The "CAN-SPAM Act of 2003," which became effective on January 1, 2004, sets forth new federal restrictions on the use of commercial e-mail which could have significant effects on businesses that use e-mail to advertise or to communicate with customers. The Act outlines three categories of commercial e-mail, two of which are potentially relevant to our clients:

1) Commercial Electronic Mail Message ("CEMM"), defined as any e-mail message the primary purpose of which is commercial advertisement or promotion of a commercial product or service; and

2) Transactional or Relationship Message, defined as an e-mail message with the primary purpose of facilitating or confirming commercial transactions, providing warranty, product recall or safety information to consumers, providing notification regarding ongoing commercial relationships, or the delivery of goods or services such as product updates that the recipient has previously agreed to receive. The Act specifically excludes the above-described Transactional or Relationship Messages from the definition of CEMMs and, for the most part, they do not fall within the scope of the Act.

The legislation does not outlaw the sending of unsolicited commercial e-mail; rather it is focused on certain misleading tactics used by businesses that send those messages. Businesses that send unsolicited commercial e-mail must ensure that they comply with the following key provisions of the Act:

Labeling: unsolicited e-mails must be clearly identified as solicitations or advertisements.

Header information: header information is defined in the Act to mean the source, destination, and routing information attached to the e-mail and includes any information that appears in the line identifying a person initiating the message. The sending of any message, including a Transactional or Relationship Message, which contains materially false or misleading header information is prohibited. It is also unlawful for businesses to allow themselves to be promoted by third parties that they know or should have known are using such materially false or misleading header information.

Opt-out procedures: senders must provide means for consumers to decline to receive future CEMMs. Failure to comply with a consumer's request is a violation of the Act.

Subject lines: senders are prohibited from using misleading or fictitious subject lines in CEMMs in order to trick consumers into opening the message.

Sender's addresses: unsolicited CEMMs must contain sender's e-mail address and postal address.

Bulk solicitation: the use of automated means, such as "harvesting," to establish multiple e-mail accounts for the sending of unsolicited e-mail messages is also banned. Furthermore, it is a felony to transmit more than 2,500 CEMMs in a 24-hour period, 25,000 in 30 days, or 250,000 in one year.

Enforcement of the Act is assigned to the Federal Trade Commission. Violators are subject to penalties of up to $2 million as well as prison terms of up to five years for violations of the Act's felony provisions. In addition, the Act authorizes civil actions to be brought by state attorneys general on behalf of its citizens and by Internet service providers for fraud or abuse. Individual consumers do not have the right to sue.

It is also to be noted that numerous states have adopted anti-spam laws.

If you may potentially be affected by this new legislation or are concerned about the impact of state laws, please contact us.

This Alert is provided for informational and educational purposes only and is not intended as legal advice. This publication may be considered advertising under applicable state laws. ã 2004 Halloran & Sage February 24, 2004.