Hopelessly Preparing for the Cessation of CASL’s Transitional Provision

Andrew Schiestel is the president at tbk Creative, a co-founder of AODA Online, and is the founder of #LightenCASL. [email protected].

Editor’s Note: Since the writing of this article on May 16, 2017, the government has stopped, with much gratitude, Private Right of Action (PRA) from coming into effect. Therefore, information in this article pertaining to PRA is no longer up to date.

A short while ago, tbk Creative received an inquiry that looked something like this: “With Canada’s Anti-Spam Legislation (CASL)’s July 1, 2017, date fast approaching, which will end the transitional provision (s. 66 of the Act), should we be sending out an email blast to our current list of subscribers and requesting they provide express consent?”

This is a good question to ask at this juncture, but the answer isn’t as simple as a yes or a no. In this article, I’ll flush out what this whole three-year transitional provision cessation date is all about, if you should be taking any action to anticipate for it, and recommendations to our federal government to put an end to these unnecessarily complex situation for our Canadian businesses.

What the Transitional Provision Is

The transitional provision is based on section 66 of CASL, which reads:

“66. A person’s consent to receiving commercial electronic messages from another person is implied until the person gives notification that they no longer consent to receiving such messages from that other person or until three years after the day on which section 6 comes into force, whichever is earlier, if, when that section comes into force,

(a) those persons have an existing business relationship or an existing non-business relationship, as defined in subsection 10(10) or (13), respectively, without regard to the period mentioned in that subsection; and

(b) the relationship includes the communication between them of commercial electronic messages.”

To translate this provision for businesses, it’s basically saying if you had an existing business relationship with someone prior to July 1, 2014, and that relationship consists of a commercial electronic message (CEM) between you and them, you have three years from July 1, 2014, to continue to send them CEMs (unless they provide express consent, unsubscribe, a different exception as per the regulations is formed between you and them, etc.).

Extending the Olive Branch

In a legislation that is anti-competitive to our Canadian businesses, the transitional provision was a bit of an olive branch in that CASL’s 2-year and 6-month existing business relationship purging rules were delayed from coming into force. According to sections 10.10.a and 10.10.e, after someone buys a product or service, or someone inquires about a product or service you sell, an existing business relationship is formed and you have implied consent to send them CEMs for up to 2 years or 6 months, respectively. If they don’t buy a product in that period, provide express consent, or a different exception isn’t formed as per the regulations, you are prohibited from sending them any further CEMs.

How this ties into the transitional provision is that without this provision, you would have to remove everyone you had an existing business relationship with prior to July 1, 2014, as per their individual, appropriate 2-year or 6-month dates (the actual date would be unique to every contact); however, because of the transitional provision, you’re given three years, and those three years terminate on July 1, 2017.

Revisiting the Inquirer’s Question

The inquirer asked if their company should send out an email to their subscribers to request express consent. You remember these types of emails, right? You were probably the recipient of dozens of them between March 2014 and June 2014. Perhaps not at the same Richter scale, but you should expect another round of businesses sending you these requests as the July 1, 2017, closes in.

The answer to the inquirer’s question is, “It depends on a bunch of factors.”

Don’t look at the list as an aggregate total. It may be beneficial to send an express consent request email to some and not others, depending on a number of factors.

Here are the factors:

First, anyone who provided express consent doesn’t need an additional email requesting express consent. They already provided it.

Second, anyone you had an existing business relationship with pre-July 1, 2014, (and who meet the full definition of s. 66) who hasn’t provided express consent, re-inquired, purchased a product since, or an additional exception hasn’t formed, it’s probably a good idea to send them an email requesting express consent prior to July 1, 2017.

Third, anyone who bought a product or inquired about a product or service post July 1, 2017, you may not need to send them an email yet requesting express consent or you may be prohibited entirely at this point from sending them an email requesting express consent as you may already be prohibited from sending them CEMs based on the 2-year and 6-month existing business relationship purge date rules. Let me explain this last point with two examples.

If someone last purchased a product in August 2014, and no new relationship or additional transactions have occurred since then, you had an existing business relationship with that contact until August 2016 (2-year rule), which was last year. It’s now past August 2016, so you can no longer send that contact CEMs. The Act also states an electronic message that requests consent is also considered a CEM.

As a second example, if someone last purchased a product in December 2016, and no new relationship or additional transaction have occurred since then, you have an existing business relationship with that contact and can send them CEMs until December 2018. Therefore, you can send this contact an email (at any time you wish) requesting their express consent, but you’re not required to remove them from your list yet.

