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The passage of the national law CAN-SPAM Act of 2003 finally sets a uniform legal standard for email marketing practices. Although ambiguous in several areas, the law is a tremendous step forward in terms of establishing some order in the chaos. This article breaks down the new rules, and helps demystify the new restrictions regarding email marketing.

The Big Picture
Congress felt an urgent need to take some form of action regarding the proliferation of Unsolicited Commercial Email (UCE). As they state in the initial findings, “The convenience and efficiency of electronic mail are threatened by the extremely rapid growth in the volume of UCE.” At 21 pages long, the law is fairly complex, and doesn’t even specify details about some of it’s own restrictions. It does admit that it is a work in progress, and actually requires that it be updated and revised in several areas, such as the establishment of a national “Do Not Email” registry and wireless messaging. However, despite its shortcomings, it does establish some basic rules and definitions that the email community will now have to reckon with.

Solicitation, Or Not?
The new law regulates only commercial email. And of commercial messages, there are a couple of different categories. Emails that are transactional or relationship messages in nature are permitted. This means that you can safely email an invoice, account statement, order or shipment confirmation, or other message that contains information about a business relationship that already exists. You can also send out a recall notice, or an upgrade offer for something that the recipient has already purchased.

On the other hand, if the primary purpose of an email is selling a product or service, the rules are a bit more complex about how it is to be treated. The email must be clearly identifiable as an advertisement, although the law does not specify how that needs to be done. Also, the recipient must be able to request that no further solicitations be sent from the sender, by a means that is clearly indicated in the email.

The Sender Defined
The sender or initiator of an email is the company whose product or service is being marketed in the email. In the case of separately operated business units, each brand is considered a separate sender. For example, consider the case of a company like PepsiCo that owns several companies like Frito-Lay and Taco Bell. Each operating company, Frito-Lay and Taco Bell needs to maintain their own suppression list, without needing to share information between them, since each is an autonomous unit.

Affiliate marketing is another story. The litmus test is, which is the company that primarily stands to benefit (over 50%) financially from sales gained thru the email? Whichever company this is, will likely be the initiator of the email, even if they did not provide the list. In the case of a legal problem, the initiator is going to pay. Companies can no longer afford to allow their brands to be marketed by affiliates who violate the law, as the fines will come after the brand holder, not just the sender. This will in theory eliminate the lax attitude toward list sharing that has resulted in out of control affiliate marketing.

Sender’s Return Address
The sender’s return email address has to be functional for a minimum of 30 days after sending a message to receive opt-out requests. In addition, a valid postal mailing address must now be included in all mailings. This is a simple requirement to fulfill, and is also mandatory under the new law.

Ability To Opt Out From All Further Communication
Recipients must be able to opt out from ALL further communication from a sender. For example, if recipient A is on the contact list for both salesperson X and salesperson Y, and the recipient opts out of all further communication from a mailing sent using X’s list, they must not receive a subsequent mailing from person Y. This can be a little tricky for simplistic list management systems that do not provide a way to opt out from all lists for a particular sender, but is absolutely required under the new law.

Predatory and Abusive Email Is Prohibited
The new law is very clearly designed to attack the most offensive unethical mailers: fraud and pornography. Once this front line of the spam problem has been addressed, there may or may not be further action from the federal government. Many different groups wanted to influence the final legislation, but lawmakers felt that addressing what the majority of their constituents consider to be offensive was the first priority. As such, the three main areas of email abuse addressed under the law are deceptive subject lines, disguising the source of email, and harvesting of email addresses.

  • No Deceptive Subject Lines
    A common practice of unethical mailers has been use of deceptive subject lines. According to the new law, if “a subject heading of the message would be likely to mislead a recipient” then it is a violation.

  • No Disguising The Source Of Email
    Another practice of unethical mailers has been using false or misleading return address information. The new law states that use of false return email addressing, use of false IP addressing of the server used for sending is a violation. Furthermore, it is unlawful if “the person initiating the message knowingly uses another protected computer to relay or retransmit the message for purpose of disguising its origin.”

  • No Automated Harvesting Of Email Addresses
    The third element of the attack on fraudulent mailers is the prohibition on the “harvesting”, or automated collection, of email addresses from web sites and newsgroups. The use of automated software to build email databases is the cornerstone of unethical email marketing, and criminalizing such collection may dramatically reduce the quantities of untargeted, unsolicited commercial email.

The Punishments
The law contains some pretty severe penalties for violators. Fines of $250 per email sent are just the statutory damages (means the normal minimum penalty). Up to three times that amount can be imposed under extreme circumstances. And those are just the fines for not following the labeling or opt-out rules; penalties for fraud can also include prison! A violator can get up to one year in prison from a first offense. Up to five years of jail time can result from a second offense under the new law, or from using email in furtherance of another felony.

It’s My Email, And I’ll Filter If I Want To
The new law regulates what can be sent, and still preserves the rights of email service providers to filter or reject email for any reason they choose. The assumption is that ISP’s can implement whatever technological remedies they choose, while simultaneously the government will pursue legal action against violators.

The Future
The law recognizes that the landscape of the Internet is a fluid and ever changing one. As such, it contains provisions to extend itself in the future. One planned extension is establishing a national “do-not-e-mail” registry similar to the registry setup to stop telemarketing. Another area includes paying bounties to individuals who help identify violators of the law (at least 20% of the fines collected on conviction). The law recommends coming up with a standard way to label commercial email from its subject line. It also discusses the need to regulate marketing and wireless messaging. Lastly, the law requires a study of the effects of the law, to determine other changes that it may need to incorporate as technology continues to advance.

Now that the standards have been set, you must comply or risk serious legal action. Of course, these standards are simply the minimum required. We strongly recommend even more stringent practices; to not only comply with the laws, but to exceed them. Assuming one is ethical and follows the legal rules, spam will become largely a problem of negative perception, and one that is avoidable by using proper best practices. This new law does not mean email marketing is going away; rather a cleanup of those who abuse email will help to improve response rates for legitimate marketers.

This Web Marketing article was written by Ron Evans on 3/21/2005