CAN-SPAM Act of 2003

The acronym CAN-SPAM derives from the bill's full name: ' Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003'. The bill was sponsored in Congress by Senators Conrad Burns and Ron Wyden. The CAN-SPAM Act is occasionally referred to by critics as the "You-Can-Spam" Act because the bill fails to prohibit many types of e-mail spam and preempts some state laws that would otherwise have provided victims with practical means of redress. In particular, it does not require e-mailers to get permission before they send marketing messages. It also prevents states from enacting stronger anti-spam protections, and prohibits individuals who receive spam from suing spammers except under laws not specific to e-mail. The Act has been largely unenforced, despite a letter to the FTC from Senator Burns, who noted that "Enforcement is key regarding the CAN-SPAM legislation." In 2004, less than 1% of spam complied with the CAN-SPAM Act of 2003. The law prescribed the FTC to report back to Congress within 24 months of the effectiveness of the act. Once this took place, no changes were recommended. It also requires the FTC to promulgate rules to shield consumers from unwanted mobile phone spam. On December 20, 2005 the FTC reported that the volume of spam has begun to level off, and due to enhanced anti-spam technologies, less was reaching consumer inboxes. A significant decrease in sexually explicit e-mail was also reported. Later modifications changed the original CAN-SPAM Act of 2003 by (1) Adding a definition of the term "person"; (2) Modifying the term "sender"; (3) Clarifying that a sender may comply with the act by including a post office box or private mailbox; and (4) Clarifying that to submit a valid opt-out request, a recipient cannot be required to pay a fee, provide information other than his or her email address and opt-out preferences, or take any other steps other than sending a reply email message or visiting a single page on an Internet website. == The mechanics of CAN-SPAM ==

Applicability CAN-SPAM, a direct response of the growing number of complaints over spam e-mails, () clarifying the phrase "primary purpose" on December 16, 2004. Previous state laws had used bulk (a number threshold), content (commercial), or unsolicited to define spam. The explicit restriction of the law to commercial e-mails is widely considered by those in the industry to essentially exempt purely political and religious e-mail from its specific requirements. Such non-commercial messages also have stronger First Amendment protection, as shown in Jaynes v. Commonwealth. Congress determined that the US government was showing an increased interest in the regulation of commercial electronic mail nationally, that those who send commercial e-mails should not mislead recipients over the source or content of them, and that all recipients of such emails have a right to decline them. However, CAN-SPAM does not ban spam emailing outright, but imposes laws on using deceptive marketing methods through headings that are "materially false or misleading". In addition there are conditions that email marketers must meet in terms of their format, their content, and labeling. • Opt-out lists also known as suppression lists are used only for compliance purposes. Content compliance • Accurate "From" lines • Relevant subject lines (relative to offer in body content and not deceptive) • A message cannot be null. There are no restrictions against a company emailing its existing customers or anyone who has inquired about its products or services, even if these individuals have not given permission, as these messages are classified as "relationship" messages under CAN-SPAM. But when sending unsolicited commercial emails, it must be stated that the email is an advertisement or a marketing solicitation. Note that senders are exempt from this rule if recipients have signed up to receive commercial messages from the sender. If a user opts out, a sender has ten days to cease sending and can use that email address only for compliance purposes. The legislation also prohibits the sale or other transfer of an e-mail address after an opt-out request. The law also requires that the unsubscribe mechanism must be able to process opt-out requests for at least 30 days after the transmission of the original message. Use of automated means to register for multiple e-mail accounts from which to send spam compound other violations. It prohibits sending sexually oriented spam without the label later determined by the FTC of "SEXUALLY EXPLICIT." This label replaced the similar state labeling requirements of "ADV:ADLT" or "ADLT." CAN-SPAM makes it a misdemeanor to send spam with falsified header information. A host of other common spamming practices can make a CAN-SPAM violation an "aggravated offense," including