Survey finds U.S. companies ill-prepared for new Canadian anti-spam law

Fasken Martineau released a new survey of marketing executives primarily based in the United States that revealed an overwhelming lack of preparedness for a new Canadian law that aims to regulate unsolicited electronic commercial messages, commonly called “spam.”

“While it’s not surprising that almost 60 per cent of survey respondents were unaware of the new law, it was shocking that 75 per cent of the marketing executives surveyed who were aware of the law were not aware of the penalties that could be levied against them for violating this law,” said Julie Desrosiers, leader of Fasken Martineau’s Technology and Intellectual Property group. “The new Canadian law couples tough anti-spam measures with substantial statutory damages and a private right of action, which would allow plaintiffs to bring class actions and seek millions of dollars in damages. While the law is intended to crack down on ‘spam,’ it will have an impact on mainstream marketing activity that many businesses currently consider legitimate and proper.”

On December 22, 2010, the Canadian House of Commons passed Bill C-28. When enforced, this law will require Canadian individuals and companies, as well as foreign individuals and companies sending commercial electronic messages to Canada to obtain prior consent from recipients before sending them commercial electronic messages. Even those who are outside of Canada will be susceptible to penalties stemming from this law. Once this law is enacted, existing mass mailing lists will need to be purged of all contacts for which the company is unable to prove consent or an exception.

“It is these penalties, and the ability of private parties to sue for statutory damages, that have caused particular alarm to Canadian companies,” said Charles Lupien, an Associate in the Technology and Intellectual Property group. “U.S. companies marketing in Canada are well advised to take steps now to bring themselves, as well as any marketing subcontractors, into compliance with the new law.”

Key findings and themes from Fasken Martineau’s Canadian Anti-spam Act Survey include:

  • As predicted, there was a significant lack of awareness amongst respondents, with nearly 60 per cent unaware of the new law;
  • Unawareness was most likely due to the lack of mainstream media coverage that this law has received, and the fact that it is not yet in effect;
  • Of the respondents who were aware of the new law, nearly 1 in 4 (23.6 per cent) did not know about the potential fines;
  • Only 27 per cent of respondents knew that a company complying with the U.S. Do Not Call legislation is not automatically compliant with the Anti-Spam Act. If nothing is done, nearly three in four companies surveyed would be immediately at risk.

Respondents aware of the Canadian Anti-Spam Act indicated that it will have a definitive impact on business planning. Three in four respondents expect that the new act will impact external email marketing, and of respondents who purchase email lists, 89 per cent said the act would impact how they purchase email lists and would, for example, insist on their vendors being compliant. Of those with knowledge of their company’s long-term risk management strategy, 88 per cent will factor in the Canadian Anti-Spam Act.

In December 2011, Fasken Martineau distributed a survey to a group of mainly marketing executives at publicly traded or highly regulated companies. The survey was completed by 92 respondents. Of the respondents, 82 per cent were located in the United States, 12 per cent were located in Canada, and six per cent did not identify a location. A small percentage of respondents were in-house counsel or outside lawyers. Respondents represented organizations from a wide variety of industries.

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