New anti-spam regulations could hurt business growth, industry says

While industry experts say Canada’s new anti-spam consent regulations are necessary, some are worried the rules could also prevent startup companies from reaching out to clients and impede established firms from maintaining business relationships. Canada’s anti-spam law, Bill C-28, was given royal assent on Dec. 15, 2010, but following the publication this month of regulations to implement the law, concerns are being raised about restrictions the legislation might impose on the growth of Canadian businesses. Barry Sookman, a copyright lawyer and partner with McCarthy Tetrault in Toronto, told The Wire Report in an interview that the regulations could be a major problem for new businesses because they would prevent many entrepreneurs from making their name, products, or services public with minimal costs. “Particularly new businesses without any existing relationships, they have to pound a lot of doors, make a lot of phone calls, and do a lot of promotion to get known in order to grow,” he said. “You can have the best product in the world, but if you have no way of reaching people to let them know what you have, then it’s very difficult.” In a May 25 blog post, Sookman noted that the new law “prohibits sending any commercial electronic message (CEM) to any electronic address unless express consent is given by the recipient”—and that this is a problem for new businesses. Sookman said that, under the proposed regulations, a new business would need previously established relationships with clients to be able to send electronic messages without being penalized. He wrote that, at it stands, a newly established orthodontist who sends an electronic announcement to dentists in his or her town would be in violation of the regulations. “Although few would find these activities offensive, they will all likely be illegal under FISA (Canada’s anti-spam law),” he wrote. Sookman wrote that the proposed regulations identify the term “existing relationship” in two ways. For one, there is an existing business relationship that arises from a purchase, an acceptance of investment, or the existence of a contract within the past two years. Secondly, there is also an existing non-business relationship that arises from a donation or gift, performed volunteer work, or membership to a charity within the past two years, he wrote. But Sookman said in an interview that some form of initial contact is necessary before a commercial electronic message can be sent by a company without fear of penalty. Janet DiFrancesco, director general of the electronic commerce branch at Industry Canada, said last December that, under the new legislation, fines of up to $750,000 for individuals and up to $1 million for repeat violations can be levied. DiFrancesco said the legislation permits fines of up to $10 million for businesses and up to $15 million for any repeat infraction. “The amendments, for us, will allow the bureau to more effectively address the false and misleading representations and the deceptive electronic marketing practices in the electronic marketplace,” Gabrielle Tassé, senior communications advisor for the Competition Bureau’s public affairs branch, told The Wire Report. The legislation also gives new enforcement powers to the CRTC and Office of the Privacy Commissioner. Under the new law, the Competition Bureau will investigate deceptive marketing practices, the CRTC telecom issues, and the privacy commissioner personal information collection. Without commercial electronic messages, Sookman said new companies will be forced to use more expensive ways of communication such as couriers and postal services, which could be detrimental to their growth. Bill Munson, vice-president of the Information Technology Association of Canada (ITAC), said in an interview that the new regulations could also have an impact on established businesses because of the definition of a business relationship extends back two years. “There’s a lot of companies whose businesses don’t demand that they stay in contact with their clientele on a regular basis,” Munson said. “ law firms for example. It’s a good day when you don’t hear from your lawyer, and it’s a good day when you don’t have to call your lawyer.” Munson acknowledged that the regulations are necessary, however. He said that a lot of useless and unwanted messages are sent through malware, or malicious software programs. “Spam clogs up the artery of this increasingly important digital network of ours,” he said. “So anything totally useless and unwanted that clogs it up has to be dealt with.” Bell Canada spokeswoman Jacqueline Michelis said in an interview that Bell takes the issue of spam very seriously. “We have systems in place to identify and filter out the vast majority of spam before it ever reaches our customers,” she said. Michelis added that the company has established an anti-spam working group to review the proposed regulations and provide feedback on them. Sookman also acknowledged that the legislation is necessary because Canada has a spamming problem. But Sookman said Bill C-28 will force companies to be more conservative with the volume of emails or commercial electronic messages they send out because the law does not clearly differentiate between the sending of relevant promotional messages and spamming. “We know there’s bad guys out there. They are commercial spammers and I don’t think anyone has a problem with throwing the book at them,” he said. “The difficulty is that the legislation is so restrictive that bona fide Canadian companies are going to be subject to big fines.” Sookman warned that limitations on commercial electronic messages could impact how business in Canada is carried out and could limit the country’s economic growth. “If you make illegal what would be normal practice, then you really run the risk of not promoting, but creating disincentives for Canadian businesses to use digital networks. And that can’t be Canadian policy,” he said. Sookman said the targeting of spam messaging is necessary in Canada but that a healthy balance must be found. “Given how important commercial messages are to our economy, if we tip the balance too far against using commercial messaging, we could do serious damage to the economy,” Sookman said. Industry Canada is accepting comments on the draft regulations for 60 days from their publication on July 9, 2011 The CRTC in late June opened a consultation on draft regulations to amend its regulatory framework. Its deadline for comments is Aug. 29. The commission's proposed regulations define “commercial electronic message”; specify how an “unsubscribe mechanism may be accessed”; outline definitions for requests for “express consent” to send spam and install computer programs. dgrenier@thewirereport.ca --- CORRECTION: An earlier version of this story incorrectly identified Bill Munson.

New anti-spam regulations could hurt business growth, industry says

News | July 15, 2011

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