March 8, 2017
On July 1, 2014, Canada’s new federal anti-spam legislation (CASL) largely came into force. Since it was introduced, both the CRTC (the primary enforcement body) and the Competition Bureau have been enforcing the legislation, with penalties to date ranging from $48,000 to $1.1 million.
Beginning on July 1, 2017, however, the risks of violating CASL, as well as related sections of PIPEDA (the Personal Information Protection and Electronic Documents Act) and the Competition Act, will be significantly greater. This is because private individuals and organizations affected by a violation of CASL will have a right to commence private actions when sections 47 to 51 and 55 come into force.
In general, the new private right of action will allow private parties (i.e., as opposed to the federal regulators) to commence applications to recover damages, which, in some cases, could be assessed to be as much as $1 million a day.
Overview of CASL
In general, CASL creates an opt-in regime for commercial electronic marketing. It requires express or implied consent for the sending of commercial electronic messages and imposes certain form (i.e., disclosure) and un-subscribe requirements for electronic communications.
CASL is relevant to individuals, companies and other organizations that engage in electronic marketing, such as e-mail, text messaging, instant messaging and some types of social media marketing.
CASL also imposes consent requirements for some other types of electronic practices, namely altering transmission data in electronic messages and the installation of computer programs on other persons’ computer systems.
In addition, CASL has broadened the Competition Bureau’s power to regulate misleading advertising in the context of electronic communications – for example, misleading representations made electronically, such as in sender information, subject matter information and electronic messages or locators. In this regard, new electronic marketing sections were added to the Competition Act (under section 74.011).
Currently, violating CASL can result in significant penalties of up to $1 million for individuals and $10 million for corporations.
Key Points About CASL Private Action Rights
The following are some of the key points about the private right of action sections of CASL, which will come into force on July 1, 2017:
Who has standing: Section 47(1) of CASL provides that “a person” may apply for a court order, which is defined very broadly to include an individual, corporation, organization, association or legal representative.
Causes of action: Private actions may be brought for violations of CASL and also PIPEDA and the electronic marketing sections of the Competition Act (under section 74.011).
Pleading formalities: An application under the private action provisions of CASL will be subject to several formalities, including serving the application on both the respondent and the relevant enforcement agency or agencies.
Required harm: Actions may be brought based on actual loss or damage suffered. However, a court may also award statutory damages based merely on the number and duration of violations of CASL, PIPEDA or the electronic marketing sections of the Competition Act.
Limitation period: Private actions must be brought within three years of being discovered by the applicant (i.e., will be subject to the discoverability principle), unless otherwise ordered by a court.
Damages: On a successful application, an applicant may be awarded compensation for the actual loss or damage they have suffered (and expenses). Importantly, a court may also award statutory damages, which include: (i) $200 per violation up to $1 million a day for contravening section 6 of CASL (unsolicited electronic messages); (ii) $1 million a day for violation of sections 7 or 8 (altering transmission data and unauthorized installation of computer programs); and (iii) $200 per violation up to $1 million a day for contravening the electronic marketing sections of the Competition Act.
Aiding a violation: In addition to the above penalties, aiding, inducing or procuring a violation of CASL may also result in liability once the private action provisions of CASL come into force with a potential penalty of up to $1 million per day.
Director and officer liability: CASL also exposes senior officers to potential liability. In this respect, section 52 of CASL provides officers, directors or agents of a corporation that directed, authorized, assented to or participated in a violation of CASL (or related provisions of PIPEDA or the Competition Act) are also liable for the violation, regardless of whether the corporation is proceeded against.
Factors for assessing penalties: A court must consider a number of factors when assessing penalties. These include the type and scope of the violation, any prior violations, financial benefits and ability to pay.
Joint and several liability: Once the private action provisions are in force, parties that violate CASL are potentially jointly and severally liable for court awards.
What Can Be Done to Prepare?
Based on the increased risk after July 1, 2017, individuals, companies and other types of organizations that engaged in electronic marketing should review their CASL compliance.
Some steps that can be taken include reviewing marketing to identify activities that are subject to CASL, ensuring that the core requirements of CASL (consent, identification, un-subscribe mechanisms and documenting consent) are met and reviewing due diligence efforts in case of enforcement.
Organizations that rely on electronic marketing as a key aspect of their marketing are also well advised to adopt and maintain CASL compliance programs.
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