Posted by: Adam Solomon
January 06, 2009
Topic: Sweepstakes Law

The Federal Trade Commission announced that it had approved new rule provisions intended to clarify CAN-SPAM requirements. The comments to the updated rules discuss various fact situations in which a company would (or would not) be responsible as the "sender" in a Forward to a Friend situation. The discussion of Forward to a Friend focuses mainly on issues of inducement.

Under the rules, a company will be a sender if it "procures" the sending of a message, namely offering a consumer something of value to send the message - - even something nominal of value like a sweepstakes entries - - or otherwise "inducing" the consumer to send the message. "Inducement" can occur directly, where a company "leads on to, influences, to prevails on, to move by persuasion or influence". Although, the FTC did state that "use of language exhorting consumers to forward a message does not, absent more, subject the seller to 'sender' liability under the Act." "Inducement" can also occur indirectly, such as where a company has a relationship with an affiliate who contracts with a sub-affiliate who has no direct contact with the company.

A seller, of course, is not prohibited from offering consideration to a visitor to its website in exchange for forwarding a commercial message, or otherwise inducing the visitor to do so. If it does, however, it will not be engaged in mere ''routine conveyance'' and must therefore comply with CAN-SPAM's requirements for a ''sender.'' For instance, the seller will need to ensure that it does not forward a message to a recipient who has previously made an opt-out request and will need to include in the message an opt-out mechanism."

With respect to Forward to a Friend messages sent through a web-based mechanism, a company may fall under a "routine conveyance" exception (and not be a sender) if it is only transmitting a message through an automatic, technical process to an e-mail address provided by a Web site user. However, to the extent it induces someone to send the message, then it would be viewed as the sender. With respect to refer-a-friend messages sent through a user's own e-mail program, the routine conveyance exception is not available. The FTC indicated that if the company induced the sending of the message through a user's own e-mail program, it will be considered the sender and must make sure that there is opt out information in the message, and that the message is not sent to individuals who have asked not to receive marketing from the company.

The latest interpretation by the FTC highlights the ongoing importance of CAN-SPAM compliance. Companies who participate in online marketing may need to revaluate any Forward to a Friend campaign to ensure it is CAN-SPAM compliant.

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