Ottawa freezes anti-spam provision, seeks review of legislation

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The federal government has put on hold the implementation of part of Canada's anti-spam law in response to feedback from the business community.

The law, which came into effect in 2014, puts restrictions on e-mails and other electronic communications for promotional purposes. That means that marketers wanting to contact consumers directly this way need their explicit consent to do so.

The government's announcement on Wednesday does not change that: The law continues to be enforced, but for now it shelves a provision to allow private citizens to take legal action against businesses for violating it.

The government also announced Wednesday that it will ask a parliamentary committee to review the legislation.

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The change is the result of a concerted lobbying effort by business groups, who have communicated their concerns to the government about the possibility of lawsuits under CASL.

"Canadians deserve to be protected from spam and other electronic threats so that they can have confidence in digital technology.

At the same time, businesses, charities and other non-profit groups should have reasonable ways to communicate electronically with Canadians," Navdeep Bains, Minister of Innovation, Science and Economic Development, said in a statement on Wednesday.

The law was designed to come into effect in stages:

• By June, 2014, businesses had to have consent to send messages to customers for marketing purposes, and had to provide an easy opt-out in all future messages. The Canadian Radio-television and Telecommunications Commission, one of three regulators that oversee the law, was in charge of administering penalties for violations, from $1-million for individuals and up to $10-million for businesses in Canada. (Fundraising for registered charities and political campaigns are exempt.) In the first week and a half after the law went into effect, the CRTC received more than 12,000 complaints.

• In January, 2015, it began to cover “malware,” or malicious software installed on people’s computers and other devices without their permission. Marketers who use apps to advertise to customers had to ensure those apps weren’t infected with malware, and had to have permission to collect personal information, take any actions or install any programs on those devices.

• On July 1 of this year – in addition to the fines that the CRTC can already hand down for CASL violations – people and organizations would have been given the right to take violators to court and seek damages. That third phase has now been suspended.

Just last year, CRTC chair Jean-Pierre Blais was talking tough about the 2017 deadline.

"Once there's a private right of action … you're on your own. Good luck with that," he said in a speech to marketers in Toronto in March, 2016. "All the more reason to get into compliance as much as you can with us, because it will diminish the risk."

One part of the law that will continue to take effect on July 1 is the end of a three-year grace period for companies to prove they have consent to contact everyone on their marketing lists.

The law also applies to SMS text messages and one-to-one messages sent via social media, such as Facebook's Messenger service.

"You still need to be compliant. But this saves a lot of companies a major headache," said Derek Lackey, president of the Direct Marketing Association of Canada, which was part of the lobbying effort. Mr. Lackey said his membership was concerned they could face "hundreds of millions of dollars" in costs defending "frivolous" lawsuits.

The law has also had a positive effect: Mr. Lackey consults with companies on becoming CASL-compliant, and says some clients have seen the rates of promotional e-mails actually being opened jump from 17 per cent to 43 per cent.

"It's about respecting the consumer, only sending stuff that's relevant to them," he said. "It may be a smaller list, but they're more engaged. … Really good companies who were doing e-mail marketing effectively, were doing this anyway."

There have been increasing complaints, however, about mobile phone text messages – which also require consent and the option to opt-out of future messages.

"CASL as it currently has been functioning is protecting Canadian consumers well," said Wally Hill, vice-president of government and consumer affairs for the Canadian Marketing Association, which plans to encourage the government to permanently abandon the private-right-of-action aspect of the law. He is also hopeful that the review of the legislation will further clarify for businesses how they can stay out of trouble.

"The potential of unfounded lawsuits burdening businesses, in our view, would have been counterproductive. It's a great decision."