[Federal Register: August 13, 2004 (Volume 69, Number 156)]
[Proposed Rules]
[Page 50091-50107]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13au04-17]
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FEDERAL TRADE COMMISSION
16 CFR Part 316
[Project No. R411008]
RIN 3084-AA96
Definitions, Implementation, and Reporting Requirements Under the
CAN-SPAM Act
AGENCY: Federal Trade Commission (FTC).
ACTION: Notice of proposed rulemaking; request for public comment.
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SUMMARY: In this document, the Federal Trade Commission (the
``Commission'' or ``FTC'') proposes rules to implement the Controlling
the Assault of Non-Solicited Pornography and Marketing Act of 2003
(``CAN-SPAM Act'' or ``Act''). Sections 7702(2)(C) and 7711(a) of the
Act direct the FTC to prescribe rules, within 12 months after December
16, 2003, defining the relevant criteria to facilitate the
determination of the primary purpose of an electronic mail message and
making such other modifications as the Commission deems appropriate to
implement the provisions of the Act.
This document invites written comments on issues raised by the
proposed Rule and seeks answers to the specific questions set forth in
Section VII of this NPRM.
DATES: Written comments will be accepted until Monday, September 13,
2004. Due to the time constraints of this rulemaking proceeding, the
Commission does not contemplate any extensions of this comment period
or any additional periods for written comment or rebuttal comment.
ADDRESSES: Interested parties are invited to submit written comments.
Comments should refer to ``CAN-SPAM Act Rulemaking, Project No.
R411008'' to facilitate the organization of comments. A comment filed
in paper form should include this reference both in the text and on the
envelope, and should be mailed to the following address: Federal Trade
Commission, CAN-SPAM Act, Post Office Box 1030, Merrifield, VA 22116-
1030. Please note that courier and overnight deliveries cannot be
accepted at this address. Courier and overnight deliveries should be
delivered to the following address:
[[Page 50092]]
Federal Trade Commission/Office of the Secretary, Room H-159, 600
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing
confidential material must be filed in paper form, as explained in the
Supplementary Information section. Comments filed in electronic form
should be submitted by clicking on the following weblink: https://secure.commentworks.com/ftc-canspam/
and following the instructions on
the web-based form.
To ensure that the Commission considers an electronic comment, you
must file it on the web-based form at the https://secure.commentworks.com/ftc-canspam/
weblink. You may also visit http:/
/http://www.regulations.gov to read this proposed Rule, and may file an
electronic comment through that Web site. The Commission will consider
all comments that regulations.gov forwards to it.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC makes
every effort to remove home contact information for individuals from
public comments it receives before placing those comments on the FTC
Web site. More information, including routine uses permitted by the
Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm
.
FOR FURTHER INFORMATION CONTACT: Michael Goodman, Staff Attorney, (202)
326-3071; or Catherine Harrington-McBride, Staff Attorney, (202) 326-
2452; Division of Marketing Practices, Bureau of Consumer Protection,
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION:
I. Background
A. CAN-SPAM Act of 2003
On December 16, 2003, the President signed into law the CAN-SPAM
Act.\1\ The Act, which took effect on January 1, 2004, imposes a series
of new requirements on the use of commercial electronic mail
(``email'') messages. In addition, the Act gives federal civil and
criminal enforcement authorities new tools to combat unsolicited
commercial email (``UCE'' or ``spam''). The Act also allows state
attorneys general to enforce its civil provisions, and creates a
private right of action for providers of Internet access services.
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\1\ 15 U.S.C. 7701-7713.
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In enacting the CAN-SPAM Act, Congress made the following
determinations of public policy, set forth in Sec. 7701(b) of the Act:
(1) There is a substantial government interest in regulation of
commercial electronic mail on a nationwide basis;
(2) Senders of commercial electronic mail should not mislead
recipients as to the source or content of such mail; and
(3) Recipients of commercial electronic mail have a right to
decline to receive additional commercial electronic mail from the
same source.
Based on these policy determinations, Congress set forth in
Sec. Sec. 7704(a) and (b) of the CAN-SPAM Act certain acts and
practices that are unlawful in connection with the transmission of
commercial email messages, including those practices which are
aggravated violations that compound the available statutory damages
when alleged and proven in combination with other CAN-SPAM violations.
Section 7704(a)(1) of the Act prohibits transmission of any email that
contains false or misleading header or ``from'' line information, and
clarifies that a header will be considered materially misleading if it
fails to identify accurately the computer used to initiate the message
because the person initiating the message knowingly uses another
protected computer to relay or retransmit the message in order to
disguise its origin.\2\ The Act also prohibits false or misleading
subject headings,\3\ and requires a functioning return email address or
similar Internet-based mechanism for recipients to use to ``opt-out''
of receiving future commercial email messages.\4\ The Act prohibits the
sender, or others acting on the sender's behalf, from initiating a
commercial email to a recipient more than 10 business days after the
recipient has requested not to receive additional emails from the
sender,\5\ and prohibits sending a commercial email message without
providing three disclosures: (1) clear and conspicuous identification
that the message is an advertisement or solicitation, (2) clear and
conspicuous notice of the opportunity to decline to receive further
commercial email messages from the sender, and (3) a valid physical
postal address of the sender.\6\ Section 7704(b) of the Act specifies
four aggravated violations: address harvesting, dictionary attacks,
automated creation of multiple email accounts, and relaying or
retransmitting through unauthorized access to a protected computer or
network.\7\
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\2\ 15 U.S.C. 7704(a)(1).
\3\ 15 U.S.C. 7704(a)(2).
\4\ 15 U.S.C. 7704(a)(3).
\5\ 15 U.S.C. 7704(a)(4).
\6\ 15 U.S.C. 7704(a)(5).
\7\ 15 U.S.C. 7704(b). The Act's provisions relating to
enforcement by the states and providers of Internet access service
create the possibility of increased statutory damages if the court
finds a defendant has engaged in one of the practices specified in
Sec. 7704(b) while also violating Sec. 7704(a). Specifically,
Sec. Sec. 7706(f)(3)(C) and (g)(3)(C) permit the court to increase
a statutory damages award up to three times the amount that would
have been granted without the commission of an aggravated violation.
Sections 7706(f)(3)(C) and (g)(3)(C) also provide for this
heightened statutory damages calculation when a court finds that the
defendant's violations of Sec. 7704(a) were committed ``willfully
and knowingly.''
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The Act authorizes the Commission to enforce violations of the Act
in the same manner as an FTC trade regulation rule.\8\ Section 7706(f)
authorizes the attorneys general of the states to enforce compliance
with certain provisions of Sec. 7704(a) of the Act by initiating
enforcement actions in federal court, after serving prior written
notice upon the Commission when feasible.\9\ Finally, CAN-SPAM
authorizes providers of Internet access services to bring a federal
court action for violations of certain provisions of Sec. Sec.
7704(a), (b), and (d).\10\
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\8\ Sections 7706(a) and (c) of the CAN-SPAM Act provide that a
violation of the Act shall be treated as a violation of a rule
issued under Sec. 18(a)(1)(B) of the FTC Act. 15 U.S.C.
57a(a)(1)(B).
\9\ 15 U.S.C. 7706(f). Specifically, the state attorneys general
may bring enforcement actions for violations of Sec. Sec.
7704(a)(1), 7704(a)(2), or 7704(d). The states may also bring an
action against any person who engages in a pattern or practice that
violates Sec. Sec. 7704(a)(3), (4), or (5).
\10\ 15 U.S.C. 7706(g). Section 7704(d) of the Act requires
warning labels on email containing sexually oriented material. 15
U.S.C. 7704(d). The Commission recently promulgated its final rule
regarding such labels: ``Label for Email Messages Containing
Sexually Oriented Material'' (``Sexually Explicit Labeling Rule'').
69 FR 21024 (Apr. 19, 2004). The Commission is integrating the
provisions of that existing rule into the proposed Rule, renumbering
certain provisions as follows: former Sec. Sec. 316.1(a) and (b)
appear at Sec. 316.4(a) and (b) in the proposed Rule; former Sec.
316.1(c) [definitions] appears at Sec. 316.2 in the proposed Rule;
and former Sec. 316.1(d) [severability] appears at 316.5 and
applies to the entire rule, not only the Sexually Explicit Labeling
Rule provisions.
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Congress directed the Commission to issue regulations, not later
than 12 months after December 16, 2003, ``defining the relevant
criteria to facilitate the determination of the primary purpose of an
electronic mail message.'' \11\ The term ``primary purpose'' is
incorporated in the Act's definition of the key term ``commercial
electronic mail message.'' Specifically, ``commercial electronic mail
message'' encompasses ``any electronic mail message the primary purpose
of which is the commercial advertisement or
[[Page 50093]]
promotion of a commercial product or service (including content on an
Internet web site operated for a commercial purpose).'' \12\ In
addition to the mandatory rulemaking regarding the definition of
``primary purpose,'' CAN-SPAM also provides discretionary authority for
the Commission to issue regulations concerning certain of the Act's
other definitions and provisions.\13\ Specifically, the Commission is
authorized to:
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\11\ 15 U.S.C. 7702(2)(C).
\12\ 15 U.S.C. 7702(3)(A) (Emphasis supplied). The term primary
purpose is also used in the Act's definition of ``transactional or
relationship message.'' 15 U.S.C. 7702(17).
\13\ The Act authorizes the Commission to use notice and comment
rulemaking pursuant to the Administrative Procedures Act, 5 U.S.C.
553. 15 U.S.C. 7711.
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Modify the definition of the term ``transactional or
relationship message'' under the Act ``to the extent that such
modification is necessary to accommodate changes in electronic mail
technology or practices and accomplish the purposes of [the] Act'';
\14\
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\14\ 15 U.S.C. 7702(17)(B).
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Modify the 10-business-day period prescribed in the Act
for honoring a recipient's opt-out request; \15\
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\15\ 15 U.S.C. 7704(c)(1)(A)-(C).
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Specify activities or practices as aggravated violations
(in addition to those set forth as such in Sec. 7704(b) of CAN-SPAM)
``if the Commission determines that those activities or practices are
contributing substantially to the proliferation of commercial
electronic mail messages that are unlawful under subsection [7704(a) of
the Act]''; \16\ and
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\16\ 15 U.S.C. 7704(c)(2).
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``issue regulations to implement the provisions of this
Act.'' \17\
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\17\ 15 U.S.C. 7711(a). This provision excludes from the scope
of its general grant of rulemaking authority Sec. 7703 of the Act
(relating to criminal offenses) and Sec. 7712 of the Act (expanding
the scope of the Communications Act of 1934). In addition, Sec.
7711(b) limits the general grant of rulemaking authority in Sec.
7711(a) by specifying that the Commission may not use that authority
to establish ``a requirement pursuant to Section 7704(a)(5)(A) to
include any specific words, characters, marks, or labels in a
commercial electronic mail message, or to include the identification
required by Section 7704(a)(5)(A) * * * in any particular part of
such a mail message (such as the subject line or body).'' Section
7704(a)(5)(A) provides that, among other things, ``it is unlawful
for any person to initiate the transmission of any commercial
electronic mail message to a protected computer unless the message
provides clear and conspicuous identification that the message is an
advertisement or solicitation. * * *'' Thus, Sec. 7711(b)
explicitly precludes the Commission from promulgating rule
provisions requiring inclusion of any specific words, characters,
marks, or labels in a commercial email message, or inclusion of the
identification required by Sec. 7704(a)(5)(A)(i) in any particular
part of a commercial email message.
