Violations of CAN Spam Act Cost Businesses Millions; But Help May Be On The Way

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10/26/2010 3:00 AM

Most modern businesses have experienced the tremendous frustrations caused by spam messages.  Unsolicited emails clog inboxes, crash servers, and cost companies billions.  In 2003, Congress enacted the CAN Spam Act (the “Act”) with the goal of drastically reducing or eliminating spam.  However, the Act has been heavily criticized, and many believe it does little to eliminate the problem.  Experts argue that the Act serves as a “how to legally spam” guide for e-marketers, rather than a serious legal deterrent.  Others insist that spam has actually increased since the Act’s passage.

In response, the Federal Trade Commission (the “FTC”), internet service providers (“ISPs”), and state governments have recently been very aggressive in enforcing the Act.  To date, the FTC has brought 26 cases in federal courts and has collected over $10.5 million in damages.  It is estimated that state suits and private ISP actions double or triple that figure.  Further, the FTC enacted stricter rules for the Act in 2008, and Congress passed the U.S. SAFE WEB Act in 2006 to allow for international cooperation in spam prosecutions.

Courts have also reacted in kind, extending the reach of the Act.  Recently, it was held that unsolicited emails inviting new union members were commercial communications and unions that sent such emails would be liable for any violations of the Act.  Other courts have applied the Act to internal messages sent through social networking sites like Facebook, MySpace, LinkedIn, and Twitter.  Additionally, courts have held that third parties with requisite knowledge and intent may be liable under the Act, even if they did not personally send the illegal spam email(s).  For example, a mortgage broker that hires a marketer to generate leads via unsolicited emails will be liable for the marketer’s illegal spam, if the broker actually knew of the violations, or consciously avoided knowing of them.

With the recent focus on enforcement, it is imperative for businesses that use marketing email to familiarize themselves with the requirements of the Act and the liability associated with violations.  Legitimate marketers must understand how to avoid costly errors, and aggrieved businesses should also know their options regarding enforcement.  The FTC provides “A Compliance Guide for Businesses,” which substantively addresses these issues and is an essential primer for all business entities.

If you need additional assistance with spam messages or the CAN Spam Act, please contact Christopher Tully at (410) 752-9755 or via email at ctully@tydingslaw.com.

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