THE CAN-SPAM ACT went into effect January 1, restricting unsolicited commercial e-mail and imposing stiff penalties for violations. The Act defines “unsolicited e-mail” as “any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service” (including seminars, sponsorships, conferences, educational materials, membership drives, etc.).

While the CAN-SPAM Act is clear about how commercial e-mails must be treated — they must be identified as an advertisement or solicitation, provide an opt-out mechanism, and include the sender's physical address — only recently has the Federal Trade Commission issued regulations defining the criteria for determining the “primary purpose” of an e-mail.

Defining the line between commercial and “transactional or relationship” e-mail is important because the latter (e.g. those sent to complete a previous commercial transaction; those that provide information regarding subscriptions, memberships, accounts, or similar ongoing relationships; or those that provide information related to an employment relationship) are not subject to the Act's requirements.

What happens when your e-mails contain some commercial content and some transactional content? That's exactly what the FTC's new “primary purpose” regulations explain. Here they are, effective March 28:

1. If an e-mail message contains only the commercial advertisement or promotion of a commercial product or service (“commercial content”), its primary purpose is commercial.

2. If an e-mail message contains a mix of commercial content and transactional content, it is considered commercial if:

   • a recipient interpreting the subject line would likely conclude that the message contains commercial content; or

   • the e-mail's transactional content does not appear in whole or in substantial part at the beginning of the message.

3. If an e-mail message contains both commercial content and content that does not qualify as commercial or transactional, it will be deemed to be commercial if either:

   • a recipient interpreting the subject line would likely conclude that the message contains commercial content; or

   • a recipient interpreting the body of the message would likely conclude that the primary purpose of the message is commercial. Relevant factors include the placement of commercial content at the beginning of the message; the proportion of the message dedicated to commercial content; and how color, graphics, type size, and style are used to highlight commercial content.

The Act prohibits the use of fraudulent or deceptive subject lines in any type of e-mail.

Organizations should establish a format for both commercial and transactional messages, and institute policies to ensure that the proper format is used for every e-mail that is sent out on an organization's behalf. Additionally, an opt-out system must be instituted, effectively managed, and integrated with an organization's customer/client database.

There's a price to pay if you don't.While individual “spam” recipients cannot sue under the Act, a state attorney general is able to go after spammers for $250 per illegal e-mail message up to a maximum of $2 million (more if there are certain aggravating circumstances); and an ISP can sue in federal court for $100 per illegal e-mail message, up to a maximum of $1 million or more.

Jed Mandel is a partner in the Chicago-based law firm of Neal, Gerber & Eisenberg, where he heads the trade and professional association practice. Reach him at jmandel@ngelaw.com