Dustin Moores

On Friday, June 5, 2020, Canada’s Federal Court of Appeal (FCA) handed down its first decision regarding Canada’s Anti-Spam Legislation (CASL, the Act) in 3510395 Canada Inc v Canada (Attorney General). Many will likely know this case as “CompuFinder,” the operating name of 3510395 Canada Inc. The decision tackled some very big issues, namely the constitutionality of CASL itself, as discussed here by my colleague Shaun Brown, but also drilled down into humbler matters, such as the interpretation of CASL’s business to business exemption, “conspicuous publication” implied consent, and the law’s required unsubscribe mechanism for commercial electronic messages (CEMs). This post will focus on some of the practical outcomes of the FCA’s decision relating to these smaller matters. 

As any Canadian marketer will tell you, CASL’s 2014 coming into force led to a mad-dash among organizations in this country to bring their email marketing practices into compliance with the law. At the time, the CRTC provided some welcome guidance, however, as with any new law, there were lingering ambiguities as to where the line was drawn with regards to certain compliant versus non-compliant practices. In the intervening years, the CRTC has provided further guidance and decisions on CASL, but the FCA’s foray into CASL interpretation brings with it added clarity for lawyers and organizations regarding some of the law’s somewhat fuzzier concepts.  

Background 

CompuFinder was the subject of one of the CRTC’s first administrative monetary penalties under CASL, and it was a whopper: $1.1 million for some four violations of the Act (later reduced to $200,000). CompuFinder’s transgressions? It had sent 317 CEMs without the recipients’ consent or without a functioning unsubscribe mechanism as required by CASL (however, it should be noted that an Office of the Privacy Commissioner of Canada investigation suggested CompuFinder was a spammer of much larger proportions than this number suggests). Namely, CompuFinder, a provider of professional training courses, sent unsolicited emails to employees of businesses to whom it had previously provided courses and to certain email addresses it seemed to have gathered from telemarketing, online sources, and third parties. Eighty-seven of the CompuFinder emails cited by the CRTC contained two unsubscribe links, one functioning and one non-functioning.  

CompuFinder submitted representations to the CRTC, arguing that the emails it sent to the employees of its customers were subject to CASL’s “business to business” exemption and that it had individuals’ implied consent for other emails under CASL’s “conspicuous publication” provision. CompuFinder also argued that the functioning unsubscribe links within its emails should have negated the effect of the non-functioning links. The CRTC was unsympathetic to CompuFinder’s representations and upheld the $200,000 penalty. CompuFinder then appealed the CRTC’s decision to the FCA as permitted by Section 27 of CASL. 

What does CASL Say? 

Business–to–Business Exemption 

CASL’s “business to business” exemption is found in section 3(a)(ii) of its Electronic Commerce Protection Regulations. Section 3(a)(ii) states that CASL’s general consent requirement does not apply to a CEM that is sent by an employee, representative, consultant or franchisee of an organization to an employee, representative, consultant or franchisee of another organization if the organizations have a relationship and the message concerns the activities of the organization to which the message is sent. So in order for a CEM sent by an organization to fall into this category, three main conditions must be met:  

1. the recipient must be an employee, representative, consultant or franchisee of another organization; 
2. the two organizations must have a relationship; and 
3. the message must concern the activities of the recipient organization (in other words, must be relevant to the activities of the recipient). 

Sounds easy enough doesn’t it? But what exactly does it mean for two organizations to have a “relationship”? Is it the same thing as an “existing business relationship” as defined in CASL’s Section 10(10)? And organizations undertake many activities. For example, most organizations perform at least some accounting outside of their core activities, so would it be offside to send a message about accounting courses to an employee at a marketing company? Or conversely, a message about a marketing course to an employee at an accounting company?  

Not always so clear-cut is it?  

Implied Consent by Conspicuous Publication 

Section 10(9)(b) of CASL says that a person’s consent to receive CEMs is implied if three conditions are met:  

1. the recipient must have conspicuously published their electronic address or “caused” it to be conspicuously published; 
2. where published, the electronic address is not accompanied by a statement that the person does not wish to receive unsolicited CEMs; and 
3. the message must be relevant to the person’s business, role, functions or duties in a business or official capacity. 

The CRTC has provided some interpretation of this provision in its CASL FAQ. But the “relevance” of a message to a person’s business, role, functions or duties, tends to be somewhat of a subjective judgement call. As discussed below, likely the biggest implication from the FCA’s decision for marketers is its reiteration that the onus is on the sender to provide evidence that the three 10(9)(b) conditions are met.  

Functioning Unsubscribe 

I won’t delve into the specifics of CASL’s mandated unsubscribe mechanism here, but will highlight what the regulations say about the form it must take. Section 3 of the Electronic Commerce Protection Regulations (CRTC) requires the unsubscribe mechanism within a CEM “be set out clearly and prominently” and “be able to be readily performed.” So what happens when the sender includes two unsubscribe links in their CEM, one functioning and one non-functioning? Spoiler alert: the FCA deferred to the CRTC’s judgement on this one, and it wasn’t favourable to CompuFinder. 

