Get ready for dealing with new anti-spam laws in your practice. With this week’s announcement that Canada’s new anti-spam legislation comes into force July 1, 2014, financial advisors and their firms should now be ramping up their plans to deal with what may be the toughest anti-spam laws in the world. Indeed, the new law casts a wide net by establishing a basic prohibition against sending a “commercial electronic message” unless the recipient has consented to the message, or the message fits within certain limited exceptions.
Among other penalties, violations of the law carry monetary fines of up to $10 million for companies, and permit individuals to launch private actions for redress. Such actions have the potential to turn into expensive class actions.
In a partial reprieve for businesses, there is a three-year transitional period (until July 1, 2017) relating to the private right of action for non-compliance with the act. Existing business relationships, with certain restrictions, will also be covered by the transitional period. The legislation will be known as Canada’s Anti-Spam Legislation (CASL).
The new law means that advisors and their firms will have to conduct careful reviews of their online and email practices: central to the new legislation is a general requirement that those receiving commercial emails have consented to the contact, as defined in the legislation. However, industry pushback over the last few years did lead to some exemptions for businesses, which should be of some assistance to firms that use email for communicating with potential clients.
These include: an exemption for social media, with certain conditions, and a definition of the “family and personal relationship” exemption that is more flexible than was initially proposed. Importantly for advisors, the government also granted an exemption for one-time, third party referrals from an existing business relationship, as defined under the legislation.
As a result, advisors will now have to keep close track of whether they have obtained a recipient’s consent to be contacted by email and the nature of that consent.
Wendy Mee, a lawyer who specializes in privacy, marketing and advertising at Blake, Cassels & Graydon in Toronto, suggests that, among other measures, advisors can take the some of the following steps to avoid being in violation of the new regime.
First, they should ensure that they use the next six months well, to ensure that they have obtained the express consent of those they wish to contact using email. This may involve reviewing existing marketing contact lists and practices to evaluate what sorts of changes are required under CASL. A major stumbling block under CASL will be that electronic messages asking for consent will themselves be treated as violations of the act. Advisors will thus need to be creative about how this consent is obtained after the act comes into force in July, Mee notes.
It will be very helpful to put clear compliance programs and procedures in place to deal with the requirements of the act, Mee says. If a lawsuit is launched under the new act, being able to point to such procedures and note that full efforts were made to comply will have a protective effect. “Having corporate programs in place now is very important,” Mee says.
For financial advisors, who often work independently, it will also be particularly important to have sound training programs in place to ensure advisors have the consent they require, or that they fit within a particular exemption. Companies need to “reach out to people and say, ‘listen, you can’t do this,'” Mee cautions.
In general, Mee notes that advisors need to be aware that the new law covers far more than what most people may think of as spam. “It has a very broad application,” she notes. “It’s not just our general idea of anti-spam.” Added Mee: “It is certainly going to be challenging for organizations to comply, so it is important to get started earlier, rather than later.”