How Canada’s New Anti-Spam Law May Affect U.S. Credit Unions
Credit unions that serve Canadian members will be required to comply with a new sweeping anti-spam law, which comes with hefty financial penalties and allows consumers to file class action suits.
The Canadian anti-spam law mandates all businesses not located in Canada to secure affirmative opt-ins from their customers who want to continue receiving commercial electronic messages from those companies via email, SMS text messages and direct messaging on social media sites.
Though most of CASL’s provisions were enacted on July 1, the new law gives credit unions three years, or until July 1, 2017, to secure affirmative opt-ins from their Canadian members, said Michael S. Edwards, vice president and chief counsel for the World Council of Credit Unions in Wash. D.C.
Edwards said the new law means the U.S.A’s top trading partner is serious about going after “professional spammers” who blast hundreds of millions of spam emails from other countries to Canadian consumers.
Nevertheless, he stressed it’s important for credit unions take this new law seriously or risk potentially expensive legal liabilities.
“That this law could apply to U.S. credit unions wasn’t really on anyone’s radar until recently,” Edwards said. “As it turns out, the law applies to anybody that sends an email that is received in Canada. Hopefully, there won’t be a lot of enforcement against people who are not serious professional spammers, but that is a big question mark because they have only started to enforce the law on July 1.”
CASL defines a commercial electronic message as an email, text message or social media direct message that includes an offer to purchase, sell, barter or lease products, goods, services, land, or an offer to provide a business, investment or gaming opportunity.
The law authorizes the Canadian government to impose huge administrative monetary penalties of up to $10 million on any business for violating CASL’s provisions.
“There is also a private right of action for consumers to sue the sender of unauthorized commercial electronic messages,” he said. “However, the private right of action does not take effect until July 1, 2017.”
Nonetheless, Edwards’s concern is that CASL’s private right of action could lead to class action lawsuits similar to those that hit U.S. financial institutions when they were required by federal law to post transaction fee disclosure stickers or signs on ATMS.
“There were people driving around the country looking for ATMs that did not have this sticker on them, and then they would file class action suits on behalf of everybody who used the ATM and paid the fee,” he said. “Though Congress eventually changed the law, there were a number of settlements over the past five years where financial institutions paid $20,000 or more just to make the class action suits go away.”
It’s unknown how many Canadians are member of U.S. credit unions. However, there are dozens of cooperatives that operate branches near the U.S.-Canadian land border in 11 states from Alaska to Maine where Canadians or U.S. citizens who live in Canada cross the border daily to work at a U.S. company. The new law also would affect other credit unions far from the border but serve international members such as the $4 billion United Nations FCU in Long Island City, which serves about 2,000 members who live in Canada.
At Maine’s northern tip, the $125 million Acadia Federal Credit Union in Fort Kent serves about 600 Canadian members. The credit union has a total membership of 10,114 and operates five branches along the St. John River that separates the U.S and Canada.
David D. Desjardins, president/CEO of Acadia FCU, said most of the Canadian members work on the U.S. side and live in Canada. Other members have a Canadian spouse or are retired and live in Canada.
“We certainly plan to review the law’s details, and we’ll probably have to include some additional disclosures when we sign up new Canadian members,” Desjardins said. “For existing members we have to figure out how best to proceed with this law.”
The $1 billion Whatcom Educational Credit Union in Bellingham, Wash., is less than 30 miles from the Canadian border but less than one-half of a percent of its 72,218 members live in Canada.
Kessa Volland, WECU marketing manager, doesn’t think the Canadian law will have much of an impact because the credit union doesn’t use email marketing. However, for members who have signed up for online banking, WECU does send them email notifications about their bank statements as well as a newsletter.
“Right now we tend to provide more educational information in that notification rather than product/promotional information, so I hope we’ll be in the clear,” Holland said.
But what about marketing messages on bank statements or newsletters? Edwards believes credit unions would be in compliance because of implied consent.
“Even if the bank statement has commercial messages, under CASL the customer has given implied consent to receive that information,” he said.
The CASL opt-in consent may be in writing or oral, and must include the following: the purpose for which consent is sought (i.e. permission to receive CEMs); identity of the name of the requester, including its business name; contact information including mailing address and one of the following: telephone number, email address, or web address; and a statement that the person can withdraw consent.
CASL also has requirements for what information features a CEM must have, which are similar to the US’s CAN SPAM law but not identical
“CASL requires an unsubscribe feature (like CAN SPAM) and the sender company’s contact info including mailing address and one of the following: telephone number, email address, or web address (similar to CAN SPAM’s requirement for the commercial email to include the sender’s physical address and an email address),” Edwards explained. “A difference from CAN SPAM is that CASL applies to all forms of electronic messages, including SMS text messages and direct messaging on social networks (such as a Facebook message), not just emails.”