Canadian COMPETITION LAW

December 9, 2021

On December 8, 2021, the CRTC announced that global apparel retailer Gap Inc. (Gap) had agreed to a settlement to pay $200,000 for allegedly violating Canada’s federal federal anti-spam legislation (CASL) (see: Gap Inc. agrees to pay $200,000 for allegedly violating Canada’s anti-spam legislation).

According to the CRTC, consumers had been filing complaints regarding Gap’s electronic marketing practices. Following a formal investigation, the CRTC found that during a three-year period (January 2018 to August 2021) Gap had been sending commercial electronic messages (CEMs) to promote itself and its subsidiaries Banana Republic and Old Navy, without the required consent. The Gap also allegedly failed to include either an unsubscribe mechanism or an unsubscribe mechanism that could be easily performed.

Consent (whether express or implied), sender identification and a CASL-compliant unsubscribe mechanism are the three core requirements to comply with section 6 of CASL (the unsolicited CEMs provision). In addition, the onus is on senders to document consent (or any category of implied consent or CASL exemption being relied upon). For more information, see: CASL and CASL (Anti-Spam Law) Compliance Tips.

Despite CASL now being in force for seven years, since July 2014, we still continue to routinely see companies and agencies, including large brands and sophisticated marketers, make fundamental CASL related compliance errors. For some of the most common CASL compliance related errors, see: CASL Compliance Errors.

Under the term of the settlement Gap also agreed to update its corporate compliance program to include CASL compliance. In particular, Gap agreed to: (i) include CASL related corporate compliance policies and procedures; (ii) training and education for its employees; and (iii) monitoring, auditing and reporting mechanisms. For information about CASL compliance programs, see: CASL (Anti-Spam Law) Compliance and CASL Precedents.

Interestingly, the terms of the settlement also require Gap to monitor and review its policies and procedures to determine whether any have the effect of providing incentives to employees to violate CASL and, if so, to eliminate any such incentives.

In making the announcement, the CRTC also cited several recent enforcement statistics, including payments collected to date of more than $1.4 million (penalties of about $805,000 and $668,000 under negotiated undertakings). The CRTC also indicated that it was taking measures to enhance its spam-related monitoring.

For a more detailed summary of recent CRTC CASL enforcement, see: Recent CRTC CASL (Anti-Spam Law) Enforcement: New CASL Enforcement Report.

For more information about CASL, see: CASL, CASL Compliance, CASL Compliance Errors, CASL Compliance Tips and CASL Precedents/Forms.

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Tips For Complying With
CASL (Canadian Anti-Spam Law)

Canada’s federal anti-spam legislation (CASL) came into force in 2014.  Since then, electronic marketers and their advisors have been working to comply with what remains a complex law with outstanding uncertainties in some key areas. Having said that, many of the core requirements of CASL are not overly difficult to comply with (though continue to be misunderstood in many cases).

The following are some key legal tips for complying with CASL:

Express Consent. If you cannot rely on any category of implied consent (e.g., an existing business relationship within two years of a purchase) or a CASL exemption, ensure that you have collected and documented express consent from recipients. Express consent requests must include all of the information set out in CASL and its regulations otherwise the consent will not be valid. Failure to correctly collect consent is the most common CASL compliance error we see and a key basis for CRTC enforcement. For more information, see: Anti-Spam Law (CASL), Anti-Spam Law (CASL) FAQs and Canadian Anti-Spam Law (CASL) Precedents.

Implied Consent. If you are relying on one or more categories of implied consent to send commercial electronic messages (CEMs) (e.g., an existing business relationship within two years of a purchase or six months of a product inquiry) ensure that all of the requirements of the particular type of implied consent are met. Remember that there is not a single blanket type of implied consent under CASL; rather, there are many different types of implied consent each with their own specific requirements. Also, as with express consent, CEMs that rely on implied consent must still include the prescribed sender identification information and unsubscribe mechanism. For more information, see: Anti-Spam Law (CASL), Anti-Spam Law (CASL) FAQs and Canadian Anti-Spam Law (CASL) Precedents.

Consent For Third Parties To Send CEMs. Under CASL, consent to send CEMs can be requested for a sender themselves, identified third parties (or multiple identified third parties) or unidentified third parties (i.e., entities whose identities are not yet known when consent is requested). Importantly, however, each type of consent request has specific requirements for the request and, in the case of consent requests on behalf of unidentified third parties, somewhat complex additional requirements. The failure of marketers to correctly request consent for third parties (e.g., partners, affiliates, co-sponsors in promotions, etc.) is another CASL-related error that we regularly see. For more information, see: Anti-Spam Law (CASL) FAQs and Canadian Anti-Spam Law (CASL) Precedents.