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B. Advance Notice of Proposed Rulemaking
On March 11, 2004, the Commission published an Advance Notice of
Proposed Rulemaking (``ANPR'') which solicited comments on a number of
issues raised by the CAN-SPAM Act, most importantly, the definition of
``primary purpose.'' In addition, the ANPR requested comment on the
modification of the definition of ``transactional or relationship
message,'' on the appropriateness of the 10-business-day opt-out period
that had been set by the Act, on additional aggravated violations that
might be appropriate, and on implementation of the Act's provisions
generally.\18\ The ANPR set a date of April 12, 2004, to submit
comments. In response to petitions from several trade associations, the
Commission announced on April 7 that it would extend the comment period
to April 20, 2004.\19\
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\18\ 69 FR 11776 (Mar. 11, 2004). The ANPR also solicited
comment on questions related to four reports that the Commission
must submit to Congress within the next two years: a report on
establishing a ``Do Not Email'' Registry that was submitted on June
15, 2004; a report on establishing a system for rewarding those who
supply information about CAN-SPAM violations to be submitted by
September 16, 2004; a report setting forth a plan for requiring
commercial email to be identifiable from its subject line to be
submitted by June 15, 2005; and a report on the effectiveness of
CAN-SPAM to be submitted by December 16, 2005. The comments related
to the ``Do Not Email'' registry are discussed in the Commission's
June 15, 2004 report. The Commission will consider the relevant
comments received in response to the ANPR in preparing the remaining
reports.
\19\ 69 FR 18851 (Apr. 9, 2004). The associations seeking
additional time were the Direct Marketing Association, the American
Association of Advertising Agencies, the Association of National
Advertisers, the Consumer Bankers Association, and the Magazine
Publishers of America. The associations indicated that an extension
was necessary because of the religious holidays and the need to
consult more fully with their memberships to prepare complete
responses.
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In response to the ANPR, the Commission received approximately
13,517 comments from representatives from a broad spectrum of the
online commerce industry, trade associations, individual consumers, and
consumer and privacy advocates.\20\ Commenters generally applauded CAN-
SPAM as an effort to stem the flood of unsolicited and deceptive
commercial email that has threatened the convenience and efficiency of
online commerce. Commenters also offered several suggestions for the
Commission's consideration in drafting regulations to implement the
Act. Suggestions with respect to the Commission's ``primary purpose''
rulemaking and CAN-SPAM's definition of ``commercial electronic mail
message'' and the Commission's reasons for accepting or rejecting them
are discussed in detail in Section II. Because the ``primary purpose''
proceeding must meet a tight statutory deadline, the Commission will
address issues of discretionary rulemaking upon which comment was
solicited in the ANPR in a future Federal Register notice that the
Commission anticipates will be published shortly.
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\20\ This figure includes comments received on the ``Do Not
Email'' Registry, which had a comment period that ended March 31,
2004. Appendix A is a list of commenters and the acronyms used to
identify each commenter who submitted a comment in response to the
ANPR, including comments on the ``Do Not Email'' Registry, the
proposed reward program, the proposal for labeling commercial email,
and the efficacy of the Act. A full list of commenters, as well as a
complete record of this proceeding, may be found on the Commission's
web site: http://www.ftc.gov/os/comments/canspam/index.htm.
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C. Notice of Proposed Rulemaking
Based on the comments received in response to the ANPR, as well as
the Commission's law enforcement experience, the Commission proposes in
this NPRM regulations establishing criteria for determining ``the
primary purpose'' of an email message. The Commission invites written
comment on the questions in Section VII to assist the Commission in
determining whether the proposed Rule provisions strike the appropriate
balance, maximizing protections for email recipients while avoiding the
imposition of unnecessary compliance burdens on legitimate industry.
II. Analysis of Comments and Discussion of the Proposed Rule
A. Section 316.1--Scope of the Regulations
Section 316.1 of the proposed Rule states that this part implements
the CAN-SPAM Act. The Commission received a number of comments in
response to the ANPR asking that the Commission expressly exempt from
CAN-SPAM those entities that are not subject to the FTC's jurisdiction
under the FTC Act (``FTC Act''), 15 U.S.C. 41 et seq.\21\
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\21\ See, e.g., ASAE; NSBA; Walters; ASTC; UNC; Independent.
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Section 7706(d) of the CAN-SPAM Act makes clear that the Commission
may not initiate an enforcement action under the Act against any person
or entity over which the Commission lacks jurisdiction under the FTC
Act.\22\ The
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CAN-SPAM Act does not expand or contract the Commission's jurisdiction
or the scope of the proposed Rule's coverage. Limits on the FTC's
jurisdiction, however, do not affect the ability of other federal
agencies, the states, or providers of Internet access service to bring
actions under the Act against any entity within their jurisdiction as
authorized.\23\ Thus, many persons and entities not within the FTC's
jurisdiction may still be subject to an enforcement action for
violating the CAN-SPAM Act.
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\22\ Under Sec. 5(a)(2) of the FTC Act, the Commission does not
have jurisdiction over ``banks, savings and loan institutions
described in section 18(f)(3) [of the FTC Act], Federal credit
unions described in section 18(f)(4) [of the FTC Act], common
carriers subject to the Acts to regulate commerce, air carriers and
foreign air carriers subject to the Federal Aviation Act of 1958,
and persons, partnerships, or corporations insofar as they are
subject to the Packers and Stockyards Act, 1921, as amended, except
as provided in Section 406(b) of said Act.'' 15 U.S.C. 45(a)(2)
(footnotes omitted). In addition, the FTC does not have jurisdiction
over any entity that is not ``organized to carry on business for its
own profit or that of its members.'' 15 U.S.C. 44. Finally, the FTC
does not have jurisdiction over the business of insurance to the
extent that such business is regulated by state law. See Sec. 2 of
the McCarran-Ferguson Act, 15 U.S.C. 1012(b).
\23\ Sections 7706(b) and (c) of the CAN-SPAM Act authorize
federal agencies other than the FTC to enforce the Act against
various entities outside the FTC's jurisdiction.
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B. Section 316.2--Definitions
Section 316.2 of the proposed Rule includes the definitions of a
number of key terms of the Rule.\24\ Thirteen of these terms are
defined by references to the corresponding sections of the Act; the
definition of the fourteenth term--``character''--is repeated verbatim
from the Sexually Explicit Labeling Rule. Section 316.2 tracks Sec.
316.1(c) of the Sexually Explicit Labeling Rule.\25\
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\24\ Most of the terms listed in Sec. 316.2 occur in the text
of the proposed Rule; several of them are not in the Rule text, but
are defined in the proposed Rule because CAN-SPAM incorporates and
defines them within the definition of another term. For example, the
term ``procure'' is listed in the Rule's definitions [at Sec.
316.2(h)] because the Act defines and includes it in the term
``initiate.''
\25\ Section 316.2 contains definitions of fourteen (14) terms,
renumbered from Sec. 316.1(c) of the Sexually Explicit Labeling
Rule. These fourteen (14) terms are: ``affirmative consent;''
``character;'' ``commercial electronic mail message;'' ``electronic
mail address;'' ``electronic mail message;'' ``initiate;''
``Internet;'' ``procure;'' ``protected computer;'' ``recipient;''
``routine conveyance;'' ``sender;'' ``sexually oriented material;''
and ``transactional or relationship message.''
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The Commission believes that by referencing the definitions found
in the Act, and any future modifications to those definitions, the Rule
will accurately and effectively track any future changes made to the
definitions in the Act. Thus, with the sole exception of the addition
of the definition of ``character,'' the Commission has defined key
terms of the proposed Rule by reference to the Act without any
substantive changes to any definition.
C. Section 316.3--Primary Purpose
Section 7702(2)(C) of the CAN-SPAM Act directs the Commission to
``issue regulations pursuant to section 13 [of the Act] defining the
relevant criteria to facilitate the determination of the primary
purpose of an electronic mail message.'' (Emphasis supplied.) The term
``primary purpose'' comes into play in the Act's definition of
``commercial electronic mail message,'' which is ``any electronic mail
message the primary purpose of which is the commercial advertisement or
promotion of a commercial product or service (including content on an
Internet web site operated for a commercial purpose).'' \26\ Section
7702(2)(B) expressly excludes from the Act's definition of ``commercial
electronic mail message'' messages that meet the definition of
``transactional or relationship message,'' \27\ which also incorporates
the term ``primary purpose.'' Generally, CAN-SPAM applies only to
messages that fall within the Act's definition of ``commercial
electronic mail message.'' \28\
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\26\ 15 U.S.C. 7702(2)(A) (Emphasis supplied).
\27\ Section 7702(17)(A) of the Act defines a ``transactional or
relationship message'' as ``an electronic mail message the primary
purpose of which is--
(i) to facilitate, complete, or confirm a commercial transaction
that the recipient has previously agreed to enter into with the
sender;
(ii) to provide warranty information, product recall
information, or safety or security information with respect to a
commercial product or service used or purchased by the recipient;
(iii) to provide--
(I) notification concerning a change in the terms and features
of;
(II) notification of a change in the recipient's standing or
status with respect to; or
(III) at regular periodic intervals, account balance information
or other type of account statement with respect to, a subscription,
membership, account, loan, or comparable ongoing commercial
relationship involving the ongoing purchase or use by the recipient
of products or services offered by the sender;
(iv) to provide information directly related to an employment
relationship or related benefit plan in which the recipient is
currently involved, participating, or enrolled; or
(v) to deliver goods or services, including product updates or
upgrades, that the recipient is entitled to receive under the terms
of a transaction that the recipient has previously agreed to enter
into with the sender.''
\28\ One provision, Sec. 7704(a)(1), which prohibits false or
misleading transmission information, applies equally to ``commercial
electronic mail messages'' and ``transactional or relationship
messages;'' otherwise, CAN-SPAM's prohibitions and requirements
cover only ``commercial electronic mail messages.''
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1. Proposed Primary Purpose Provision
Proposed Sec. 316.3 sets forth criteria for determining the
``primary purpose'' of an email message.\29\ Because the Commission
does not believe that a single standard can adequately cover the
various ways that senders present commercial content in email messages,
this proposal includes three sets of criteria that apply in specified
circumstances. All three sets of criteria are based on a single
fundamental principle: determining ``the primary purpose'' of an email
message must focus on what the message's recipient would reasonably
interpret the primary purpose to be.
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\29\ These criteria will amplify and inform CAN-SPAM's
definition of ``commercial electronic mail message,'' as
contemplated by Sec. Sec. 7702(2)(C) and 7711(a). The proposed Rule
provision specifically addresses how CAN-SPAM applies to email
messages that contain both ``commercial'' and ``transactional or
relationship'' content. The latter term is defined in Sec.
7702(17)(A).
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First, proposed Sec. 316.3(a)(1) states that 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.
Second, proposed Sec. 316.3(a)(2) covers email messages that
contain both commercial content and content that falls within one of
the categories listed in Sec. 7702(17)(A) of the Act (``transactional
or relationship content''). The ``primary purpose'' of such an email
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.
Third, proposed Sec. 316.3(a)(3) covers email messages that
contain both commercial content and content that is neither commercial
nor ``transactional or relationship.'' In such a case, 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) a recipient reasonably interpreting the body of the
message would likely conclude that the primary purpose of the message
is to advertise or promote a product or service. Proposed Sec.
316.3(a)(3)(ii) sets out certain factors as illustrative of those
relevant to this interpretation, including 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.
Proposed Sec. 316.3(b) restates subparagraph (A) of the Act's
definition
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of ``transactional or relationship message'' for clarity in applying
the criteria that would be established in proposed Sec. 316.3(a).
a. The Function of the Subject Line in Determining the Primary Purpose
of an Email Message
The Commission believes that the subject line is important because
consumers reasonably use the information it contains to decide whether
to read a message or delete it without reading it. For this reason,
bona fide email senders likely use the subject line to announce or
provide a preview of their messages.\30\ These email senders, when they
are advertising or promoting a product or service, will likely
highlight that fact in their subject lines so that recipients may
decide whether to read the messages.
