[Federal Register Volume 70, Number 12 (Wednesday, January 19, 2005)]
[Rules and Regulations]
[Pages 3110-3129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-974]



[[Page 3109]]

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Part II





Federal Trade Commission





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16 CFR Part 316



Definitions and Implementation Under the CAN-SPAM Act; Final Rule

  Federal Register / Vol. 70, No. 12 / Wednesday, January 19, 2005 / 
Rules and Regulations  

[[Page 3110]]


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FEDERAL TRADE COMMISSION

16 CFR Part 316

[Project No. R411008]
RIN 3084-AA96


Definitions and Implementation Under the CAN-SPAM Act

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: In this document, the Federal Trade Commission (``FTC'' or 
``Commission'') issues its Statement of Basis and Purpose and final 
Rule pursuant to the requirement imposed by the Controlling the Assault 
of Non-Solicited Pornography and Marketing Act of 2003 (``CAN-SPAM'' or 
``the Act'') for the Commission, not later than 12 months after 
December 16, 2003, to ``issue regulations pursuant to section 7711 [of 
the Act] defining the relevant criteria to facilitate the determination 
of the primary purpose of an electronic mail message.''

EFFECTIVE DATE: May 19, 2004, except for Sec.  316.3, which will become 
effective on March 28, 2005.

ADDRESSES: Requests for copies of the ``primary purpose'' provisions of 
the Rule and the Statement of Basis and Purpose should be sent to 
Public Records Branch, Room 130, Federal Trade Commission, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Copies of these 
documents are also available at the Commission's Web site: http://www.ftc.gov.

FOR FURTHER INFORMATION CONTACT: Michael Goodman, Staff Attorney, (202) 
326-3071; or Catherine Harrington-McBride, Staff Attorney, (202) 326-
2452; Division of Marketing Practices, Bureau of Consumer Protection, 
Federal Trade Commission, 600 Pennsylvania Avenue, NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: The ``primary purpose'' provisions of the 
Rule implement the CAN-SPAM Act by defining the relevant criteria to 
determine the primary purpose of an electronic mail message. These 
provisions describe types of electronic mail messages that contain 
commercial content or what the Act terms ``transactional or 
relationship'' content, and establish different criteria for each type. 
These provisions also clarify that the definitions of certain terms 
taken from the Act and appearing in the Rule are prescribed by 
particular referenced portions of the Act. The Rule also includes a 
severability provision that provides that if any portion of the Rule is 
found to be invalid, the remaining portions will survive.

Statement of Basis and Purpose

I. Background

A. CAN-SPAM Act of 2003

    On December 16, 2003, the President signed into law the CAN-SPAM 
Act.\1\ The Act, which took effect on January 1, 2004, imposes a series 
of new requirements on the use of commercial electronic mail (``e-
mail'') messages. In addition, the Act gives Federal civil and criminal 
enforcement authorities new tools to combat commercial e-mail that is 
unwanted by the recipient and/or deceptive. The Act also allows state 
attorneys general to enforce its civil provisions, and creates a 
private right of action for providers of Internet access service.
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    \1\ 15 U.S.C. 7701-7713.
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    In enacting the CAN-SPAM Act, Congress made the following 
determinations of public policy, set forth in section 7701(b) of the 
Act: (1) There is a substantial government interest in regulation of 
commercial electronic mail on a nationwide basis; (2) senders of 
commercial electronic mail should not mislead recipients as to the 
source or content of such mail; and (3) recipients of commercial 
electronic mail have a right to decline to receive additional 
commercial electronic mail from the same source.
    Based on these policy determinations, Congress, in section 7704(a) 
and (b) of the CAN-SPAM Act, outlawed certain commercial e-mail acts 
and practices. Section 7704(a)(1) of the Act prohibits transmission of 
any e-mail that contains false or misleading header or ``from'' line 
information. Section 7704(a)(1) also clarifies that a header will be 
considered materially misleading if it fails to identify accurately the 
computer used to initiate the message because the person initiating the 
message knowingly uses another protected computer to relay or 
retransmit the message in order to disguise its origin.\2\ The Act also 
prohibits false or misleading subject headings in commercial e-mail 
messages.\3\ It requires a functioning return e-mail address or similar 
Internet-based mechanism for recipients to use to ``opt out'' of 
receiving future commercial e-mail messages,\4\ and prohibits the 
sender, or others acting on the sender's behalf, from initiating a 
commercial e-mail to a recipient more than 10 business days after the 
recipient has opted out.\5\ In addition, the Act prohibits sending a 
commercial e-mail message without providing three disclosures: (1) 
Clear and conspicuous identification that the message is an 
advertisement or solicitation, (2) clear and conspicuous notice of the 
opportunity to decline to receive further commercial e-mail messages 
from the sender, and (3) a valid physical postal address of the 
sender.\6\ Finally, the Act specifies four ``aggravated violations''--
practices that compound the available statutory damages when alleged 
and proven in combination with other CAN-SPAM violations.\7\
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    \2\ 15 U.S.C. 7704(a)(1).
    \3\ 15 U.S.C. 7704(a)(2).
    \4\ 15 U.S.C. 7704(a)(3).
    \5\ 15 U.S.C. 7704(a)(4).
    \6\ 15 U.S.C. 7704(a)(5).
    \7\ 15 U.S.C. 7704(b). The four such practices set forth in the 
statute are: Address harvesting, dictionary attacks, automated 
creation of multiple e-mail accounts, and relaying or retransmitting 
through unauthorized access to a protected computer or network. The 
Act's provisions relating to enforcement by the States and providers 
of Internet access service create the possibility of increased 
statutory damages if the court finds a defendant has engaged in one 
of the practices specified in section 7704(b) while also violating 
section 7704(a). Specifically, sections 7706(f)(3)(C) and (g)(3)(C) 
permit the court to increase a statutory damages award up to three 
times the amount that would have been granted without the commission 
of an aggravated violation. Sections 7706(f)(3)(C) and (g)(3)(C) 
also provide for this heightened statutory damages calculation when 
a court finds that the defendant's violations of section 7704(a) 
were committed ``willfully and knowingly.''
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    The Act authorizes the Commission to enforce violations of the Act 
in the same manner as an FTC trade regulation rule.\8\ Section 7706(f) 
authorizes the attorneys general of the States to enforce compliance 
with certain provisions of section 7704(a) of the Act by initiating 
enforcement actions in Federal court, after serving prior written 
notice upon the Commission when feasible.\9\ CAN-SPAM also authorizes 
providers of Internet access service to bring a Federal court action 
for violations of certain provisions of section 7704(a), (b), and 
(d).\10\
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    \8\ Sections 7706(a) and (c) of the CAN-SPAM Act provide that a 
violation of the Act shall be treated as a violation of a rule 
issued under section 18(a)(1)(B) of the FTC Act. 15 U.S.C. 
57a(a)(1)(B).
    \9\ 15 U.S.C. 7706(f). Specifically, the state attorneys general 
may bring enforcement actions for violations of section 7704(a)(1), 
7704(a)(2), or 7704(d). The states may also bring an action against 
any person who engages in a pattern or practice that violates 
section 7704(a)(3), (4), or (5).
    \10\ 15 U.S.C. 7706(g). Section 7704(d) of the Act requires 
warning labels on commercial e-mail messages containing sexually 
oriented material. 15 U.S.C. 7704(d). In April, 2004, the Commission 
promulgated its final rule regarding such labels: ``Label for e-mail 
Messages Containing Sexually Oriented Material'' (``Sexually 
Explicit Labeling Rule''). 69 FR 21024 (Apr. 19, 2004). The 
Commission is integrating the provisions of that existing rule into 
the final Rule announced in this Federal Register Notice, 
renumbering certain provisions as follows: former 316.1(a) and (b) 
appear at 316.4(a) and (b) in the final Rule; former 316.1(c) 
[definitions] appears at 316.2 in the final Rule; and former 
316.1(d) [severability] appears at 316.5 and applies to the entire 
final Rule, not only the Sexually Explicit Labeling Rule provisions.

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    Congress directed the Commission to issue regulations, not later 
than 12 months after December 16, 2003, ``defining the relevant 
criteria to facilitate the determination of the primary purpose of an 
electronic mail message.'' \11\ The term ``primary purpose'' is 
incorporated in the Act's definition of the key term ``commercial 
electronic mail message.'' Specifically, ``commercial electronic mail 
message'' encompasses ``any electronic mail message the primary purpose 
of which is the commercial advertisement or promotion of a commercial 
product or service (including content on an Internet Web site operated 
for a commercial purpose).'' \12\ In addition to the mandatory 
rulemaking regarding the determination of an e-mail message's ``primary 
purpose,'' CAN-SPAM also provides discretionary authority for the 
Commission to issue regulations concerning certain of the Act's other 
definitions and provisions.\13\
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    \11\ 15 U.S.C. 7702(2)(C). The Act authorizes the Commission to 
use notice and comment rulemaking pursuant to the Administrative 
Procedures Act, 5 U.S.C. 553, 15 U.S.C. 7711.
    \12\ 15 U.S.C. 7702(2)(A) (emphasis supplied). The term 
``primary purpose'' is also used in the Act's definition of 
``transactional or relationship message.'' 15 U.S.C. 7702(17).
    \13\ 15 U.S.C. 7702(17)(B); 7704(c)(1)(A)-(C); 7704(c)(2); 
7711(a).
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B. Advance Notice of Proposed Rulemaking

