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Suspension of the private right of action provisions within CASL

In a move greeted with a sigh of relief from businesses, on 2 June 2017 the Government of Canada put on hold a number of controversial provisions of Canada’s Anti-Spam Legislation (‘CASL’), most significantly those provisions which would have allowed for individuals to have a private right of action (‘PRA’) against organisations directly1, as of 1 July 20172. In this article, John Beardwood of Fasken Martineau LLP reviews the reasons for this suspension, and the impact on businesses seeking to comply with CASL.

The PRA provisions provide individuals with the right to have a ‘private right of action’ against any organisation that sends them a commercial electronic message (‘CEM’) without their consent. The contemplated penalties would have been relatively steep: $200 per message, with a maximum of $1,000,000 per day3. The PRA would not have only applied to CASL, but also to a contravention of provisions surrounding false or misleading electronic messages under the Competition Act, and email/personal information harvesting provisions of the Personal Information Protection and Electronic Documents Act (both of these Acts were amended by CASL to add these provisions)4.

Given the existing significant Administrative Monetary Penalties (the ‘AMPs’) under CASL - up to $1,000,000 for individuals, and $10,000,000 for corporations5 - businesses were understandably concerned about the pending coming into force of a second remedy in the form of the PRA, in particular given what was perceived as enthusiasm by class action plaintiff counsel to utilise this additional remedy.  This suspension was therefore greeted with an audible sigh of relief by the Canadian business community.

Effect of the suspension

This suspension means that there is now no scheduled date for the PRA provisions to come into force. In fact, the provisions themselves are in jeopardy, as the Government stated in a press release explaining Order 2017-0580 that it “will ask a parliamentary committee to review the legislation, in keeping with the existing provisions of CASL6,” which provisions contemplate a parliamentary review three years after such provisions come into force. Considering the fears that the PRA would spawn a host of class action lawsuits, it seems that the Government is exercising caution in determining whether or not implementing the PRA provisions as originally planned would in fact best achieve the goals of the legislation.

Why the suspension?

In its press release, the Government stated that the suspension was “in response to broad based concerns raised by businesses, charities and the not for profit sector7.” It goes on to provide the following rationale:

“Canadians deserve an effective law that protects them from spam and other electronic threats that lead to harassment, identity theft and fraud. At the same time, Canadian businesses, charities and non profit groups should not have to bear the burden of unnecessary red tape and costs to comply with the legislation […] The Government supports a balanced approach that protects the interests of consumers while eliminating any unintended consequences for organisations that have legitimate reasons for communicating electronically with Canadians8.”

While the press release, in typical Government fashion, was effectively much sound and fury signifying nothing, what is clear is that there was intensive lobbying by various stakeholders to prevent the PRA provisions from coming into force. For example, the Canadian Marketing Association (‘CMA’) and the Canadian Chamber of Commerce led a business coalition which created a series of submissions and led numerous meetings with the Federal Government with the view of achieving this goal. The CMA argued that “the PRA is unnecessary given that Canadian consumers are already well protected from spam by the three regulators tasked with enforcing CASL,” and that “the PRA provision would have created a competitive disadvantage for Canadian businesses engaged in digital marketing and eCommerce9.” The Canadian Federation of Independent Business (the ‘CFIB’) similarly welcomed the suspension, noting that the provision would have had harmful consequences on small business, by imposing “red tape headaches” which would put them at a “competitive disadvantage10.”

The Government was likely also responding to concerns that the complexity of CASL had led to higher levels of confusion and less compliance by organisations than would have been originally expected. This confusion has been compounded by CRTC findings which have in the past read more like a press release than a regulator’s reported action11 (although the CRTC has now responded to this criticism by providing reasonably detailed findings, with some precedential value), and by guidance from the CRTC and Industry Canada (both published and as disseminated through various CASL ‘road shows’) which has often been at best contradictory12, and at worst wrong.