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\30\ Although some senders may use a ``teaser'' subject line
from which advertising or promoting a good or service may not be
apparent until the recipient views the body of the message, as
explained below, Sec. 7704(2) of CAN-SPAM places a limit on this
practice. Unlike teasers in conventional advertising, where
contextual features such as program breaks or layout likely alert
consumers that the teaser has a commercial purpose, consumers
viewing subject lines in an email browser have no other cues that
they are about to view an advertisement.
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i. Deception in Subject Lines
The Commission is well aware that, in contrast, spammers frequently
misrepresent or fail to disclose the commercial purpose of their
messages in the subject line in order to induce recipients to open
messages they otherwise would delete without opening.\31\ Section
7704(a)(2) of CAN-SPAM, however, prohibits the use of ``a subject
heading * * * [that] would be likely to mislead a recipient, acting
reasonably under the circumstances, about a material fact regarding the
contents or subject matter of the message (consistent with the criteria
used in enforcement of Section [5 of the FTC Act]).'' (Emphasis
supplied.) Thus, CAN-SPAM specifically applies to the subject line of
covered email messages the deception jurisprudence the Commission has
developed under Sec. 5(a) of the FTC Act.\32\ Accordingly, actual
deception need not be shown, only that a representation, omission, or
practice is likely to mislead.\33\ The ``acting reasonably under the
circumstances'' aspect of the analysis considers the representation
from the perspective of the ordinary consumer to whom it is
directed.\34\ A material fact ``is one which is likely to affect a
consumer's choice of or conduct regarding a product. In other words, it
is information that is important to consumers.'' \35\
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\31\ See, e.g., FTC v. Brian Westby, et al., Case No. 03 C 2540
(N.D. Ill. Amended Complaint filed Sept. 16, 2003) (FTC alleged in
part that Defendants used deceptive subject lines to expose
unsuspecting consumers to sexually explicit material).
\32\ 15 U.S.C. 45(a). The express language of Sec. 7704(2)(a)
of CAN-SPAM tracks the deception standard developed in the
Commission's cases and enforcement statements, thereby prohibiting
subject line content that is likely to mislead a consumer acting
reasonably under the circumstances about a material fact regarding
the content or subject matter of the message. Cliffdale Associates,
Inc., 103 F.T.C. 164-5. The framework for analyzing alleged
deception is explicated in an Appendix to this decision, reprinting
a letter dated Oct. 14, 1983, from the Commission to The Honorable
John D. Dingell, Chairman, Committee on Energy and Commerce, U.S.
House of Representatives (1984) (``Deception Statement''). Note,
however, that Sec. 7704(a)(6) of the Act establishes a definition
of ``materially'' that is distinct from, but consistent with, the
definition articulated in the Deception Statement. The Sec.
7704(a)(6) definition applies only to Sec. 7704(a)(1), which
prohibits header information that is ``materially false or
materially misleading.''
\33\ Id. at 176. Thiret v. FTC, 512 F.2d 176, 180 (10th Cir.
1975); Ger-Ro-Mar, Inc. v. FTC, 518 F.2d 33, 36 (2d Cir. 1975);
Resort Car Rental System, Inc. v. FTC, 518 F.2d 962, 964 (9th Cir.
1975).
\34\ Cliffdale at 177-8.
\35\ Id. at 182 (citations omitted).
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CAN-SPAM's focus on subject lines that misrepresent the content or
subject matter of the message is in accord with case law developed
under Sec. 5 of the FTC Act with respect to deceptive ``door-
openers.'' The subject line of an email message serves as a door-
opener--an initial contact between a sender and a recipient that
typically makes an express or implied representation about the purpose
of the contact. Before the recipient views the body of an email
message, he typically may view the subject line that, as the
designation ``subject line'' implies, announces what the email message
concerns. Some senders may be tempted to use misrepresentations in the
subject line to induce recipients to open their messages. These senders
would be well advised that CAN-SPAM prohibits using the subject line as
an initial contact with consumers to get their attention by
misrepresenting the purpose of the contact.\36\
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\36\ ``[W]hen the first contact between a seller and a buyer
occurs through a deceptive practice, the law may be violated even if
the truth is subsequently made known to the purchaser.'' Deception
Statement at 180. See also Carter Products, Inc. v. FTC, 186 F.2d
821, 824 (5th Cir. 1951); Exposition Press, Inc. v. FTC, 295 F.2d
869, 873 (2d Cir. 1961), cert. denied 370 U.S. 917 (1962); National
Housewares, Inc., 90 F.T.C. 512, 588 (1977); Resort Car Rental v.
FTC, 518 F.2d 962, 964 (9th Cir. 1975); Encyclopaedia Britannica,
Inc., 87 F.T.C. 421, 497 (1976), aff'd sub nom. Encyclopaedia
Britannica, Inc. v. FTC, 605 F.2d 964 (7th Cir. 1979), cert. denied
445 U.S. 934 (1980).
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ii. Subject Lines in Email Messages that Contain Only Content
Advertising or Promoting a Product or Service
In view of the legal obligation under both CAN-SPAM and Sec. 5 of
the FTC Act for senders to ensure that the subject lines of their email
messages are not deceptive, the Commission believes that when the body
of an email message contains only content that advertises or promotes a
product or service, then the subject line of that message must be
consistent with that content. A non-deceptive subject line of such a
message is therefore not a separate signifier of the primary purpose of
the email; it complements and is consistent with the body of the email
message. Therefore, the proposed criterion covering such messages does
not include a separate element addressing the subject line.
iii. Subject Lines in Email Messages That Contain Both Commercial and
Noncommercial Content (``Dual-Purpose Messages'')
In the case of a dual-purpose message with a subject line that a
recipient would reasonably interpret as signaling a commercial message,
under the proposed criteria, the message would be deemed to be
commercial, regardless of whether the body of the message contained--in
addition to commercial content--either: content that is ``transactional
or relationship;'' or content that is neither commercial nor
``transactional or relationship.'' \37\ This criterion is supported by
the Commission's belief, discussed above, that bona fide email senders,
when they are advertising or promoting a product or service, likely
highlight that fact in their subject lines so that recipients may
decide whether to read the messages. Thus it is reasonable to deem an
email message to have a commercial primary purpose if the sender
highlights the message's commercial content in the subject line.
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\37\ This ``subject line'' discussion is not intended to require
that every email message with any commercial content must use a
subject line that refers to the message's commercial content.
Depending on the facts of a given situation, a dual-purpose message
may use a subject line that is not deceptive and does not refer to
commercial content.
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b. Analysis of the Body of a Dual-Purpose Message To Determine the
Message's Primary Purpose
With respect to dual-purpose email messages, if a recipient
reasonably interpreting the subject line of the message would not
likely conclude that the message advertises or promotes a product or
service, then the Commission proposes two additional criteria relevant
to determining a message's ``primary purpose.''
[[Page 50096]]
i. Dual-Purpose Messages Containing Commercial and ``Transactional or
Relationship'' Content
The Commission proposes a criterion to apply to messages containing
both commercial content and transactional or relationship content. That
criterion states that the ``primary purpose'' of the message shall be
deemed to be commercial if the message's content pertaining to one of
the functions listed in subparagraph (b)(1)-(5) of the proposed Rule
provision \38\ (i.e., the message's transactional or relationship
content) does not appear at or near the beginning of the message.
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\38\ Subparagraph (b) of proposed Sec. 316.3 restates the five
categories of ``transactional or relationship messages'' identified
in Sec. 7702(17)(A) of CAN-SPAM. See note 27.
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Commenters argued that CAN-SPAM's ``primary purpose'' standard
should distinguish between such dual-purpose messages--which arise from
a business relationship between the sender and the recipient--and dual-
purpose messages that are basically ``cold-call'' contacts where no
relationship exists between the sender and recipient. These commenters
claimed that senders of messages with transactional or relationship
content will not abuse their ability to communicate with customers via
email by sending unnecessary transactional or relationship messages
larded with commercial content, or by continuing to send unwanted
messages to customers who have expressed a desire not to receive the
sender's commercial messages.\39\
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\39\ See Comerica; Venable; Wells Fargo.
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One commenter noted that the Act's legislative history supports
treating as ``transactional or relationship'' messages that contain
both commercial and transactional or relationship content:
Our goal here is not to discourage legitimate online
communications between businesses and their customers. Senator Burns
and I have no intention of interfering with a company's ability to
use e-mail to inform customers of warranty information, provide
account holders with monthly account statements, and so forth.\40\
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\40\ Verizon (citing Statement of Sen. Wyden, 149 Cong. Rec.
S5208 (Apr. 10, 2003)).
The Act's use of the phrase ``primary purpose'' in the
``commercial'' and ``transactional or relationship'' definitions
establishes that a message can contain both types of content and still
be regulated as either commercial or transactional or relationship. The
Act does not specify that a ``transactional or relationship message''
is one containing only transactional or relationship content.
Commenters' arguments regarding messages containing commercial and
transactional or relationship content, as well as the legislative
history quoted above, persuade the Commission that the proposed
``primary purpose'' criteria should distinguish between messages that
contain transactional or relationship content and those that do not.
The Commission's proposed criteria give clear guidance to senders of
messages that contain both commercial and transactional or relationship
content: if the subject line criterion is not determinative, such dual-
purpose messages have a commercial primary purpose unless the
transactional or relationship content appears at or near the beginning
of the message.\41\
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\41\ The Commission rejects an argument made by several
commenters that CAN-SPAM establishes that messages with any
transactional or relationship content are necessarily
``transactional or relationship messages.'' See, e.g., NFCU;
Verizon; ACLI; SIIA. The view espoused by these commenters is not
supported by CAN-SPAM's ``transactional or relationship''
definition, which indicates that a message is ``transactional or
relationship'' only if the primary purpose of the message is
``transactional or relationship.'' 15 U.S.C. 7702(17)(A) (Emphasis
supplied).
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There is no evidence on the record establishing that senders of
bona fide transactional or relationship content would suffer any
detriment under a CAN-SPAM regime calling for transactional or
relationship content to be placed before commercial content in an email
message.\42\ Moreover, the harm that CAN-SPAM is meant to address--
primarily, the time and resources wasted in dealing with unwanted
unsolicited commercial messages--probably does not result from messages
that begin with transactional or relationship content, followed by
commercial content, if any.\43\ Congress's decision largely to exempt
transactional or relationship messages from CAN-SPAM requirements
supports this determination. CAN-SPAM's definition of ``transactional
or relationship message'' includes specific categories of messages that
Congress determined to be ones that consumers want to receive. These
categories include vital information such as bank account statements,
product recalls, transaction confirmations, and warranty information.
For messages containing both commercial and transactional or
relationship content to be considered ``transactional'' rather than
commercial, the Commission's proposed ``primary purpose'' criteria
would require only that senders of such messages place their
transactional or relationship content ``at or near the beginning of the
message.'' This would allow recipients quickly to identify messages
providing transactional or relationship content without first having to
wade through commercial content. The Commission seeks comment and
information regarding this approach to messages containing both
commercial and transactional or relationship content.
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\42\ Without this requirement, some senders might be tempted to
use dual-purpose messages that begin with commercial content and
close with transactional or relationship content as a means of
taking advantage of their business relationship with a recipient to
send commercial messages that do not comply with CAN-SPAM.
\43\ See 15 U.S.C. 7701 (Congressional findings and policy of
the CAN-SPAM Act).
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ii. Dual-Purpose Messages That Contain Both Commercial Content and
Content That Is Neither Commercial Nor Transactional/Relationship
In addition to the subject line criterion that would apply to all
dual-purpose messages under the Commission's proposed ``primary
purpose'' criteria, a separate criterion would apply to messages
containing both commercial content and other content that is neither
commercial nor transactional/relationship. Even if a recipient
reasonably interpreting the subject line of the message would not
likely conclude that the message advertises or promotes a product or
service, the primary purpose of the message still would be deemed to be
commercial if a recipient reasonably interpreting the body of the
message would likely conclude that the primary purpose of the message
is to advertise or promote a product or service. Factors relevant to
this interpretation include, but are not necessarily limited to, 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 criterion for this type of dual-purpose message derives from
the Commission's traditional analysis of advertising under Sec. 5 of
the FTC Act.\44\ The Commission assesses claims made in advertising by,
among other things, evaluating the entire document. ``[I]n advertising,
the Commission will examine `the entire mosaic, rather than each tile
separately.' '' \45\ ``[T]he Commission looks to the impression made by
the advertisement as a whole.'' \46\ The Commission draws on this
approach in its proposed criteria to
[[Page 50097]]
determine whether a dual-purpose email message is commercial when it
contains both commercial content and content that is neither commercial
nor transactional/relationship. The Commission believes this approach
would provide guidance to email marketers while preventing spammers
from evading CAN-SPAM by adding noncommercial content to an email sales
pitch.
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\44\ See Deception Statement.
\45\ Deception Statement at 181, citing and quoting FTC v.
Sterling Drug, 317 F.2d 669, 674 (2nd Cir. 1963).
\46\ Deception Statement at 181, citing and quoting FTC v.
American Home Products, 695 F.2d 681, 688 (3rd Cir. 1982).
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This proposed criterion is rooted firmly in traditional Commission
legal analysis. Marketers have long been under an obligation to
evaluate their advertising material from the reasonable consumer's
perspective and determine what impression their material makes on
consumers.\47\
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\47\ The ``reasonable consumer'' standard focuses on the
ordinary or average consumer, not any particular consumer. Deception
Statement at 178. If a particular act or practice is directed to a
particular audience, then the Commission assesses the overall
sophistication and understanding of that particular group in
determining the reaction of the ``reasonable consumer.'' Id. at 178,
180. For a more detailed explanation of the ``reasonable consumer''
standard, see Deception Statement at 176-87.
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In enforcing CAN-SPAM and the primary purpose criteria, the
Commission will approach the issue of whether the body of an email
message, taken as a whole, is primarily commercial in the same way it
approaches the issue of whether certain claims are made in a challenged
advertisement. ``In cases of implied claims, the Commission will often
be able to determine meaning through an examination of the
representation itself, including an evaluation of such factors as the
entire document, the juxtaposition of various phrases in the document,
the nature of the claim, and the nature of the transactions.'' \48\ In
other situations, extrinsic evidence--such as expert opinion, consumer
testimony, copy tests, surveys, or any other reliable evidence of
consumer interpretation--may be necessary to make this
determination.\49\ In all instances, the Commission will carefully
consider any extrinsic evidence that is introduced.\50\
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\48\ Cliffdale at 176.
\49\ Id.
\50\ Id.
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2. Overview of ``Primary Purpose'' Comments
In response to the ANPR, the Commission received approximately 220
comments addressing ``primary purpose'' issues. Many individual
consumers opined that a message has a commercial primary purpose if it
contains any commercial content. Other consumers expressed the view
that CAN-SPAM should regulate only unsolicited messages and should not
apply to messages sent with the recipient's consent or where there is
an established business relationship between the sender and the
recipient.
Many commenters noted that criteria based upon the ``importance''
of a message's commercial content relative to any noncommercial content
would not, on their own, provide adequate guidance.\51\ According to
these commenters, such criteria would need additional substance and
structure to provide industry with the guidance it needs to comply with
the Act's requirements. Many of these commenters--particularly email
marketers--advocated criteria based on the sender's intent.
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\51\ The ANPR suggested three possible approaches, based
respectively on whether the commercial purpose was (1) ``more
important than all of the email's other purposes combined;'' (2)
``more important than any other single purpose of the email, but not
necessarily more important than all other purposes combined;'' or
(3) ``more than incidental.'' The ANPR also identified three other
approaches that might be used to determine ``the primary purpose''
of an email: (1) A ``net impression'' analysis; (2) a ``financial
support'' analysis; and (3) a ``sender'' analysis. The ANPR also
asked whether there were ``other ways to determine whether a
commercial advertisement or promotion in an email is the primary
purpose of the email.'' 69 FR at 11779-80.
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Other commenters supported criteria based on the ``net impression''
of a message, which was a possible approach suggested in the questions
included in the ANPR. Under this approach, the primary purpose of an
email message would be determined by assessing the message from the
recipient's point of view, not the sender's. Many of these comments
endorsed the ``net impression'' elements suggested in the ANPR--
chiefly, placement and prominence of commercial content within the
message. A number of comments also proposed that if a message's subject
line refers to a promotion or advertisement, then the message likely
has a commercial primary purpose. Each of these proposals is discussed
below.
3. Commenters' Suggestions Not Adopted as Part of the Commission's
Proposed Standard for Determining the ``Primary Purpose'' of an Email
Message
In addition to suggesting several possible approaches to determine
the ``primary purpose'' of an email message, the ANPR sought to elicit
alternatives. The commenters responded with approximately 25 proposals.
Some commenters were concerned primarily with advocating an objective
standard for determining an email message's primary purpose. A second
group advocated the sender's intent as the characteristic that
determines an email's primary purpose. A third group focused on certain
attributes that, in their view, rendered messages possessing them
commercial. A fourth group discussed characteristics that, in their
view, placed messages exhibiting those characteristics outside the
commercial category.\52\ The following sections discuss each of these
groups.
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\52\ A few commenters proposed standards for determining when an
email is ``spam,'' such as: sending a message in bulk; including a
tracking device in a message; ``spoofing'' identifying information
in a message; or committing an aggravated violation when sending a
message. See, e.g., Bighorse; Sewing; Gitzendanner; Emmers; Just.
The Commission appreciates that some commenters respond negatively
to messages with these characteristics, but the proposals they
advanced are too narrow as criteria and probably unworkable to
determine the primary purpose of an email message. Additionally, a
few commenters argued that a message is commercial if it is not
``transactional'' or personal, or if the message begins with an opt-
out mechanism. See RealTime; Practice; BestPrac; Hawkins. Other
commenters suggested that a message should be considered
``commercial'' only if it refers to an offer for a specific product
or service. See MCI. Cf. Reed. The Commission does not believe that
these proposals adequately reflect Congressional intent or provide
the most useful guidance in establishing criteria to determine a
message's primary purpose. Finally, two consumers argued that the
government should not regulate email marketing. See Quinn; Ewing.
Nevertheless, in CAN-SPAM, Congress has determined that commercial
email is subject to regulation.
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a. Comments Discussing Use of an ``Objective Standard'' as a ``Primary
Purpose'' Criterion
Many comments from industry members criticized some or all of the
``primary purpose'' standards suggested in the ANPR questions.\53\ A
common thread throughout these critiques was that any ``subjective''
standard would provide inadequate guidance to industry members who need
to determine (1) whether CAN-SPAM applies to their messages, and, if
so, (2) whether their messages comply with the law.\54\ These
commenters recommended that the Commission adopt some form of
``objective'' test for determining the primary purpose of a
message.\55\
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\53\ Several consumers also supported this view. See Lunde; Ord;
Mead; Marzuola. These suggested standards and commenters' criticisms
are discussed in more detail below.
\54\ See, e.g., MBNA; MasterCard; Nextel; SIA.
\55\ See, e.g., DMA.
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Many advocates of an objective standard supported a ``proportion of
content'' standard. Under such a proposal, a message would have a
commercial primary purpose if its commercial content comprised, for
example, at least 25%,\56\ 33\1/3\%,\57\ or
[[Page 50098]]
51% \58\ of the message's total content. Supporters of these
``percentage'' proposals claimed that a quantitative standard had the
advantage of providing a clear standard while preserving marketers'
flexibility in message design.\59\
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\56\ Mead; Goth.
\57\ MPAA (proposing a safe harbor under which a message will
not have a commercial primary purpose if its commercial content
``constitutes no more than 33\1/3\%'' of the message's overall
content, which MPAA claims is consistent with consumer
expectations). See also Marzuola.
\58\ Go Daddy; Nextel; MBNA.
\59\ See, e.g., MPAA, whose ``percentage'' proposal would
measure the amount of email ``space'' or ``volume'' dedicated to
commercial content.
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On the other hand, a number of commenters criticized such a
``proportion'' standard as unworkable. AeA wrote that ``[d]etermining
whether a message is a commercial promotion or not based on pre-set
proportions is not a viable alternative, because setting a formula * *
* would be arbitrary and unreliable.'' AeA noted that, with respect to
messages with both commercial and transactional content--e.g.,
``account balance information''--a ``proportion'' standard could yield
different results depending on whether or not a recipient's account
reflected a lot of activity.\60\ Presumably, this is because the amount
of space in a message occupied by transactional content would increase
as account activity increased. If so, a message reflecting a lot of
account activity could be considered transactional and a message
reflecting little account activity could be considered commercial even
if both messages contained the same amount of commercial content. IAC
opposed a bright-line test which would ``likely be easy for those
intent on violating the statute to exploit and circumvent.'' \61\
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\60\ AeA instead favored a ``net impression'' test using the
sender's intent as the perspective.
\61\ IAC instead favored a standard that considered the sender's
intent, a reasonable consumer's perception, and the subject line.
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The Commission declines to adopt a rigidly mechanical
``proportion'' standard for determining the primary purpose of a
message. A standard that, for example, counts the lines of commercial
versus noncommercial content is not responsive to the countless ways to
market products and services via email. Such an approach would likely
miss entirely the nuances that characterize any communication,
including email. Moreover, as one commenter noted, a percentage-based
standard is inadequate when non-commercial content is presented as text
and commercial content is in the form of a Web site URL.\62\ As IAC
noted, such a standard could be easily sidestepped by email marketers
seeking to evade CAN-SPAM. The Commission is particularly persuaded by
this critique.
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\62\ Danko.
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As was explained above, the Commission's proposed criteria
distinguish between messages that package commercial content with
transactional or relationship content and those that package commercial
content with some other type of content. The Commission believes that
senders of the former category of dual-purpose message are far less
likely to attempt to evade CAN-SPAM. Moreover, messages in the former
category provide content that Congress has legislatively determined to
be particularly important to recipients.\63\ The Commission's proposed
``primary purpose'' criteria for these messages would require them to
provide transactional or relationship content at or near the beginning
of the message in order to qualify as ``transactional or relationship''
rather than commercial.
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\63\ See statement from Sen. Wyden cited above.
---------------------------------------------------------------------------
IAC's cautionary comment, however, supports the Commission's view
that messages that contain both commercial content and content that is
neither commercial nor transactional/relationship merit a different
standard. Such messages may or may not deliver content that is
important to recipients; Congress has made no legislative determination
on this issue. Therefore, the proposed criterion does not rely entirely
on placement of the noncommercial content, although placement is one
element to consider in determining the net impression. The Commission's
proposed criteria with respect to these messages looks to the net
impression created by the message.
b. Comments Discussing a ``Primary Purpose'' Criterion Based on
Sender's Intent, Such as a ``But For'' Standard
As a whole, industry members expressed greatest support for a
``primary purpose'' standard based on the sender's intent. Most of
these commenters framed this proposal as a ``but for'' test, under
which a message would not be considered ``commercial'' if it would have
been sent in any event because of its noncommercial content. These
comments framed the ``but for'' test in several ways, such as asking
whether a message would have been sent but for its commercial purpose
\64\ or its non-commercial purpose.\65\ Other comments refined the
standard and stated that the relevant question is whether a message
would have been sent but for particular commercial content \66\ or any
commercial content.\67\ Several other commenters proposed that the
sender's intent should be part of a ``net impression'' approach to
determining a message's primary purpose.
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\64\ See, e.g., DMA; PMA; Visa.
\65\ CBA; SIA; Wells Fargo.