    On March 11, 2004, the Commission published an Advance Notice of 
Proposed Rulemaking (``ANPR'') that solicited comment on a number of 
issues raised by the CAN-SPAM Act, most importantly, the definition of 
``primary purpose.'' \14\ In addition, the ANPR requested comment on 
the CAN-SPAM issues over which the Commission has discretionary 
rulemaking authority.\15\ In response to the ANPR, the Commission 
received more than 13,500 comments from representatives from a broad 
spectrum of the online commerce industry, trade associations, 
individual consumers, and consumer and privacy advocates.\16\ 
Commenters generally applauded CAN-SPAM as an effort to stem the flood 
of unsolicited and deceptive commercial e-mail messages that has 
threatened the convenience and efficiency of online commerce. 
Commenters also offered several suggestions for the Commission's 
consideration in drafting regulations to implement the Act, including 
the definition of ``primary purpose.''
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    \14\ 69 FR 11776 (Mar. 11, 2004).
    \15\ The ANPR also solicited comment on questions related to 
four reports that the Commission must submit to Congress: a report 
on establishing a ``Do Not e-mail'' registry that was submitted on 
June 15, 2004; a report on establishing a system for rewarding those 
who supply information about CAN-SPAM violations that was submitted 
on September 16, 2004; a report setting forth a plan for requiring 
commercial e-mail messages to be identifiable from their subject 
line to be submitted by June 16, 2005; and a report on the 
effectiveness of CAN-SPAM to be submitted by December 16, 2005. The 
comments related to the ``Do Not e-mail'' registry and the reward 
system are discussed in the Commission's June 15, 2004, and 
September 16, 2004 reports. The Commission will consider the 
relevant comments received in response to the ANPR in preparing the 
remaining reports.
    \16\ Comments that were submitted in response to the March 11, 
2004, ANPR are available on the Commission's Web site at the 
following address: http://www.ftc.gov/os/comments/canspam/index.htm.
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C. Notice of Proposed Rulemaking

    On August 13, 2004, the Commission published a Notice of Proposed 
Rulemaking (``NPRM'') proposing criteria to facilitate the 
determination of the primary purpose of an e-mail message.\17\ In the 
NPRM, the Commission proposed rule provisions to divide all types of e-
mail messages containing ``commercial'' content \18\ into three 
categories: (1) Messages that contain only commercial content, (2) 
messages that contain both commercial content and content that falls 
within one of the categories listed in section 7702(17)(A) of the Act 
(``transactional or relationship content''), and (3) messages that 
contain both commercial content and content that is neither commercial 
nor ``transactional or relationship.'' Messages in the first category 
were considered ``single-purpose messages.'' The second and third 
categories were considered ``dual-purpose messages.'' For each of these 
categories, the Commission proposed different criteria for determining 
when the ``primary purpose'' of such messages was commercial.
    In response to this NPRM, the Commission received 226 comments from 
e-mail marketers and their associations, e-mail recipients, and others 
interested in CAN-SPAM's application to e-mail messages.\19\ Based upon 
the entire record in this proceeding, the final ``primary purpose'' 
Rule provisions the Commission hereby adopts are very similar to the 
proposed Rule provisions. The final Rule provisions, however, contain 
some minor changes from the proposed Rule provisions. These 
modifications, discussed in detail below, are based upon the 
recommendations of commenters and careful consideration of relevant 
First Amendment law. Commenters' recommendations that the Commission 
has declined to adopt in its final Rule are also discussed, along with 
the Commission's reasons for rejecting them.\20\
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    \17\ 69 FR 50091 (Aug. 13, 2004).
    \18\ Based on the Act's definition of the term ``commercial 
electronic mail message,'' the NPRM proposed that content is 
``commercial'' if it advertises or promotes a product or service. 
See 15 U.S.C. 7702(2)(A).
    \19\ Approximately 75 of these comments were submitted by 
industry representatives, 56 were submitted by consumers, and 3 were 
submitted by privacy groups. The remaining comments were form 
letters or other duplicate submissions. Appendix A is a list of the 
commenters and the acronyms used to identify each commenter who 
submitted a comment in response to the August 13, 2004, NPRM. These 
comments are available on the Commission's web site at the following 
address: http://www.ftc.gov/os/comments/canspam2/index.htm. 
References to comments are cited by the commenter's acronym.
    \20\ In response to the August, 13, 2004, NPRM, many commenters 
addressed issues relating to the Commission's discretionary 
rulemaking authority, in addition to addressing ``primary purpose'' 
rulemaking. The Commission is currently reviewing the comments 
addressing issues of discretionary rulemaking and is reserving 
action on those issues until a later time.
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II. Discussion of the Final Rule

A. Section 316.1--Scope of Regulations

    Section 316.1 of the final Rule states, ``[t]his part implements 
the Controlling the Assault of Non-Solicited Pornography and Marketing 
Act of 2003 (`CAN-SPAM Act' [or `the Act']), 15 U.S.C. 7701-7713.'' A 
number of commenters requested express findings that CAN-SPAM does not 
apply to their e-mail messages.\21\ Section 7706(d) of the CAN-SPAM Act 
makes clear that the Commission has only the same jurisdiction and 
power under the Act as it has under the FTC Act.\22\ The CAN-

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SPAM Act does not expand or contract the Commission's jurisdiction or 
the scope of the final Rule's coverage. Limits on the FTC's 
jurisdiction, however, do not affect the ability of other Federal 
agencies, the States, or providers of Internet access service to bring 
actions under the Act against any entity within their jurisdiction as 
authorized.\23\ Thus, many persons and entities not within the FTC's 
jurisdiction may still be subject to an enforcement action for 
violating the CAN-SPAM Act.
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    \21\ See, e.g., ASAE; Incentive; NADA; AAMFT; DMA-NF (regarding 
messages from nonprofit organizations); and ACA (regarding debt 
collection messages). In addition, Experian stated that the 
regulations' scope is tied to the definition of the term ``sender,'' 
and requested clarification of that term with respect to compliance 
obligations of multiple advertisers in a single commercial e-mail 
message. In the ANPR, the Commission sought comment on the issue of 
multiple-sender liability, which it identified as one possible area 
of discretionary rulemaking under section 7711 of the Act. The 
Commission staff is currently reviewing comments addressing the 
multiple-sender issue, as well as all comments on all other possible 
issues that fall within the Commission's discretionary CAN-SPAM 
rulemaking authority, and is reserving action on these issues until 
later.
    \22\ Under 5(a)(2) of the FTC Act, the Commission lacks 
jurisdiction over ``banks, savings and loan institutions described 
in section 18(f)(3) [of the FTC Act], Federal credit unions 
described in section 18(f)(4) [of the FTC Act], common carriers 
subject to the Acts to regulate commerce, air carriers and foreign 
air carriers subject to the Federal Aviation Act of 1958, and 
persons, partnerships, or corporations insofar as they are subject 
to the Packers and Stockyards Act, 1921, as amended, except as 
provided in Section 406(b) of said Act.'' 15 U.S.C. 45(a)(2) 
(footnotes omitted). In addition, the FTC does not have jurisdiction 
over any entity that is not ``organized to carry on business for its 
own profit or that of its members.'' 15 U.S.C. 44. Finally, the FTC 
does not have jurisdiction over the business of insurance to the 
extent that such business is regulated by State law. See section 2 
of the McCarran-Ferguson Act, 15 U.S.C. 1012(b).
    \23\ Section 7706(b) and (c) of the CAN-SPAM Act authorize 
Federal agencies other than the FTC to enforce the Act against 
various entities outside the FTC's jurisdiction.
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B. Section 316.2--Definitions