Getting our Heads out of Theory and into Practicum

Do the above sound like a practical nightmare to implement for your business? Welcome to what businesses are dealing with across Canada as they continue to grapple with the complexities of CASL.

To effectively implement the above solution, you’ll need:

1. a customer relationship management (CRM) or enterprise resource planning (ERP) software that properly tracks the dates of inquiries and last purchases.
2. a CRM / ERP that allows for the customization to add labels, so you know the status of a person (e.g., prospect, customer, personal relationship, family relationship, business to business relationship, express consent, unsubscribed, etc.).
3. a CRM / ERP with the intelligence to automatically change the status of a person (noted in #2 above) based on a combination of the person’s last action and prioritizing certain statuses over others. For a simple example, if an inquiry buys a product, their status should go from “prospect” to “customer”. For a more complex example, if you already have express consent with someone and they buy another product, you want to ensure the “express consent” status maintains, not resorting the contact back to a “customer” (which, consequently, would be purged in 2-years inaccurately).
4. to apply proper policies and training to staff who are expected to keep the CRM / ERP up to date. With the potential of an up to $10 million corporate administrative monetary penalty (regulatory) or $1 million per day in statutory damages through the courts (private right of action), you want to make sure your staff does a good job.
5. a software solution that will bridge the CRM / ERP to your email marketing software. Before every email campaign, the CRM / ERP must send new data to the email campaign—removing people who have been previously purged or who have manually requested to unsubscribe.
6. Inversely, the email marketing software should communicate data back to the CRM / ERP and it should be updated (e.g., if someone unsubscribes from an email campaign).
7. In the case of wanting to send an express consent email request, the CRM / ERP should pull out segments of your list based on filtering requirements you provide.

The above software won’t come cheap—there’s no out of the box solution I’m aware of. As a technology entrepreneur who has historically invested in software for Canadian regulation compliance (i.e., AODA Online), I can hypothesize why there’s no out of the box software yet:

First, the solution would be challenging to create as there aren’t any universal CRMs / ERPs or email marketing software in existence. CRMs, ERPs, and email marketing software come in hundreds of shapes and sizes. Second, many wonder if CASL is even constitutional or if our federal government will reform the legislation at some point. Third, the financial opportunity in a Canadian-only marketplace is limited compared to investing in solutions that could have extraterritorial appeal. One could argue that people outside Canada need to comply with CASL when emailing Canadian recipients, but we all know CASL is largely ignored by groups outside Canada. At a May 16, 2017 Ontario Bar Association (OBA) event in Toronto, I clarified with two CRTC representatives that 100% of publicly completed administrative monetary penalties (AMPs) and undertakings have been against Canadian entities.

This brings us back to a custom software solution for the individual business. While it can be done for a company, expect the pricing to range from tens of thousands to hundreds of thousands of dollars, depending on a business’ size and number of business units, customer segments, and service lines.

All of Canada’s one million plus companies are required to comply with CASL, and the vast majority don’t have a hope to—those that do (who spent the money on software to get there), will become less competitive against foreign counterparts in the process.

At this point, the most effective thing our government can do is get ahead of this proactively before the private right of action commences on July 1, 2017, and reform the legislation.

There are three ways they can do this (these have been written about on tbk Creative’s blog before, were echoed by competition and advertising lawyer, Steve Szentesi, in Canadian Lawyer magazine, and are the official recommendations of #LightenCASL):

1. Change the definition of implied consent to be ‘one party providing their contact information to another party’.
2. Eliminate the 2-year and 6-month rules around existing business relationships (i.e., implied consent).
3. Allow any two people who are voluntarily connected on a social network or instant messaging system (e.g., Skype, Facebook Messenger, Snapchat, etc.) to have formed implied consent.

By implementing the above recommendations, our federal government will immediately make the electronic messages provisions of CASL easy for our Canadian businesses to comply with while still protecting consumers (consumers will still know the people that send them messages and may still unsubscribe at any time).

If these changes were to occur, I could now easily answer our friend’s question at the start of this article. My answer would become, “Don’t bother sending your list a nuisance-laced email requesting express consent—they already provided you their contact information. They know who you are. Make sure you continue to have proper sender details and an unsubscribe mechanism in your emails and they’ll unsubscribe if or when they wish to.”

Now let’s get on with business and make Canada more competitive and innovative.

This article is provided as educational for businesses and informational for policymakers; don’t take it as legal advice.