\66\ ERA; MBNA; USCC.
\67\ NAR.
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Several commenters argued that Congress's use of the phrase
``primary purpose'' evidences its ``clear intent to establish a
standard which evaluates the status of the email based on the sender's
objective and motivation.'' \68\ The Commission is not persuaded by
this argument. CAN-SPAM refers to the primary purpose of the message,
not of the sender. While one way to determine a message's purpose could
be to assess the sender's intent, a more appropriate way is to look at
the message from the recipient's perspective.\69\ Several commenters
made this point. One urged the Commission ``to refrain from adopting
any `primary purpose' test that seeks to prioritize the subjective
motivations of email senders.'' \70\
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\68\ PMA. See also Coalition; ERA; AT&T; ICC.
\69\ It is well-settled that the Commission need not show intent
to prove a violation of Sec. 5 of the FTC Act. See, e.g., FTC v.
Publishing Clearing House, Inc., 104 F.3d 1168 (9th Cir. 1997); In
re National Credit Management Group, LLC, 21 F. Supp. 2d 424 (D.N.J.
1998); FTC v. Patriot Alcohol Testers, Inc., 795 F. Supp. 851 (D.
Mass. 1992); FTC v. Affordable Media, LLC, 1999 U.S. App LEXIS
13130, 1999-1 Trade Cas. (CCH) ] 72,547 (11th Cir. Jun. 15, 1999).
Consistent with that principle, the Commission does not believe
that, generally, the sender's intent would serve as a workable
indicator of an email message's primary purpose. Nevertheless, the
Commission discusses below the possibility that spammers may be
tempted to use a ``deceptive format'' to trick recipients into
thinking that an email message does not have a commercial primary
purpose. In that discussion, the Commission asks whether the
sender's intent should be added to the proposed ``primary purpose''
criteria to establish clearly that spammers may not evade CAN-SPAM
in this manner.
\70\ Cox. See also Microsoft; NetCoalition.
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Based largely on the analytical approach the Commission takes with
respect to advertising--which looks at claims in marketing material
from the consumer's perspective rather than the marketer's \71\--the
Commission declines, at this time, to adopt an approach that instead
considers the advertiser's intent. Nevertheless, as is discussed in
more detail below, the Commission recognizes that some spammers could
attempt to evade CAN-SPAM by deceptively portraying commercial content
as noncommercial content.\72\
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\71\ See generally Deception Statement.
\72\ Spammers could claim that such messages do not have a
commercial primary purpose under the Commission's proposed criteria
if, due to a sender's use of a deceptive advertising format, a
recipient reasonably interpreting the body of the message would not
likely conclude that the primary purpose of the message is to
advertise or promote a product or service. See the ``net
impression'' discussion below, including note 99, for the
Commission's conclusion that such messages may still be deemed to
have a commercial primary purpose under the Commission's proposed
criteria.
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[[Page 50099]]
The Commission requests comment and information on whether it should
consider the sender's intent to advertise or promote a product or
service within the criteria for determining the primary purpose of
email messages that contain both commercial content and content that is
neither commercial nor transactional/relationship.
c. Commenters' Proposals for Determining When a Message Has a
Commercial Primary Purpose
Several commenters supported a standard that treated any
unsolicited message (not sent with the recipient's consent) as
commercial.\73\ The regulatory scheme incorporated into the CAN-SPAM
Act, however, obviates such an approach. The Act defines ``affirmative
consent'' and describes how ``consent'' affects CAN-SPAM
compliance.\74\ It is clear from the Act that Congress did not intend
for the primary purpose of an e-mail message to be determined based on
whether a message was unsolicited. The Commission's proposed Rule is
consistent with the Act's treatment of ``consent.''
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\73\ See Teevan; Smith; Lane; ClickZ; Lenox.
\74\ Under CAN-SPAM, commercial messages sent based on the
recipient's ``affirmative consent'' need not provide the ``clear and
conspicuous identification that the message is an advertisement or
solicitation'' required by Sec. 7704(a)(5)(A)(i); and a recipient's
affirmative consent provided subsequent to an opt-out request
overrides that previous request. 15 U.S.C. 7704(a)(5)(A)(i),
7704(a)(4)(B).
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Another proposal widely supported by consumers was to treat the
primary purpose of an e-mail message as commercial if the message
contains any commercial content.\75\ CAN-SPAM specifies, however, that
a ``commercial electronic mail message'' is a message ``the primary
purpose of which is the commercial advertisement or promotion of a
product or service. * * *'' \76\ (Emphasis supplied.) That language
establishes that mere inclusion of any commercial content is not enough
by itself to bring an e-mail message within the ambit of the Act's
coverage. Therefore, the Commission declines to adopt this proposed
standard.
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\75\ See, e.g., Dobo-Hoffman (``If ANYONE is going to
potentially generate income in any way, the email is commercial.'');
DeHotman (``Any language which could be interpereted [sic] as an
inducement to buy, sell, or support an action or position should be
considered commercial.'').
\76\ See 15 U.S.C. 7702(2)(A).
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At the opposite extreme, some commenters urged that a message can
be deemed to have a commercial primary purpose only if it contains
nothing but commercial content.\77\ EFF argued that ``when the ad or
promotional aspects of the message are inextricably intertwined with
noncommercial aspects, then the message is noncommercial for purposes
of First Amendment analysis,'' and therefore likely beyond the reach of
CAN-SPAM's requirements and prohibitions.\78\ EFF criticized the
standards posited in the ANPR that were based on the ``importance'' of
commercial content and on the ``net impression.'' Cox's extensive
comment developed the analysis more fully. Cox discussed the potential
First Amendment implications of the ``primary purpose'' rule on the
company's web sites that offer consumers the opportunity to register
online to receive a variety of free content and information services,
such as electronic newsletters and weather alerts. Cox argued that:
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\77\ See EFF; Cox; Davis; Anderson; Lykins. See also M&F; SIA;
Wells Fargo; CBA; Cox; MCI; MPAA; Hekimian-Williams (arguing that
electronic newsletters should not be regulated by CAN-SPAM as
commercial messages).
\78\ See also MPAA; OPA; Courthouse (arguing that the First
Amendment prohibits the Commission from treating messages with
editorial content as commercial speech, even if such content is
supported by advertising).
[t]o avoid encroaching on core constitutionally-protected
expression, Cox urges the Commission to refrain from adopting any
``primary purpose'' test that seeks to prioritize the subjective
motivations of e-mail senders. Instead, the FTC should clarify that
the ``primary purpose'' of an e-mail message that contains
substantial editorial content is to convey constitutionally-
protected speech--regardless of whether the message is supported by
advertising. As discussed below, such an objective test is
consistent with the intent of Congress and would harmonize the CAN-
SPAM Act with the requirements of the First Amendment. (Emphasis
---------------------------------------------------------------------------
supplied.)
The Commission believes that the proposed ``primary purpose''
standard achieves the goal that Cox espouses, and avoids the
constitutional problems that prompt Cox's cautionary comments. The
Commission is mindful of First Amendment limitations, but believes that
the law is clear that commercial content generally may be regulated
without violating the First Amendment.\79\
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\79\ See, e.g., Central Hudson Gas & Electric Corp v. Public
Service Comm'n. of N.Y., 447 U.S. 557 (1980).
---------------------------------------------------------------------------
Under the ``primary purpose'' standard, an electronic newsletter
that combines editorial or informational content and advertising would
be governed by the proposed criteria for dual-purpose messages. If the
newsletter satisfies any element of the ``transactional or relationship
message definition--for example, if the newsletter constitutes
``deliver[y of] goods or services * * * that the recipient is entitled
to receive under the terms of a transaction that the recipient has
previously agreed to enter into with the sender'' \80\--then it would
not be considered to 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.
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\80\ 15 U.S.C. 7702(17)(A)(v).
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If the newsletter does not satisfy any element of the
``transactional or relationship message'' definition--for example, a
message combining unrequested informational and commercial content--
then it would not be considered to 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) a recipient reasonably interpreting the body
of the message would likely conclude that the primary purpose of the
message is to advertise or promote a product or service.\81\ In the
case of a bona fide electronic newsletter, application of this analysis
is likely to result in the conclusion that the message does not have a
primary purpose that is commercial.
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\81\ As is explained above, factors illustrative of those
relevant to this interpretation include the placement of content
advertising or promoting a product or service at or near the
beginning of the body of the message; the proportion of the message
dedicated to such content; and how color, graphics, type size, and
style are used to highlight commercial content.
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Articulating a concern noted by other commenters,\82\ Cox opined
that the Commission should adopt a standard ``that retains enough
flexibility to allow for `common sense' judgments'' necessary to ensure
that unscrupulous `spammers' cannot sidestep CAN-SPAM through the ruse
of faux newsletters. As Cox put it, spammers should not be able to:
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\82\ See, e.g., ABM; CASRO.
immunize commercial messages from the requirements of the CAN-SPAM
Act merely by including an incidental reference to a public issue or
an editorial comment in a commercial sales solicitation. Thus, for
example, spammers using commercial email messages to advertise
discounts on generic Viagra tablets could not avoid the Act's
requirements simply by larding their solicitations with an appeal
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for expanded Medicare prescription drug benefits.
[[Page 50100]]
Again, the Commission's proposed ``primary purpose'' criteria
should provide the requisite flexibility that Cox advocates. The
Commission seeks comment on how email messages with both commercial and
noncommercial content should be treated.
d. Commenters' Proposals for Determining When a Message Does NOT Have a
Commercial Primary Purpose
A significant number of comments, especially from industry members,
proposed a number of criteria that would establish when a message is
not commercial. Many of these comments urged that certain categories of
messages should be exempted from the Act's ``commercial electronic mail
message'' definition.
Messages From Nonprofit Entities--One category of messages that
commenters recommended should not be treated as ``commercial'' under
the Act are those sent by nonprofit entities. The nature and subject of
email messages from nonprofit entities encompass a wide range, and the
treatment of such messages under the Act elicited a variety of
opinions. Some consumers argued for a broad interpretation of
``commercial'' that would extend the term to nonprofit entities.\83\
NAA espoused a similar position: ``[A] not-for-profit university
advertising grandfather clocks to alumni probably is sending a
commercial advertisement that should be covered by the regulations,
regardless of the sender's not for profit status.'' \84\
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\83\ See K. Krueger; Sawyer.
\84\ NAA.
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Nonprofit commenters took the opposite position. Some argued for a
broad exemption, asserting that messages from nonprofit entities either
should not be regulated at all, or should be treated as ``transactional
or relationship messages.'' \85\ Other nonprofit entities argued for a
narrower exemption, which would be limited to messages ``primarily
related to one or more of the organization's duly authorized tax exempt
nonprofit purposes.'' \86\ A third set of nonprofit entities urged that
messages between a nonprofit entity and its members should not be
regulated as commercial,\87\ arguing for a nonprofit-based exemption
that would apply to messages sent to both current and former
members.\88\
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\85\ See NADA; KSU.
\86\ ASAE. See also IAAMC; AWWA; ABA; PMA; ASTC; Bankers.
\87\ See NSBA; AVHA; NTA; PAR.
\88\ See, e.g., NTA.
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As a preliminary matter, the Commission notes that, under the FTC
Act, the Commission does not have jurisdiction over entities that do
not operate for their own profit or the profit of their members.\89\
Nevertheless, this limit on the FTC's jurisdiction does not exclude
these entities totally from the ambit of CAN-SPAM. States and providers
of Internet access service have a right of action under the Act. Thus,
if a nonprofit organization were to send messages that could be deemed
to have a primary purpose that is commercial, conceivably the
organization could face the necessity of defending against an action
brought by a state or provider of Internet access service based on the
failure to abide by the requirements and prohibitions of CAN-SPAM.
While such a scenario may seem unlikely, it could possibly arise.