    The proposed Rule included definitions of a number of key terms, 
nearly all of which were defined by references to the corresponding 
sections of the Act. These terms include: ``affirmative consent,'' 
``commercial electronic mail message,'' ``electronic mail address,'' 
``initiate,'' ``Internet,'' ``procure,'' ``protected computer,'' 
``recipient,'' ``routine conveyance,'' ``sender,'' ``sexually oriented 
material,'' and ``transactional or relationship message.'' \24\ An 
additional term, ``character,'' not defined in the Act, had been 
defined in the Commission's Sexually Explicit Labeling Rule proceeding, 
and was included in the proposed Rule with the same definition it had 
been given in that earlier proceeding.\25\
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    \24\ Proposed Rule 316.2(a), (c)-(n).
    \25\ Proposed Rule 316.2(b).
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    In the NPRM, the Commission set forth its rationale for defining by 
reference those definitions included in both the Act and the Rule, 
stating ``that by referencing the definitions found in the Act, and any 
future modifications to those definitions, the Rule will accurately and 
effectively track any future changes made to the definitions in the 
Act.'' \26\
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    \26\ 69 FR at 50094.
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    None of the small number of the NPRM comments concerning the 
definitions challenged the Commission's proposal to incorporate by 
reference definitions included in the Act. Several commenters urged 
modifications that the Commission theoretically could effectuate under 
the discretionary rulemaking authority of section 7711 of the Act.\27\ 
The largest number of comments on this section urged the Commission 
explicitly to exempt messages from not-for-profit entities from the 
definition of ``commercial electronic mail message.'' \28\ It is 
possible that a message from a nonprofit could meet the definition of 
``commercial electronic mail message'' (e.g., an e-mail message sent by 
a nonprofit hospital offering medical screening in exchange for a fee). 
There is no reason that recipients of such an e-mail message should 
forfeit the protections afforded by CAN-SPAM. Moreover, it is 
possible--or even likely--that messages between a nonprofit and its 
members could constitute ``transactional or relationship messages'' 
under section 7702(17)(A)(v).\29\ Thus, the Commission does not believe 
there is adequate basis or need to create an across-the-board exemption 
for e-mail messages initiated by nonprofit entities.
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    \27\ A handful of comments touched on the definition of 
``sender,'' advocating clarification of the multiple-sender issue 
raised in the ANPR. Experian; NRF; Adknowledge (alternatively 
recommending clarification of the definition of ``transactional or 
relationship message''); ESPC (recommending that the definition of 
``sender'' be addressed in this proceeding because the term is 
related to the ``standard associated with primary purpose''). MBA 
recommended that the Commission ``explicitly state that verbal 
consent is sufficient to comply with the definition of ``affirmative 
consent'' and that definition's requirement for a ``clear and 
conspicuous'' requirement.'' Baker urged the Commission to expressly 
define expiration/renewal notices as transactional. As noted in the 
NPRM, the Commission anticipates addressing issues of discretionary 
rulemaking, including the definitions of the terms ``sender,'' 
``affirmative consent,'' and ``transactional or relationship 
message'' in a future Federal Register notice, and does not address 
them here.
    \28\ See, e.g., AE; Incentive; Independent (requesting 
clarification in the definition of ``transactional or relationship 
messages'' that e-mails sent by a nonprofit to its base constituency 
will not be considered commercial e-mail); ASAE; AAMFT; NAEDA.
    \29\ These messages will only be considered ``commercial 
electronic mail messages,'' and thus subject to greater regulation 
than transactional or relationship messages, if (1) a recipient 
reasonably interpreting the subject line of the message would likely 
conclude that the message advertises or promotes a commercial 
product or service, or (2) the transactional or relationship content 
does not appear, in whole or in substantial part, at the beginning 
of the body of the message.
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    A few comments suggested definitions of the term ``spam.'' \30\ In 
the CAN-SPAM Act, Congress set forth a regulatory scheme built around 
the defined terms ``commercial electronic mail message'' and 
``transactional or relationship message.'' Because this structure is 
provided in the Act, it is unnecessary to define the term ``spam'' in 
the context of this rulemaking, and the Commission declines to do so.
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    \30\ Schomaker; Cleaver; Anonymous; Dickert.
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    ECFCU, without offering any definition of its own, recommended that 
the Commission define the phrase ``reasonably interpreting,'' used in 
section 316.3 of the Rule, ``to alleviate different interpretations of 
this term.'' \31\ The Commission believes that definition of this 
phrase is unnecessary as the plain language is sufficiently clear, 
especially in light of the fact that a ``reasonableness'' standard is a 
basic legal concept that is broadly understood.\32\ Finally, two 
commenters, CIPL and Experian, asked the Commission to add definitions 
of the terms ``advertisement'' and ``promotion,'' which are used in the 
Act's definition of ``commercial electronic mail message.'' The 
Commission believes these terms are sufficiently clear and declines to 
add definitions of these terms.
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    \31\ ECFCU.
    \32\ See, e.g., the reasonableness element of the Commission's 
deception standard as articulated in Cliffdale Assocs., Inc., 
(Deception Statement) 103 F.T.C. 110 (1984): ``We examine the 
practice from the perspective of a consumer acting reasonably in the 
circumstances.''
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C. Section 316.3--Primary Purpose Criteria: Four Categories of e-mail 
Messages With Distinct Criteria for Each

    As noted above, section 7702(2)(C) of the CAN-SPAM Act directs the 
Commission to ``issue regulations pursuant to section 7711 of this 
[Act] defining the relevant criteria to facilitate the determination of 
the primary purpose of an electronic mail message.'' The term ``primary 
purpose'' comes into play in the Act's definition of ``commercial 
electronic mail message,'' which is ``any electronic mail message the 
primary purpose of which is the commercial advertisement or promotion 
of a commercial product or service (including content on an Internet 
Web site operated for a commercial purpose).'' \33\ Section 7702(2)(B) 
expressly excludes from the Act's definition of ``commercial electronic 
mail message'' messages that meet the definition of ``transactional or 
relationship message,'' \34\ which also

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incorporates the term ``primary purpose.'' Generally, CAN-SPAM applies 
only to messages that fall within the Act's definition of ``commercial 
electronic mail message.'' \35\
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    \33\ 15 U.S.C. 7702(2)(A) (emphasis supplied). The Commission's 
authority to establish ``primary purpose'' criteria does not include 
the authority to modify the Act's definition of ``commercial.''
    \34\ Section 7702(17)(A) of the Act defines a ``transactional or 
relationship message'' as ``an electronic mail message the primary 
purpose of which is--
    (i) To facilitate, complete, or confirm a commercial transaction 
that the recipient has previously agreed to enter into with the 
sender;
    (ii) To provide warranty information, product recall 
information, or safety or security information with respect to a 
commercial product or service used or purchased by the recipient;
    (iii) To provide--
    (I) Notification concerning a change in the terms or features 
of;
    (II) Notification of a change in the recipient's standing or 
status with respect to; or
    (III) At regular periodic intervals, account balance information 
or other type of account statement with respect to, a subscription, 
membership, account, loan, or comparable ongoing commercial 
relationship involving the ongoing purchase or use by the recipient 
of products or services offered by the sender;
    (iv) To provide information directly related to an employment 
relationship or related benefit plan in which the recipient is 
currently involved, participating, or enrolled; or
    (v) To deliver goods or services, including product updates or 
upgrades, that the recipient is entitled to receive under the terms 
of a transaction that the recipient has previously agreed to enter 
into with the sender.''
    \35\ One provision, section 7704(a)(1), which prohibits false or 
misleading transmission information, applies equally to ``commercial 
electronic mail messages'' and ``transactional or relationship 
messages''; otherwise, CAN-SPAM's prohibitions and requirements 
cover only ``commercial electronic mail messages.''
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    In the August 13, 2004, NPRM, the Commission's proposed criteria to 
facilitate the determination of when an e-mail message has a commercial 
primary purpose contemplated three categories of e-mail messages 
containing ``commercial'' content and applied different criteria to 
each category. The three categories proposed were: (1) e-mail messages 
that contain only commercial content, (2) e-mail messages that contain 
both commercial content and content that falls within one of the 
categories listed in section 7702(17)(A) of the Act (``transactional or 
relationship content''),\36\ and (3) e-mail messages that contain both 
commercial content and content that is neither commercial nor 
``transactional or relationship.'' The first category covered those e-
mail messages with only commercial content--``single-purpose 
messages.'' The second and third categories covered ``dual-purpose 
messages.'' Commenters supported the proposal's distinction between 
single-purpose and dual-purpose e-mail messages, and between the two 
types of dual-purpose e-mail messages.\37\ The Commission retains the 
three categories of messages containing commercial content in the final 
Rule's primary purpose criteria, and adds a fourth category--e-mail 
messages containing only transactional or relationship content--and 
provides a criterion for determining the primary purpose of such e-mail 
messages.\38\
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    \36\ See note 34 above.
    \37\ See, e.g., AAM (with some reservations); BMI; CASRO; ICOP; 
Reed; SIIA (asking for more guidance). But see Adknowledge; SIA; 
State Farm (claiming that the proposal's distinctions are 
inconsistent with the text of the Act and could result in improper 
regulation of messages that should be outside the scope of the Act). 
Other commenters argued that one standard should apply to all dual-
purpose messages. See, e.g., DoubleClick; ESPC.
    \38\ See NBC; NetCoalition; NRF (advocating criteria for 
messages containing only transactional or relationship content). The 
Commission declines to adopt a fifth category for messages 
containing commercial content, transactional or relationship 
content, and content that is neither commercial nor transactional or 
relationship. See Experian; NBC. The criteria for messages 
containing both commercial and transactional or relationship content 
apply to messages of this type.
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    The final Rule, however, slightly modifies the proposed Rule's 
description of what constitutes ``commercial'' content. Under the 
proposed Rule, ``commercial content'' was described as ``content that 
advertises or promotes a product or service.'' \39\ This description is 
based on the Act's definition of ``commercial electronic mail 
message.'' Under the Act's definition, a commercial e-mail message is 
an e-mail message ``the primary purpose of which is the commercial 
advertisement or promotion of a commercial product or service 
(including content on an Internet Web site operated for a commercial 
purpose).'' \40\ The key concept from the Act's definition--does the e-
mail message advertise or promote a product or service?--was 
incorporated in the proposal but the repeated references to the term 
``commercial'' were omitted.
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    \39\ Proposed Rule 316.3(a)(1). 69 FR at 50106.
    \40\ 15 U.S.C. 7702(2)(A) (emphasis supplied).
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    Three commenters argued that the Commission had erred in dropping 
these additional inclusions of the term ``commercial'' from its 
proposed criteria, and urged the Commission to rectify this in its 
final Rule.\41\ These commenters claimed that failing to include these 
references from the text of the Act could inappropriately broaden the 
scope of the Act by including individuals sending one e-mail message 
one time to a single recipient to sell a personal item.\42\ These 
commenters also argued that omitting the word ``commercial'' would 
improperly bring within the Act's reach ``electronic mail messages that 
do not promote commercial products or services,'' such as messages from 
trade groups promoting seminars or other gatherings.\43\ Contrary to 
these commenters' views, however, CAN-SPAM may apply to a trade 
association's e-mail messages promoting a seminar because a seminar may 
be considered a ``commercial product or service'' if attendees must pay 
an admission charge. Nevertheless, as will be discussed in detail 
below, a trade association's e-mail messages to its members or donors 
are likely ``transactional or relationship messages'' under the Act 
even if the messages consist primarily of the commercial advertisement 
or promotion of a commercial product or service. Commenters offered no 
other situations where adding the word ``commercial'' before 
``advertisement or promotion'' and ``product or service'' alters the 
definition proposed in the NPRM.
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    \41\ See MPAA; Schwartz; SIA. In addition, many comments 
submitted by nonprofit entities argued that the Act's repeated 
references to ``commercial'' in the ``commercial electronic mail 
message'' definition reflect Congress's intent to exempt messages 
from nonprofits. See, e.g., AE; Incentive. The final Rule's 
application to messages sent by nonprofit entities is discussed in 
greater detail below. As the Commission explained in the NPRM, the 
use of the term ``commercial'' in the Act shows intent to regulate 
messages whose primary purpose is to sell something, as 
distinguished from ``transactional or relationship messages'' and 
other non-commercial communications. 69 FR at 50100.
    \42\ See MPAA; Schwartz; SIA.
    \43\ Schwartz; SIA. See also MPAA.
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    The Commission is persuaded by these comments that the language of 
the Rule should adhere more closely to the language of the Act to avoid 
the possibility of overbreadth. Reviewing the matter in light of the 
comments, the Commission has concluded that the repeated inclusion of 
the modifying word ``commercial'' in section 7702(2)(A) of the Act is 
not merely tautological, but evidences an intention to ensure that the 
CAN-SPAM regulatory scheme would not reach isolated e-mail messages 
sent by individuals who are not engaged in commerce,\44\ but 
nevertheless seek to sell something to a friend, acquaintance, or other 
personal contact.\45\ To be consistent with the text of CAN-SPAM, under 
the final Rule, ``commercial'' content is ``the commercial 
advertisement or promotion of a commercial product or service.'' \46\

