Preparing Your Organization for CASL's Commercial Electronic Message Requirements

In this article:

1. CASL Commercial Electronic Message Compliance Program Objectives
2. What You Need to Know Before Starting
3. Key Steps Towards CASL Compliance

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The world's toughest anti-spam and malware law, commonly known as Canada's Anti-Spam Legislation (CASL), will come into force in Canada on July 1, 2014. Organizations must act now to comply with CASL by this fast-approaching deadline. This article sets out the steps organizations should be taking to achieve compliance with CASL's anti-spam provisions.

CASL also contains provisions regarding the installation of computer programs on third-party computers. These anti-malware provisions will come into force on January 15, 2015. Additional procedures should be taken by organizations that install computer programs on other persons' computers to comply with CASL's malware provisions. These additional procedures will be the subject of a separate article.

1. CASL Commercial Electronic Message Compliance Program Objectives

Key objectives of an organization's CASL compliance program should include:

1. instilling an understanding of CASL and its requirements within the organization;
2. forming the organization's CASL team;
3. gaining a thorough understanding of the organization's Commercial Electronic Message (CEM) practices;
4. building data buckets within the organization's information systems for the categorization of CEM consents required and received;
5. applying CASL's consent and content exceptions and implied consent scenarios to the organization and its systems and procedures;
6. establishing information mechanisms within the organization to track and record information necessary for CASL's content exceptions and implied consent scenarios to apply and to facilitate recipient unsubscribe requests;
7. establishing policies and procedures to ensure CASL's content requirements will be followed within the organization;
8. ensuring appropriate contracts are in place where the organization shares consents with third parties;
9. building a CASL-compliant corporate culture within the organization; and
10. establishing the basis for a due diligence defence against future CASL contraventions.

2. What You Need to Know Before Starting

Informed planning will be key to developing an effective CASL compliance program for your organization. Here are some important aspects of CASL you should consider when planning and carrying out a CASL compliance program.

(a) Penalties for Non-Compliance, the Due Diligence Defence and the Burden of Proof

Your organization should understand CASL's penalty provisions before commencing its CASL compliance program. Understanding the potentially significant penalties for contravening CASL will help ensure sufficient internal support and resources are allocated to your compliance program and enable the program to be carried out more effectively.

Non-compliance with CASL may give rise to significant penalties. Organizations will face administrative monetary penalties of up to $10,000,000 for an offence under CASL. In addition, a private right of action will come into force as of July 1, 2017 to give persons who have been affected by a contravention of CASL a right to bring an action for damages and a statutory penalty of $200 per offence. This raises the potential for class actions suits for CASL contraventions.

Liability for CASL contraventions may extend beyond the corporate veil. CASL specifically extends liability to the officers, directors and agents of a corporation that contravenes CASL if they directed, authorized, assented to, acquiesced in or participated in the contravention[1].

Fortunately for those individuals, however, CASL provides a due diligence defence. No person is liable for a violation under CASL where they establish that they exercised due diligence to prevent the commission of the violation[2]. The organization's CASL compliance program should therefore be well planned, executed and documented to provide the basis for a future due diligence defence, if one ever becomes necessary.

Under CASL, organizations that claim they have the consents required by CASL bear the burden of proving this.[3] As a result, obtaining and recording the necessary consents and keeping track of them in up-to-date information systems will be crucial elements of CASL compliance.

(b) What is a Commercial Electronic Message (CEM)?

CASL defines a CEM as an electronic message that has, as one of its purposes, the encouragement of participation in a commercial activity[4]. CEMs specifically include electronic messages that are sent to promote a person as being someone who conducts a commercial activity. It is not necessary that the commercial activity have the expectation of profit. Two-way voice communications, facsimile messages and voicemail messages sent to telephone accounts are excluded from CASL's anti-spam provisions[5].

(c) CASL's commercial electronic message requirements

CASL's anti-spam provisions can be summed up as follows. After July 1, 2014, persons that send CEM's to electronic addresses in Canada must ensure the CEM's contain prescribed content identifying the sender and permitting the recipient to unsubscribe from further messages in a manner prescribed by CASL. The senders must have the recipient's express, opt-in consent before sending the CEM. The aforementioned content and consent requirements will not apply in a limited number of circumstances where exceptions are specified in CASL and its regulations. In addition, the required consent will be implied in a limited number of circumstances specified in CASL. Where consent is implied, however, the CEM content requirements will still apply.