harvesting, dictionary attacks, IP address spoofing, hijacking computers through Trojan horses or worms, or using open mail relays for the purpose of sending spam. Criminal offenses Although according to the law, legitimate businesses and marketers should be conscientious regarding the aspects mentioned above, there are misinterpretations and fraudulent practices that are viewed as criminal offenses: • Sending multiple spam emails with the use of a hijacked computer • Sending multiple emails through Internet Protocol addresses that the sender represents falsely as being his/her property • Trying to disguise the source of the email and to deceive recipients regarding the origins of the emails, by routing them through other computers • Sending multiple spam emails via multiple mailings with falsified information in the header • Using various email accounts obtained by falsifying account registration information, in order to send multiple spam emails. == Private right of action ==

CAN-SPAM provides a limited private right of action to Internet Access Services that have been adversely affected by the receipt of emails that violate the Act; and does not allow natural persons to bring suit. A CAN-SPAM plaintiff must satisfy a higher standard of proof as compared with government agencies enforcing the Act; thus, a private plaintiff must demonstrate that the defendant either sent the email at issue or paid another person to send it knowing that the sender would violate the Act. Despite this heightened standard, private CAN-SPAM lawsuits have cropped up around the country, as plaintiffs seek to take advantage of the statutory damages available under the Act. == Overriding state anti-spam laws ==

CAN-SPAM preempts (supersedes) state anti-spam laws that do not deal with false or deceptive activity. The relevant portion of CAN-SPAM reads: :This chapter supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto. Though this move was criticized by some anti-spam activists, some legal commentators praised it, citing a heavily punitive California law seen as over broad and a wave of allegedly dubious suits filed in Utah. == CAN-SPAM and the FTC ==

CAN-SPAM allows the FTC to implement a national do-not-email list similar to the FTC's popular National Do Not Call Registry against telemarketing, or to report back to Congress why the creation of such a list is not currently feasible. The FTC soundly rejected this proposal, and such a list will not be implemented. The FTC concluded that the lack of authentication of email would undermine the list, and it could raise security concerns. The legislation prohibits e-mail recipients from suing spammers or filing class-action lawsuits. It allows enforcement by the FTC, state attorneys general, Internet service providers, and other federal agencies for special categories of spammers (such as banks). An individual might be able to sue as an ISP if (s)he ran a mail server, but this would likely be cost-prohibitive and would not necessarily hold up in court. Individuals can also sue using state laws about fraud, such as Virginia's that gives standing based on actual damages, in effect limiting enforcement to ISPs. The McCain amendment made businesses promoted in spam subject to FTC penalties and enforcement remedies, if they knew or should have known that their business was being promoted by the use of spam. This amendment was designed to close a loophole that allowed those running affiliate programs to allow spammers to abuse their programs, and encouraged such businesses to assist the FTC in identifying such spammers. Senator Jon Corzine sponsored an amendment to allow bounties for some informants. The FTC has limited these bounties to individuals with inside information. The bounties are expected to be over $100,000 but none have been awarded yet. == Reaction ==

Those opposing spam greeted the new law with dismay and disappointment, almost immediately dubbing it the "You Can Spam" Act. Internet activists who work to stop spam stated that the Act would not prevent any spam — in fact, it appeared to give federal approval to the practice, and it was feared that spam would increase as a result of the law. CAUCE (Coalition Against Unsolicited Commercial Email) stated: This legislation fails the most fundamental test of any anti-spam law, in that it neglects to actually tell any marketers not to spam. Instead, it gives each marketer in the United States one free shot at each consumer's e-mail inbox, and will force companies to continue to deploy costly and disruptive anti-spam technologies to block advertising messages from reaching their employees on company time and using company resources. It also fails to learn from the experiences of the states and other countries that have tried "opt-out" legal frameworks, where marketers must be asked to stop, to