[[Page 3114]]

According to CAN-SPAM's definition of ``commercial electronic mail 
message,'' ``a commercial product or service'' includes ``content on an 
Internet Web site operated for a commercial purpose.'' \47\ By 
incorporating specifically the Act's definition of ``commercial 
electronic mail message,'' the final Rule also incorporates that 
definition's inclusion of ``content on an Internet Web site operated 
for a commercial purpose.'' Thus, in the text of the final Rule, and 
throughout this Federal Register Notice, every reference to 
``commercial'' content or ``a commercial product or service'' includes 
``content on an Internet Web site operated for a commercial purpose.'' 
Therefore, an e-mail message's reference or hyperlink to the address of 
a Web site that is operated for a commercial purpose is ``commercial'' 
content under the Act and the final Rule.
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    \44\ The Random House College Dictionary defines ``commercial'' 
as ``of, pertaining to, or characteristic of commerce; engaged in 
commerce.'' It defines ``commerce'' as ``an interchange of goods or 
commodities, especially on a large scale; trade; business.'' Random 
House College Dictionary 270 (Revised edition unabridged 1980).
    \45\ The Act's coverage of single business-to-business e-mail 
messages is an issue that several commenters addressed. The text of 
the Act has no business-to-business exemption and does not establish 
a minimum number of e-mail messages that must be sent before the Act 
applies. This may invite an interpretation that it regulates such 
messages as commercial, even when they are not sent in bulk. 
Nevertheless, a number of commenters advanced equitable arguments 
for an exemption from CAN-SPAM for isolated business-to-business 
commercial e-mail messages. See, e.g. MBNA. The Commission has not 
made any determination regarding this issue, which it intends to 
review when addressing discretionary rulemaking issues.
    \46\ See 15 U.S.C. 7702(2)(A). CAN-SPAM's definition of 
``commercial'' content does not modify sections 4 and 5 of the FTC 
Act, which define ``commerce'' and establish the Commission's 
authority to prevent, among other things, ``unfair or deceptive acts 
or practices in or affecting commerce.'' 15 U.S.C. 44 and 45.
    \47\ 15 U.S.C. 7702(2)(A).
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1. Section 316.3(a)(1)--Criterion for E-mail Messages That Contain Only 
Commercial Content
    In the NPRM, the Commission proposed that ``if an e-mail message 
contains only content that advertises or promotes a product or service 
(`commercial content'), then the `primary purpose' of the message would 
be deemed to be commercial.'' Only a few commenters addressed this 
component of the proposed primary purpose criteria, and those 
commenters generally supported the Commission's approach.\48\ Thus, the 
Commission adopts a final Rule provision that retains the proposed 
criterion for determining the primary purpose of an e-mail message 
containing only commercial content. As was explained above, however, 
the final Rule's version of this criterion slightly modifies the 
proposal's description of ``commercial content.'' In the final Rule, 
commercial content is ``the commercial advertisement or promotion of a 
commercial product or service.'' Under section 316.3(a)(1) of the final 
Rule, if an e-mail message contains only commercial content, the 
``primary purpose'' of the message shall be deemed to be commercial.
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    \48\ See CASRO; ESPC; Keyspan; NCL; Visa.
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2. Section 316.3(a)(2)--Criteria for e-mail Messages That Contain Both 
Commercial Content and ``Transactional or Relationship'' Content
    In the NPRM, the Commission proposed that section 316.3(a)(2) would 
set out criteria for determining the primary purpose of messages 
containing both commercial content and transactional or relationship 
content. The proposal was that this type of dual-purpose message would 
have a commercial primary purpose if: ``(1) A recipient reasonably 
interpreting the subject line of the electronic mail message would 
likely conclude that the message advertises or promotes a product or 
service; or (2) The electronic mail message's [transactional or 
relationship content] does not appear at or near the beginning of the 
message.'' \49\ These proposed criteria prompted a substantial number 
of comments. The Commission has determined to adopt final Rule 
provisions that retain both criteria, but to make slight modifications 
to each one. Under section 316.3(a)(2) of the final Rule, if an 
electronic mail message contains both commercial content \50\ and 
transactional or relationship content, then the primary purpose of the 
message shall be deemed to be commercial if: (1) A recipient reasonably 
interpreting the subject line of the electronic mail message would 
likely conclude that the message contains the commercial advertisement 
or promotion of a commercial product or service; or (2) the electronic 
mail message's transactional or relationship content does not appear, 
in whole or in substantial part, at the beginning of the body of the 
message.\51\ In other words, for such a message to be deemed to have a 
``transactional or relationship'' primary purpose, the subject line 
must not contain a reference to a commercial advertisement or promotion 
of a commercial product or service and the transactional or 
relationship content must appear in whole or in substantial part at the 
beginning of the body of the message. Both criteria must be fulfilled 
if a message is to be deemed to have a purpose that is primarily 
transactional or relationship.
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    \49\ Proposed Rule 316.3(a)(2). 69 FR at 50106.
    \50\ As explained above, the final Rule's description of 
``commercial'' content has been modified to be consistent with the 
Act's text. Thus, commercial content is ``the commercial 
advertisement or promotion of a commercial product or service.''
    \51\ Several commenters urged the Commission to adopt two 
additional categories of e-mail messages that may be regulated by 
CAN-SPAM: messages consisting solely of ``transactional or 
relationship'' content, and messages that contain commercial 
content, transactional or relationship content, and content that 
does not belong in either category (e.g., informational content). 
See Experian; NBC; NetCoalition; NRF. The Commission has determined 
to add a fourth category of messages addressed in its primary 
purpose criteria: those containing only transactional or 
relationship content. That category and its criterion are discussed 
below. The Commission declines to adopt a fifth category for 
messages containing commercial content, transactional or 
relationship content, and content that is neither commercial nor 
transactional or relationship. Instead, the Commission has 
determined that such messages will be evaluated using the criteria 
for messages containing both commercial content and transactional or 
relationship content. Thus, the transactional or relationship 
content, which Congress has identified as especially important to 
recipients, must appear, in whole or in substantial part, at the 
beginning of the body of the message for the message not to be 
deemed to have a commercial primary purpose.
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a. Sections 316.3(a)(2)(i) and (3)(i)--The Function of the Subject Line 
in Determining the Primary Purpose of e-mail Messages Containing Both 
Commercial Content and Transactional or Relationship Content, or 
Containing Both Commercial Content and Content That Is Neither 
Commercial Nor Transactional or Relationship
    In the NPRM, the Commission stated: ``[T]he subject line is 
important because consumers reasonably use the information it contains 
to decide whether to read a message or delete it without reading it. 
For this reason, bona fide e-mail senders likely use the subject line 
to announce or provide a preview of their messages. These e-mail 
senders, when they are advertising or promoting a product or service, 
will likely highlight that fact in their subject lines so that 
recipients may decide whether to read the messages.'' \52\ The 
Commission continues to believe that the subject line is a reliable 
indicator of an e-mail message's primary purpose. The Commission also 
believes that the subject line criterion has the substantial benefit of 
being a clear test for e-mail senders to apply to their messages. 
Several commenters supported the subject line criterion.\53\ Visa 
supported independent evaluation of the subject line ``because it 
assists consumers in deciding whether or not to read a particular e-
mail message.'' Visa agreed that bona fide e-mail senders ``will 
highlight in the subject line the principal purpose of the e-mail 
message,'' although it recommended substituting a different criterion 
in place of the proposed net impression standard.\54\ NCL stated that 
the subject line is the first thing a recipient sees and is often the 
sole basis on which a recipient decides whether to open the

