E-Mail Marketing Under UCE Statutes

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A California appellate court in Ferguson v. Friendfinder Inc. held California's unsolicited commercial e-mail, or UCE, statute to be constitutional early this year. Last summer, the Washington Supreme Court upheld the constitutionality of its state's UCE statute.


These decisions pose obvious concerns for companies that send bulk e-mail to prospective customers. They also pose less obvious concerns for companies that send only targeted e-mails to recipients with whom they have previously interacted. Because some UCE statutes apply to a broader range of communications than others, some common marketing practices may unwittingly fall under a given state's statute.


Given the breadth of some state UCE statutes and the monetary penalties that may be incurred for violations, firms that send e-mail to current or prospective customers should know what these statutes require and what the courts have said about them.


Overview of the California UCE statute. The statute in Friendfinder applies to UCE delivered to California residents via an ISP's service or equipment located in California. Like many other states' statutes, California's generally defines UCE as an e-mail advertisement sent to an individual who has not consented to receive e-mail from the sender and with whom the sender has no existing business or personal relationship.


To comply, a company must establish a method by which recipients may opt out of receiving subsequent messages. This method must appear as the first text in the body of the message and be the same size as the majority of the text in the message. If a recipient opts out of receiving additional messages, the sender must comply promptly. In addition, the subject line of each e-mail generally must contain the characters "ADV:".


Overview of court proceedings. Friendfinder argued that the California statute violated the "dormant Commerce Clause" of the U.S. Constitution because it placed undue burdens on interstate commerce. More specifically, it argued that companies cannot reasonably comply with the statute because it is often impossible to know where the recipient of an e-mail message lives. In addition, UCE statutes enacted by other states contain different requirements and exemptions than the California statute. Because the patchwork of inconsistent state regulations places heavy burdens on some companies, the trial court found the California UCE statute to be unconstitutional.


The appellate court, however, rejected the notion that companies cannot determine the residency of recipients, noting that companies can use presorted lists. And though the court acknowledged that the requirements in UCE statutes vary, it was unconvinced that a firm would ever face a situation in which it would have to comply with conflicting statutes. The court held that though complying with various UCE statutes might prove "inconvenient and even impractical," this inconvenience alone did not render the statute unconstitutional. Because the court determined that the statute was more beneficial than burdensome, it held it to be constitutional.


Tips for e-mail marketers. State UCE statutes generally contain exemptions for e-mail messages sent to individuals with whom a company has interacted in the past or to individuals who have indicated a willingness to receive such messages. These exemptions are worded differently in each state, however, and a practice that is exempt in one state may not be exempt in another. Therefore, just because a company has interacted with an individual in the past, it should not automatically assume that it falls under a statutory exemption.


Here are some tips that should help companies take advantage of the exemptions in most UCE statutes while engaging in some common marketing practices:


E-mails sent to prior purchasers. Companies frequently send e-mails advertising new products to customers who made purchases from them in the past. In some states, this prior relationship might not be enough for e-mail to fall under a pre-existing business relationship exemption. In Colorado, for example, this exemption may apply only if the e-mail concerns the product that had been purchased and if the message is sent within 13 months of the purchase, or within the warranty period, whichever is longer.


To be safe, it is a good idea for a company to ask permission from existing customers before sending e-mail updates about products they purchased. This should easily allow a company to take advantage of a prior-consent exemption, even when a prior business relationship exemption may not apply. In addition, the company may want to ask customers separately for permission to send e-mail about other products the company sells.


E-mails sent to referred friends. Some companies give customers incentives to provide friends' e-mail addresses and then automatically send messages to the friends. Because it is the customer and not the company that supplies the address and initiates the transmission, the message probably will not be considered UCE. It is important, though, to clearly disclose to the customer that an e-mail will be sent to the friend. Without an appropriate disclosure, it could be difficult to argue that the customer, rather than the company, sent the e-mail.


Though the initial message probably does not fall under a definition of UCE, this conclusion may not be true for subsequent e-mails sent to the friend by the company. Subsequent messages are not sent at the customer's request, so they will be covered differently than the initial message. Unless the friend has initiated contact with the company in the interim, subsequent messages probably will have to comply with the UCE statute in the state where the friend lives.


E-mails sent to sweepstakes entrants. Many companies that sponsor online sweepstakes send e-mail messages advertising the company's products to entrants. Just because an individual entered a sweepstakes, however, does not mean the individual consented to receive e-mail from the company. Unless the entrant has bought a product or service from the company in the past, the sponsor probably cannot claim that it has an existing business relationship.


To fall under an exemption in a UCE statute, a sweepstakes sponsor should disclose that it will send e-mail to entrants. While a clear disclosure in the official rules may be sufficient in certain circumstances, some courts may find that this is not enough to show that the entrant agreed to receive subsequent e-mails from the company. It is a good idea, then, to give entrants the option to choose whether to receive such e-mails.


General tips for commercial e-mail. Regardless of how a company asks permission to send commercial e-mail, the company must be clear about what it is asking the customer to agree to. The nature and, if possible, the frequency of the mailings should be disclosed. If a company plans to share a customer's e-mail address with other companies, or sometimes even with different divisions of the same company, this also should be disclosed.


With these practices, a company will increase the likelihood that its e-mails will fall outside the scope of a state UCE statute. It also will go a long way toward developing good will with its customers.


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