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The Federal Trade Commission (FTC) on December 16, 2004 issued its Final Rule defining the relevant criteria for determining the "primary purpose" of an electronic mail message under the CAN-
SPAM Act of 2003 (“CAN-SPAM” or “the Act”). The “primary purpose” provisions of the Rule will become effective March 28, 2005.
The Final Rule follows an Advanced Notice of Proposed Rulemaking
(ANPR) and a Notice of Proposed Rulemaking (NPRM), both of which sought comment on a number of issues related to CAN-SPAM. In response to comments filed, the FTC issued its Final Rule on the
“primary purpose” issue by December 16, 2004, as required by statute. The FTC did not issue any other rules pursuant to its discretionary rulemaking authority, but indicated that it would take up issues related to the definition of the terms "sender," "affirmative consent," and "transactional and relationship message" in a future Federal Register notice.
In the NPRM, the FTC had proposed three tests for determining the "primary purpose" of an email, and thus whether the email is a commercial message subject to the requirements of CAN-SPAM.
Those tests divided all types of email messages containing “commercial” content into three categories: (1) messages that contain only commercial content, (2) messages that contain both commercial content and
“transactional or relationship content,” and (3) messages that contain both commercial content and content that is neither commercial nor “transactional or relationship.” Messages in the first category were considered “single-purpose messages.” The second and third categories were considered “dual purpose messages.” For each of these categories, the FTC proposed different criteria for determining when the
“primary purpose” of such messages was commercial
The FTC's Final Rule is extremely close to the proposed Rule. The two most notable changes are: (1) the FTC created a fourth category in the Final Rule to distinguish email messages containing only transactional or relationship content from dual purpose messages; (2) the FTC tweaked the criteria for dual purposes messages by modifying the criteria regarding the importance of where transactional content is placed within a dual purpose message .
1.
FTC Adds a Fourth Category of “Primary Purpose” Criteria
In response to certain comments it received, the FTC added a fourth category in the Final Rule for email messages containing only transactional or relationship content. The FTC accepted the commentators’ assertion that without this fourth category of messages, certain transactional messages could be miscategorized as commercial under the dual purpose test for mixed commercial and transactional messages. The additional category states that “the ‘primary purpose’ of an electronic mail message shall be deemed to be transactional or relationship if the electronic mail message consists exclusively of transactional or relationship content.” Messages under this fourth category are subject to only the Act’s prohibition against false or misleading transmission information.

Determining what types of messages fall into this category, however, remains tricky, and final resolution of the issue may require additional discretionary rulemaking on the definition of transactional and relationship messages. For now, the FTC has provided some guidance on the treatment of newsletters, periodicals and catalogs that contain information and advertising. In a positive sign, the FTC indicated that "the starting point to analyze the impact of CAN-SPAM on a periodical is to consider whether it is sent pursuant to a subscription. When a recipient subscribes to a periodical delivered via email, then transmission of that periodical to that recipient falls within one of the ‘transactional or relationship message’ categories.” The FTC then went on to consider what types of content may be contained in the periodical, reflecting that such analysis required consideration of the recipient's understanding of what he or she is entitled to receive under the terms of the agreed-to transaction. The
FTC appears to suggest that the expectation of the consumer is the determining factor, and therefore a complete and full disclosure of the products and services that will be delivered to the consumer should allow senders to categorize any messages fitting that definition as pure "transactional and relationship messages." However, the FTC also made clear that a pure transactional relationship message can
never consist purely of commercial content. In the Rule the FTC expressly states: “If, however, an email message consists exclusively of commercial content (such as a catalog or other content that is purely advertisement or promotion), then the email message would be a single-purpose commercial message.”
Thus, it appears that for inclusion under the "transactional or relationship" exception, a message must contain some bona fide content other than just advertising.
2.
FTC Slightly Modifies the Dual Purpose Criterion Two Part Tests
In considering the dual purpose criteria, the FTC first revised its definition of “commercial content," and slightly modified the two part criteria in the proposed dual purpose test by amending the placement criteria and clarifying the net impression test.