[[Page 3115]]

message or delete it.\55\ Reed Elsevier, a publishing and information 
company, stated that this criterion ``while subjective, provide[s] * * 
* guidance for compliance with the Act.'' For these reasons, the 
Commission has adopted a subject line criterion in the final Rule for 
all dual-purpose e-mail messages that closely tracks the proposed 
Rule's subject line criterion.\56\
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    \52\ NPRM, 69 FR at 50095 (footnotes omitted).
    \53\ See CASRO (requesting additional guidance); NCL; Reed; 
Visa.
    \54\ Visa. While generally supportive of the evaluation of the 
subject line, Visa recommended that the Commission adopt a test for 
determining the primary purpose of an e-mail message that would 
evaluate whether the commercial content in an e-mail message was 
``more important than all other purposes,'' and ``but for'' the 
inclusion of such content, the message would not have been sent.
    \55\ But see DoubleClick (stating that e-mail recipients rely 
more on the from line than the subject line when deciding whether to 
read a message). DoubleClick's data show that one-third of e-mail 
recipients surveyed consider the subject line to be the most 
important factor in deciding whether to open a permission-based e-
mail. The Commission considers this data as support for its use of 
the subject line in its primary purpose criteria. It is reasonable 
to presume that an even greater percentage of consumers rely most on 
the subject line when deciding whether to open unsolicited messages 
from unfamiliar senders, when the from line is less useful to 
recipients.
    \56\ As explained above, the final Rule's description of 
``commercial content'' has been modified to be consistent with the 
Act's text. Thus, commercial content is ``the commercial 
advertisement or promotion of a commercial product or service.''
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    Some commenters claimed that the subject line criterion did not 
provide enough guidance regarding how CAN-SPAM would apply to e-mail 
messages that contained commercial content but did not refer to this 
commercial content in the subject line.\57\ Some commenters warned that 
this criterion should not--indeed, could not--require e-mail messages 
containing commercial content to refer to that content in the subject 
line.\58\ The subject line criterion does not require senders to use a 
subject line that refers to the message's commercial content.\59\ This 
is necessarily a fact-specific analysis, and a dual-purpose message may 
use a subject line that is not deceptive and yet does not refer to 
commercial content.
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    \57\ See, e.g., Experian; KeySpan; NetCoalition.
    \58\ See Associations; CBA; DMA; Experian; PMA; Wells Fargo. 
Section 7711(b) of the Act, cited by these commenters, prohibits the 
Commission from ``establish[ing] a requirement pursuant to section 
7704(a)(5)(A) * * * to include any specific words, characters, 
marks, or labels in a commercial electronic mail message, or to 
include the identification required by section 7704(a)(5)(A) * * * 
in any particular part of such a mail message (such as the subject 
line or body).'' This criterion, however, does not require any 
specific content in the subject line of e-mail messages, and is 
plainly consistent with the Act.
    \59\ Despite requests from CBA and DMA to add to the Rule's text 
a statement explaining this point, the Commission believes it 
unnecessary. See also NetCoalition (proposing three tests--``close 
alignment,'' ``net impression,'' and ``deceptiveness''--for 
determining when a dual-purpose message's subject line should refer 
to commercial content). These tests do not add materially to the 
criterion adopted in the final Rule.
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    It is worth noting, however, that section 7704(a)(2) of CAN-SPAM 
prohibits the use of ``a subject heading * * * [that] would be likely 
to mislead a recipient, acting reasonably under the circumstances, 
about a material fact regarding the contents or subject matter of the 
message (consistent with the criteria used in enforcement of section [5 
of the FTC Act]).'' \60\
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    \60\ Thus, CAN-SPAM specifically applies to the subject line of 
covered e-mail messages the deception jurisprudence the Commission 
has developed under section 5(a) of the FTC Act. 15 U.S.C. 45(a). 
The express language of section 7704(a)(2) of CAN-SPAM tracks the 
deception standard developed in the Commission's cases and 
enforcement statements, thereby prohibiting subject line content 
that is likely to mislead a consumer acting reasonably under the 
circumstances about a material fact regarding the content or subject 
matter of the message. Cliffdale Assocs., Inc. (Deception 
Statement), 103 F.T.C. 164-5. The framework for analyzing alleged 
deception is explicated in an Appendix to this decision, reprinting 
a letter dated Oct. 14, 1983, from the Commission to The Honorable 
John D. Dingell, Chairman, Committee on Energy and Commerce, U.S. 
House of Representatives (1984) (``Deception Statement''). Under 
this framework, actual deception need not be shown, only that a 
representation, omission, or practice is likely to mislead. Id. at 
176. Thiret v. FTC, 512 F.2d 176, 180 (10th Cir. 1975); Ger-Ro-Mar, 
Inc. v. FTC, 518 F.2d 33, 36 (2d Cir. 1975); Resort Car Rental Sys., 
Inc. v. FTC, 518 F.2d 962, 964 (9th Cir. 1975). The ``acting 
reasonably under the circumstances'' aspect of the analysis 
considers the representation from the perspective of the ordinary 
consumer to whom it is directed. Cliffdale at 177-8. A material fact 
``is one which is likely to affect a consumer's choice of or conduct 
regarding a product. In other words, it is information that is 
important to consumers.'' Id. at 182 (footnotes omitted). Note, 
however, that section 7704(a)(6) of the Act establishes a definition 
of ``materially'' that is distinct from, but consistent with, the 
definition articulated in the Deception Statement. The section 
7704(a)(6) definition applies only to section 7704(a)(1), which 
prohibits header information that is ``materially false or 
materially misleading.''
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    CAN-SPAM's focus on subject lines that misrepresent the content or 
subject matter of the message is in accord with case law developed 
under section 5 of the FTC Act with respect to deceptive ``door-
openers.'' \61\ The subject line of an e-mail message serves as a door-
opener--an initial contact between a sender and a recipient that 
typically makes an express or implied representation about the purpose 
of the contact. Before the recipient views the body of an e-mail 
message, he or she typically may view the subject line that, as the 
designation ``subject line'' implies, announces what the e-mail message 
concerns. Some senders may be tempted to use misrepresentations in the 
subject line to induce recipients to open their messages.\62\ These 
senders would be well advised that CAN-SPAM prohibits using the subject 
line as an initial contact with consumers to get their attention by 
misrepresenting the purpose of the contact.
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    \61\ ``[W]hen the first contact between a seller and a buyer 
occurs through a deceptive practice, the law may be violated even if 
the truth is subsequently made known to the purchaser.'' Cliffdale 
Assocs. (Deception Statement), 103 F.T.C. at 180. See also Carter 
Products, Inc. v. FTC, F.2d 821, 824 (5th Cir. 1951); Exposition 
Press, Inc. v. FTC, 295 F.2d 869, 873 (2d. Cir. 1961), cert. denied, 
370 U.S. 917 (1962); National Housewares, Inc., 90 F.T.C. 512, 588 
(1977); Resort Car Rental, 518 F.2d at 964; Encyclopaedia 
Britannica, Inc., 87 F.T.C. 421, 497 (1976), aff'd sub nom. 
Encyclopaedia Britannica, Inc. v. FTC, 605 F.2d 964 (7th Cir. 1979), 
cert. denied, 445 U.S. 934 (1980).
    \62\ See, e.g., FTC v. Brian Westby, et al., Case No. 03 C 2540 
(N.D. Ill. Amended Complaint filed Sept. 16, 2003) (FTC alleged in 
part that Defendants used deceptive subject lines to expose 
unsuspecting consumers to sexually explicit material).
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(1) Commenters' Opposition to the Subject Line Criterion in Determining 
the Primary Purpose of e-mail Messages Containing Both Commercial 
Content and Transactional or Relationship Content
    In response to the Commission's proposal, many comments from e-mail 
senders opposed any standard by which the subject line alone could be 
the basis for determining the primary purpose of an e-mail message.\63\ 
First, many of these commenters objected to the subject line 
criterion's focus on a recipient's reasonable interpretation of the 
subject line; they claimed this was an ``unnecessarily subjective'' 
standard.\64\ These commenters argued that it would be difficult, 
costly, and time-consuming to determine how recipients would interpret 
the subject lines of the commenters' messages.\65\ Although senders 
will need to spend some time evaluating their message's subject line, 
the Commission believes that these commenters exaggerate the difficulty 
and expense involved in determining whether recipients will likely 
interpret the subject line as indicating a message with commercial 
content. A subject line that indicates that the message contains a 
commercial advertisement or promotion of a commercial product or 
service will likely lead a recipient to conclude that the message is 
commercial, not ``transactional or relationship.'' \66\ A

[[Page 3116]]

