Canada’s Anti-spam Law (CASL) is coming into force on July 1, 2014 – Some suggestions for compliance preparation

December 2013 | Susan M. Manwaring, Andrew Valentine

On December 4, 2013, the Government of Canada announced that the anti-spam provisions of Canada’s anti-spam legislation (CASL) will come into force on July 1, 2014.  We have reported on developments with CASL in previous issues of this Newsletter.  As a result of the July 1st in force date, Canadian charitable and not-for-profit organizations will have less than seven months to put into place their anti-spam CASL compliance strategies.

Will CASL apply to you and your organization?

CASL’s broad scope and reach means that it has the potential to impact every Canadian charitable and not-for-profit organization.  CASL applies to commercial electronic messages, which means e-mails, texts, social media messages or any other form of electronic communication to third parties, whether they are businesses, consumers, members, volunteers or donors. CASL’s definition of “commercial” includes activities carried on without the prospect of gain.

Why should CASL matter to you and your charitable or not-for-profit organization?

Charitable and not-for-profit organizations will want to ensure that they are CASL compliant because non-compliance may lead to significant consequences and penalties, including: (i) the imposition of major monetary penalties; (ii) corporate officers and directors being held personally liable for corporate violations; (iii) vicarious liability arising for violations committed by employees or agents; (iv) a private right of action (including the possibility of a class-action lawsuit) against an organization and the individuals who work or volunteer for the organization; and (v) reputational risks.

Exemption for communications with a “primary purpose of raising funds

During public consultations that were held by the federal government, numerous charitable and not-for-profit advocates had, in an effort to soften CASL’s impact on the sector, strongly advocated for numerous changes to the draft CASL regulations.  Those efforts led to the introduction of one exemption specific to the application of CASL’s anti-spam provisions to charities that are registered under the Income Tax Act.

CASL’s anti-spam provisions will not apply to an electronic message “that is sent by or on behalf of a registered charity as defined in subsection 248(1) of the Income Tax Act and the message has as its primary objective raising funds for the charity.”  Non-profit organizations will be unable to rely upon this exemption because it only applies to registered charities. Regrettably, many of the other proposed changes were rejected by the government.

Additionally, the language in the exempting provision raises a number of questions as to the scope of the exemption.   First, it is unclear whether “raising funds” – the language used in the CASL Regulations – has the same meaning as “fundraising” for the purposes of T3010 reporting by registered charities.  Many charities publish and distribute newsletters and other communications to their supporters and stakeholders that are primarily in furtherance of their charitable purposes, but which also include a short appeal for donations.  Under CRA’s Guidance on Fundraising by Registered Charities, charities can report such expenditures as charitable or, if appropriate, allocate the expenditure between charitable and fundraising expenditures on their T3010.

It is also possible that the phrase “raising funds” will be interpreted more broadly than “fundraising” for charity tax reporting purposes.  If so, communications that could result in funds being raised for the charity – but which would not normally be viewed as “fundraising” – could be caught by the exemption.  For example, communications related to tuition fees for universities or ticket sales by arts charities could be considered to have a primary purpose of raising funds, even though such communications would not normally be considered fundraising from a CRA reporting standpoint.

Various questions are raised by the wording.  For example:  When will such donor communications be considered to have a “primary purpose” of “raising funds” for the purposes of CASL?  Must the entirety of the expenditure be allocated to fundraising?  Will the exemption apply if more than 50% of the expenditure is allocated to fundraising?

The new exemption is a welcome step in recognizing the difficulty that CASL presents for the charitable sector.  That said, there do remain a number of questions still to be answered.  We hope that further communication from the federal government will provide insight into the scope of this exemption.

Other Exemptions

One or more of the other exemptions from compliance with CASL’s anti-spam provisions may be available to individuals and/or organizations, depending on their particular circumstances.  Messages sent: (i) by a business to an existing customer; (ii) internally within a business; (iii) in regard to a legal obligation or a legal right; (vi) to respond to an inquiry or a referral; (v) within an existing “family relationship” or “personal relationship” (as defined); (vi) where there is an “existing business relationship” (as defined); or (vii) where there is an “existing non-business relationship” (as defined), may be exempted under CASL if all of the necessary criteria are met.

New consents are required

Consent under CASL can be express or implied.  Unlike Canadian privacy laws which permit “opt out” consent for less sensitive types of information, such as receipt of marketing information, this form of consent is not sufficient under CASL for the receipt of marketing information by electronic means.

Next Steps for your organization

While developing their CASL compliance strategies, there are a number of steps that charitable and not-for-profit organizations can take.

Step 1:  If an organization has not already done so, it should conduct an audit to collect information about its current electronic communication practices.

Step 2:  If an organizations has not already done so, it should review and update its privacy policies, including its website privacy policies (where applicable), and the terms of use/terms of service for their website (where applicable).

Step 3:  Once an organization has completed an audit of its current electronic communication practices, the next step should be to consider CASL’s requirements and assess what changes might be required to an organization’s current policies, procedures, practices, processes, and/or computer systems and networks in order to ensure that the organization is CASL compliant.

Step 4:  Utilize available resources.  The federal government’s main CASL/anti-spam website is located at www.fightspam.gc.ca, and it contains information that charitable and not-for-profit organizations may find of interest.

On January 15, 2015, CASL’s provisions relating to computer programs will come into force, and, in a future article, we will provide some details on how those provisions will also impact charitable and not-for-profit organizations.

Miller Thomson LLP is developing resource materials, and CASL information will be available on www.millerthomson.com. In future issues of Miller Thomson LLP’s Charities and Not-for-Profit Newsletter, we will be providing more details about how CASL’s provisions will impact charitable and not-for-profit organizations, and we will also offer compliance suggestions.  If you would like to discuss CASL and its requirements, please contact your Miller Thomson LLP advisor or one of the authors.

Disclaimer

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

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