CASL Confusion: What July 1 Really Signifies for Marketers

June 20, 2017

July 1, 2017 is not only Canada’s 150th birthday -- it is also marks three years since Canada’s Anti-Spam Legislation (CASL) has been in force.  While Canadian businesses are unlikely to celebrate the latter anniversary with barbecues and fireworks, July 1 will signify an important change in the way that CASL will apply. 

Unfortunately, there seems to be some confusion about what the approaching deadline really means for marketers.  From a CASL perspective, July 1 is important for 3 reasons:

Private right of action

Let’s start with what it doesn’t mean: July 1 will no longer mark the coming into force of the private right of action contained in the law.  This provision would have allowed civil suits to be filed against individuals and organizations for alleged violations of the law.  In addition to suing for actual damages, the provision also would have allowed plaintiffs to claim statutory damages (which need not be proved) of up to $200 – including for receipt of a non-compliant email message.

The order that proclaimed CASL in force as of July, 2014, had originally set July 1, 2017 as the day on which the private right of action provisions in the law would come into force.  However, the government recently amended this order so as to suspend indefinitely the coming into force of the private right of action. 

In a news release announcing the suspension of the implementation of this statutory cause of action, the government noted that it was acting “in response to broad-based concerns raised by businesses, charities and the not-for-profit sector.”  The precis to the order indicated that the original coming into force date was being suspended “in order to promote legal certainty for numerous stakeholders claiming to experience difficulties in interpreting several provisions of the Act while being exposed to litigation risk.”

Parliamentary review

The second important consequence to the arrival of July 1, 2017, is that CASL includes is a section requiring a general review, after that date, of the provisions and operations of the Act by a parliamentary committee.

The government has indeed announced – when it suspended the private right of action - that it will ask a parliamentary committee to review the legislation, in keeping with this requirement of the law.

While it is difficult to know at this time precisely how that review might unfold, the legislative provision itself is very broad.  Accordingly, we may see in the near future a review that will take into account the law as a whole, followed by recommendations to the government for possible reform.

The law has many detractors in the business community, which have raised concerns relating to issues such as vagueness and impracticality of the law, disproportionate enforcement and penalties and real damage to economic interests.  That said, the law also has many fans, which see the regime as an important new protection for consumers.  As a result, the pending committee hearings are expected to be lively.

Expiry of transition period for prior business relationships

Finally, July 1, 2017 will mark the end of the initial transition period during which organizations are deemed to have implied consent to send commercial electronic messages to recipients based on certain types of business relationships that arose prior to the law coming into force.

The law deems implied consent to exist where the sender of a message has an “existing business relationship” or an “existing non-business relationship” with the recipient.  While there are several narrow scenarios that give rise to these defined relationships, for most commercial businesses, an existing business relationship most commonly arises through the purchase of goods or services.  In such a case, the law normally deems an organization to have implied consent to send electronic marketing messages to a customer for a period of two years after such a purchase, unless they otherwise unsubscribe.

However, for the initial 3-year transition period, CASL deemed implied consent to exist for business relationships that arose at any time before July 1, 2014 (when the law came into force), without regard to the two-year limitation.  In other words, during the transition period, the law effectively deemed an organization to have implied consent to send commercial electronic messages to a customer that had made a purchase at any time before July 1, 2014. 

The stated purpose of this transition period was to provide organizations with the opportunity to obtain express consent.  As a result, in the months leading up to the end of the transition period, many organizations have been reaching out by email to their distribution lists in order to confirm consent.

While such outreach campaigns make good sense for some businesses, seeking express consent at this time is not required in all cases.  The real impact of the expiry of the transition period will vary from business to business, based on a number of factors, including the following:

  1. If an organization is sending commercial electronic messages based on an existing business relationship that arose from a purchase made after the law came into force, then the transition period does not apply.  These types of business relationships are subject to the normal two-year limitation imposed by the law.  Indeed, for transactions that occurred in 2014 and early 2015, this period will have already expired.
  2. If express consent was collected prior to July 1, 2014, in compliance with applicable privacy law, that consent continues to be valid, even if the request did not meet the form requirements now imposed by CASL.  Businesses with reliable records of that type of consent need not reach out now to secure an additional consent.
  3. If an organization is likely to have at least one sale transaction every two years with addressees on its email marketing list, it may elect not to secure express consent, relying solely on implied consent arising from its existing business relationships.  Much depends on the typical business cycles for a particular industry/service category, but many businesses have found that they can reasonably attain marketing objectives solely through reliance on implied consent.  Of course, where a given addressee does not make a purchase within the allowed 2-year period, they must be dropped from the list, but some organizations find this churn to be manageable, and also find that, in any event, marketing offers are less likely to be effective with respect to such “stale” customers.  Recognizing that consent outreach campaigns tend to have a low rate of success, continued reliance on existing business relationships may be an attractive option for some companies.
  4. Organizations that engage in B2B marketing may not be affected by the expiry of the transition period.  The transition period affects only existing business relationships and existing non-business relationships; it does not affect implied consent that may arise under the law as a result of conspicuous publication or direct disclosure of a business electronic address, nor does it affect to general B2B exemption found in the Electronic Commerce Protection Regulations.
  5. Similarly, other types of businesses that rely on exemptions set out in the Regulations need not reach out now to obtain express consent -- for example, registered charities sending fund-raising messages, or messages sent and received on an electronic messaging service where the information and unsubscribe mechanism required by the law is available on the user interface through which the message is accessed.

Businesses are advised to carefully review their own circumstances and to seek advice as to the best approach to deal with the issues arising from the end of the transition period. 

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