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CUNA Regulatory Comment Call

August 17, 2004

EXECUTIVE SUMMARY

• The Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act), effective January 1, 2004, requires the Federal Trade Commission (FTC) to issue rules that determine when an e-mail message has a commercial primary purpose. Every such e-mail is required to:
  • Clearly and conspicuously indicate that the message is an advertisement or solicitation.
  • Provide recipients with an opportunity to “opt-out” from receiving additional commercial e-mail messages from the same entity.
  • Provide a physical postal address of the sender.
• “Transactional or relationship” e-mails are not covered under these CAN-SPAM Act requirements. The proposed rule outlines criteria for determining when an e-mail has a commercial primary purpose, specifically those e-mails that also contain transactional or relationship content.
• The FTC is responsible for enforcement of the CAN-SPAM Act for state-chartered credit unions, and the National Credit Union Administration is responsible for enforcement for federally-chartered credit unions.
• Comments on the proposed rule are due by September 13, 2004. Please submit your comments to CUNA by September 2, 2004. If you provide comments directly to the FTC, please refer to “CAN-SPAM Act Rulemaking, Project No. R411008” on the response and on any envelope you send to the FTC at the addresses indicated in the proposed rule.

Please feel free to fax your responses to CUNA at 202-638-7052; e-mail them to Associate General Counsel Mary Dunn at mdunn@cuna.coop and to Assistant General Counsel Jeff Bloch at jbloch@cuna.coop; or mail them to Mary and Jeff in c/o CUNA’s Regulatory Advocacy Department, 601 Pennsylvania Avenue, NW, South Building, Suite 600, Washington, DC 20004-2601. You may also contact us at 800-356-9655, ext. 6732, if you would like a copy of the proposed rule, or you may access it on the Internet using the following link:
http://www.ftc.gov/os/2004/08/canspamfrn.pdf

BACKGROUND

Under the CAN-SPAM Act, every commercial e-mail message is required to:

• Clearly and conspicuously indicate that the message is an advertisement or solicitation.
• Provide recipients with an opportunity to “opt-out” from receiving additional commercial e-mail messages from the same entity. The sender may not send additional commercial e-mails more than ten business days after the recipient has elected to “opt-out.”
• Provide a physical postal address of the sender.

The CAN-SPAM Act defines a “commercial e-mail message” as an e-mail in which the primary purpose is the commercial advertisement or promotion of a product or service, including content on an Internet website operated for a commercial purpose. These CAN-SPAM Act requirements do not apply to “transactional or relationship messages,” defined as e-mails in which the primary purpose is:

• to facilitate, complete, or confirm a commercial transaction that the recipient has previously agreed to enter into with the sender of the message;
• to provide notification about a change in terms, features, or account information; or
• to deliver goods or services, including product updates.

BRIEF DESCRIPTION OF THE PROPOSED RULE

The CAN-SPAM Act requires the FTC to issue rules by December 16, 2004 that define the relevant criteria for determining whether the “primary purpose” of an e-mail is commercial and, therefore, subject to the CAN-SPAM requirements for commercial e-mails. The FTC has now issued a proposed rule outlining the following criteria, which also addresses e-mails containing both “commercial” content and “transactional or relationship” content:

• The primary purpose is commercial if the e-mail contains only content that advertises or promotes a product or service.
• The primary purpose is commercial if the e-mail contains both content that advertises or promotes a product or service and “transactional or relationship information” and if:
  • a recipient reasonably interpreting the subject line of the e-mail would likely conclude that the message advertises or promotes a product or service; or
  • the transactional content does not appear at or near the beginning of the message.
• The primary purpose is commercial if the e-mail contains both content that advertises or promotes a product or service and other material that is not transactional or relationship information and if:
  • a recipient reasonably interpreting the subject line of the e-mail would likely conclude that the message advertises or promotes a product or service; or
  • a recipient reasonably interpreting the body of the message would likely conclude that the message’s primary purpose is to advertise or promote a product or service.

• Under the proposed rule, e-mails incorporating both “commercial” and “transactional or relationship” content would not have to comply with the CAN-SPAM requirements as long as the “transactional” content is placed at or near the beginning of the e-mail. Is this a reasonable approach and does it provide sufficient guidance? What other standard would be more appropriate?
  
  

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• Do the benefits of this proposal to consumers outweigh the burden to the legitimate senders of these types of e-mails? What would be the impact on credit unions that may send these types of messages? What changes could be made to this proposed rule that would mitigate the impact of this proposal?
  
  

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• Should there be a complete exemption for membership organizations, such as credit unions, since consumers may likely welcome e-mail messages from organizations in which they hold membership and, therefore, are not the type of unsolicited messages the CAN-SPAM Act was intended to address?
  
  

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• Will this proposal cover credit union e-mails that you would not think or believe should be considered “commercial e-mail messages?” What types of e-mails would those be?
  
  

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• Should the FTC specifically exclude newsletters from the CAN-SPAM requirements, especially newsletters from membership organizations, such as credit unions? Should the inclusion and/or amount of “commercial content” be a factor as to whether these newsletters should be excluded?
  
  

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• Other comments?
  
  

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