no avail. AOL Executive Vice President and General Counsel Randall Boe stated: [CAN-SPAM] not only empowered us to help can the spam, but also to can the spammers as well. ... Our actions today clearly demonstrate that CAN-SPAM is alive and kicking — and we're using it to give hardcore, outlaw spammers the boot. Advertising organizations such as the Data & Marketing Association (DMA) have sought to weaken implementation of the law in various ways. These include lengthening the time for honoring opt-outs from 10 business days to 31 calendar days, limiting the validity of opt-out requests to no more than two to three years, and eliminating rewards to persons who assist the Federal Trade Commission in enforcement of the act. The DMA has also opposed provisions requiring the subject line of spam to indicate that the message is an advertisement. == Criminal enforcement ==

On February 16, 2005, Anthony Greco, 18, of Cheektowaga, New York, was the first person to be arrested under the CAN-SPAM Act of 2003. After pleading guilty, he was sentenced in a closed session. Within a few months, hundreds of lawsuits had been filed by an alliance of ISPs. Many of these efforts resulted in settlements; most are still pending. Though most defendants were "John Does," many spam operations, such as Scott Richter's, were known. On April 29, 2004, the United States government brought the first criminal and civil charges under the Act. Criminal charges were filed by the United States Attorney for the Eastern District of Michigan, and the FTC filed a civil enforcement action in the Northern District of Illinois. The defendants were a company, Phoenix Avatar, and four associated individuals: Daniel J. Lin, James J. Lin, Mark M. Sadek, and Christopher Chung of West Bloomfield, Michigan. Defendants were charged with sending hundreds of thousands of spam emails advertising a "diet patch" and "hormone products." The FTC stated that these products were effectively worthless. Authorities said they face up to five years in prison under the anti-spam law and up to 20 years in prison under U.S. mail fraud statutes. On September 27, 2004, Nicholas Tombros pled guilty to charges and became the first spammer to be convicted under the Can-Spam Act of 2003. He was sentenced in July 2007 to three years probation, six months house arrest, and a fine of $10,000. On April 1, 2006, Mounir Balarbi, of Tangier, Morocco, was the first person outside the United States to have an arrest warrant validated under the CAN-SPAM Act of 2003. Mounir's trial was held in absentia, and he was sentenced in a closed session. On January 16, 2006, Jeffrey Goodin, 45, of Azusa, California, was convicted by a jury in United States district court in Los Angeles in United States v. Goodin, U.S. District Court, Central District of California, 06-110, under the CAN-SPAM Act (the first conviction under the Act), and on June 11, 2007, he was sentenced to 70 months in federal prison. Out of a potential sentence of 101 years, prosecutors asked for a sentence of 94 months. Goodin was already detained in custody, as he had missed a court hearing. As of late 2006, CAN-SPAM has been all but ignored by spammers. A review of spam levels in October 2006 estimated that 75% of all email messages were spam, and the number of spam emails complying with the requirements of the law were estimated to be 0.27% of all spam emails. , about 90% of email was spam. On August 25, 2005, three people were indicted on two counts of fraud and one count of criminal conspiracy. On March 6, 2006 Jennifer R. Clason, 33, of Raymond, New Hampshire, pled guilty and was to be sentenced on June 5, 2006. She faced a maximum sentence of 5 years on each of the three counts and agreed to forfeit money received in the commission of these crimes. On June 25, 2007, the remaining two were convicted of spamming out millions of e-mail messages that included hardcore pornographic images. Jeffrey A. Kilbride, 41, of Venice, California, and James R. Schaffer, 41, of Paradise Valley, Arizona, were convicted on eight counts in U.S. District Court in Phoenix, Arizona. Both were sentenced to five years in prison, and ordered to forfeit $1,300,000. The charges included conspiracy, fraud, money laundering, and transportation of obscene materials. The trial, which began on June 5, was the first to include charges under the CAN-SPAM Act of 2003, according to the Department of Justice. The specific law that prosecutors used under the CAN-Spam Act was designed to crack down on the transmission of pornography in spam. Two other men, Andrew D. Ellifson, 31, of Scottsdale, Arizona, and Kirk F. Rogers, 43, of Manhattan Beach, California, also pled guilty to charges under the CAN-SPAM Act related to this spamming operation. Both were scheduled to be sentenced on June 5, 2006 in Phoenix. == Civil enforcement ==