For example, CASL provides that consent to receive a CEM is implied where an existing business relationship, as prescribed by CASL, exists between the sender and recipient[6] Where this prescribed relationship exists, consent to receive the CEM is implied, but the sender must nevertheless ensure the CEM meets CASL's content requirements, including the prescribed form of unsubscribe mechanism.

A comprehensive review of the various exclusions from CASL's consent and content requirements, and CASL's implied consent scenarios, is outside the scope of this article. However a high-level summary of these provisions, in decision tree flow chart form, can be downloaded here: 'Canada's Anti-Spam Law: Commercial Electronic Message (C.E.M.) Process Chart' for your everyday reference. Reference to CASL and its regulations or the specific advice of experienced legal counsel will of course be necessary for your organization to ensure it takes full advantage of these provisions.

(d) Privacy consent requirements vs. CASL

It is important for your organization to recognize that the consent requirements under applicable privacy law are different than the consent requirements under CASL. For example, private sector organizations carrying on commercial activity in Ontario are subject to PIPEDA[7]. PIPEDA already requires those organizations to obtain the consent of individuals before using their e-mail addresses or other personal information for commercial activity. Consent under PIPEDA may be express or implied, depending on the circumstances.

CASL, on the other hand, will require express consent to send a CEM, subject only to certain prescribed exemptions and prescribed situations where consent is implied, as briefly mentioned above. Organizations that currently rely on implied consent to send CEMs in compliance with privacy law may find those consents to be insufficient for CASL purposes on and after July 1, 2014.

(e) The need to obtain consents before July 1, 2014

Email solicitations for consents to send CEMs will themselves be considered to be CEMs under CASL on and after July 1, 2014. As such, email consent solicitations sent on or after July 1, 2014 will be subject to CASL's consent and content requirements (and certain content requirements that are unique to solicitations for CASL consent[8]). If your organization does not have sufficient consent to send a CEM as required by CASL by July 1, 2014, it will be prohibited from sending CEMs to solicit those consents on or after July 1, 2014 unless one of CASLs prescribed exemptions or implied consent scenarios apply.

3. Key Steps Towards CASL Compliance

(a) Build Your CASL Team

CASL compliance programs should involve multiple functional areas of the subject organization. In many cases representatives of your organization's marketing, information technology and human resources functions should be part of the CASL implementation team. In addition, your organization's legal counsel and chief privacy officer should play a leading role in the CASL preparation process. In many cases a CASL implementation team should be formed to facilitate participation of each of these functional areas throughout the CASL compliance process.

(b) Audit Your Current Practices and Consents

The first objective of your CASL compliance team should be to obtain an understanding of, and to document, your organizations' current practices and information systems regarding CEMs. Specifically, you should determine the following:

1. For what purpose does your organization send CEMs?
2. In what form are these CEMs sent?
3. Who sends your organization's CEMs?
4. What procedures do your organization's personnel carry out when sending CEMs?
5. Who does your organization send CEMs to? How are the recipient address databases structured and populated? How does your organization collect names and electronic addresses for purposes of delivering CEMs?
6. How does your organization currently obtain and track consents and withdrawals of consents for the use of electronic addresses?
7. Are the consents your organization currently relies on when sending CEMs express or implied? Does your organization identify and distinguish these categories of consents in its database?
8. Does your organization rely on third parties to have and hold consent to send CEM's on its behalf? Does your organization send CEMs on behalf of third parties? If so, does your organization identify the arrangements and agreements with these third parties that support these activities?

(c) Build Data Buckets

After the audit process is completed, your organization should know which recipients have provided express consent, implied consent, or have withdrawn or otherwise not consented to receive CEMs. These "data buckets" should be readily identifiable in your information systems.

Your organization should obtain express consent from each CEM recipient in the implied consent category prior to July 1, 2014, where an exception or implied consent scenario does not apply under CASL.

Your organization should ensure each express consent it will rely on to send a CEM is sufficiently documented so your organization can discharge the burden of proving it has such consent, if necessary.

Your organization may send CEMs to the recipients in the "implied consent" data bucket after July 1, 2014 as long as an exception or implied consent is valid under CASL at the time the CEM is sent and the recipient has not "unsubscribed" from receiving your organization's CEMs. To take advantage of this, your organization should establish more specific data buckets delineating the recipients to whom CASL's particular consent exceptions and implied consent provisions apply.