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\89\ 15 U.S.C. 44. For purposes of this discussion, the term
``nonprofit entities'' refers to entities that do not operate for
their own profit or that of their members.
---------------------------------------------------------------------------
At least one nonprofit argued that Sec. 7701 of the Act--setting
out Congressional findings and policy--reveals an intent to leave
nonprofit entities unregulated. These commenters, however, are unable
to point to any statement in Sec. 7701 of CAN-SPAM (or, indeed, in any
other provision) expressly exempting nonprofit organizations from
coverage.
Some nonprofit entities argued that the multiple references to the
word ``commercial'' in the definition of ``commercial electronic mail
message'' reflect an intent to distinguish between for-profit and
nonprofit messages.\90\ The Commission is not persuaded by this
argument. CAN-SPAM does not set up a dichotomy between ``commercial''
and ``nonprofit'' messages. Rather, it focuses on messages whose
primary purpose is to sell something, as distinguished from
``transactional or relationship messages,'' informational and editorial
messages, and (relevant to nonprofit entities) messages seeking a
charitable contribution.
---------------------------------------------------------------------------
\90\ See NSBA.
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Under 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. On 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 Sec. 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. Consistent with CAN-SPAM, the proposed
``primary purpose'' criteria apply to all email messages with
commercial content, regardless of whether sent by a nonprofit entity or
a for-profit entity.
Arguments Advanced to Treat Other Types of Messages As Not Having a
Primary Purpose That Is Commercial--Some businesses sought an exemption
from CAN-SPAM for specialized messages sent in a narrow set of
circumstances. For example, BMI argued that the primary purpose of its
``commercial email message[s] to enforce bona fide copyright rights of
its affiliates'' is not commercial even if the messages also promote a
music licensing service.\91\ The Commission believes that specific
criteria addressing narrow categories of messages like BMI's would
create an unwieldy standard.\92\ Moreover, such an approach is
unnecessary in light of the criteria proposed by the Commission, which
apply the same test to all email messages. A message containing
commercial content as well as content that is neither commercial nor
transactional/relationship has a commercial primary purpose if a
recipient reasonably interpreting the subject line of the message would
likely conclude that the message advertises or promotes a product or
service, or a recipient reasonably interpreting the body of the message
would likely conclude that the primary purpose of the message is to
advertise or promote a product or service.\93\ One main advantage of
the Commission's proposed ``primary purpose'' criteria is that they
work well with respect to all
[[Page 50101]]
messages that may be subject to CAN-SPAM, regardless of the subject
matter or the sender of the message.
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\91\ BMI.
\92\ Similarly, the Commission rejects the proposal that the Act
exempt business-to-business messages. See MMS; DSA. The comments did
not present a persuasive reason to treat messages to businesses
differently from messages to consumers. The Congressional findings
in Sec. 7701(a) of the Act clearly evidence Congress's concern with
the economic injury to businesses caused by unsolicited emails. See,
e.g., 15 U.S.C. 7701(a)(4) and (6).
\93\ As is explained above, factors illustrative of those
relevant to this interpretation include the placement of content
advertising or promoting a product or service at or near the
beginning of the body of the message; the proportion of the message
dedicated to such content; and how color, graphics, type size, and
style are used to highlight commercial content.
---------------------------------------------------------------------------
Standards Mentioned in the ANPR Questions but Not Included as Part
of the Commission's Proposed Criteria--Standards Based on
``Importance''--Questions included in the ANPR to aid in eliciting
comment made reference to three separate standards for determining an
email's primary purpose based on the importance of the commercial
content of an email message: whether the commercial content was,
respectively, ``more important than all of the email's other purposes
combined,'' ``more important than any other single purpose of the
email, but not necessarily more important than all other purposes
combined,'' or ``more than incidental to the email.''
Several commenters--mostly industry representatives--supported the
first of these approaches.\94\ The two other standards based on the
importance of the commercial content received little support from
commenters. The Commission received many more comments, especially from
businesses, opposing as unhelpfully subjective all standards mentioned
in the ANPR that were based on importance of the commercial content of
an email message. These comments typically asserted that an objective
standard would provide more useful and certain guidance for email
marketers.\95\
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\94\ See ACB; AT&T; Visa; ABM; MPAA; NEPA; NetCoalition; NADA.
In addition, some consumers proposed their own standards for
``primary purpose'' that were akin to the FTC's importance-based
standards, using phrases such as ``chief emphasis'' and ``main
focus'' to describe when the commercial content of a message is its
primary purpose. See McMichael; Narcum; Noll.
\95\ See BMO; Grogan; Ford; MasterCard; NetCoalition; Nextel.
---------------------------------------------------------------------------
The Commission is persuaded that an importance-based standard,
without more, probably would not adequately ``facilitate the
determination of the primary purpose of an electronic mail message.''
Any such standard would likely fail to provide email marketers with
specific criteria they could apply to their messages to determine with
confidence whether a particular message is covered by CAN-SPAM's
requirements and prohibitions. The Commission's proposed ``primary
purpose'' standard, which consists of specific criteria, will provide
the reliability marketers and other email senders need to operate under
the Act.
``Net Impression'' as Determining the ``Primary Purpose'' of an
Email Message--Commenters from across the entire spectrum of interested
parties supported the ANPR's suggestion that the primary purpose of an
email message should be determined based on the ``net impression''
created by the message. Consumers, advertisers, email service
providers, and industry associations all supported the placement,
proportion, style, and subject line elements of this approach, as well
as the proposed criteria's focus on the reasonable recipient.\96\ The
Commission's proposed criteria include a ``net impression'' criterion
to determine whether the primary purpose of a message is commercial
when the message contains both commercial content and content that is
neither commercial nor transactional/relationship.\97\
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\96\ See, e.g., NCL; Cook; Swallow; Tietjens; NFCU; Microsoft;
DoubleClick; Discover; Time Warner; IAC; ABM; DSA.
\97\ As was explained above, the Commission's proposed criteria
for messages that contain both commercial and transactional/
relationship content does not employ a ``net impression'' approach.
---------------------------------------------------------------------------
As was discussed above, the Commission considers the ``net
impression'' of an advertisement to determine if it is deceptive under
Sec. 5 of the FTC Act. Under this approach, `` `the Commission looks
to the impression made by the advertisements as a whole. Without this
mode of examination, the Commission would have limited recourse against
crafty advertisers whose deceptive messages were conveyed by means
other than, or in addition to, spoken words.' '' \98\ The Commission
asked about the utility of the ``net impression'' approach as applied
to CAN-SPAM because the primary purpose of an email message may not be
stated expressly.
---------------------------------------------------------------------------
\98\ Deception Statement at 181, citing and quoting American
Home Products, 695 F.2d 681, 688 (3rd Cir. 1982).
---------------------------------------------------------------------------
One of the Commission's concerns in the ``primary purpose''
rulemaking process is that spammers not be able to structure their
messages to evade CAN-SPAM by placing them outside the technical
definition of ``commercial electronic mail message.'' A typical example
is a hypothetical message, unrequested by the recipient, that begins
with a Shakespearean sonnet (or paragraphs of random words) and
concludes with a one-line link to a commercial website. The Commission
believes that a recipient of such a message could reasonably conclude
that the message's primary purpose is commercial.
Spammers may also try to evade CAN-SPAM by presenting the
commercial content of their email messages in the guise of
informational content, deliberately structuring their messages to
create the mistaken impression in the minds of reasonable recipients
that the messages do not have a commercial primary purpose. A spammer
might try to argue that, applying the Commission's proposed criteria,
CAN-SPAM does not cover such a message, because a recipient reasonably
interpreting the message would not likely conclude that the primary
purpose of the message is commercial. The Commission believes this
strategy may tempt some spammers, although it is unclear whether email
messages are as conducive to deceptive format ploys as are other
media.\99\ In any event, if a sender deliberately structures his
message to create a false impression that the message does not have a
commercial primary purpose, the message should be considered to have a
commercial primary purpose under the proposed criteria. In the
Commission's view, if a message's entire design is to disguise
commercial content as noncommercial content, the message is
commercial.\100\ In this regard, the Commission seeks comment and
information on whether the proposed ``primary purpose'' criteria should
include an element expressly providing that a message may be deemed to
have a commercial primary purpose if the message creates a false ``net
impression'' that the message is noncommercial because it is
deliberately structured to do so.
---------------------------------------------------------------------------
\99\ In other contexts, such as direct mail marketing, the
Commission has sued marketers for violating the FTC Act because they
disguised their sales pitches as informational content. The
Commission recently filed a complaint against A. Glenn Braswell and
four of his corporations alleging, among other things, that the
defendants used deceptive advertising formats (including advertising
material portrayed as an independent health magazine) to market
their products. See FTC v. A. Glenn Braswell, et al., No. CV 03-3700
DT (PJWx) (C.D. Cal. filed May 27, 2004). For other deceptive format
enforcement actions brought by the Commission, see FTC v. Direct
Mktg. Concepts, Inc., Civ. No. 04-11136-GAO (D. Mass. filed June 1,
2004); Mega Sys., Int'l., Inc., 125 F.T.C. 973 (consent order) C-
3811 (June 8, 1998); Olsen Laboratories, Inc., 119 F.T.C 161
(consent order) C-3556 (Feb. 6, 1995); Wyatt Mrktg.Corp., 118 F.T.C.
86 (consent order) C-3510 (July 27, 1994); Synchronal Corp., 116
F.T.C. 989 (consent order) D-9251 (Oct. 1, 1993); Nat'l. Media
Corp., 116 F.T.C. 549 (consent order) C-3441 (June 24, 1993); CC
Pollen Co., 116 F.T.C. 206 (consent order) C-3418 (March 16, 1993)
(consent order); Nu-Day Enterprises, Inc., 115 F.T.C. 479 (consent
order) C-3380 (Apr. 22, 1992); Twin Star Productions, 113 F.T.C. 847
(consent order) C-3307 (Oct. 2, 1990) (consent order); JS&A Group,
Inc., 111 F.T.C. 522 (consent order) C-3248 (Feb. 24, 1989).
\100\ See proposed Rule Sec. 316.3(a)(1): ``If an electronic
mail message contains only content that advertises or promotes a
product or service, then the ``primary purpose'' of the message
shall be deemed to be commercial.''
---------------------------------------------------------------------------
The Commission believes that the proposed ``net impression''
approach for messages that contain commercial
[[Page 50102]]
content as well as content that is neither commercial nor
transactional/relationship gives guidance to email marketers but also
retains flexibility to allow the standard to reflect recipients'
perceptions of the primary purpose of the messages they receive.\101\
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\101\ Several commenters argued that the ``net impression''
analysis is vague and arbitrary. See, e.g., ACB; EFF; SIA; MBNA;
MBA. The Commission disagrees. It is not vague because it directs
marketers to clear-cut and fundamental signifiers of an email
message's primary purpose: the subject line and the message's
content. It is not arbitrary because it derives from the
Commission's long-standing approach to the scrutiny of advertising
under its deception authority. One commenter claimed that a ``net
impression'' standard could be ``potentially draconian.'' This
commenter was concerned that a message could inadvertently have a
commercial primary purpose when that was not the sender's intent.
See Visa. Nevertheless, the Commission believes it unlikely that the
proposed standard would apply in ways that would take an email
marketer by surprise. The record thus far does not provide support
for the argument that an email message could inadvertently be
considered ``commercial'' in light of the fact that marketers retain
control over the content of their messages' subject lines and their
messages' presentation of content. A marketer who has concerns about
the net impression of an email message with both commercial and
noncommercial content could always copy test a planned email to
determine whether the reasonable recipient would interpret it to
have a primary purpose that is commercial.
