Email Marketing in Canada – Small Businesses and CASL

Email law in Canada

By Ian Ross

If you do business online with Canadians, you need to keep the country’s recent CASL legislation in mind.  You may have heard of it – or even attended the odd web seminar – but many still are clueless about the law, largely because it goes significantly beyond the norms of email opt-in compliance that are the standard in most other countries.  With small and microbusinesses relying so heavily on email marketing, it’s wise to pay attention.

CASL is Canada’s Anti-Spam Legislation which began taking effect on July 1, 2014. The primary resource to learn about the law is online at FightSpam.gc.ca.  It differs from most countries’ anti-spam regulations in that in places like Australia, the United Kingdom or the United States, for example, all commercial emails require identification of the sender, clear subjects and an ability to “opt out” of receiving further emails but Canada’s enforces a more strict “opt-in” regimen.

This means that before you ever send a Commercial Electronic Message (CEM — or basically any message online that relates to business or financial transactions) to anyone in Canada.  Whether you are in Canada or a foreign company abroad sending email to Canada, you must have a clear consent from the receiving party to send it first.  You can’t just send a test email or mobile message and watch to see who then opts out.  And, even asking for that consent can’t be done electronically.  They have to come to you – or I suppose you could send them a postcard in the regular mail requesting permission to email them and hoping that they check the box and send it back for your files.  As a small business owner you must record how and when you received this permission.

Two kinds of consent permitted – implied and express.

Express is easier to define provided you are just as clear in how you receive it.  Recipients must actively enter their email or check a box saying they consent to receive your CEM. The legislation will not permit pre-checked boxes for when you ask people on your site to submit to a mailing list – or after January 1st, in the case of installing software.  After that point, any Canadian, for example, who tries to install an update and is presented with pre-checked bundle apps along with it, should by rights have recourse to file a complaint.  (I’m looking at you, Java.)

Implied consent opens up a few more possibilities but companies must remain similarly diligent in their use of this as it is generally time-sensitive.  If you have an existing business relationship with a recipient, you may continue emailing them or likewise if you are a charity or political party and they’ve sent you a gift or donation or they are members.  This relationship generally dissipates after two years, however.  A bit more broadly acceptable is if a recipient has publicly posted their email address without restrictions and your email relates to their job function.  That’s good for business-to-business dealings but not if you’re targeting new business with consumers.

In all cases, a CEM must include the sender’s identification, where they may readily contact you, and an unsubscribe mechanism that is valid for 60 days at no cost to person who is seeking to sever communication.

Failure to adhere opens you up to the complaint process and those complaints can end up carrying a hefty price tag.  They amount to a million dollars per infraction (e.g. per email you send) and up to ten million dollars for companies.  It’s to be enforced by the Canadian Radio-Television and Telecommunications Commission (CRTC), along with the Competition Bureau and the Office of the Privacy Commissioner.  Fines will be levied by the CRTC.

The future of the law

How long this legislation will last is a good question.  In its current form, it’s over-reaching and unwieldy, especially for small businesses which rely on email marketing.  For Canadian small business, especially, it is hurtful and damages their global competitiveness while ultimately seeming unable to combat the scourge of spam it was meant to.  There are also questions as to whether this is an unlawful attack on freedom of speech.

Its effectiveness is also under scrutiny. My email box has been swamped more since the legislation than ever before and according to sources such as Kapersky Labs, Canadian email junk mail accounts for less than 1% of global spam traffic.

Frankly, I am hedging my bets that it will be an American company that will eventually get it overturned.  Why?  Because the North American Free Trade Agreement (NAFTA) includes investor protection clauses and recourse against “expropriation by regulation”, that’s why.  A U.S. company selling to Canada (quite a few of them) could easily be hit by a fine unsuspectingly which they may have more resources to fight than a Canadian mom & pop shop on Facebook.  Once the software provisions take effect on January 1st, 2015, imagine if they were brave enough to tackle Google, which often has its toolbar or Chrome browser bundled with other software, unacceptably claiming consent with pre-checked boxes.

However, even in a case where no one is fined, Canadian law has placed a monetary value on email lists.  This is why, in Canada, it’s illegal to offer prizes to random people signing up to your email list without first obtaining a lottery license.  Even if they pay no money to be eligible to win, there is a perceived financial value to them allowing you to email them – and that makes it technically a lottery.  (Yes, people do this on Facebook all the time but it’s illegal in actuality.)  I’m not a lawyer, but it would be my understanding that a company could argue that this legislation is diminishing the value of their email database and would have grounds to file a lawsuit under NAFTA.

Learn more

One of the best online resources you can read to become more familiar with the legislation is Barry Sookman’s blog which focuses on legal issues around copyright, intellectual property, internet and e-commerce.  He updates often with the most relevant information and I encourage you to follow along if you’re conducting business online which involves Canada.

You may also wish to learn more from sources such as the Canadian Chamber of Commerce’s website.

And it’s worth pointing out that the law also has supporters, such as Michael Geist, a professor of law at the University of Ottawa and you can read his thoughts on his blog, to offer a different perspective.


Ian Ross is an entrepreneur, and the owner of Spring Digital Media in Halifax, NS, Canada.
Published by Spring Digital Media, All Rights Reserved.