CAN-SPAM Offers Recipe for E-marketing

Posted: 2/2004

CAN-SPAM Offers Recipe for E-marketing
By David O. Klein, Esq., and John T. Um, Esq.

After what seemed to be a
never-ending pause, a federal law regulating unsolicited commercial e-mail
finally was enacted. On Dec. 16, 2003, President Bush signed into law the
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003
commonly known as CAN-SPAM effective Jan. 1. After years of legislative wrangling
over several different bills, including numerous versions of CANSPAM, Congress
came together in promulgating a comprehensive law intended to curb the
transmission of unsolicited commercial e-mail. This unprecedented and unified
response to spam is the byproduct of intense pressure originating from all
segments of society, ranging from individual users, to the government and big
business.

CAN-SPAM has not arrived without its share of controversy. Already, commentators have presented heated, often
conflicting, opinions on CAN-SPAM, depending on their respective positions on
unsolicited commercial e-mail. Indeed, one commentator has gone so far as to dub
the law the Yes, You Can Spam Act of 2003. Regardless of their
stances, the pundits generally agree on this point: CAN-SPAM is a
marketer-friendly law by virtue of the fact that it does not proscribe all
unsolicited commercial e-mail. In fact, it permits marketers to transmit
unsolicited commercial e-mail to any recipient as long as the email complies
with certain requirements and disclosures.

In brief, CAN-SPAM:

The legal landscape pre-CAN-SPAM is probative in understanding
the importance of this new law. At the time of enactment, there were 36 distinct
state laws regulating the transmission of unsolicited commercial e-mail and
every previous attempt to legislate on a national level failed. Most frustrating
for online marketers was the lack of uniformity among the various state laws. In
fact, it was one states law that propelled Congress to promptly pass CANSPAM.
In September 2003, California passed a law essentially banning
unsolicited commercial e-mail. Californias law was due to become effective on
Jan. 1, 2004, and Congress felt that it had to act quickly before
the California law became the national standard. Although some companies will
feel that CANSPAM goes too far in restricting unsolicited commercial e-mail,
they would be the minority. As a whole, CAN-SPAM is consistent with what
legitimate e-mail marketers and advertisers have long requested from Congress: a
single law that permits opt-out-based e-mail marketing. Fortunately for the
online marketer, in enacting CAN-SPAM to preempt existing state laws
Californias in particular Congress explicitly recognized a fundamental
right to transmit unsolicited commercial e-mail.

Another important aspect to the new law is its limited
enforcement provisions. CAN-SPAM affords some reprieve to e-mail marketers by
establishing a legal and regulatory framework that is almost entirely left to
governmental agencies. Private causes of action to enforce CAN-SPAM violations are
prohibited. This is significant because in the past, the FTC and several
attorneys general, such as those of Washington and New York, have repeatedly
stated that enforcement resources are so limited that only the most egregious
offenders can be prosecuted. Accordingly, while the number of enforcement
actions may be relatively low, the few actions that are commenced, if
successful, could result in extensive damages for the violator. In this vein,
Senator Ron Wyden, co-sponsor of CAN-SPAM, wrote to Timothy Muris, Chairman of
the FTC, imploring his agency to immediately prepare for legal action against
kingpin spammers, so that when the law comes into effect on January 1,
2004, [the FTC] will be in a position to take some high profile enforcement
actions without delay, preferably within the first week.

A final cautionary note: do not get too comfortable with
CAN-SPAM compliance in its present form. There is still a great deal of
uncertainty as to what CAN-SPAM really means and how it will evolve over time.
As noted above, much can change over the next few years as the FTC continues
rolling out its series of mandatory reports including those on the Do-Not-E-Mail
registry, the bounty system and the overall
effectiveness of CAN-SPAM in curtailing the transmission of unlawful e-mail.
Moreover, enough public dissatisfaction with the CAN-SPAM may force Congress to
go back to the pits to fashion another solution for spam. To those who engage in
e-mail marketing, we advise that developing a close relationship with competent
regulatory counsel will greatly aid in keeping abreast of the inevitable changes
in this area of the law. Only time will tell what the true ramifications are on
e-mail marketing and your business.

David O. Klein, Esq., is a partner and John T. Um, Esq., an
associate, with the firm of Klein, Zelman, Rothermel & Dichter L.L.P., New
York, N.Y., where they practice telecommunications and advertising law. They can
be reached by telephone at +1 212 935 6020 or by e-mail at [email protected].