A 2017 survey of Canadian organisations conducted by Fasken Martineau DuMoulin LLP and the Direct Marketing Association of Canada, and to which this author contributed, supports this thesis13. The survey data, for example, demonstrated that, of the respondents, only 50% were confident about their organisation’s ability to evidence compliance with the CASL content requirements for CEMs, and only 48% had the same confidence regarding the CASL consent requirements14. The survey concluded that an alarming number of organisations felt that they were not yet equipped to comply with CASL.

In short, the Government may have perceived that, given the belated state of compliance of many organisations, such organisations were simply ‘not ready’ for a new enforcement mechanism to be implemented.

What does this mean for organisations?

While businesses across the board definitely consider this a win, it would be a critical mistake for organisations to interpret this suspension as a reason to ease up on their compliance efforts, for the three key reasons we outline below.

AMPs

Organisations continue to remain susceptible to the imposition of AMPs by the CRTC. High profile AMPs have included the imposition of fines by the CRTC on Plentyoffish Media Inc. ($48,000 for sending CEMs without an adequate unsubscribe mechanism), Porter Airlines ($150,000 for sending CEMs without an adequate unsubscribe mechanism, proof of recipients’ consent or contact information), Rogers Media Inc. ($200,000 for sending CEMs without an adequate unsubscribe mechanism)15, and Compu-Finder ($1.1 million for sending CEMs without recipients’ consent or an adequate unsubscribe mechanism)16. This is in addition to the additional twin enforcement mechanisms under CASL of the entry into an undertaking by the offending party, and the issuance of a notice of violation against the offending party. Significantly, the CRTC has also recently showed that it will not hesitate to penalise small businesses: in the only CASL related AMP of 2017 thus far, the CRTC fined small business owner William Rapanos $15,000 for sending various emails which did not include proper identification information, verifiable consent from recipients or a functioning unsubscribe mechanism17. Also notably, the CRTC fined Rapanos personally for sending the emails on behalf of his design, printing and distribution service. On that note, it is important to remember that CASL stipulates that directors and officers can be found personally liable for violations of CASL if they ‘directed, authorised, assented to, acquiesced in or participated in the commission of the violation18’.

Three year transition period ends 1 July 2017

1 July 2017 will be the third anniversary of CASL’s coming into force and, more importantly, represents the end of CASL’s one time, three year transition period for implied consents (as mandated by Section 66 of CASL), which commenced on 1 July 2014.

With the expiry of that transition period, organisations will need to conduct due diligence and implement record keeping sufficient to ensure that they can prove that they either (a) obtained the required express or (non transitional) implied consent to send each CEM, or (b) qualified under one of the CASL consent exemptions. In August 2016 the CRTC highlighted the importance of such record keeping in its ‘Enforcement Advisory - Notice for businesses and individuals on how to keep records of consent,’ and noted in the introduction that ‘Commission staff has observed that some businesses and individuals are unable to prove they have obtained consent before sending CEMs19.’

In short, it is not unreasonable to foresee that the end of the transition period may encourage a renewed focus by the CRTC enforcement efforts on the extent to which organisations can prove that they have obtained the appropriate consent.

Increased emphasis on role of regulators as the CASL enforcement mechanism

Now that the PRA enforcement mechanism has been suspended indefinitely, there is a likely increased pressure, whether self imposed or externally imposed, on the CRTC to ‘fill the gap’ in enforcement. To this point, it is not inconceivable that the CRTC might take this opportunity to ‘step up’ its enforcement, so as to remind organisations that, notwithstanding this suspension of the PRA, the regulators will continue to diligently enforce the legislation.

Thus, for all those reasons we have identified above, it would be prudent for organisations to strive hard to implement their CASL compliance efforts.

John Beardwood Partner

jbeardwood@fasken.com

Fasken Martineau LLP, Toronto

The author would like to thank Demetre Vasilounis, Summer Law Student at Fasken Martineau LLP, for his invaluable assistance with this article.

