Commentary

Return To Sender: Addressing CAN-SPAM Misconceptions

When the CAN-SPAM Act was signed into law by President Bush, marketers and advertisers had only 15 days to comply with the first national regulation of email marketing. This rapid transition has caused much confusion and given life to several misconceptions. The biggest source of both has been the advertiser's obligations under the Act.

The Act imposes certain requirements on an email sender, the most significant of which is the requirement of an opt-out mechanism and physical address. Common sense tells us that the term "sender" is not the advertiser. Lesson No. One: common sense and legislation often are mutually exclusive.

The CAN-SPAM Act defines the term "sender" in a manner totally inconsistent with its normal usage. Under the Act, the sender "means a person who initiates such a message and whose product, service, or Internet web site is advertised or promoted by the message," which means the advertiser. Of course, this is tantamount to defining "black" as "brown" (brown is the new black after all - or was that last year?). Luckily, the kind-hearted staff members of the Senate Commerce Committee made things crystal clear in the Committee Report on the bill by offering the following example:

  • If one company hires another to coordinate an e-mail marketing campaign on its behalf, only the first company is the sender, because the second company's product is not advertised by the message.

    Confusion aside, this approach makes sense since now the advertiser is invested in the campaign by reason of their potential exposure and will want to work with legitimate marketers to avoid liability.

    The second misconception is the repeated characterization of the CAN-SPAM Act as a huge step backward from existing state laws and a failure after only its second week. This is hardly the case. There is no question that the CAN- SPAM Act is not a strict as the California law banning Spam; but putting the recent California law aside - is CAN-SPAM really a step back from the existing patchwork of state laws? State laws were not widely known; nor were they having an effect on the volume of Spam - with Spam growing 450 percent in 2002 alone. Noticeable enforcement of state statutes was limited to only a few states such as Utah and Washington and state attorney generals conceded at the FTC Spam Forum last spring that they lacked the resources to enforce state spam laws given their other obligations such as public safety.

    In contrast, passage of CAN-SPAM has been featured in newspapers across the country and led to an exponential increase in industry and consumer awareness. Now, instead of 36 attorney generals enforcing their laws in their particular state in relative obscurity, CAN-SPAM can be enforced nationwide by the FTC, 50 state attorney generals and ISPs with maximum penalties reaching $6 million. (States also retain the ability to enforce their deceptive practices statutes, as New York's Attorney General recently did with its high profile action against OptInRealBig and Synergy6.)

    Once enforcement actions begin, it is certain that it will be felt throughout the industry. Once this occurs, advertisers will increasingly migrate away from Spammers to legitimate marketers and thereby achieve one of the Act's primary goals. This cannot happen, however, until regulators and/or ISPs have some period of time to identify defendants and build a case, but the FTC likely will be under political pressure to strike with force early on. In the interim, even without enforcement proceedings, Spam appears to have leveled off according to Spam Butcher's "Spam Index." I suspect that this leveling can be attributed both to filtering technology and CAN-SPAM, which is fitting since at the end of the day the problem of Spam will require both regulatory and technological solutions.

    Bennet Kelley is Vice President of Legal & Strategic Affairs for Hi-Speed Media, Inc., an interactive marketing company in Los Angeles.