Mr. Chairman, thank you to the committee for the invitation to present the Canadian Marketing Association's views on this important review of Canada's anti-spam law.
CMA's membership includes most major financial institutions, major retailers, large technology companies, and of course, many marketing agencies and related suppliers across the country. CMA was a member of the 2004 federal task force on spam, and we have long supported some form of regulation to encourage good electronic messaging practices and to deter spam. Our requirement for email marketing, including proper identification of senders, unsubscribe links and lists, opt-in for sensitive communications, all predated CASL by at least a decade.
CMA commends the government and Minister Bains for listening to stakeholders and recently suspending the private right of action. We believe these hearings are an important opportunity for parliamentarians to review the law to see if it's working as intended.
What effect has CASL had in the marketplace and is it well crafted to promote a positive e-commerce environment for both consumers and businesses? On the positive side, the law has encouraged wider adoption of good marketing practices. Companies are more aware and taking steps to ensure CASL compliance. Some surveys also indicate that many users feel they're getting less spam, although the filters provided by our own organizations and Internet providers do much to protect us from both the dangers and inconvenience of spam.
On the other hand, CASL has had very limited impact on the most damaging forms of spam: botnets, phishing scams, fraudulent product claims, malware, and the like all seem to be as prevalent as ever. Yet most CASL enforcement efforts seem to have been focused on legitimate companies sending messages to customers or prospects.
In addition, certain features of CASL have also created confusion and uncertainty for organizations, a concern compounded by the potential for the enormous penalties resulting from something like a broken unsubscribe link.
These uncertainties have a chilling effect on electronic marketing in Canada. Many businesses are avoiding legitimate email marketing campaigns out of fear of inadvertently running afoul of CASL. This effect is directly counter to CASL's stated objective of promoting the efficiency and adaptability of the Canadian economy.
Scott Smith from the chamber appeared here a couple of weeks back, and he mentioned that the chamber, Canadian Marketing Association, the Retail Council, and some other associations are surveying our members about CASL. Interim results are showing that over 40% of respondents indicate they are doing less electronic marketing since CASL took effect, that over 65% say that CASL has put their competitive edge at risk, and over 80% say that CASL is too complicated and confusing. We will be providing the committee with the complete survey results in another 10 days or so.
CMA has a number of suggestions to improve CASL, which we will capture in more detail in our written brief to the committee, but today I want to focus on six key issues and suggestions.
The first is business to business. CASL has created unnecessary barriers for businesses prospecting for new customers in the B to B environment. These limitations on email prospecting create inefficiencies with businesses resorting to more expensive and time-consuming contact methods. Particularly in the B to B environment, the issue of gaining consent, checking lists, and keeping detailed records becomes an impractical nightmare for organizations dealing with groups of salespeople who daily make any number of one-off communications.
We would suggest that CASL should be amended so it does not apply to B to B messages. This approach would be in line with the telemarketing regulations and the national do not call list.
Subsection 6(6) you've heard about already in some detail. It's created a lot of confusion as to what CASL is intended to cover since the messages described in subsection 6(6) are commonly referred to as transactional service security-type messages. Businesses aren't sure how to comply with that subsection. They are at risk if they don't, and if they do, they are likely to confuse their customers. The solution here is to amend CASL to make it very clear that it doesn't apply to transactional or service messages.
Like many others, CMA has argued that CASL should have used the PIPEDA approach to consent, with express consent required in relation to sensitive matters of communication, and valid implied consent required for most other commercial electronic communication and backed up, forcefully, with the unsubscribe offer on every message.
We hope the committee will consider looking closely at consent, but in the absence of such a fundamental change to the law, it should be noted that the current rules for implied consent are challenging for many organizations. The two-year and six-month rule that was mentioned a moment ago creates a systems and data entry headache for many small and medium-sized organizations. Every customer must be tracked so that a two-year clock starts ticking after their latest transaction.
When the two years expire, the organization loses the implied consent to message that customer, but there's an “unsubscribe” on every message and the consumer can opt out at any time, whether it's at two weeks, two months, 24 months, or 30 months. Why create a cumbersome 24-month rule for organizations? It's rather arbitrary, and it creates a serious data management challenge for organizations. Our solution to this would be to simply remove the unnecessary six-month and two-year definitions in the EBR and, where there's a customer relationship or interaction, permit messages to be sent based on implied consent unless or until the consumer signals otherwise.
We're also concerned about the burden of record-keeping. Some organizations are not even using the exemptions in the law because of the related record-keeping requirements, which are too onerous. You have examples. For example, if you obtain express consent from a customer at a retail counter, the CRTC has suggested that you should have a voice recording as evidence of that. The solution here is that the government, as opposed to the CRTC, should develop regulations indicating what are acceptable records and, we would hope, endorse reasonable, ordinary business records.
On the private right of action, I won't revisit the points of concern, because you've heard about them from many others. We simply propose that the private right of action is unnecessary. There are three regulators enforcing this law. The private right of action should be removed from the law or significantly narrowed so as to eliminate statutory damages and/or restrict its availability to ISPs.
On enforcement and penalties, the CMA considers that to date the penalties imposed under CASL are not proportional to the nature of the violations to which they relate. Massive penalties against legitimate companies that made minor errors while attempting to comply with CASL are creating a chill on legitimate marketing activity.
I'm going to ask David Elder to bring his legal expertise to bear and comment on the CRTC enforcement structure.