(d) Apply CASL's Exceptions and Implied Consent scenarios to your organization

If your organization wishes to send CEMs to recipients under CASL without express consent, it will have to be able to prove an exception or implied consent scenario applies. The exceptions and implied consent provisions of CASL and its regulations should be applied to the knowledge you gained during your CASL compliance audit to determine when your organization may send a CEM without express consent. The outcome of this analysis will inform the creation of the CASL exception and implied consent "data buckets" outlined above.

It is recommended that the outcome of this analysis be reflected in a CASL procedures policy. Your organization's CASL procedures policy should reference the CASL exceptions and implied consent scenarios that may apply to your organization, when they will be considered to apply and how the information necessary to support them is collected and tracked.

This policy may require some interpretation of CASL's provisions beyond what CASL provides on its face. For example, consider CASL's consent and content exception for CEMs sent between employees of different organizations concerning activities of the recipient organization[9]. This exception applies to CEM's sent by an organization's employee to an employee of another organization, where the two organizations have a "relationship". CASL does not provide a definition of this "relationship". Your organization's CASL policy should set out when such a relationship will be considered to exist if your organization plans to rely on this exemption in practice.

Of course, your policy should be regularly reviewed and updated as case law develops under CASL.

(e) Establish Information Support Mechanisms

Your organization's information systems will require some particular features for your organization to be considered CASL compliant. Mechanisms and processes should be created to move electronic addresses between the applicable data buckets to keep them up to date over time. Most importantly, recipients who withdraw their consent will have to be moved promptly to the "no consent" data bucket.

Where your organization creates data buckets to reflect CASL's consent exceptions and implied consent scenarios, methods of tracking, collecting and organizing the data required to establish that the applicable exception or scenario applies will have to be established and reflected in your organization's information systems. "Sun setting" features should be maintained to move electronic addresses out of these data buckets when the applicable exception or implied consent expires pursuant to CASL.

Your organization's sun setting protocols should flag expiring implied consent scenarios in advance, where applicable, to trigger the sending of consent requests to convert an implied consent into an express consent before the implied consent expires.

Finally, the procedures your organization follows when sending CEMs should be coordinated to your organization's data buckets of recipient addresses and CASL compliance policy requirements.

(f) Establish policies and procedures to ensure CASL's content requirements will be followed

Your organization should establish policies and procedures to ensure CASL's CEM content requirements are complied with. Your organization's CEM templates should be reviewed and updated to satisfy these requirements.

After July 1, 2014, CEMs will have to contain CASL's prescribed "unsubscribe mechanism" to effectively and promptly enable recipients to opt-out of receiving CEMs. Your information technology systems and procedures will have to align to and facilitate this mechanism in a manner that satisfies CASL's requirements. Your organization should ensure its unsubscribe mechanisms are effective and easy to use.

Your CEM content policies and procedures should account for the different content requirements that pertain to solicitations your organization makes for CASL consents. In the case of consent solicitations your organization makes by way of electronic message, the CEM content requirements applicable to other forms of CEM will apply. However, where CEM consent is solicited by CEM, a statement that withdrawal of consent may be made at any time is also required.

CASL's content requirements are not limited to consent solicitations that are made via electronic message. Solicitations for CEM consent that are made on paper or orally will also be subject to content requirements. Such paper forms should be reviewed to ensure they satisfy CASL's content requirements. Where CASL consent will be solicited orally, telephone scripts may be useful. Your organization should determine how it will discharge its onus to prove consent where consents are collected orally.

(g) Establish appropriate inter-corporate contracts where consents are shared

CASL requires persons who share consents with respect to CEMs[10] to ensure their counterparts comply with CASL. Where your organization shares CEM consents with other organizations, such as affiliates, service providers or customer organizations, CASL-compliant information technology protocols and contractual protections will have to be established or revised.

(h) Building a CASL-compliant corporate culture

Your organizations' personnel should receive CASL training and information to ensure they understand and facilitate your organization's CASL policies and procedures. This training should include CASL consent collection procedures, CEM content requirements and related procedures for interacting with your organization's information technology systems. Your organization's CASL procedures policy should of course be covered during this training. CASL training should be carefully documented as it may prove to be a valuable part of a future due diligence defence against any charges of CASL contravention. After training is completed, CASL refreshers and policy updates should be circulated to staff from time to time to ensure knowledge of CASL compliance requirements is retained and is up to date, and to help further instil CASL compliance as part of your organization's corporate culture.

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