---------------------------------------------------------------------------
Standards Based on Whether Commercial Content Finances Other
Aspects of an Email Message--The ANPR also asked whether a message's
commercial content financially supporting its other aspects might be
useful to determine the primary purpose of the message. In requesting
comment on this possible standard, the Commission noted that, in the
case of an electronic newsletter funded by advertising within the
newsletter, ``[s]uch advertising arguably would not constitute the
primary purpose of the newsletter.'' \102\
---------------------------------------------------------------------------
\102\ 69 FR at 11780.
---------------------------------------------------------------------------
A small number of commenters argued that it may be proper to treat
a message as commercial when commercial content funds noncommercial
content.\103\ Most commenters, however, were generally negative in
responding to the ANPR's question regarding a standard for determining
the primary purpose of an email message based upon whether
noncommercial content was financially supported by commercial
content.\104\ Commenters criticized such a standard as, among other
things, unworkable.\105\ The Commission agrees that the mere fact that
noncommercial content is financially supported by accompanying
commercial content is not enough to decide the question of an email
message's primary purpose.
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\103\ See ABM; CASRO. These commenters seemed most concerned
with preventing a marketer from evading CAN-SPAM by adding minimal
noncommercial content, or by masking commercial content as
noncommercial information content. The Commission believes the
proposed ``primary purpose'' criteria would prevent such
illegitimate conduct from being successful.
\104\ See, e.g., DMA; Cox; MasterCard; Nextel; CFC.
\105\ See Nextel; Experian; NetCoalition.
---------------------------------------------------------------------------
Other commenters attacked this standard as contrary to legislative
intent regarding CAN-SPAM's intended scope, citing comments from the
floor debate that indicate intent to limit CAN-SPAM's reach to only
commercial email.\106\ The Commission does not dispute that CAN-SPAM,
by its terms, encompasses only commercial and ``transactional or
relationship'' email messages.\107\ Nevertheless, the Commission
appreciates the concern raised by Cox, ABM and CASRO that spammers
could avoid regulation under the Act by adding informational content to
their commercial messages. The Commission's proposed criteria with
respect to messages containing commercial content as well as content
that is neither commercial nor transactional/relationship provide
needed flexibility to ensure that such marketers will not evade CAN-
SPAM's compliance obligations.
---------------------------------------------------------------------------
\106\ NEPA; Cox. ``Specifically, the [CAN-SPAM] legislation
concerns only commercial and sexually explicit email and is not
intended to intrude on the burgeoning use of email to communicate
for political, news, personal and charitable purposes.'' Rep.
Sensenbrenner's comments are available at 149 Cong. Rec. H12186,
H12193 (Nov. 21, 2003). The text of the Act is in accord with this
statement; the Act focuses on ``commercial'' email messages--
messages the primary purpose of which is the advertisement or
promotion of a product or service. The Act's limited regulation of
``transactional or relationship'' messages--see note 27 above for
this definition--only prohibits use of false or misleading header
information. Thus, emails that are not commercial, and are not sent
pursuant to a designated transaction or a relationship between the
sender and the recipient--e.g., messages that do no more than
solicit charitable contributions, or promulgate political or other
non-commercial content--are not regulated under CAN-SPAM.
\107\ SIIA's comment noted that the FTC stated at a
Congressional hearing on spam that legislation should distinguish
emails consisting of newspaper articles and advertising from
messages that most consumers would consider ``spam.'' SIIA. The
comments of BCP Bureau Director, Howard J. Beales, III, are
available at http://energycommerce.house.gov/108/action/108-35.pdf
(July 9, 2003).
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``Sender's Identity'' as Determining the ``Primary Purpose'' of an
Email Message--The ANPR posed the question of whether an email sender's
identity should be an element that affects the determination of the
primary purpose of an email message. Relatively few commenters
addressed this question. Only two consumers supported using the
sender's identity to determine if an email had a commercial primary
purpose.\108\ Some industry commenters supported using the sender's
identity, arguing that an identity test could be used to exempt
nonprofit entities' messages from compliance with the Act.\109\ The
majority of comments opposed using the sender's identity as a way to
determine ``the primary purpose.'' \110\ The Commission agrees with
commenters who oppose using the sender's identity to help determine a
message's primary purpose. The sender's identity is not a reliable
indicator of whether the primary purpose of an email message is
commercial. Any sender of email messages--regardless of its identity--
may send messages that advertise or promote a product or service. The
Commission believes that its proposed ``primary purpose'' criteria
provide a more sensible approach because they focus on characteristics
of the message rather than the sender.
---------------------------------------------------------------------------
\108\ See R. Fowler; Sachau.
\109\ See IS; ABA. The Commission's views on how its proposed
``primary purpose'' standard would apply to email messages sent by
or on behalf of nonprofit entities are discussed above.
\110\ See Microsoft; NetCoalition; MasterCard. Nextel asserted
that an identity test would violate the First Amendment. Other
commenters argued that it would be an unreliable criterion because
many for-profit businesses send email for noncommercial purposes.
See NAA; SIIA.
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D. Section 316.5--Severability
This provision, which is identical to the analogous provision
included in the Sexually Explicit Labeling Rule, provides that if any
portion of the Rule is found invalid, the remaining portions will
survive. This provision would pertain to the entirety of the proposed
Rule, not just the provisions containing the Sexually Explicit Labeling
requirements.
III. Invitation to Comment
All persons are hereby given notice of the opportunity to submit
written data, views, facts, and arguments addressing the issues raised
by this NPRM. Written comments must be submitted on or before Monday,
September 13, 2004. Comments should refer to ``CAN-SPAM Act Rulemaking,
Project No. R411008'' to facilitate the organization of comments. A
comment filed in paper form should include this reference both in the
text and on the envelope, and should be mailed or delivered to the
following address: Federal Trade Commission, CAN-SPAM Act, Post Office
Box 1030, Merrifield, VA 22116-1030. Please note that courier and
overnight deliveries cannot be accepted at this address. Courier and
overnight deliveries should be delivered to the following address:
Federal Trade Commission/Office of the Secretary, Room H-159, 600
Pennsylvania Avenue, NW., Washington, DC 20580.
[[Page 50103]]
Comments containing confidential material must be filed in paper form,
and the first page of the document must be clearly labeled
``Confidential.'' \111\
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\111\ Commission Rule 4.2(d), 16 CFR 4.2(d). The comment must be
accompanied by an explicit request for confidential treatment,
including the factual and legal basis for the request, and must
identify the specific portions of the comment to be withheld from
the public record. The request will be granted or denied by the
Commission's General Counsel, consistent with applicable law and the
public interest. See Commission Rule 4.9(c), 16 CFR 4.9(c).
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To ensure that the Commission considers an electronic comment, you
must file it on the web-based form at the https://secure.commentworks.com/ftc-canspam/
weblink. You may also visit http:/
/http://www.regulations.gov to read this proposed Rule, and may file an
electronic comment through that Web site. The Commission will consider
all comments that regulations.gov forwards to it.
The FTC Act and other laws the Commission administers permit the
collection of public comments to consider and use in this proceeding as
appropriate. All timely and responsive public comments, whether filed
in paper or electronic form, will be considered by the Commission, and
will be available to the public on the FTC Web site, to the extent
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC
makes every effort to remove home contact information for individuals
from the public comments it receives before placing those comments on
the FTC Web site. More information, including routine uses permitted by
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm
.
IV. Communications by Outside Parties to Commissioners or Their
Advisors
Written communications and summaries or transcripts of oral
communications respecting the merits of this proceeding from any
outside party to any Commissioner or Commissioner's advisor will be
placed on the public record. See 16 CFR 1.26(b)(5).
V. Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506) (``PRA''), the Commission has reviewed the proposed Rule. The
proposed Rule does not impose any recordkeeping, reporting, or
disclosure requirements or otherwise constitute a ``collection of
information'' as it is defined in the regulations implementing the PRA.
See 5 CFR 1320.3(c).
VI. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-612,
requires an agency to provide an Initial Regulatory Flexibility
Analysis (``IRFA'') with a proposed rule and a Final Regulatory
Flexibility Analysis (``FRFA'') with the final rule, if any, unless the
agency certifies that the rule will not have a significant economic
impact on a substantial number of small entities. See 5 U.S.C. 603-605.
The Commission requested comment in the ANPR regarding whether CAN-
SPAM regulations would have a significant economic impact on a
substantial number of small entities. Although the Commission received
very few responsive comments, the Commission has determined that it is
appropriate to publish an IRFA in order to inquire into the impact of
the proposed Rule on small entities. Therefore, the Commission has
prepared the following analysis.
A. Reasons for the Proposed Rule
The proposed Rule was created pursuant to the Commission's mandate
under the CAN-SPAM Act, 15 U.S.C. 7701 et seq. The Act seeks to ensure
that senders of commercial email not mislead recipients as to the
source or content of such messages, and to ensure that recipients of
commercial email have a right to decline to receive additional
commercial email from a particular source. Specifically, Section
7702(c) of the Act requires the Commission to issue regulations
defining the relevant criteria to facilitate the determination of the
primary purpose of an electronic mail message.
B. Statement of Objectives and Legal Basis
The objective of the proposed Rule is to implement the CAN-SPAM
Act, 15 U.S.C. Sec. 7701 et seq. Specifically, the proposed Rule sets
forth the criteria by which the primary purpose of an email message can
be ascertained. The legal basis for the proposed Rule is the CAN-SPAM
Act, 15 U.S.C. Sec. 7701 et seq.\112\
---------------------------------------------------------------------------
\112\ Specifically, the authority for the mandatory rulemaking
``defining the relevant criteria to facilitate the determination of
the primary purpose of an electronic mail message'' is 15 U.S.C.
7702(2)(c).
---------------------------------------------------------------------------
C. Description of Small Entities to Which the Proposed Rule Will Apply
The proposed CAN-SPAM Rule, which incorporates by reference many of
the CAN-SPAM Act's definitions, applies to ``senders'' of ``commercial
electronic mail messages'' and, to a lesser extent, to ``senders'' of
``transactional or relationship messages.'' \113\ Under the Act, and
the proposed Rule, a ``sender'' is ``a person who initiates [a
commercial electronic mail message] and whose product, service, or
Internet web site is advertised or promoted by the message.'' \114\ To
``initiate'' a message, one must ``originate or transmit such message
or * * * procure the origination or transmission of such
message.''\115\ The Act does not consider ``routine conveyance''
(defined as ``the transmission, routing, relaying, handling, or storing
through an automatic technical process, of an electronic mail message
for which another person has identified the recipients or provided the
recipient addresses'') to be initiation.\116\
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\113\ One provision, Sec. 7704(a)(1), which prohibits false or
misleading transmission information, applies equally to ``commercial
electronic mail messages'' and ``transactional or relationship
messages;'' otherwise, CAN-SPAM's prohibitions and requirements
cover only ``commercial electronic mail messages.''
\114\ 15 U.S.C. 7702(16)(A); Proposed Rule Sec. 316.2(n).
\115\ 15 U.S.C. 7702(9).
\116\ 15 U.S.C. 7702(9) and (15).
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Any company, regardless of industry or size, that sends commercial
email messages or transactional or relationship messages would be
subject to the proposed Rule. This would include entities that use
email to advertise or promote their goods, services, or websites, as
well as entities that originate or transmit such messages. Therefore,
numerous small entities across almost every industry could potentially
be subject to the proposed Rule. For the majority of entities subject
to the proposed Rule, a small business is defined by the Small Business
Administration as one whose average annual receipts do not exceed $6
million or which has fewer than 500 employees.\117\
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\117\ These numbers represent the size standards for most retail
and service industries ($6 million total receipts) and manufacturing
industries (500 employees). A list of the SBA's size standards for
all industries can be found at < http://www.sba.gov/size/summary-whatis.html
.