Refined Definition of “Commercial” Content
The Final Rule slightly modifies the NPRM’s description of what constitutes “commercial” content, to adhere more closely to the language of the Act to avoid the possibility of overbreadth. Under the Final Rule, “commercial” content is defined as “the commercial advertisement or promotion of a commercial product or service.” This change is intended to exempt such emails, for example, as a onetime email between individuals offering an item for sale. The Rule also notes that the definition includes
“content on an Internet website operated for a commercial purpose.”
Reliance on the Subject Line Test
In the Final Rule, the FTC elected to continue reliance on the subject line as a dependable indicator of an email message’s primary purpose, and maintained unchanged the subject line criterion for all dual purpose emails. The FTC concluded that, given the limited space in a subject line, it is reasonable and practical for it to consider whether a recipient reasonably interpreting the subject line would likely conclude that the message contains commercial content, not whether a recipient would draw any conclusions about the message’s primary purpose. One example provided by the FTC is that of a subscription renewal reminder. If an email subject line only notified the recipient that a subscription was due to expire, it would be a transactional or relationship subject line. If that subject line also solicited renewal, it would be deemed commercial.
FTC Modifies the Placement Criterion Test
The FTC slightly modified the placement criterion test applied to messages that contain both commercial content and “transactional or relationship” content. In the NPRM, the FTC proposed that a
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dual-purpose commercial/transactional message would have a commercial primary purpose if the transactional or relationship content “does not appear at or near the beginning of the message.”
In the
Final Rule, the FTC slightly modified the standard so that an email message will be deemed to have a commercial primary purpose if the transactional or relationship content “does not appear, in
whole or in substantial part, at the beginning of the body of the message” (emphasis added). Email senders are not required to place all the transactional or relationship content before providing any commercial content. Once a message begins with a least some substantial transactional or relationship content, a sender may include commercial content. In addition, the insertion of the phrase " body of the message " should also allow senders to use frames in dual-purposes emails. The term “substantial” does not refer to volume, but rather to the nature of the content. For example, the FTC suggested that an account balance at the beginning of a message would satisfy the test, and commercial content could be included before a record of transactions, but the words “Your Account” would be insufficient.
FTC Tweaks the Net Impression Test
The FTC maintained the net impression test applied to messages that contain both commercial content and content that is neither commercial nor “transactional and relationship” content. In the
NPRM, such a dual-purpose message would have a commercial primary purpose if the “a recipient reasonably interpreting the body of the message would likely conclude that the primary purpose of the message is the commercial advertisement or promotion of a commercial product or service.” The FTC maintained this test in the Final Rule, however, the factors relevant to interpretation of this section were slightly modified to include “the placement of commercial content in whole or in substantial part at the beginning of the body of the message; the proportion of the message dedicated to commercial content; and how color, graphics, type size, and style are used to highlight commercial content.”
The FTC agreed with comments objecting to the consideration of sender intent as a component of the net impression test. In the Final Rule, the FTC did not include sender intent as a component of the net impression analysis because the benefits of the provision are outweighed by the risk of erroneous categorization of non-commercial messages as commercial.
FTC Declines To Include a Safe Harbor in the Final Rule.
The FTC determined not to include a safe harbor in the Final Rule because it did not believe one was warranted and necessary. In the FTC’s view, the criteria for determining the primary purpose of an email message are set forth with clarity, making it unlikely that a company striving to be in compliance will inadvertently err in categorizing its email content.
Sexually Explicit Labeling Rule
The Final Rule incorporates the Sexually Explicit Labeling Rule promulgated in April 2004. In the NPRM, the only change proposed to this Rule was to renumber it as Section 316.4. The Commission requested comment on this proposed change and did not receive any responsive comments.
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The complete Final Rule is available at: http://www.ftc.gov/os/2004/12/041216canspamfrn.pdf. For further information on this matter, contact Marc Zwillinger at (202) 408-9171/mzwillinger@sonnenschein.com.
These materials should not be considered as, or as a substitute for, legal advice and they are not intended to nor do they create an attorney-client relationship. Because the materials included here are general, they may not apply to your individual legal or factual circumstances. You should not take (or refrain from taking) any action based on the information you obtain from this document without first obtaining professional counsel and you should not send us confidential information without first speaking to one of our attorneys and receiving explicit authorization to do so.
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