FTC Issues Final Rule Defining Commercial Email Under CAN-SPAM

Last year, Congress ordered the Federal Trade Commission to issue a rule that clarifies what constitutes “commercial email” under the CAN-SPAM Act.

CAN-SPAM requires that commercial email contain certain disclosures and provide recipients with an opportunity to opt-out of future commercial email.  CAN-SPAM defines commercial email as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service...”

The FTC’s new rule explains how to determine the primary purpose of an email and, therefore, provides guidance to marketers who must determine whether their email messages are “commercial,” “transactional” or another type of message. The new rule takes effect February 18, 2005.

The new rule divides email into four categories:

• email that contains only commercial content;
• email that contains only “transactional or relationship” content as those terms are defined in CAN-SPAM (for example, information about an account balance, change in payment terms, delivery, warranty, or employee benefits);
• email that contains commercial content and transactional or relationship content; and
• email that contains commercial content and content that is not transactional or relationship content (for example, an e-newsletter that contains editorial content and ads).

There are different criteria for determining the primary purpose of an email for each category.  In general, the FTC’s approach is that an email will be considered commercial if a reasonable recipient would interpret the subject line or text of the email to be commercial.  This approach, focusing on the net impression for a reasonable consumer, is consistent with the FTC’s traditional approach to advertising.

• For emails that contain only commercial content, the primary purpose will be considered commercial.
• For emails that contain only transactional or relationship content, the email will be considered to have a transactional or relationship primary purpose.
• For emails that contain both commercial content and transactional or relationship content, the primary purpose will be considered commercial if

• For emails that contain commercial content and content that is not transactional or relationship content, the primary purpose will be considered commercial if a reasonable recipient would conclude the message is commercial based on the subject line or based on the body of the email.  Relevant factors include

Thus, marketers who combine commercial with transactional content but prefer that their email communications not be considered commercial (to avoid the opt-out and disclosure requirements) must pay close attention to the placement of such commercial content in drafting their messages.

This client alert is a publication of Loeb & Loeb and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein.