Updated: Jan 27
By Daniel Garcia
COVID-19 has changed the way many small business owners are interacting with their current and potential customers. Physical sign marketing is just not as effective as it was before the nation announced stay-at-home orders. Fewer people are walking, driving, and visiting the public areas and because of this, signs, billboards, or even those crazy air-filled wacky men are not bringing in the same amount of business. Many small business owners are now beginning to reach customers through emails or ramping up their email marketing campaigns. However, there is one thing to consider when marketing to customers via email, the CAN-SPAM Act.
Now you might be asking what the heck is the CAN-SPAM Act (Act)? No, it does not have any relation to an actual can of Spam; however, it does regulate certain emails that the business can send a customer. The Act was passed because of the concern that electronic mail, otherwise known as emails, is increasingly becoming relied on by Americans in both their personal and commercial (related to their work, business, etc.) lives. Given its extremely low cost and ability to reach people across the state, nation, and even world at the same time, emails offer a valuable tool for advertising to customers. We all receive emails in our inbox, whether it is from a company advertising a new product or trying to convince us to buy more of their products. All of those emails have to comply with the Act. When the Act was passed in 2003, it was estimated that unsolicited commercial emails accounted for over half of all emails and in 2019 accounted for 57.26% of all emails. With this concern in mind, the Act was passed by Congress to help prevent unwanted emails and decrease the possibility that the emails customers wanted would not be lost in a field of unwanted spam messages.
The language of the Act states its purpose, which is to limit the “transmission of unsolicited commercial electronic mail via the Internet,” categorized as “spam.” Now, what exactly does that mean? Before I get into the specifics of the Act, it might help to understand its goals which are three main concepts:
1. Protect customers through the regulation of certain emails.
2. Senders (businesses) of commercial emails should not mislead the recipients of who is sending the email and what is in the email.
3. Recipients of commercial emails should have the right to say no to receive any additional commercial emails from the same sender.
What is exactly “spam” email?
When we think about spam, I’m sure most of us imagine the junk folder that is largely untouched in all our email accounts. That folder usually contains a more malicious type of spam, for example, the prince in a foreign country that needs help to recover his money and in exchange, you will receive a percentage of the money or even an email claiming you’ve won the lottery and all you have to do is send them your bank account information. However, under the Act, an email is considered spam and must comply if it is a “commercial email”. An email is commercial if its primary purpose is to advertise or promote a product or service. For example, if a business includes a link in the email to their website or company, where you can buy their products of services, but the purpose of the email is not to advertise or promote their products or services, it will not be a commercial email per the Act. But, if the overall purpose of the email is to promote a product or service the business is selling, it must comply with the Act.
Do all product or service emails fall under CAN-SPAM?
No, as mentioned above, the Act looks to the primary purpose, so not every email that a business sends out to consumers is required to strictly follow the Act’s requirements. The Act specifically sets out certain commercial emails that are about a product or service, but will not be classified as a “commercial email.” One type of email that is specifically excluded from most of the Act is a transaction or relationship email. However, while the transaction or relationship email does not fall under a majority of the act, one requirement is that its header must not be misleading, which is discussed below.
Now, what exactly is “transaction or relationship” email? To put it simply, if the email is to confirm, complete, or inform the customer of a transaction, like buying a product and providing shipping information, the email itself will not be considered a “commercial email.” The Act also sets out other types of emails that are exempt:
- Emails providing warranty, product recall, or safety or security information
- Emails providing notifications of a change in terms, status, or account balances concerning subscriptions, memberships, accounts, or any commercial relationship.
- Emails delivering goods or services, including updates or upgrades that the customer is entitled to receive because of the transaction.
How does CAN-SPAM affect small businesses?
Small business owners may be saying “but I’m small, there is no way this should affect me.” Yet, the Act applies to all commercial emails sent from businesses of any size, which its primary purpose is to advertise or promote a product or services. That means if a small business is advertising or promoting products or services through emails, all of these emails must comply with the Act. Don’t fret as I have listed below the requirements for emails that are commercial, but a small business owner should also read the Act in full to be aware of its contents. You can find it here.
Email marketing is one of the largest methods that small business owners use to advertise to potential and current customers and since most people are currently home, the use of email is an essential tool. Email communications can be one, if not the most effective marketing method for small business owners. This Emarsys study, which lays out the benefits and data for marketing, shows that 81% of small businesses still rely on email marketing as their main method to gain new customers, and 80% use emails to retain those customers. This statistic is not surprising because people are reading emails more often, whether it’s while taking a snack break, first thing in the morning, or watching a commercial because mobile devices have made it convenient to check emails at any time of the day. More than half of the U.S. population check their emails more than 10 times a day. In fact, 49% of all emails are opened on a mobile device according to IBM and 73% of millennials prefer businesses to communicate via email. Email marketing also has a stellar return on investment according to DMA; small business owners receive $42 for every $1 spent on email marketing.
