November 2009 – Channel Crossing: Legal

CAN-SPAM and Social Media

By Jeffrey D. Knowles and Mikhia E. Hawkins

Over the past year, traditional media outlets have been awash in coverage of the way social media is revolutionizing how individuals communicate and consume information. According to marketing research firm ComScore, Twitter had more than 21 million visitors in July 2009, up from 780,000 just one year earlier. In the same period, Facebook saw its traffic double to almost 88 million users.

While using social media to drive business is an alluring prospect for marketers, it is not one free of hazards. This column addresses the implications of the CAN-SPAM Act for companies conducting outreach via social media.

What is CAN-SPAM?
The CAN-SPAM Act was passed in 2003 to combat so-called “spam” e-mails by imposing limitations and penalties on the transmission of commercial e-mail via the Internet. The original version of the Act required commercial e-mails to contain an accurate “from” line, a relevant subject line, a visible and operable unsubscribe mechanism and that adult content be labeled as such.

In 2008, the FTC released a discretionary rulemaking that clarified several compliance issues and added four new rules. These rules modified the definition of a “sender” to adjust for e-mails in which more than one party was advertising, required that all commercial e-mails feature a verifiable physical address, clarified the term “person” and required that individuals not be charged an unsubscribe fee.

When a Tweet is not a Tweet
One of the most attractive aspects of social media is the ability platforms such as Facebook give users to customize their experience. Users may, for example, receive text updates on their cell phones when information is posted to their Facebook wall, receive an e-mail when a Twitter user they follow posts a “tweet,” or receive a text, e-mail or other notification when a blog or website they follow using an RSS feed is updated.

Little has been written about whether a Twitter “tweet” by a commercial organization would, in itself, fall under the purview of CAN-SPAM, and if so, how the many CAN-SPAM requirements, such as an accurate subject line, a physical mailing address or an unsubscribe mechanism could be met within the platform’s 140-character limit.

What is clear, however, is that a “tweet” can quickly transform itself into an e-mail. For example, if a marketing message is sent, via Twitter, to users who follow a company’s Twitter updates and one of those users elects to receive Twitter updates to their e-mail account, the message–if it meets the criteria to be considered a “commercial e-mail”–could require compliance with the CAN-SPAM Act.

Although there is an untested but strong argument that the marketer has no knowledge of or control over the applications users enable on their various accounts, cautious marketers should design commercial messages intended to be distributed via social media platforms to comply with the most restrictive regulations until this theory has been tested.

Consideration
Providing consumers with something of value, or “consideration,” to encourage a behavior is one of the oldest and most reliable marketing tactics in the book. It is also the bright-line test that, according to the FTC, determines whether a forwarded e-mail is subject to CAN-SPAM.

When the FTC added new rules to CAN-SPAM in 2008, it also addressed a number of other e-mail marketing issues raised by Act. Among these was the applicability of CAN-SPAM to “forward-to-a-friend” marketing tactics, where a marketer requests or induces a person to forward a commercial message to another person. The FTC concluded that if marketers induce a person to forward a commercial e-mail message by offering money, coupons, discounts, awards, additional entries in a sweepstakes or other consideration, then the marketer is responsible for ensuring compliance with CAN-SPAM’s opt-out and disclosure requirements in the forwarded e-mail.

However, if the marketer merely provides a mechanism by which a person can forward a message, without providing consideration, then the marketer is involved in the routine conveyance of an e-mail and is not responsible for ensuring the forwarded e-mail complies with CAN-SPAM.

Because many social media instances of “forward-to-a-friend” are similar to the e-mail scenario outlined above and, in many cases, may involve e-mails sent to accounts or mobile devices, marketers should assume that the CAN-SPAM guidance will be applied to forward-to-a-friend messages transmitted via social media platforms.

One scenario with potentially dire consequences for marketers is one in which consideration is given to a user who then forwards the marketer’s message to another user. If the user receiving the forwarded message has previously opted out of receiving messages from that marketer, the marketer could be liable for violating CAN-SPAM. Given the tendency for broad and repetitive sharing of information on platforms such as Twitter and Facebook, an individual could receive the same marketing message from dozens of other users, generating significant liability for the marketer.

Accordingly, marketers should avoid using inducements of any kind to encourage “re-tweeting,” the posting of content to users’ Facebook walls, or otherwise disseminating content to users’ contacts. Avoiding triggering CAN-SPAM compliance by not providing consideration enables marketers to eliminate significant potential liabilities and helps them to avoid disclosure and opt-out requirements that may prove difficult to comply with given the limitations of some social media platforms, such as Twitter’s 140-character limit per message.

Don’t Forget the States– and Look Before You Leap
CAN-SPAM is not the only regulation marketers should consider when developing social media marketing campaigns, especially those involving contests. A poorly conceived campaign could easily run afoul of certain states’ e-mail marketing, privacy and/or gaming laws.

As social media expands and matures, marketers need to keep in mind that although the medium appears to have outpaced regulation, federal and state authorities are likely to look to existing rules and guidelines as they build a new regulatory and enforcement framework. For marketers engaging customers and prospects in the social media space, looking backward for likely regulatory guidance will be just as critical as looking forward to spot emerging opportunities and trends.

Jeffrey Knowles is a partner at Venable LLP and heads the firm’s Advertising and Marketing Practice Group. He can be reached at (202) 344-4860. Mikhia E. Hawkins is an associate in the firm’s Regulatory Practice Group with a focus on advertising and marketing law. He can be reached at (202) 344-4573.