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CAN-SPAM Regulations Will Have Little Impact on Charities

(Sept. 7, 2004) Charities must comply with the Federal Trade Commission's (FTC) new proposals regarding the CAN-SPAM law, but they are not likely to be adversely affected by the regulations.

In 2003, President Bush signed the CAN-SPAM Act into law, and the FTC was given the responsibility of implementing the law's requirements.

The CAN-SPAM law makes it unlawful to send unsolicited commercial emails unless the emails contain the following: (1) a 'clear and conspicuous identification that the message is an advertisement or solicitation' (this does not necessarily have to appear in the email subject line); (2) an ability to opt-out electronically from future emails; and (3) a valid postal address of the sender.

In its proposed regulations, the FTC rejected the argument that charities should be exempt from the CAN-SPAM law. AFP and other organizations had commented that the FTC had no authority over nonprofits and that the Congressional intent of the bill was to exempt those organizations.

The FTC agreed that it did not have jurisdiction over nonprofits, but contended that charities should have to comply with the law's requirements because other entities (states, Internet providers) could bring actions against nonprofit violators of the law.

Despite this ruling, the FTC's proposed rule will ultimately have little impact upon nonprofits because of the exemption for emails with a 'transactional or relationship content.' Under the rule, even emails with commercial content will be exempt so long as a 'transactional or relationship' message is included at the beginning of the email and the email subject line does not reference advertisements or promotions.

Therefore, a charity sending emails about commercial services to donors, volunteers or other individuals with past experience with the organization would probably be exempt from complying with the CAN-SPAM Act so long as the 'transactional or relationship' aspect of the email was referenced at the beginning and no advertisements or promotions were included in any email subject lines.

Commercial Criteria

In its regulations, the FTC proposed the following criteria for determining when an email message has a commercial primary purpose:

  1. If an email message contains only content that advertises or promotes a product or service ('commercial content'), then the primary purpose of the message would be deemed to be commercial;
  2. If an email message contains both commercial content and content that falls within one of the categories listed in the Act's definition of 'transactional or relationship message,' then the primary purpose of the message would be deemed to be commercial if either 1) a recipient reasonably interpreting the subject line of the message would likely conclude that the message advertises or promotes a product or service; or 2) the message's 'transactional or relationship' content does not appear at or near the beginning of the message; and
  3. If an email message contains both commercial content and content that is neither 'commercial' nor 'transactional or relationship,' then the primary purpose of the message would be deemed to be commercial if either: 1) a recipient reasonably interpreting the subject line of the message likely would conclude that the message advertises or promotes a product or service; or 2) a recipient reasonably interpreting the body of the message likely would conclude that the primary purpose of the message is to advertise or promote a product or service. Factors illustrative of those relevant to this interpretation would include the placement of commercial content at or near the beginning of the body of the message; the proportion of the message dedicated to commercial content; and how color, graphics, type size, and style are used to highlight commercial content.

The FTC seemed to agree that the CAN-SPAM Act would only affect nonprofit organizations in the rarest of instances because the Commission commented that:

"[u]nder the Commission's proposed 'primary purpose' criteria, it seems likely that only nonprofit entities' messages whose strongest, most prominent content advertises or promotes a product or service-- i.e., seeks to induce a purchase of goods or services--would be deemed to have a commercial primary purpose and therefore be covered by the Act."

The FTC continued by stating that even if emails from nonprofit organizations contained commercial content, the Commission still might not deem these emails to have a 'primary commercial purpose' because:

"[o]n the issue of messages between a nonprofit entity and its members, it is possible--or even likely--that such messages are 'transactional or relationship messages' under § 7702(17)(A)(v), depending on the facts of a particular membership. Even if such messages also include commercial content, they will not have a commercial primary purpose unless (1) a recipient reasonably interpreting the subject line of the message would likely conclude that the message advertises or promotes a product or service, or (2) the transactional or relationship content does not appear at or near the beginning of the message."

Given this clarification, it appears that AFP Members can avoid triggering the CAN-SPAM Act simply by

  1. ensuring that any emails to their members do not include advertisements or promotions in the email subject line; and
  2. placing the transactional or relationship content (e.g., completing a previously agreed upon commercial transaction or providing a notification of a change in terms) near the beginning of the email message.

Although AFP has concluded that the proposed rule will have little effect on nonprofit organizations, AFP may comment on the proposed rule before the September 13, 2004 deadline. AFP currently is determining whether that action is necessary.

(Note: The information in this article does not constitute legal advice.  For additional information, consult a qualified legal expert.)

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