Takeaways from the FCA Decision 

The Threshold for Establishing a Business-to-Business Relationship is Higher than that of an Existing Business Relationship 

Just because an organization sells a product or service to another doesn’t entitle it to send CEMs to the purchasing organization’s employees. CompuFinder argued that because certain organizations had purchased its courses in the past, it therefore had a relationship with the organizations’ employees for the purpose of the business-to-business exemption. The FCA deferred to the CRTC’s interpretation here, stating that there was nothing wrong with its determination that “contractual relationships comprehending a very limited number of transactions affecting very few employees do not constitute relationships for the purposes of the business-to-business exemption.” CompuFinder had provided proofs of payment from its customers for single training sessions of one or two employees as evidence of there being a relationship. Evidently, that was just not enough to form a relationship between CompuFinder and the recipient employees who had not purchased courses in the past. 

The threshold for establishing a “relationship” under the business-to-business exemption is higher than that of establishing an existing business relationship. CompuFinder argued that because an “existing business relationship” is defined within CASL, a “relationship” for the purpose of the business-to-business exemption must have a broader scope and be easier to make out. The FCA flatly disagreed, pointing out that while an existing business relationship would allow CompuFinder to send CEMs to the individuals who had paid for its courses, CompuFinder’s interpretation of the business-to-business exemption would allow it to not only send CEMs to those individuals, but to every one of their colleagues as well. In other words, it would open the floodgates to spam, an interpretation squarely at odds with CASL’s purpose. 

Lastly, CompuFinder argued that the CRTC inappropriately read into the business-to-business exemption a requirement that relationships can only be established through employees with authority to bind their organizations. The FCA did not agree. It noted that the CRTC said this might help in establishing evidence of a relationship, but it was neither determinative nor required.  

A Past Similar Purchase or Evidence of Intent to Purchase Can Satisfy Relevance Requirement of Business-to-Business Exemption 

Recall that to qualify for the business-to-business exemption, a CEM must concern the activities of the recipient organization (aka relevance). As the FCA noted, “The required connection between a good or service promoted in a CEM and the activities of the recipient organization will often be established simply by virtue of the relationship between the CEM-sending and receiving organizations, which will typically be based on the provision of that same good or service by the former to the latter.” In this regard, a past purchase or evidence of the recipient’s intention to purchase will likely meet the threshold for establishing relevance.  

If Relying on “Conspicuous Publication” Implied Consent, Be Diligent and Ready to Provide Proof 

The FCA sided with the CRTC’s finding that CompuFinder failed to show that the recipients of its emails had “conspicuously published or caused to be conspicuously published” their email addresses. The CRTC found that emails in a table of addresses provided by CompuFinder as evidence were taken from third-party directory websites that did not indicate whether their content was user-submitted. The takeaway here is that if you collect addresses from online directories, ensure there is a way to document that the corresponding individuals had either submitted the addresses themselves or caused them to be submitted. And don’t forget to make sure there is no disclaimer accompanying the addresses that the corresponding individuals do not wish to receive unsolicited emails (CompuFinder had apparently dropped the ball in that regard as well). 

Job Title Not Necessarily Enough to Establish Relevance to Person’s Business, Role, Functions or Duties for “Conspicuous Publication” Implied Consent 

As evidence of the relevance of its emails to recipients’ business, role, functions, or duties (the third requirement to meet the “Conspicuous Publication” exception), CompuFinder had included recipients’ job titles in its evidence table. The CRTC disagreed this was sufficient to establish relevance, finding that CompuFinder “merely speculated, from recipients’ job titles, what their functions might be, and then assumed that CEMs sent to them were relevant to those functions.” While the FCA did not rule out that job titles could adequately establish relevance in certain cases, it found CompuFinder’s speculative practices fell short.  

The lesson here is that organizations who wish to rely on the “conspicuous publication” exception should be ready to explicitly state the “business, role, functions or duties” of its CEM recipients and be prepared to demonstrate the relevance of the corresponding CEMs it sends as they relate to such business, role, functions, or duties.  

Unsubscribe Mechanisms: “Clearly and Prominently” Means Avoiding Obscurity and Confusion  

To meet the “clearly and prominently” requirements for unsubscribe mechanisms, organizations must avoid any elements within CEMs that may create obscurity or confusion around unsubscribe links. In other words, including a non-functioning unsubscribe link, even in the presence of another one that works, is a clear no-go.   

Conclusion 

CompuFinder’s saga is a lesson on the importance of having a diligent CASL compliance strategy in place. Such a strategy must include clearly documenting how consent is obtained and if relying on the business-to-business exemption or “conspicuous publication” implied consent, evidence of how CEMs are relevant to their recipients. Oh, and don’t forget to clean up those unsubscribe links!