1. On 2 June 2017, the Privy Council Office released Order 2017-0580, which repeals paragraph (c) of the previous CASL related Order (2013-1323) which had contemplated that Sections 47-51 and 55 of CASL were to come into force 1 July 2017. For the Privy Council Office Order see http://www.pco-bcp.gc.ca/oic-ddc.asp?lang=eng&txtToDate=2017-06-21&txtPrecis=&Page=secretariats&txtOICID=&txtAct=&txtBillNo=&txtFromDate=2017-06-01&txtDepartment=&txtChapterNo=&txtChapterYear=&rdoComingIntoForce=&DoSearch

=Search+/+List&pg=39&viewattach=34498&blnDisplayFlg=1. For Privy Council Order 2013-1323, see: http://www.pco-bcp.gc.ca/oic-ddc.asp?lang=eng&Page=secretariats&txtOICID=2013-1323&txtFromDate=&tx ToDate=&txtPrecis=&txtDepartment=&txtAct=&txtChapterNo=&txtChapter

Year=&txtBillNo=&rdoComingIntoForce=&DoSearch=Search+%2F+List&viewattach=2858

8&blnDisplayFlg=1

2. Ibid.

3. CASL, s. 51(b)(i).

4. CASL, ss. 51(b)(vi)-(vii).

5. CASL, s. 24.

6. Government of Canada suspends lawsuit provision in anti-spam legislation, Government of Canada: https://www.canada.ca/en/innovation-science-economic-development/news/2017/06/government_of_canadasuspendslawsuitprovisioninanti-spamlegislati.html

7. Ibid.

8. Ibid.

9. https://www.the-cma.org/resource/newsroom/2017/casl-pra-suspension

10. Federal government suspends lawsuit provision in anti-spam legislation, The Insurance & Investment Journal: http://insurance-journal.ca/article/federal-government-suspends-lawsuit-provision-in-anti-spam-legislation/

11. See the CRTC’s first reported action under CASL - lessons learned? Not really by John Beardwood (2014) at http://www.fasken.com/en/crtc-s-first-reported-action-under-casl/

12. One of the more public examples of contradictory guidance was the differing interpretations that Industry Canada and the CRTC issued in 2014 as to the scope of the exemption for CEMs sent by or on behalf of a registered charity, as defined under the Income Tax Act, where the primary purpose of the CEM was to raise funds for the charity. In June 2014 Industry Canada gave Imagine Canada a broad interpretation of the scope of ‘primary purposes,’ but later that month the CRTC contacted Imagine Canada and expressed some concerns with the breadth of the Industry Canada interpretation, and later published guidance that set out a narrower interpretation of this exemption.

13. Fasken Martineau and DMAC Release 2017 CASL Survey Report, Fasken Martineau DuMoulin LLP, http://www.fasken.com/en/casl-survey-report-2017/

14. CASL Survey Report: Bridging the Gaps in Understanding and Compliance, Fasken Martineau DuMoulin LLP at 28, http://www.fasken.com/files/upload/CASL%20Survey%20Report%202017/CASL%20Survey%20Report_EN.pdf

15. Undertakings 2015 - Compliance and Enforcement of Canada’s Anti-Spam Legislation, Canadian Radio-television and Telecommunications Commission, http://www.crtc.gc.ca/eng/com500/ut2015.htm

16. Notice of Violation: 3510395 Canada Inc. (Compu.Finder), Canadian Radio-television and Telecommunications Commission, http://www.crtc.gc.ca/eng/archive/2015/vt150305.htm

17. Compliance and Enforcement Decision CRTC 2017-65, Canadian Radio-television and Telecommunications Commission, http://www.crtc.gc.ca/eng/archive/2017/2017-65.htm

18. CASL, s. 31.

19. https://www.canada.ca/en/radio-television-telecommunications/news/2016/07/enforcement-advisory-notice-for-businesses-and-individuals-on-how-to-keep-records-of-consent.html

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