subject line that refers only to one of the categories listed in the 
Act's definition of ``transactional or relationship message'' would not 
lead a recipient to conclude that the message is commercial.\67\ The 
Commission believes that this standard provides the necessary guidance 
to senders of dual-purpose e-mail messages so that they can, if they 
wish, compose their messages so that they will be regulated as 
transactional or relationship messages, and not as commercial messages.
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    \63\ See, e.g., ESPC; MBNA; NAR; NBC; NetCoalition; SIIA. See 
also TrustE (stating that using the subject line as an independent 
criterion would ``transform the subject line from a versatile means 
of communication with customers into a mere rigid legal compliance 
mechanism,'' and arguing that independent evaluation of the subject 
line is ``superfluous'' because it is highly improbable, though 
admittedly possible, that commercial content may appear in the 
subject line and body of an e-mail message, or only in the body of 
an e-mail message). The Commission believes that the subject line 
criterion uses what is already true about subject lines--that they 
highlight the content of a message and that legally they cannot be 
deceptive--to facilitate the determination of an e-mail message's 
primary purpose.
    \64\ MPAA. See also CBA; Courthouse; Experian; ICC; MBA; MBNA; 
SIIA; Visa; Wells Fargo.
    \65\ See, e.g., Baker; Experian; MPAA.
    \66\ Applying the Act's definition of ``commercial electronic 
mail message,'' a subject line also refers to commercial content 
when it refers to the commercial advertisement or promotion of 
``content on an Internet Web site operated for a commercial 
purpose.'' 15 U.S.C. 7702(2)(A).
    \67\ One commenter, Baker, stated that it would seem 
``intolerable'' for an e-mail sender to have to ``worry about the 
distinction'' between a subject line that indicates that a 
recipient's periodical subscription is about to expire (which would 
refer to transactional or relationship content) and a subject line 
that packages such a notification with a reference to a sales pitch 
to renew the subscription (which would refer to both commercial 
content and transactional or relationship content). Although CAN-
SPAM provides that a notice about subscription status is 
transactional or relationship content, it does not establish that an 
offer to renew the subscription constitutes transactional or 
relationship content. As a result, the Act itself dictates this 
narrow distinction. It is therefore important to examine the subject 
line to determine the primary purpose of a dual-purpose message that 
refers to both subscription status and a renewal sales pitch. 
Senders may include the sales pitch in both the subject line and the 
message, but because this message would have a commercial primary 
purpose, the sender would have to give recipients an opportunity to 
opt out of future sales pitches.
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    A second group of commenters objecting to the subject line 
criterion argued that it fails as a ``primary purpose'' test because it 
looks at only one component of an e-mail message.\68\ According to 
these commenters, any ``primary purpose'' test must look at the e-mail 
message as a whole. The Commission believes that the criteria 
articulated in section 316.3(a)(2) do give appropriate consideration to 
all relevant elements of an e-mail message. The subject line stands out 
as a separate part of a message that serves as a preview of the body of 
the message. As such, it is appropriate to tailor the criteria to 
accommodate this basic feature of e-mail communication. Congress 
required the Commission to ``defin[e] the relevant criteria to 
facilitate the determination of the primary purpose of an electronic 
mail message.'' \69\ The Commission's use of the subject line as one 
criterion for determining an e-mail message's primary purpose is 
consistent with this mandate. e-mail recipients can and do rely on a 
message's subject line as a preview of what the message is about.\70\ 
CAN-SPAM's prohibition on deception in subject lines ensures the 
reliability of the subject line as a signal of a message's purpose.\71\ 
Because bona fide e-mail senders likely use the subject line to 
highlight the content of their messages, and because CAN-SPAM mandates 
honest subject lines, then it is proper--and efficient--to conclude 
that one way to determine the primary purpose of an e-mail message is 
by looking at the subject line.
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    \68\ See, e.g., ESPC; MBNA; MPAA.
    \69\ 15 U.S.C. 7702(2)(C).
    \70\ See, e.g., NCL.
    \71\ 15 U.S.C. 7704(a)(2).
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    A third group of commenters argued that, if the Commission were 
determined to use the subject line in its criteria, it must look at 
whether the primary purpose of the subject line is commercial.\72\ Some 
commenters in this group argued that this criterion should not look at 
whether a recipient reasonably interpreting the subject line ``would 
likely conclude that the message contains the commercial advertisement 
or promotion of a commercial product or service,'' but should instead 
look at whether such recipient would likely conclude that the primary 
purpose of the message is commercial.\73\ Given the limited space with 
which e-mail senders operate in the subject line, the Commission 
believes it is reasonable and practical for the criterion to consider 
whether a recipient reasonably interpreting the subject line would 
likely conclude that the message contains commercial content, not 
whether he or she would likely draw any conclusions about the message's 
primary purpose. It would be unworkable to adopt a test that required 
e-mail senders to weigh the relative importance of a subject line's 
different references. As explained above, CAN-SPAM ensures that the 
subject line is a non-deceptive, reliable indicator of an e-mail 
message's content. If an e-mail sender wants to send a message that 
will be treated under CAN-SPAM as a transactional or relationship 
message, the subject line criterion provides a roadmap to arrive at 
that result (i.e., place only references to transactional or 
relationship content in the subject line). The same is true of the 
``placement'' criterion discussed immediately below. Before e-mail 
senders initiate any message, they can know--and control--how their 
message will be regulated.
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    \72\ See Associations; CBA; Experian; PMA; Wells Fargo.
    \73\ See BofA; Mastercard; NBC.
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    A fourth group of commenters claimed the subject line is not a 
reliable indicator because Internet service providers, by limiting the 
length of the subject line actually presented to a recipient, may alter 
how a subject line appears on a recipient's computer in a manner that 
is beyond the sender's control.\74\ These commenters were concerned 
that, due to such alteration, a recipient could conclude that the 
subject line of an e-mail message indicated that the message contained 
commercial content when the subject line did not so indicate when it 
left the sender's computer. According to the subject line criterion, 
that conclusion would mean that a dual-purpose message has a commercial 
primary purpose. These commenters submitted nothing that shows that, 
when a subject line refers initially to transactional or relationship 
content, the subject line could appear to refer to commercial content 
because of subsequent alteration by a recipient's Internet service 
provider. Although it may be possible for a subject line to be cut 
short because of the recipient's e-mail program, it is unlikely that 
this would change a subject line from referring to transactional or 
relationship content to referring to commercial content.\75\ Moreover, 
one of the commenters raising this objection acknowledged that senders 
already take into account ISPs' subject line character limitations.\76\ 
Thus, the Commission has determined not to change the subject line 
criterion.\77\
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    \74\ See DoubleClick; ESPC; TRUSTe.
    \75\ If a long subject line refers to both transactional or 
relationship content and commercial content, the recipient would 
already reasonably conclude that the message contains an ad (and 
therefore is commercial). Therefore, if a portion of this long 
subject line is cut off, it would not change the conclusion.
    \76\ See TRUSTe.
    \77\ MPAA asserted a somewhat related argument that the subject 
line criterion should not apply when the original recipient of an e-
mail message replies to or forwards that message. Specifically, MPAA 
posed the hypothetical of a message that is initially purely 
commercial (e.g., a sales pitch) with a ``commercial'' subject line, 
but that subsequently takes on transactional or relationship content 
(e.g., completion of the transaction introduced by the sales pitch) 
as the two parties to the message reply to each other. According to 
MPAA, the subject line criterion should not render such a message 
commercial even if the message retains its original ``commercial'' 
subject line. The Deception Statement, which is a lodestar of the 
subject line criterion's focus on ``a recipient reasonably 
interpreting the subject line,'' states ``when representations * * * 
are targeted to a specific audience, the Commission determines the 
effect of the practice on a reasonable member of that group.'' See 
Cliffdale Assocs. (Deception Statement), 103 F.T.C. at 178, 180. 
That passage of the Deception Statement provides guidance to senders 
of messages described by MPAA. While the subject line criterion 
still applies to business-to-business messages that are replied to 
or forwarded, senders of such messages may be able to show that a 
recipient reasonably interpreting the subject line of the message 
would not likely conclude that the message contains commercial 
content.

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[[Page 3117]]

b. Section 316.3(a)(2)(ii)--``Placement'' Criterion for e-mail Messages 
With Both Commercial Content and Transactional or Relationship Content
    Under the Commission's second proposed criterion governing e-mail 
messages containing both commercial content and transactional or 
relationship content, this type of dual-purpose message would have a 
commercial primary purpose if the transactional or relationship content 
``does not appear at or near the beginning of the message.'' \78\ 
Several senders supported this test because it provides clear, 
objective guidance to marketers.\79\ Others opposed it, typically 
because they felt it does not provide sufficient guidance, especially 
with respect to the ``at or near the top'' element.\80\ A second 
criticism from a small number of commenters opposed to this approach 
was that they preferred to be able to provide commercial content first 
without having their messages be considered commercial e-mail 
messages.\81\ In the final Rule, in response to comments addressing 
this approach and to provide the clearest standard, the Commission has 
modified the standard so that an e-mail message will be deemed to have 
a commercial primary purpose if the transactional or relationship 
content ``does not appear, in whole or in substantial part, at the 
beginning of the body of the message.'' \82\ The Commission believes 
that this placement test provides an objective standard for e-mail 
senders to comply with, allows for flexibility in message design, and 
ensures that recipients receive the most important content of a dual-
purpose message first.\83\ e-mail senders are not required to complete 
their presentation of transactional or relationship content before 
providing any commercial content. Once they begin their message with at 
least some substantial transactional or relationship content, they may 
then provide commercial content. Use of the term ``substantial'' in 
this criterion does not refer to volume; there is no minimum number of 
``transactional or relationship'' characters that must appear at the 
beginning of the body of the message. Rather, the term ``substantial'' 
refers to the nature of the content. To satisfy this criterion, the 
transactional or relationship content that appears at the beginning 
must be something recognizable as transactional or relationship 
content. For example, if a message's transactional or relationship 
content is account balance information pursuant to section 
7702(17)(A)(iii), a statement providing the recipient's current balance 
would be substantial, and additional related information (e.g., recent 
account activity) could be provided below commercial content. On the 
other hand, merely stating ``Your account'' at the beginning of the 
message would not be sufficiently substantial. Under this standard, 
recipients of these messages will be alerted to important transactional 
or relationship content without having to first wade through 
advertising.\84\
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    \78\ NPRM, 69 FR at 50106. Of course, if a recipient reasonably 
interpreting the subject line of such a message would likely 
conclude that the message contains the commercial advertisement or 
promotion of a commercial product or service, the message would be 
deemed to have a commercial primary purpose regardless of where in 
the message the transactional or relationship content appears.
    \79\ See Keyspan; MBA; MBNA; VCU.
    \80\ See, e.g., DoubleClick; Experian. Commenters also asked how 
this standard would apply to messages with ``side-by-side'' 
presentation of commercial content and transactional or relationship 
content. See NRF; MPAA.
    \81\ See, e.g., MPAA.
    \82\ Three commenters requested that the Commission specify that 
this criterion looks at placement at the beginning of the body of 
the message (as opposed to simply ``the beginning of the message,'' 
which was proposed in the NPRM). See Experian; MBNA; NBC. For 
clarity, the Commission accepts this suggestion.
    \83\ CAN-SPAM's definition of ``transactional or relationship 
message'' includes specific categories of messages that Congress 
determined to be ones that consumers want to receive. These 
categories include vital information such as bank account 
statements, product recalls, transaction confirmations, and warranty 
information.
    \84\ A side-by-side presentation of commercial and transactional 
or relationship content could satisfy this standard.
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    Finally, in referring to ``transactional or relationship'' content, 
the proposed Rule used the phrase ``content that pertains to one of the 
functions listed'' in a portion of the rule that tracked, verbatim, the 
statutory provision that sets out the transactional or relationship 
categories [15 U.S.C. 7702(17)]. The final Rule uses the narrower and 
more precise formulation ``transactional or relationship content as set 
forth in paragraph (c) of this section.''
c. Commenters' Proposals for Determining the Primary Purpose of 
Messages Containing Both Commercial Content and Transactional or 
Relationship Content
    In the NPRM, the Commission asked commenters to propose alternative 
criteria to determine the primary purpose of messages containing 
commercial content and transactional or relationship content. 
Commenters responded with several proposals that the Commission had 
already considered and rejected in the NPRM. Some commenters also 
proposed modifications to the Commission's existing proposal.
(1) Comments Arguing That the Inclusion of Any Transactional or 
Relationship Content Should Preclude Determination That the Message Has 
a Commercial Primary Purpose
    Approximately 30 comments submitted by e-mail senders argued that 
dual-purpose messages necessarily do not have a commercial primary 
purpose if they contain certain transactional or relationship content, 
such as billing statements, legally required content, content sent in 
response to a request from the recipient, ``primarily editorial'' 
content, and subscription renewals.\85\ One commenter simply stated 
that a message is a ``transactional or relationship message'' if it 
contains any transactional or relationship content regardless of where 
it is positioned.\86\
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    \85\ See, e.g., AeA; Associations; Baker; BofA; CBA; DMA; ERA; 
MPA; PMA; Schwartz; SIIA; State Farm; Time Warner; Wells Fargo.
    \86\ Schwartz.
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    CAN-SPAM clearly rejects the hard-and-fast approach advocated by 
these commenters, which is that any modicum of transactional or 
relationship content ought to place even an overwhelmingly commercial 
message beyond the ambit of the modest requirements that the Act 
imposes on commercial messages. The Act distinguishes between messages 
the ``primary purpose'' of which is ``commercial'' and messages the 
``primary purpose'' of which is ``transactional or relationship.'' \87\ 
The concept that some analysis is necessary to determine the ``primary 
purpose'' of e-mail messages that blend commercial with transactional 
or relationship content is therefore embodied in the Act. Thus, the 
text of the Act itself contradicts the commenters' argument that the 
presence of transactional or relationship content in an e-mail message 
automatically prevents an e-mail message from being ``commercial.'' The 
Commission therefore declines to adopt a final Rule that would treat 
dual-purpose messages as transactional or relationship messages simply 
because they include any amount of transactional or relationship 
content appearing anywhere in the message.\88\
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    \87\ See 15 U.S.C. 7702(2); 7702(17).
    \88\ Similarly, several commenters expressed concern that the 
Commission not prohibit or discourage dual-purpose messages. See 
DoubleClick; Experian; NBC; NRF; Visa. This concern is unfounded. 
The Commission does not have the authority to prohibit dual-purpose 
messages, and the final Rule's criteria for messages containing both 
commercial content and transactional or relationship content do 
nothing to discourage use of these messages. Moreover, despite the 
concerns of some commenters, CAN-SPAM does not give e-mail 
recipients the right to opt-out of important transactional or 
relationship content, such as billing statements. See AeA; 
Associations; CBA; DMA; ERA; PMA; Wells Fargo.