In July 2005, the Federal Trade Commission lodged civil CAN-SPAM complaints against nine companies alleging that they were responsible for spam emails that had been sent by them or by their affiliates. Eight of the nine companies, Cyberheat of Tucson, Arizona, APC Entertainment, Inc., of Davie, Florida, MD Media, Inc., of Bingham Farms, Michigan, Pure Marketing Solutions, LLC, of Tampa, Florida, TJ Web Productions, LLC, of Tampa, Florida, and BangBros.com, Inc., RK Netmedia, Inc., and OX Ideas, Inc., LLC, of Miami, Florida entered into stipulated consent decrees. Impulse Media Group, Inc. of Seattle, Washington, represented by CarpeLaw PLLC, defended the case brought against it. The Department of Justice asserted that the CAN-SPAM statute imposed strict liability on producers such as Impulse Media for the actions of its non-agent, independent-contractor affiliates. However, the two courts to consider that argument rejected the DOJ's contention. In March 2008 the remaining defendant, Impulse Media Group, went to trial. At trial, it was determined that IMG's Affiliate Agreement specifically prohibited spam bulk-email and that if an affiliate violated that agreement, it would be terminated from the program. In fact, several affiliates had been terminated for that very reason. After a 2½ day trial, the jury retired to determine whether Impulse Media should be held liable for the bad acts of its affiliates. Three and one-half hours later, the jury returned with a verdict that IMG was not liable and that the emails were the fault of the affiliates. In March 2006, the FTC obtained its largest settlement to date—a $900,000 consent decree against Jumpstart Technologies, LLC for numerous alleged violations of the CAN-SPAM act. However, the FTC has never prevailed at trial with their theory of strict liability. Legislative History Before the passing of the CAN-SPAM Act of 2003, the United States developed a couple of anti-spam laws. These different laws imposed different standards. During the 1990s and early 2000s, there was a rapid increase in unsolicited commercial email. This prompted an interest in congress to provide a national solution. Many industry groups, organizations, and government agencies testified before Congress. They testified about the increasing fraud and identity theft due to the rise in commercial emails. The Act was passed by Congress in 2003 with bipartisan support. The Act was signed into law on December 16, 2003. This bill was described to be the first step toward national standards. However, many advocacy groups argued that the legislation was not strict enough. Specifically, March (2004) writes how it wasn't strict enough due to the permitted unsolicited commercial emails so long as certain requirements were met. Key Provisions of the CAN-SPAM Act There are several core requirements for the CAN-SPAM Act to deem emails as lawful commercial email: Prohibition of deceptive subject lines and headers: Commercial emails cannot have misleading transmission information. Identification: Emails must be labeled as commercial unless the recipient as opted-in. Valid postal address: Senders of emails must provide a legitimate physical postal address. Opt-out mechanism: Senders must provide a working unsubscribe method and must honor the opt-out requests of recipients within 10 business days. Prohibition of harvesting: The CAN-SPAM Act criminalizes certain automated methods of collecting email addresses. This law applies to any email message whose purpose is commercial content. Lake (2005) writes how this law is distinguished from many international anti-spam regines. U.S. Agencies Enforcement The CAN-SPAM Act grants authority of enforcement to the Federal Trade Commission (FTC). However, it also grants authority to the Department of Justice, State attorneys general, and the Federal Communications Commission. The Federal Trade Commission can impose civil penalties for violations against the act. The Department of Justice has authority to pursue criminal charges for aggravated offenses. This can include identity fraud and large-scale spamming operations The Act also grants authority to the Internet Service Providers (ISPs) to file civil suits against violators. David (2011) writes that ordinary consumers however do not have authority to take action. The lack of private right of action under the law is a limitation that has been widely criticised. Effectiveness of the CAN-SPAM Act Experimentation and evidence have shown various levels of effectiveness from the CAN-SPAM Act. The effectiveness is measured by how well the Act can reduce unsolicited commercial email. Kigerl (2010) has analyzed millions of spam messages and discovered that the overall amount of spam did not significantly decline after the CAN-SPAM Act took place. By the same researcher, Kigerl (2015) concluded that enforcement alone had little long-term effects on discouraging spammer behavior. The threat of taking legal action was unsuccessful in the long run. Grimes (2007) concluded that corporate compliance was inconsistent. Many companies were not fully following legal rules. Some companies did not require an option to stop receiving or unsubscribe to messages. Other companies did not provide valid postal addresses. Many businesses were not meeting basic legal standards for communication and data compliance. This research shows that the Act did establish important legal steps to take, the impact on global spam levels were not grand. Kigerl (2018) later found that spammers were moving their spamming to overseas which limited the power of the U.S. This is because after the Act was passed, moving spam operations to outside countries meant that the U.S has no legal authority over anything. This made it much more difficult to prosecute offenders when they were international and it kept global spam levels very high. This highlights how national laws have limits to its power when it comes with dealing with operations outside of the country's walls. After later research, it has been emphasized that measuring the reduction of spam is very challenging due to the global nature of email traffic. Sipior & Ward (2010) highlight that compliance amongst legitimate businesses does not necessarily correlate with reductions in malicious email content and spam. Spam is typically produced by criminal networks and not commercial marketers. Legal Challenges The Act has brought up many criticisms when it comes to challenges between the state and federal authority. Ford (2005) showed how the Act overpowered state laws that may have been more useful against spam. This made it harder for states to prosecute and go after spammers. Prince (2003) suggests that states could create their own "child protection registries" that would comply with the federal law. There have also been other limits on private enforcement. Rutenberg (2011) that on the Internet Service Providers can create lawsuits under the Act which leaves other consumers without resources. Enforcement has relied mainly from the Federal Trade Commission. Enforcement of the CAN-SPAM Act has been inconsistent among cases. High profile cases would be taken more seriously and given larger fines/jail time to felons while smaller cases would be left unattended. When the Act was enforced, enforcement actions peaked but slowly went down as operations were taken overseas. This limited enforcement structure has been argued to make the Act less effective because spam recipients have no legal resources. While groups in positions of power, like the ISPs, can take action, individuals cannot. Critics propose to let private enforcement have more power to help spam victims. This would improve accountability and provide stronger incentives to keep corporations compliant. Another concern that rises is the constitutional challenges. Some commentators have pointed out the potential First Amendment implications. They argue that restrictions on commercial speech may be too narrow. Igor (2009) writes that commentators note evolving technologies could create new constitutional scrutiny. Corporate Practices One benefit from the Act is that studies show how corporate compliance has improved. Research by Grimes (2007) shows that as awareness and compliance have increased among businesses, violations against basic provisions lowered. This is because the businesses did not want to get punished by the Federal Trade Commission. Brennan (2016) shows how automation has been implemented. Automated systems that maintain accurate sender identification have been implemented which shows how the Act as influenced many companies to develop good practices. Kigerl (2016) also found that the Act's passage increased business compliance. Spam rates from companies declined showing how there was an increased awareness in regulatory enforcement and good practices. Many major email service providers, like Google and Microsoft, have implemented good practices like automated spam filters. Furthermore, they follow compliance checks that align with the federal law. These tools have increased consumer trust in legitimate marketing emails. Enforcement Cases There are several major cases that show how the Act has been used in practice. In the United States v. Sanford Wallace case, the defendant was sentenced to 30 months in prison. The defendant was charged for running large-scale phishing and spamming operations through social media platforms. Ongoing Criticism Against the Act There are still ongoings debates on how to reform the CAN-SPAM Act. Rutenberg (2011) proposes to allow individuals to sue violators directly, giving more power to the private right of action. == See also ==