Legal Guidelines for Email Marketing

Instructor: Ashley Dugger

Ashley is an attorney. She has taught and written various introductory law courses.

Many businesses use email marketing campaigns because they are low cost and easily updated. However, email marketing campaigns must be conducted within certain legal boundaries. This lesson explains the main provisions of the CAN-SPAM Act.

Email Marketing

Tessa receives at least a dozen marketing emails every day. Some she appreciates, like those alerting her to sales at her favorite stores. She considers most to be junk mail, but it's no wonder businesses keep trying. A recent study showed that email marketing yields an average 4300% return on investment for U.S. businesses.

With that kind of return, you might wonder why all businesses don't engage in this type of low cost marketing. Unfortunately, the benefits are not without certain risks. Some common practices - such as purchasing email address lists or sending emails after being asked not to - can be against the law. Businesses must know the laws governing email marketing before launching this type of campaign.

CAN-SPAM Act

The main federal law governing business email was enacted in 2003 and is known as the CAN-SPAM Act. CAN-SPAM stands for 'Controlling the Assault of Non-Solicited Pornography and Marketing'. The Act is broad, as it's purposely drafted to govern all commercial email messages. A commercial email message is a written, electronic communication that advertises or promotes a commercial product or service.

For example, CAN-SPAM covers these types of messages:

  • E-newsletters
  • Emails announcing sales
  • E-coupons
  • Emails announcing new services

Note that CAN-SPAM governs commercial email to all audiences, such as:

  • Current customers
  • Prospective clients
  • Former customers
  • Other businesses
  • People with no connection to the business

In fact, CAN-SPAM even covers how businesses find their audiences. CAN-SPAM specifically prohibits selling email address lists.

Note also that CAN-SPAM covers both the business being promoted through the message and the company that actually sends the message. This is important for businesses that hire marketing companies to handle their email campaigns. If the marketing company violates CAN-SPAM, even without the original business knowing, both can be penalized.

The provisions of CAN-SPAM are enforced by the FTC, or Federal Trade Commission. If a business violates the terms of CAN-SPAM, the FTC can then fine that business. Fines can rack up quickly, because FTC penalties can run up to $16,000 per email. For example, online advertiser ValueClick settled its multiple CAN-SPAM charges with the FTC for $2.9 million.

Complying with CAN-SPAM

Let's take a look at some key CAN-SPAM requirements that have been commonly violated. You've probably seen some of the following examples in your email inbox.

Disclose advertising. Commercial emails must clearly disclose that the message is an advertisement. There are many different ways a business can do this as long as it's obvious the message is an ad. Some examples include 'Save up to 20% sitewide', 'Don't miss exclusive savings', and 'Big brands, little prices!'

Accurately identify business. Commercial emails must contain accurate headers, domain names, and subject lines. The 'From', 'Reply-To', originating domain name, and sender's email address must reflect truthful information. Businesses cannot use deceptive subject lines, such as 'You've won a shopping spree' for an email that contains a 20% off coupon.

State how to opt-out. Commercial emails must clearly and obviously state how the recipient can opt-out or unsubscribe from future emails. The notice must be posted so that an average person could recognize, read, and understand the opt-out procedures. The notice cannot be hidden or printed too small for an average person to recognize.

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