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[[Page 3118]]

    A number of commenters requested guidance regarding CAN-SPAM's 
regulation of periodicals (such as newsletters and catalogs) delivered 
via e-mail, many of which contain information and advertising.\89\ The 
starting point to analyze the impact of CAN-SPAM on a periodical is to 
consider whether it is sent pursuant to a subscription. When a 
recipient subscribes to a periodical delivered via e-mail, then 
transmission of that periodical to that recipient falls within one of 
the ``transactional or relationship message'' categories. Specifically, 
it constitutes delivery of ``goods or services * * * that the recipient 
is entitled to receive under the terms of a transaction that the 
recipient has previously agreed to enter into with the sender.'' \90\ 
This is true regardless of whether the periodical consists exclusively 
of informational content or combines informational and commercial 
content.\91\
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    \89\ See, e.g., Adknowledge; CBA; CIPL; Courthouse; DMA; NAA; 
NADA; NAEDA; NCL; NetCoalition; Reardon; Reed.
    \90\ 15 U.S.C. 7702(17)(A)(v). Determining whether a periodical 
delivered via e-mail will be deemed to be ``transactional or 
relationship'' under 7702(17)(A)(v), however, requires consideration 
of the recipient's understanding of what he or she is entitled to 
receive under the terms of the agreed-to transaction. This is not to 
say that, at the time of the transaction, the sender must give an 
exhaustive description of what types of content will be included in 
a periodical that the recipient has requested to receive. The 
Commission believes that recipients reasonably expect--without 
having to be told--that a newsletter will contain advertising along 
with informational content. Nevertheless, the Commission believes 
that there are limits to such an expectation. If the content that a 
recipient has requested pursuant to 7702(17)(A)(v) is overwhelmed by 
commercial content that clearly exceeds what the recipient might 
reasonably have expected, then the sender cannot persuasively argue 
that the primary purpose of its message is to deliver content the 
recipient is entitled to receive under the terms of a previously 
agreed to transaction. In such a situation, where excessive 
commercial content could cause recipients to overlook important 
transactional or relationship content, it would be contrary to 
Congress's intent to regulate the e-mail message as transactional or 
relationship rather than commercial.
    \91\ If, however, an e-mail message consists exclusively of 
commercial content (such as a catalog or other content that is 
purely advertisement or promotion), then the e-mail message would be 
a single-purpose commercial message. This is because delivery of 
such advertising or promotional content would not constitute the 
``delivery of goods or services * * * that the recipient is entitled 
to receive under the terms of a transaction that the recipient has 
previously agreed to enter into with the sender,'' as set forth in 
the relevant portion of the definition of ``transactional or 
relationship message.'' 15 U.S.C. 7702(17)(A)(v) (emphasis added).
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    When a sender delivers an unsolicited newsletter or other 
periodical via e-mail, and there is no subscription, the situation is 
materially different for purposes of CAN-SPAM than when such content is 
delivered with the consent of the recipient. In such a scenario, the 
content likely would not be ``transactional or relationship'' within 
the meaning of section 7702(17)(A)(v). Instead, if the message contains 
both commercial content and content that is neither commercial nor 
transactional or relationship, the criteria set out in section 
316.3(a)(3) would apply. Under that standard, discussed in detail 
below, an e-mail message will be deemed to have a commercial primary 
purpose if either: (1) A recipient reasonably interpreting the subject 
line would likely conclude that the message contains the commercial 
advertisement or promotion of a commercial product or service; or (2) a 
recipient reasonably interpreting the body of the message would likely 
conclude that the primary purpose of the message is the commercial 
advertisement or promotion of a commercial product or service.
(2) Comments Discussing a ``Primary Purpose'' Criterion Based on 
Sender's Intent, Such as a ``But for'' Standard
    Some commenters responding to the NPRM advocated ``primary 
purpose'' criteria based on the sender's intent.\92\ These commenters, 
repeating arguments the Commission rejected in the NPRM,\93\ claimed 
that a standard based on the sender's intent would be an objective test 
for marketers.\94\ The Commission disagrees that a sender-intent 
standard is objective. To the contrary, the sender-intent approach is 
entirely subjective. As NCL stated: ``[N]either recipients nor law 
enforcement authorities can look into the minds of senders in order to 
prove whether they intended the messages to be primarily for commercial 
or other purposes.'' \95\ The Commission agrees with NCL, and notes 
that a ``sender intent'' standard would create a difficult problem of 
proof in law enforcement actions. Such a standard presents the 
potential for a loophole for spammers, which could nullify CAN-SPAM's 
protections for e-mail recipients. The Commission's criteria obviate 
such a loophole.
---------------------------------------------------------------------------

    \92\ See, e.g., AIA; DMA; ERA; Experian; ICC; Mastercard; MBNA; 
MPA; PMA; Visa; Wells Fargo. As in the first round of comments, many 
of these commenters argued in favor of a ``but for'' sender-intent 
standard: a message would not have a commercial primary purpose 
unless the message would not have been sent but for its commercial 
content. See, e.g., ERA; MBNA; Mastercard; ACLI; SIA. Under this 
standard, a message with both transactional or relationship content 
(e.g., a billing statement) and advertising would never have a 
commercial primary purpose; according to these commenters, it would 
always be true that the transactional or relationship portion of the 
message would have been sent with or without accompanying ads. This 
standard, in effect, establishes that a message is by definition a 
transactional or relationship message if it contains any 
transactional or relationship content. The Commission declines to 
adopt this approach because it is clearly inconsistent with the text 
of the Act. ABM raised a different concern with the ``but for'' 
approach: ``[I]f a `but for' test were applied to the senders of 
electronic newsletters, who are certainly not intended to fall 
within the Act's ambit, they could very well fail * * *. Would they 
distribute these newsletters * * * `but for' the advertising? In 
many cases, they would not.'' The final Rule's criteria do not 
regulate subscription-based newsletters--and most unsolicited bona 
fide newsletters--as commercial messages.
    \93\ See 69 FR at 50098.
    \94\ See ICC; Wells Fargo.
    \95\ NCL.
---------------------------------------------------------------------------