CASL Exemptions. Similar to implied consent, there is no single exemption from CASL but many types of exemptions. If you are relying on a particular exemption (e.g., the “business-to-business” exemption) it is important to ensure that all of the requirements of the exemption are met. Importantly, there is little or no case law interpreting many CASL exemptions. This means that there may be more risk when relying on an exemption than express consent. Express consent is the strongest type of consent under CASL, considering that it does not expire unless a recipient unsubscribes.

Passive Consents. Remember that under CASL express consent or a category of implied consent is generally required to send CEMs unless a CASL exemption applies. As such, passive types of consents (e.g., language in general terms and conditions) will likely not be CASL compliant unless a sender does not need express consent (i.e., can rely on a category of implied consent or a CASL exemption).

Sharing Lists With Third Parties. Consider the potential risks of sharing e-mail or other electronic marketing lists with third parties. While this is certainly possible under CASL, marketers should be aware that there are specific requirements that must be met depending on who a list will be shared with (e.g., to expressly identify third parties with whom consent is being gathered on behalf of, including their contact information and other requirements for unidentified third parties). Marketers should also be aware that there is also potentially not only risk if they themselves violate CASL (e.g., send CEMs without consent), but also if they assist third parties that violate CASL. As such, it is often prudent for marketers that want to share electronic marketing lists with third parties to ensure that they have list sharing agreements in place with parties with whom they share e-mails. For more information, see: Anti-Spam Law (CASL) FAQs, Anti-Spam Law (CASL) Compliance Errors and Canadian Anti-Spam Law (CASL) Precedents. See also: Influencer, Co-Sponsor and List Sharing Agreements.

Sender Identification Information. Ensure that all CEMs include the prescribed sender identification information required by CASL unless an exemption applies. For more information, see: Anti-Spam Law (CASL) and Anti-Spam Law (CASL) FAQs.

Unsubscribe Mechanism. Ensure that all CEMs include a CASL-compliant unsubscribe mechanism. For more information, see: Anti-Spam Law (CASL) and Anti-Spam Law (CASL) FAQs.

Document Consent. Under CASL, the onus is on senders of CEMs to document consent. As such, it is important to document the type of consent (express or implied) or exemption being relied upon, evidence of consent (e.g., subscription logs, forms, dates and names/e-mail addresses), divide lists according to the type of consent or exemption being relied upon and to scrub lists after recipients have unsubscribed or the relevant time period for a category of implied consent has expired (e.g., two years after a purchase). Failure to adequately document consent is another CASL-related compliance error that we regularly see, including not documenting consent at all, not segregating distribution lists and inadequately documenting consents or types of implied consent. For more information, see: Anti-Spam Law (CASL), Anti-Spam Law (CASL) Compliance and Canadian Anti-Spam Law (CASL) Precedents.

CASL Compliance Program. Consider adopting a CASL compliance program, particularly if electronic marketing is a core aspect of your marketing strategy. The CRTC has issued guidance on CASL compliance programs including key recommended elements. For more information, see: Anti-Spam Law (CASL) Compliance and Canadian Anti-Spam Law (CASL) Precedents.

CASL and Specific Types of Promotions. Care should be taken in relation to specific types of promotions under CASL. Just one of many examples is friends and family type promotions (e.g., contests where entrants can gain more entries by sharing with or tagging a friend or family member). While there is an exception to the unsolicited CEMs section of CASL (section 6) for messages sent to a person with whom the sender has a personal or family relationship, these terms are narrowly defined. For example, “family relationship” is limited to spouses, common-law partners and parent-child relationships. “Personal relationship” is defined in a multi-factor and case-by-case fashion such that it is often impractical to rely on this exception for any broad “friends and family” type promotion. Marketers should also be aware that there is potential risk for both themselves and their clients in running friends and family type promotions if they cannot meet the specific definitions of “family relationship” and/or “personal relationship” under CASL for a promotion. For more information, see: Anti-Spam Law (CASL) Compliance Errors and Running a Friends-and-Family Promotion in Canada? Cruel, Cryptic CASL Strikes Again.

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