New California Anti-SPAM Law has Major Implications for Commercial and Non-Profit Advertisers

Date: Oct 02, 2003

California Senate Bill 186, enrolled September 11, 2003 and signed by Governor Gray Davis on September 23, is a sweeping new spam law that will have major implications for e-mail and other types of direct marketing (including, potentially, e-mail "advertisements" sent by non-profits). While the law will almost certainly be challenged on constitutional grounds, and the unfolding litigation regarding the FTC's Do Not Call rule will be relevant in this regard, its major provisions are as follows.
  • The bill prohibits
    • sending unsolicited commercial e-mail advertisements to any California e-mail address,
    • initiating any unsolicited commercial e-mail advertisement from California,
    • harvesting e-mail addresses or using automated means to send e-mails.
  • It defines unsolicited commercial e-mail advertisements to include messages sent to a recipient who
    • has not provided "direct consent to receive advertisements from the advertiser," or
    • does not have a preexisting or current business relationship with the advertiser.
  • The bill applies to advertisers, defined as "a person or entity that advertises through the use of commercial e-mail advertisements."
  • A "commercial e-mail advertisement" is defined as any electronic mail message initiated for the purpose of advertising or promoting the lease, sale, rental, etc. of any property, goods, or services, or extension of credit. Note that non-profits, to the extent they "advertise" through the use of a "commercial e-mail advertisement," are covered by the law.
  • "Direct consent' means that the recipient has expressly consented to receive the message, either in response to a clear and conspicuous request for consent or at her own initiative. A review of the legislative history suggests that it is intended to be applied very restrictively, with opt-in consent to receive messages from specific designated advertisers required (although one could envision opt-out mechanisms that comply with the requirements of conspicuousness and specificity).
The bill also repeals the current requirements that unsolicited e-mails include the abbreviations ADV and ADV:ADLT (for adult-oriented messages), presumably because the law now only permits requested information from known senders. It retains existing prohibitions barring use of a third party's domain name without permission and use of false or misleading header or subject information. It eliminates the requirement that e-mailers include an "unsubscribe' option except where the e-mailer is relying on the preexisting business relationship exception, although offering an unsubscribe opportunity remains standard best practices for e-mailers and is required under most other state spam laws. Opt-out is also not required for e-mail ads from a provider of a free e-mail service to recipients receiving free e-mail service from the service provider (the so-called Microsoft exception). SB 186 provides for damages of $1,000 per advertisement for violations, with a maximum of $1,000,000 per incident, plus attorney's fees and costs for successful plaintiffs. If a court finds the advertiser established practices to prevent unsolicited email, the damages may be reduced to a maximum of $100 per advertisement with a maximum of $100,000 per incident. The effective date is January 1, 2004.


List renters - including those who have adopted opt-in procedures before sharing consumer e-mail addresses - and their customers will be affected. So will for-profit and non-profit "advertisers" who rely on publishers and promotional partners to deliver targeted messages regarding their products or services. Complying with this requirement may not be overly burdensome in implementing e-partnership agreements and co-branding strategies with one or a limited number of partners, but will be much more difficult for a commercial or non-profit entity that has numerous or frequently changing partners. The implications for e-publications that include advertisements are also unclear. Given the constitutional questions, extraterritorial impact, and potential application to non-profits (already up in arms about the recent Do Not Fax regulations), the law undoubtedly will result in legal challenges on First Amendment, interstate commerce, and possibly Fifth Amendment grounds. In that regard, the Colorado court's recent ruling that the FTC's Do Not Call rule was unconstitutionally under-inclusive because it failed to include calls from non-profits will be relevant to the ultimate outcome. For up to date information on the status of any challenges to this new law, as well as to recent Do Not Call and Do Not Fax rules, contact Sheila A. Millar at (202) 434-4143, or by e-mail at millar@khlaw.com, Vanessa R. Hamilton at (202) 434-4111, or by e-mail at hamilton@khlaw.com or Tracy P. Marshall at (202) 434-4234, or by e-mail at marshall@khlaw.com. Keller and Heckman LLP also has additional information available on state telemarketing, "Do Not Call," and "Do Not Fax' laws, and spam laws.