short code mechanism to grant consent (such as pressing *52 on their wireless device), then the sender must provide a short code mechanism to opt out of future messages. The FCC also refused to exempt MSCMs from any of the disclosure requirements even though carriers argued that limitations on message length and screen size make it difficult to comply with all of the disclosure requirements of the CAN-SPAM Act.
Wireless messages are a potentially powerful marketing tool. However, such a campaign must be designed in compliance with the FCC’s rules and should be assessed to determine whether wireless messages have a commercial primary purpose. Failure to comply with the rules may result in fines up to $11,000 per violation. An individual MSCM may result in more than one violation if it is sent to an address which is listed in the wireless domain name registry and the recipient has not opted-in and the message fails to meet one or more of the requirements of the CAN-SPAM Act.
Please contact us if you would like further information regarding either of these important developments.
1 In other words, for the message to be deemed to have a “transactional or relationship” primary purpose, the converse must apply – the subject line must not contain a reference to a commercial advertisement or promotion of a commercial product or service and the transactional or relationship content must appear in whole or in substantial part at the beginning of the body of the message.