California Spam Law: Trick or treat for marketers?
OTOi, Executive Team | One to One Interactive
October 30, 2003
With nearly 40% of all email as Spam, marketers are beginning to
realize that there will be no single solution or "silver bullet" to
the problem. Industry will continue to use a combination of
legislative, regulatory, judicial, technology and user efforts to
combat the Spam problem.
To date, one of the primary issues for marketers has been
staying on top of the changing legal landscape of anti-Spam
efforts. There are 36 States with anti-Spam legislation (see
http://www.spamlaws.com/state/index.html). A
couple of weeks ago, the US Senate passed SB 877 ("CAN-SPAM") in
its first ever step in addressing the Spam issue at the Federal
Legislative level (see
http://www.cauce.org/news/index.shtml for
analysis and a link to the bill).
This article focuses on the latest ant-spam measures,
California's legislation on current permission marketing
practices[1]. (To read the law
click here.)
Introduction - the law itself
One of the primary changes under the new California law,
"CALIFORNIA BUSINESS AND PROFESSIONS CODE DIVISION 7, PART 3,
CHAPTER 1 ARTICLE 1.8. Restrictions on Unsolicited Commercial
E-mail Advertisers", is the distinction between advertisers and
senders of Unsolicited Commercial Email (UCE). Previously,
"persons" transmitting email were required to add an opt-out
capability and were not allowed to send email to persons who had
not explicitly requested it. "Transmitters" were defined as those
controlling the mechanism of transmission. "Advertisers" are now
defined as the promoter of the good or service in the email and are
the focus of the new California law.
First, a few important definitions:
An
Advertiser is defined simply as §17529.1(a) "… a person or
entity that advertises through the use of commercial e-mail
advertisements."
At §17529.1 (d)
direct consent " … mean(s) that the recipient has expressly
consented to receive e-mail advertisements from the advertiser,
either in response to a clear and conspicuous request for the
consent or at the recipient's own initiative".
This new law defines
UCE at §17529.1(o) as "a commercial e-mail advertisement
sent to a recipient who meets both of the following criteria: (1)
the recipient has not provided direct consent to receive
advertisements from the advertiser. (2) The recipient does not have
a preexisting or current business relationship, as defined in
subdivision (l), with the advertiser promoting the lease, sale,
rental, gift offer, or other disposition of any property, goods,
services, or extension of credit." At §17529.2 (b) the law states
that an entity may not " … Initiate or advertise in an unsolicited
commercial e-mail advertisement to a California electronic mail
address, or advertise in an unsolicited commercial e-mail
advertisement sent to a California electronic mail address"
The stated intent of the Law as revealed in the preamble to
the legislation (§17529(j) and (k)) is an attempt to move the
assumption of responsibility and liability to the advertisers (who
according to the California Legislature benefit from UCE) rather
than the transmitters. Unfortunately, the law does not clearly
address current practices of permission based email.
While it is clear that the California legislation is targeting
Spam, the legislation broadly defines UCE in the legislative
preamble and does not explicitly address the current best industry
practices of using permissioned 3d party lists.
Ironically, the California legislature may create sufficient
confusion and concern on the part of advertisers as to prevent the
delivery of specifically desired and appropriately permissioned
emails.
Interpreting the law relative to permission marketing practices
The law states that consent between the advertiser and the
message recipient must be "clear and conspicuous". While it is not
unreasonable to surmise that "direct consent" means between the
advertiser whose content is featured in the email and the
recipient, the law is not explicit nor clear on this important
point.
Further, the test for "clear and conspicuous" is not explicit.
Clear and conspicuous could arguably include a situation where a
list member has specifically opted into a list owner's system
giving the list owner permission (direct consent) to send to the
list member various types of information from other "advertisers"
(these advertisers are customers or clients of the list owner).
I argue that a list owner has direct consent from its list
member to send email addresses that are not "UCE" but do include
content from a 3d Party when the list owner: collects express
permission from its list members for types of content (e.g.
JupiterMedia newsletters and 3d party email examples below) and
where the terms and conditions of the relationship between the list
member and the list owner clearly state that the list owner has
permission to send email messages to the recipient (see
JupiterMedia Privacy Policy infra).
This is particularly relevant where a contractual relationship
exists between the list owner and the list member especially where
the list member has explicitly opted in to certain forms of
communication. In this case the list owner qualifies as an
advertiser; and where the list owner has direct consent from the
recipient to send the content such email should be viewed as by
definition not UCE.
Said another way, the law is susceptible to a reading that
covers 3d party advertisers who contract with list owners who have
"permissioned lists"; where the permissioned list owner sends the
email; where the email "from" line is the list owner; and the list
member has provided "clear and conspicuous" permission for the list
owner to send specific email content.
Changes to the law
It is likely that the California law will be challenged on at
least 3 general fronts;
- Whether certain definitions pertaining to such terms as
California email address or Direct Consent are clear and
unambiguous;
- Whether the law violates the commerce clause of the US
constitution; and
- Whether the law violates an advertiser's right to free
speech.