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Although it is impossible to identify every industry that sends
commercial email messages or transactional or relationship messages,
some surveys suggest that an ever-increasing number are using the
Internet. A recent Harris Interactive poll, for example, found that
about 70 percent of small businesses have an online presence or plan to
have one by 2005.\118\ A 2001 study by the National Federation of
Independent Business found that, at that time, 57 percent of all small
employers used the
[[Page 50104]]
Internet for business-related activities.\119\ While these statistics
do not quantify the number of small businesses that send commercial
email messages or transactional or relationship messages, they suggest
that many small businesses are using the Internet in some capacity. The
Commission is aware of at least one survey, conducted by a web hosting
provider, Interland, that suggests that 85 percent of small businesses
surveyed communicate with existing customers via email, and 67 percent
of those small businesses communicate with potential buyers via
email.\120\
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\118\ See < http://www.ecommercetimes.com/story/35004.htm
.
\119\ See <http://www.nfib.com/object/2937298.html.
\120\ See Electronic Commerce News, Mar. 15, 2004, ``Gearing Up
for Next Front In the War on Spam.'' SBA also cited studies that
show that 83 percent of small businesses use email.''
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Given the paucity of data concerning the number of small businesses
that send commercial email messages or transactional or relationship
messages, it is not possible to determine precisely how many small
businesses would be subject to the proposed Rule. Accordingly, the
Commission believes that a precise estimate of the number of small
entities subject to the proposed Rule is not currently feasible, and
specifically requests information or comment on this issue.
D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements
The proposed Rule would not impose any specific reporting,
recordkeeping, or disclosure requirements within the meaning of the
Paperwork Reduction Act. The CAN-SPAM Act establishes a comprehensive
regulatory scheme for commercial and transactional or relationship
email messages, and is enforceable by the FTC as though it were an FTC
Rule. The proposed Rule sets forth the criteria by which the primary
purpose of an email message would be ascertained. The proposed Rule
does not impose substantive compliance obligations.
In any event, as explained further below, after considering various
alternatives, the Commission has determined to propose criteria
designed to enable regulated entities to determine as clearly and
objectively as possible when ``the primary purpose'' of an email
message is commercial and subject to CAN-SPAM. Such criteria, in the
Commission's view, should help reduce any interpretive uncertainty that
could potentially contribute to compliance costs, and ensure that the
scope of the proposed Rule will not sweep any more broadly than
reasonably necessary to carry out the purpose and intent of the CAN-
SPAM Act. The Commission invites comment and information on the
proposed ``primary purpose'' criteria, including ways, if any, that the
Commission might further minimize their possible scope and impact while
still satisfying the Act's mandate.
E. Identification of Other Duplicative, Overlapping, or Conflicting
Federal Rules
The FTC has not identified any other federal statutes, rules, or
policies that would conflict with the proposed Rule's provisions,
which, as noted above, set forth the criteria by which the primary
purpose of an email message can be ascertained. The FTC seeks comment
and information about any statutes or rules that may conflict with the
proposed requirements, as well as any other state, local, or industry
rules or policies that may overlap or conflict with the requirements of
the proposed Rule.
F. Discussion of Significant Alternatives
As discussed above, the CAN-SPAM Act primarily seeks to ensure that
senders of commercial email not mislead recipients as to the source or
content of such messages, and to ensure that recipients of commercial
email have a right to decline to receive additional commercial email
from a particular source. The Act, not the proposed Rule, imposes these
obligations. The Commission nonetheless has considered and is proposing
to adopt a provision setting out criteria to facilitate the
determination of when an email message has a commercial primary
purpose. Although the proposed criteria do not impose any compliance
burden, they should help avoid legal or other costs that could
otherwise result from uncertainty, if any, about what the proposed Rule
covers or requires.
As noted in its ANPR, the Commission also considered other criteria
for determining when the primary purpose of an email message is
commercial, including, for example, the identity of the sender, the use
of commercial content to fund noncommercial content, and various
approaches based on the relative importance of the commercial content
(i.e., more important than all other purposes combined, more important
than any other single purpose, or more than incidental). As noted
earlier, the Commission has instead determined to propose criteria that
it believes will be clearer, more objective, and easier to interpret
and apply. This should help ease compliance burdens by avoiding
interpretive uncertainty and by ensuring that the Rule extends no
further than reasonably necessary to implement the purpose and intent
of the CAN-SPAM Act. The Commission nonetheless seeks comment on any
significant alternatives that should be further considered in order to
minimize CAN-SPAM's impact on entities under the Rule, including small
entities.
VII. Questions for Comment on the Proposed Rule
The Commission seeks comment on various aspects of the proposed
Rule. Without limiting the scope of issues on which it seeks comment,
the Commission is particularly interested in receiving comments on the
questions that follow. In responding to these questions, include
detailed, factual supporting information whenever possible.
A. General Questions for Comment
Please provide comment, including relevant data, statistics, or any
other evidence, on each proposed change to the Rule. Regarding each
proposed provision commented on, please include answers to the
following questions:
1. What is the effect (including any benefits and costs), if any,
on consumers?
2. What is the impact (including any benefits and costs), if any,
on individual firms that must comply with the Rule?
3. What is the impact (including any benefits and costs), if any,
on industry?
4. What changes, if any, should be made to the proposed Rule to
minimize any cost to industry or consumers?
5. How would each suggested change affect the benefits that might
be provided by the proposed Rule to consumers or industry?
6. How would the proposed Rule affect small business entities with
respect to costs, profitability, competitiveness, and employment?
B. Questions on Proposed Specific Provisions
In response to each of the following questions, please provide: (1)
Detailed comment, including data, statistics, and other evidence,
regarding the problem referred to in the question; (2) comment as to
whether the proposed changes do or do not provide an adequate solution
to the problems they were intended to address, and why; and (3)
suggestions for additional changes that might better maximize consumer
protections or minimize the burden on industry.
[[Page 50105]]
1. Section 316.1--Scope
Does the proposed section appropriately describe the scope of the
CAN-SPAM rules? If not, how should it be modified?
2. Section 316.3--Primary Purpose
a. Does the Commission's ``primary purpose'' standard provide
sufficient guidance as to when a message will be considered
``commercial'' under the CAN-SPAM Act? When a message will be
considered ``transactional or relationship''? Why or why not? What
``primary purpose'' standard would provide better guidance?
b. Does the Commission's ``primary purpose'' standard fail to cover
any types of messages that should be treated as commercial messages
under the Act? If so, what types of messages are not covered? Does the
standard cover any types of messages that should not be treated as
commercial? If so, what types of messages are covered? Is there some
other ``primary purpose'' standard that would provide more appropriate
coverage, and if so, what is it?
c. The Commission's proposed criteria identify three categories of
email messages that contain commercial content: those that contain only
commercial content; those that contain both commercial content and
transactional/relationship content; and those that contain both
commercial content and content that is neither commercial nor
transactional/relationship. The Commission's approach proposes
different criteria for each category of email messages. Is this
approach useful for determining the primary purpose of email messages?
Why or why not? Should the Commission use a single set of criteria for
all email messages? Why or why not?
d. Does the proposed approach to email messages containing only
commercial content provide criteria to facilitate the determination of
the primary purpose of an email message? Why or why not? Would a
different approach better accomplish this goal? Why or why not?
e. Does the proposed approach to email messages containing both
commercial and transactional/relationship content provide criteria to
facilitate the determination of the primary purpose of an email
message? Why or why not?
f. Would a different approach better facilitate the determination
of the primary purpose of an email message that contains both
commercial and transactional/relationship content? Why or why not? Are
there any additional legal or factual issues that support an approach
based on either (1) calculating whether a fixed percentage of the
message is dedicated to transactional/relationship content, or (2) an
exclusively ``net impression'' test? Are there any arguments supporting
these approaches to which the Commission did not give adequate weight?
Should the Commission consider additional factors to determine the
primary purpose of an email message that contains both commercial and
transactional/relationship content--such as whether the transactional/
relationship content is clearly and prominently displayed, or whether
the commercial content interferes with, detracts from, or otherwise
undermines the presentation of the transactional/relationship content?
Why or why not?
g. Does the proposed approach to email messages containing both
commercial content and content that is neither commercial nor
transactional/relationship provide criteria to facilitate the
determination of the primary purpose of an email message? Why or why
not? Would a different approach better accomplish this goal? Why or why
not?
h. The Commission's proposed criteria for email messages containing
both commercial content and content that is neither commercial nor
transactional/relationship identify placement of commercial content,
proportion of message dedicated to commercial content, and how color,
graphics, type size, and style are used to highlight commercial content
as factors to consider in assessing the net impression of an email
message. Are these factors appropriate? Should additional factors be
considered? Why or why not? Should the sender's identity be considered
as a factor, and if so, how? Why or why not? Should the sender's intent
be considered as a factor? Why or why not? If so, how? And if so, how
should the sender's identity be measured?
i. The Commission suggests that a message with a noncommercial
``net impression'' may still be deemed to have a commercial primary
purpose if the sender deliberately structures his message to create a
mistaken impression in the mind of a reasonable recipient that the
message has a noncommercial primary purpose. Should the sender's
deliberate structuring of a message affect ``primary purpose'' analysis
under CAN-SPAM, and if so, how? Why or why not?
j. The Commission's proposed criteria use the subject line in one
criterion to determine the primary purpose of ``dual-purpose
messages.'' Is this an appropriate criterion for this determination?
Why or why not?
k. The Commission's proposed criteria do not use the subject line
as a criterion to determine the primary purpose of messages that
contain only commercial content. Is this choice proper? Why or why not?
l. Do bona fide email marketers use a message's subject line to
highlight the fact that the message is advertising or promoting a
product or service when that is a purpose of the message? Why or why
not?
m. Do bona fide e-mail marketers use a message's subject line to
highlight the fact that their message is a transactional or
relationship message when that is a purpose of the message? Why or why
not?
n. Are there potential loopholes in the proposed ``primary
purpose'' standard? If so, what are they, and how might they be
eliminated?
o. The Commission suggests that spammers could add unrelated
noncommercial content (or paragraphs of random words) to commercial e-
mail messages if doing so might mean that CAN-SPAM would not apply to
their messages. Is this likely? Why or why not?
p. Should the same three-category ``primary purpose'' criteria be
applied to messages sent by for-profit entities and nonprofit entities
alike? Why or why not?
q. Where a recipient has entered into a transaction with a sender
that entitles the recipient to receive future newsletters or other
electronically delivered content, should such e-mail messages be deemed
to be transactional or relationship messages? Why or why not? Should
the inclusion of commercial content affect this analysis? If so, how?
3. Renumbering of Provisions of the Sexually Explicit Labeling Rule and
Integration of Those Provisions Into the Proposed CAN-SPAM Rule
a. Is the Commission's proposal to renumber and integrate into the
Proposed CAN-SPAM Rule the provisions of the previously-adopted
Sexually Explicit Labeling Rule a good solution? If not, why not? What
other approach would be better? Why?
IX. Proposed Rule
List of Subjects in 16 CFR Part 316
Advertising, Computer technology, Electronic mail, Internet, Trade
practices.
Accordingly, it is proposed that chapter 1 of title 16 of the Code
of Federal Regulations, be amended by
[[Page 50106]]
adding a new part 316 to read as follows:
PART 316--CAN-SPAM RULE
Sec.
316.1 Scope.
316.2 Definitions.
316.3 Primary purpose.
316.4 Requirement to place warning labels on commercial electronic
mail that contains sexually oriented material.
316.5 Severability.
Authority: 15 U.S.C. 7701-7713.
Sec. 316.1 Scope.
This part implements the Controlling the Assault of Non-Solicited
Pornography and Marketing Act of 2003 (``CAN-SPAM Act''), 15 U.S.C.
7701-7713.
Sec. 316.2 Definitions.
(a) The definition of the term ``affirmative consent'' is the same
as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(1).
(b) ``Character'' means an element of the American Standard Code
for Information Inte