Law Times

Page 12 aPril 27, 2015 • Law Times www.lawtimesnews.com CRtC surprises with initial anti-spam enforcement Actions against two companies suggest regulator taking proactive approach By miChael mcKiernan For Law Times Businesses banking on a laid- back approach in the early days of anti-spam enforcement got a rude awakening when the Canadian Radio-television and Telecom- munications Commission an- nounced its first fines last month. The CRTC came out of the gate with a seven-figure penalty for its first enforcement action under Canada's anti-spam leg- islation as it fined Quebec-based management training company Compu-Finder $1.1 million. Then came a smaller $48,000 settlement with well-known online dating company Plen- tyOf Fish Media Inc. After an investigation, the CRTC concluded Compu-Finder had committed four violations in e-mails sent without consent and without a working unsubscribe function to addresses found by scouring web sites. According to a CRTC release, the e-mails promoted the company's train- ing courses on social media and professional development among other topics to businesses. PlentyOfFish agreed to pay its penalty as part of an undertak- ing with the CRTC for violating the unsubscribe requirements of the act. E-mails to registered us- ers about the services available to them contained an unsubscribe mechanism that "was not clearly and prominently set out" and "could not be readily performed," the CRTC said in a statement. "The key message here is that the CRTC is very focused on en- forcement. Egregious non-com- pliance will clearly result in very significant monetary penalties, and even technical non-com- pliance may result in sizeable penalties," says Michael Fekete, co-chairman of the technology group at Osler Hoskin & Har- court LLP. "They seem intent on having financial remedies that organizations will take note of and the adverse consequences are so large that you really can't ignore the statute." Maanit Zemel, a Toronto lawyer who runs a boutique practice devoted to Internet law and litigation, says any compa- nies that weren't taking enforce- ment of the act seriously "really need to do that now." "Compu-Finder was first and you could be next," she says. "It's clear the CRTC intends to use its full enforcement abilities, and being a small- or medium- sized business clearly doesn't take you out of their firing line. That size of fine I would think is likely to put them out of business." Timothy Banks, who leads the privacy and data security practice at Dentons Canada LLP, says the vastly contrasting penal- ties in the two cases announced so far provide lessons for busi- nesses that are subject to future investigations by the CRTC. "We now have a kind of book- ending of the process. At one end, the CRTC has moved to apply a big administrative monetary penalty, and the company has to either submit written submis- sion or pay. At the other end, you have a situation that was worked out on a more co-operative ba- sis with an undertaking and a much smaller penalty. The clear message is that the CRTC will at least initially look favourably on a company if it moves quickly to correct the alleged violation and enters into an undertaking with the CRTC to do so. It is consis- tent with the approach we saw years ago with the introduction of the do-not-call list." Zemel says she was surprised by the size of the fines based on the limited information available on the nature of the violations in both cases as she expected the CRTC would go after some of the more stereotypical spammers for its first penalties. "I would have thought that the first major fine would focus on something a bit more serious, maybe someone who had targeted consumers with fraud or malware," she says. In fact, both cases appear to include elements some observ- ers had thought the CRTC would consider mitigating circum- stances. For example, the CRTC release suggests Compu-Finder's violations involved business e-mails rather than individual consumers. "There has been this misconception that when you send spam, sending it to a busi- ness was less serious than send- ing it to consumers, but CASL doesn't actually differentiate be- tween the two," says Zemel. In the PlentyOfFish case, e- mail recipients were registered users of the service, meaning the messages in question were likely sent with either explicit or implied consent under the act. However, there were problems with the unsubscribe mechanism that the company has now fixed. "If it was just a question of the prominence of the unsub- scribe function, then I think even $48,000 is a little surpris- ing because it signals that even for what may be a technical vio- lation, you're still going to get a significant penalty," says Fekete, noting the limited publicly available facts so far. He hopes the CRTC will re- lease a more detailed description of the violations uncovered at some point in the future. "Oth- erwise, it's very difficult for orga- nizations to know what the legal standards are," says Fekete. According to Banks, neither case touched on the grey areas of the act that are causing his clients the most grief. He says drafting problems mean there's still con- fusion over s. 6(6) of the act and whether or not certain transac- tional e-mails will count as com- mercial electronic messages for the purposes of the legislation. "Those grey areas are some- times the most costly," says Banks. Zemel says she was a little sur- prised neither party in the cases so far has contested the CRTC's approach to enforcement but is looking forward to the first chal- lenges. "This is legislation that is not without many problems. Some sections are not drafted very clearly; others are maybe too broad. If you're willing to take the government on, you're going to have a lot of people cheering you on from the sidelines," she says. LT FOCUS Be confident when advising clients on the use of cheques, notes and other negotiable instruments in business transactions. Make sure they understand their rights and responsibilities under Canada`s Bills of Exchange Act with the only comprehensive treatment of the law of bills of exchange currently available. Written by a specialist in commercial litigation, Law of Cheques and Promissory Notes provides: • A detailed review of negotiable instruments such as cheques, promissory notes, bank drafts, and money orders • Expert interpretation of Canada's Bills of Exchange Act and the related federal and provincial legislation • Guidance on handling negotiable instruments • Discussion of the rights and obligations arising from negotiable instruments • Commentary on key cases and extensive references to the case law • Insight into modern trends, including Internet payments, electronic transfers and Bitcoin electronic exchange • Samples of the various forms of notes, cancellation notes, and more Understand the legal implications of negotiable instruments New Publication Law of Cheques and Promissory Notes Lazar Sarna, B.C.L., M.A., D.C.L., of the Bar of Quebec Available risk-free for 30 days Order online: www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Order # 986671-65203 $320 1 volume looseleaf supplemented book April 2015 Anticipated upkeep cost – $250 per supplement 4-5 supplements per year Supplements invoiced separately 978-0-7798-6671-7 Shipping and handling are extra. Price(s) subject to change without notice and subject to applicable taxes. 00229BJ-A49809 With more than 1,400 pages of essential legal references, Ontario Lawyer's Phone Book is your best connection to legal services in Ontario. Subscribers can depend on the credibility, accuracy and currency of this directory year after year. More detail and a wider scope of legal contact information for Ontario than any other source: ȕ 0WFS27,000 lawyers listed ȕ 0WFS9,000 law firms and corporate offices listed ȕ 'BYBOEUFMFQIPOFOVNCFSTFNBJMBEESFTTFTPGȮDFMPDBUJPOT BOEQPTUBMDPEFT Includes lists of: ȕ Federal and provincial judges ȕ Federal courts, including a section for federal government departments, boards and commissions ȕ Ontario courts and services, including a section for provincial government ministries, boards and commissions ȕ Small claims courts ȕ The Institute of Law Clerks of Ontario ȕ Miscellaneous services for lawyers 7JTJUDBSTXFMMDPNPSDBMMGPSBEBZOPSJTLFWBMVBUJPO Perfectbound Published December each year On subscription $77 One time purchase $80 L88804-677 Multiple copy discounts available . Plus applicable taxes and shipping & handling. (prices subject to change without notice) 2015 ONTARIO LAWYER'S PHONE BOOK THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES AND COURTS Untitled-5 1 2015-04-20 5:57 PM

• Cover