Commentators reflect both sides of the argument as to the law's
constitutionality. The previous law has been litigated on
constitutionality with results requiring modification for some
parts and other parts being upheld (see Mylene Mangalindan,
9/25/03,
Wall Street Journal "Spam Law Is Sure to Face Legal
Test").
These challenges will take months if not years to litigate.
In the interim, there are several courses of action that a firm
using email could follow in order to continue to leverage the email
channel for acquisition purposes in California. These range from
working with media properties and list owners to develop new
tactics that comply with the strict interpretation of the Law (like
developing generic emails with links to an advertiser Microsite
where an opt-in could take place or developing a sponsored content
section on the list owners site, etc.).
Firms could also reasonably decide to pursue further
definitive analysis of the legal interpretation of the Law as
discussed herein which finds that the California Law does not
proscribe sending advertising content to permissioned 3d Party
lists.
An Example in Pracitice
JupiterMedia is a company that runs
http://www.internet.com/. JupiterMedia has
extensive newsletter and list development capabilities and adheres
to an Industry best practice of permissioning requiring list
members to proactively select the types of information they want to
receive.
At
http://www.internet.com/corporate/privacy/privacypolicy.html
JupiterMedia Corporation's Privacy Policy states (emphasis
added):
What information do you collect when I register for
something?
JUPM offers access to some services that require
registration. We may use your registration contact information to
send notification to you of JUPM products and services by e-mail
and/or postal mail. We also may share that information with our
clients.
Our clients may send you promotional material that is related
to the topic of the service for which you registered.
(emphasis added) We may also use your IP address internally and
share it with third parties. See
Will you disclose the information that you collect to outside
third parties? And;
What other information do you request?
We may also request your e-mail address or mailing
address for the purposes of conducting a survey or to provide
additional services (for example, subscriptions to e-mail
newsletters, announcement lists or information about conferences
and trade shows). Whenever we request the identity of a visitor,
we will clearly indicate the purpose of the inquiry before the
information is requested.
We maintain a strict "No-Spam" policy that means that we do
not sell, rent, or otherwise give your e-mail address to a
third-party, without your consent or as permitted by this Privacy
Policy. (emphasis added)
We may from time to time send e-mail announcing new JUPM
products and services. Except as stated above, JUPM will not send
you e-mail that you have not agreed to receive. If you choose to
supply your postal address in an online form, you may receive
postal mailings from other third party companies. And;
Opt-in announcement List Privacy Policy
As an added benefit to the visitors of the JUPM Network of
sites, we have a relationship with PostMasterDirect, an
independent, third party company that sends e-mail announcements
to individuals who request to receive them.(emphasis added)
When you sign up for an JUPM e-mail newsletter, you are given the
opportunity to also receive announcement lists from
PostmasterDirect. Whether you want to receive these announcement
lists is your choice; you should only receive those lists you
affirmatively choose to. If you choose to receive a specific
announcement list, you will receive commercial messages that are
related to the topic of the list from independent third parties
that have contracted with JUPM and/or PostMaster Direct to send
messages to the list. Personally identifiable information will
not be used by JUPM or PostMasterDirect for any purposes other
than to deliver the e-mail announcements. You may stop the
arrival of these announcement lists at any time by removing your
e-mail address from the list by forwarding the announcement list
to
deleteall@postmasterdirect.com, or by
following the instructions on the e-mails you receive.
Click here to see the Postmaster Direct privacy
policy. And;
Your consent to this agreement
By using the JUPM Network, you consent to the collection
and use of information by JUPM as specified above. If we decide
to change our privacy policy, we will post those changes on this
page so that you are always aware of what information we collect,
how we use it, and under what circumstances we disclose it."
In this privacy policy (similar to many other publishing
companies in the business of developing permissioned lists),
members opt-in for announcements and advertisements from other
advertisers. These advertisers hire the list owner (Jupiter in this
case) to send email on their behalf as desired and explicitly
requested by the list member. This permission and agreement on the
part of the list member to receive this email (direct consent) is a
specific term and condition of the use of the list owner's site and
would likely be construed as a contractual relationship between the
list member and the list owner.
I argue that as long as JupiterMedia (or any list owner) sends
an email that references its relationship with the list member
and that the email is being sent as a result of the list
member explicitly opting in to receive advertisements from
JupiterMedia
and as long as JupiterMedia adheres to the contractual
obligations of its relationship with list members (e.g. honoring
their requests as to the types of information JupiterMedia sends
even if it is featuring the content of another advertiser) the
email is done with "direct consent" and is not UCE.
Conclusion
While Spam is a threat to email marketing, the marketer who
applies permission marketing principles will continue to find email
an important communications channel that is cost efficient and
effective in sustaining and growing profitable customer
relationships.
Marketers need to stay current, creative and patient when
analyzing and reacting to the changing landscape created by
technology, legislatures, courts and user expectations. By
continuing to apply best practices of permission marketing,
marketers and consumers will both benefit.
[1] While some of the analysis is based on legal and regulatory
issues, it is not intended to be a formal legal opinion.
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