ARE YOU DOING E-MAIL MARKETING? LEGALLY?
Copyright © 2016, Michael D. Jenkins, J.D., CPA
Since so many small businesses now do a substantial part of their marketing on the Internet, it is not surprising that many have resorted to doing e-mail marketing to advertise their products or services, since it costs next to nothing to send out zillions of e-mail messages, other than the cost of acquiring the "mailing lists." You can't help but be aware of this kind of marketing blitz, since everyone on the planet with an e-mail address seems to receive dozens of e-mail ads every day for such necessities of life as those wonderful herbal supplements that will supposedly enlarge certain critical parts of your anatomy.
In recent years, most of us are have grown tired of receiving these unwanted, unsolicited junk e-mail messages ("SPAM"), which now make up something like 80% of the e-mail volume we receive, even after SPAM filters have done their work. That has led to pressure on governments around the world to do something to stem the tide of SPAM. However, many of us who run small businesses may have privately thought about using such e-mail campaigns ourselves to market our own products or services. Or maybe we are doing it already, unaware of the possible legal consequences. Since we receive such a huge volume of SPAM in our e-mail inboxes every day, it isn't hard to jump to the conclusion that, since everyone does it, SPAM must be legal, as long as you aren't selling or promoting something like weapons-grade plutonium or some type of sleazy scam.
Wrong. In fact, most of the SPAM you receive on a daily basis (even "innocent," non-fraudulent SPAM) is illegal under U.S. laws, but since most of the illegal e-mail solicitations originate in places that don't crack down on SPAMmers, or even encourage them, there is very little most Western governments can do about it.
However, many small businesses who have heard about the new federal anti-SPAM law may be unnecessarily refraining from doing e-mail marketing, for fear of the legal consequences. Such caution is certainly warranted, but you should not assume that all e-mail marketing is illegal. It is still possible to legally send unsolicited e-mail to potential or existing customers -- but only if you meet a number of very specific federal guidelines.
Before embarking upon an e-mail marketing campaign, you need to be aware that, even though you and your business may be perfectly ethical and you may be advertising a useful, legal product or service, you must be extremely careful to avoid both criminal prosecution and, even more of a realistic risk, being sued for private damages by Internet service providers (ISPs) that provide Internet access and who are now authorized to sue the pants off SPAMmers -- for statutory legal damages.
Thus, if or when you decide to do any e-mail solicitations for your business, you first need to know what the legal ground rules are, to avoid incurring fines or massive legal liability to ISPs, either of which penalties could put you out of business in a hurry. Those "ground rules" are all summarized in the remainder of this article, below, adapted from the author's e-book, "Starting and Operating a Business in Colorado," part of his e-book series for each of 32 states and D.C. (Colorado edition and other state editions are available as Kindle e-books at www.roninsoft.com/kindle.htm.)
Federal Government Comes Down Hard on (U.S.) SPAMmers
The U.S. Congress has enacted legislation, effective in 2004, in an attempt to stem the flow of unwanted, unsolicited junk e-mail ("SPAM") and "porn mail" on the Internet, by enacting the "CAN-SPAM" Act [15 U.S. Code Sec. 7701]. This law imposes hefty penalties of up to $250 per violation (limited to $2 million total) on SPAMmers who engage in any of these practices:
The chances of your being prosecuted for minor technical violations of the CAN-SPAM act may not be that great, but there are other severe anti-SPAM penalties that can be enforced by private Internet service providers whose servers are being jammed with huge numbers of SPAM messages, costing them both time and energy to deal with it.
These provisions of the new law not only include harsh sanctions, but provide major incentives to ISPs to sue you for violations. Under the CAN-SPAM law, ISPs may seek statutory damages from a SPAMmer who uses their facilities or servers to send SPAM that violates the anti-SPAM rules. The liquidated damages are set at $25 per message and are increased to $100 per e-mail that uses a fake or "spoofed" return address or false header.
An ISP may collect up to $1 million of such statutory damages in an action against a violator.
Congress also ordered the Federal Trade Commission (FTC) to create, by July 1, 2004, a "Do-Not-E-Mail" Registry, where anyone who wished not to receive commercial e-mail solicitations could list their e-mail address. Mass e-mailers were supposed, in theory, to refrain from sending e-mail addresses listed on the Do-Not-E-Mail Registry. (Yeah, right.) It was to be similar to the Do-Not-Call Registry that has been established to prevent unwanted telephone solicitations, which has had some degree of success.
Luckily for us, reality soon set in at Foggy Bottom. Recognizing that illicit purveyors of SPAM would most likely use such a registry as just another handy list of e-mail addresses to send their SPAM to, the FTC told Congress on June 15, 2004 that the Do-Not-E-Mail Registry would fail to reduce SPAM, since there is currently no way to enforce the registry effectively against SPAMmers who are outside U.S. jurisdiction.
Thus, the Do-Not-E-Mail Registry will apparently not be implemented by the FTC until technological improvements and international cooperation make it possible to effectively enforce the anti-SPAM laws. That may take a while. Quite a while.
You have probably noticed, if you have an e-mail account, that the anti-SPAM laws have so far had zilch effect on the ever-growing volume of SPAM and "porn mail" we receive daily, since most of the SPAMmers are either outside the United States or are using servers in foreign countries, where U.S. laws cannot reach them or find out who is behind them. One expert recently estimated that, since the anti-SPAM laws have made it riskier to send SPAM from within the U.S., some 70% of the SPAM we receive is now sourced from SPAMmers in China or Taiwan, nations that have shown little if any interest in cracking down on SPAMmers.
The Ground Rules for Sending E-Mail Solicitations
Although anti-SPAM laws have not been able to stem the tide of unwanted e-mail clogging your in-box, the laws do have significant teeth in them, as noted above, for anyone based in the United States who sends out SPAM e-mails. Thus, if you are using e-mail as an advertising or marketing tool, you need to know what is, and is not, allowed, in order to avoid possible serious legal jeopardy.
These are the basic rules:
WHAT YOU CAN DO
Otherwise, you can only send out SPAM if it meets all of the following legal requirements:
WHAT YOU CANNOT DO (UNLESS YOU HAVE THE AFFIRMATIVE CONSENT OF THE RECIPIENT)
EUROPE HAS ANTI-SPAM LAWS, TOO:
About the Author Author Michael D. Jenkins, is a graduate of the Harvard Law School and has practiced as a tax attorney and a CPA with major California law and CPA firms and with a major national management and economics consulting firm in Washington, D.C.. Since 1981, he has authored the "Starting and Operating a Business" series of small business guidebooks for each of 32 states and D.C., all of which are now published only in electronic format (Kindle e-books). Each state edition is updated regularly and is approximately 500 pages long, if printed out. To order or for more information on these guidebooks, see: www.roninsoft.com/bizbooks.htm
Copyright © 2016 Michael D. Jenkins