Why is this important? As most small business owners use emails to reach potential customers and to retain current customers, they might be unaware that there are penalties for failing to comply with the Act or that it even exists. Each email in violation of the Act can result in a penalty of up to $43,280, a costly mistake. Given that most people are currently home, paying more attention to their emails, it is more important than ever to comply with the Act. Especially as the stay-at-home orders are slowly lifting, all those marketing emails will prove fruitful and email marketing is likely to increase to market new products, the small business, and entice customers to get out and shop!
Steps to avoid running afoul to CAN-SPAM
A business cannot use misleading headers
The business must be identified correctly and may not mislead a recipient as to who is sending the email. The header includes the “from,” and “reply to” sections. This requirement applies to commercial and transactional and relationship emails that are sent from a business.
Subject lines must accurately reflect the content of the message
This is one of the simpler rules to follow; any commercial email must be honest as to what is in the email. For example, you cannot have “Free Gift cards” in the subject line and have the contents of the email only promote a new line of snowboards.
The commercial email must be identified as an advertisement
While you do not have to include advertisement in the subject line of the message, it should be obvious that the email is an advertisement. It must be “clear and conspicuous,” which means you cannot make it difficult to tell that the email is an advertisement. A business can include a statement saying “this is an advertisement” at the bottom of the email. However, if the recipient has already consented to receive commercial emails from the business, they do not have to identify the email as an advertisement.
There is no opt-in requirement
Yes, this isn’t a typo. The Act does not require that recipient’s consent to receive commercial emails before the business can advertise to them. However, whenever the business decides to purchase or receive a list of emails, it is important to consider that it may have customer emails that have previously opted out or the emails may have been collected illegally. So, some companies prefer to send emails to recipients they already have a relationship with or ask to receive emails.
You must include an opt-out
You may have seen the “unsubscribe” links at the bottom of most of your emails. One main reason is that businesses have to include some way to opt-out of their emails if they are advertising products or services even if the recipient has asked to receive the emails. No matter the size of the company, there must be an option to stop receiving emails. The “unsubscribe” option at the bottom of emails may be the easiest and most convenient; however, that specific method is not required. A business can also include a list and categories of opt-out preferences when a recipient is asking to stop receiving emails. For example, a business can include options when a customer wants to unsubscribe, such as receive fewer, certain types, or no emails.
You must honor opt-out within ten days
A business must honor the request to stop receiving commercial advertisements within ten days. After this point, a business may no longer send recipients commercial emails unless the customer later asks to receive emails. It is important to know that once the recipient has asked to no longer receive the commercial emails, the business cannot sell, exchange, or transfer the email address of the recipient.
You must include a physical address
All commercial emails must also include the business’s address, so the recipient has a way to contact them. This can be either a physical address such as their store location, headquarters, office, or a P.O. box.
You are still responsible for those who manage your email campaigns
Under the Act, a business is responsible for all commercial emails that are sent by themselves or on behalf of the company. If a business hires a marketing agency to send emails or if a family member is sending emails on behalf of the business, the company is still responsible to ensure those emails are compliant with the Act.
Maybe the requirements still seem like too much or a small business owner may rather not deal with determining if their emails are compliant. The FTC, who is in charge of compliance with the Act, published this article with answers to questions by business owners which can prove helpful. The FTC has also included a summary of the key points mentioned above as well as examples of what a commercial versus transactional or relationship email looks like on their webpage here.
Maybe this is still too much. If that is the case, some companies specialize in sending emails to customers and one, in particular, is SendGrid. Their business is sending emails to customers on behalf of companies, and they have an article explaining common myths and facts about the Act itself, which you can find here. However, keep in mind the last point above, a small business is still responsible for other companies managing their email campaigns.
A small business owner can also utilize these law firms to help determine if their comply with the Act:
Honesty is the best policy when it comes to “spam”. Being honest with what the message is, how to opt-out, and where a business is located are all ways to stay in compliance. Small business owners are ready to resume business as normal and receive revenue they have been so desperately expecting and deserved. Good luck with this new wave of business as the nation begins to open up; may the email marketing campaigns be as fruitful as ever!
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