    Some commenters argued that a ``sender intent'' standard would be 
more consistent with Congress's intent than the criteria the Commission 
proposed.\96\ According to these commenters, Congress signaled its 
intent to focus on the sender's intent rather than the recipient's 
interpretation by using the term ``purpose'' in the Act. They 
criticized the Commission's approach as an improper ``effect'' test 
rather than a ``purpose'' test.\97\ As the Commission noted in the 
NPRM, however, CAN-SPAM refers to the primary purpose of the message, 
not of the sender.\98\ The primary purpose of an e-mail message may be 
fairly determined by looking at the sender's intent or the recipient's 
interpretation. The latter is the better choice because it is 
consistent with the Commission's approach to analyzing deception in 
advertising. The ``recipient's interpretation'' approach also 
eliminates a vast potential loophole for spammers.
---------------------------------------------------------------------------

    \96\ See, e.g., MBNA.
    \97\ See Adknowledge; AIA; Associations; CBA; DMA; Experian; 
MBNA; MPA; NBC; PMA; Time Warner; Wells Fargo.
    \98\ See 69 FR at 50098.
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(3) Comments Proposing Substantial Modifications to the Commission's 
Proposed Criteria for e-mail Messages Containing Both Commercial 
Content and Transactional or Relationship Content
    Many senders of commercial e-mail advocated their own ``primary 
purpose'' standards for e-mail messages containing both commercial 
content and transactional or relationship content. Some of these 
commenters proposed that an e-mail message should have to satisfy both 
of the Commission's criteria for this type of dual-purpose message for 
the message to be deemed to have a commercial primary purpose.\99\ In 
other

[[Page 3119]]

words, this type of dual-purpose message would have a commercial 
primary purpose only if (1) a recipient reasonably interpreting the 
subject line would likely conclude that the message contained 
commercial content, and (2) the transactional or relationship content 
did not appear, in whole or in substantial part, at the beginning of 
the body of the message.\100\ Some advocates of this approach claimed 
it would be more consistent with Congress's intent than the 
Commission's approach.\101\
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    \99\ See ACB; CBA; ESPC; Experian; Mastercard; MBNA; NBC; Wells 
Fargo. According to MBNA, ``[t]he net effect * * * would be to shift 
the presumption from favoring a commercial content finding to one 
more favorable to a finding of TRM [transactional or relationship 
message].''
    \100\ The Commission's approach is that a message has a 
commercial primary purpose if either of the two criteria is met.
    \101\ See, e.g., CBA; MBNA.
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    The Commission believes that its criteria better preserve 
recipients' right to opt out of messages that are ``primarily'' 
commercial and that they therefore better fulfill Congress's 
intentions. Under the commenters' approach, if the subject line 
referred to transactional or relationship content, the e-mail message 
would always be considered ``transactional or relationship.'' (As noted 
above, under their approach, both subject line and placement criteria 
must be met before the message would be considered commercial.) Yet, 
the e-mail message may open with a substantial amount of unsolicited 
advertising and close with an extremely small amount of transactional 
or relationship content. Recipients could easily overlook the important 
transactional or relationship content that is at the end (or buried in 
the middle) of a long message that contains an overwhelming amount of 
advertising. Recipients would understandably be frustrated if they did 
not have the right to opt out of these overwhelmingly commercial 
messages. e-mail senders could therefore continue to send these 
messages under the guise of transactional or relationship messages 
without giving recipients the right to opt out.\102\ Because the 
Commission's approach examines the subject line and placement 
independently, it treats these messages as ``commercial'' and therefore 
preserves recipients'' right to opt out of these messages. Therefore, 
the Commission declines to adopt the commenters' suggested change to 
the criteria.
---------------------------------------------------------------------------

    \102\ Alternatively, an e-mail message may contain a subject 
line that refers only to commercial content. If the transactional or 
relationship content is placed at the beginning of the body of the 
message, under the commenters' approach, this is a transactional or 
relationship message, and recipients do not have the right to opt 
out. However, recipients reading the subject line may expect the 
message to contain only commercial content. They may delete the 
message without reading it or only casually review the body of the 
message if they are not expecting anything more than just 
advertising. Again, they may inadvertently overlook the important 
transactional or relationship content. If this occurs, recipients 
may be frustrated by not having an ability to opt out of future 
similar messages.
---------------------------------------------------------------------------

    Other commenters proposed that the Commission reformulate the 
``primary purpose'' criteria as a safe harbor.\103\ As described by one 
of these commenters, ``[f]or e-mail messages containing both commercial 
and transactional or relationship content there could be a safe harbor 
whereby the message would be deemed not to have a commercial primary 
purpose if either: (1) The subject line of the e-mail referred to the 
transactional or relationship content, or (2) the transactional or 
relationship content appeared at or near the beginning of the e-mail 
message. * * * In the event that a marketer opted not to take advantage 
of the safe harbor, its dual purpose e-mail messages would be viewed on 
the basis of the net impression of the message as a whole on the 
reasonable consumer.'' \104\
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    \103\ See Associations; ERA; ITAA; MPA; PMA.
    \104\ ERA.
---------------------------------------------------------------------------

    Under this alternative, as long as the subject line included any 
reference to transactional or relationship content, a message would not 
have a commercial primary purpose even if a recipient reasonably 
interpreting the subject line would likely conclude that the message 
contained commercial content. A message would not have a commercial 
primary purpose even if it opened with a block of commercial content 
and closed with a mere line of transactional or relationship content, 
provided the subject line referred to transactional or relationship 
content. These results abandon CAN-SPAM's dual objectives to enable 
recipients to opt-out of unwanted commercial content and to ensure that 
recipients receive important transactional or relationship content. The 
Commission's criteria, on the other hand, protect the opt-out rights 
that CAN-SPAM created and encourage e-mail senders to present 
transactional or relationship content with sufficient prominence to 
ensure that recipients will notice it. At the same time, the 
Commission's criteria allow e-mail senders, before initiating any 
message, to determine with a fair level of certainty whether CAN-SPAM 
will regulate the message as commercial or ``transactional or 
relationship.'' These senders simply need to satisfy themselves of two 
things: that a recipient reasonably interpreting the subject line of 
the message will not likely conclude that the message contains 
commercial content; and that the transactional or relationship content 
appears, in whole or in substantial part, at the beginning of the body 
of the message.
    Some commenters suggested determining the primary purpose of 
messages containing both commercial content and transactional or 
relationship content by applying a ``net impression'' standard.\105\ 
The Commission believes this is the appropriate standard for e-mail 
messages containing both commercial content as well as content that is 
neither commercial nor transactional or relationship. There are 
material differences between the two types of dual-purpose messages, 
however, that support applying different criteria to each type. 
Spammers are notorious for unsolicited messages combining commercial 
content and content that is neither commercial nor transactional or 
relationship--nonsensical, random words, quotations, aphorisms, and the 
like.\106\ These messages require a flexible standard, such as the 
``net impression'' approach, because a standard focusing only on a 
recipient's reasonable interpretation of the subject line and the 
placement of non-commercial content within the body of the message 
would simply give spammers carte blanche to evade CAN-SPAM. e-mail 
messages with transactional or relationship content, on the other hand, 
provide content that Congress has identified as important to 
recipients.\107\ The most efficient way to ensure that recipients get 
this important content is to require that it be placed, in whole or in 
substantial part, at the beginning of the body of the message. Thus, 
the Commission declines to adopt criteria that would apply a ``net 
impression'' test to messages containing both commercial content and 
transactional or relationship content.
---------------------------------------------------------------------------

    \105\ See DoubleClick; ESPC; NetCoalition; Experian; MPA. Under 
this approach, an e-mail message has a commercial primary purpose if 
the net impression created by the message is that it has a 
commercial primary purpose.
    \106\ In the NPRM, the Commission labeled these messages 
``Shakespearean sonnet'' spam and discussed how its criteria would 
regulate such messages as ``commercial'' under the Act. See 69 FR at 
50101.
    \107\ Moreover, unlike spammers, these senders already have a 
business relationship with their recipients, so the likelihood of 
consumer harm is reduced. See NPRM, 69 FR at 50096. As a result, an 
objective test is proper because there is little risk that these 
senders will abuse it.

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[[Page 3120]]

3. Section 316.3(a)(3)--Criteria for e-mail Messages That Contain Both 
Commercial Content and Content That Is Neither Commercial Nor 
``Transactional or Relationship''
    In addition to the subject line criterion applicable to all dual-
purpose messages, discussed above, the NPRM proposed a separate 
criterion to determine the primary purpose of a message that contains 
commercial content and content that is neither commercial nor 
``transactional or relationship'' in nature. This criterion would come 
into play for messages with subject lines that likely would not prompt 
a recipient to conclude that the message advertises or promotes a 
product or service. In such a case, the primary purpose of the message 
still would be deemed to be commercial if a recipient reasonably 
interpreting the body of the message would likely conclude that the 
primary purpose of the message is to advertise or promote a product or 
service. The proposed Rule listed several factors illustrative of those 
relevant to this interpretation, including the placement of content 
that advertises or promotes a product or service at or near the 
beginning of the body of the message; the proportion of the message 
dedicated to such content; and how color, graphics, type size, and 
style are used to highlight commercial content.\108\
---------------------------------------------------------------------------

    \108\ Proposed Rule 316(a)(3).
---------------------------------------------------------------------------

    The following is an example of how the ``net impression'' criterion 
for the body of an e-mail message would be applied along with the 
separate subject line criterion. Consider a newsletter sent to 
consumers with whom the sender had no previous dealings. Because the 
newsletter is not sent pursuant to a subscription or similar 
arrangement whereby the recipient has agreed to receive such content, 
the message does not constitute transactional or relationship 
content.\109\ Instead, the primary purpose of the message would be 
determined by considering whether (1) ``a recipient reasonably 
interpreting the subject line of the electronic mail message would 
likely conclude that the message contains the commercial advertisement 
or promotion of a commercial product or service,'' or (2) if ``a 
recipient reasonably interpreting the body of the message would likely 
conclude that the primary purpose of the message is the commercial 
advertisement or promotion of a commercial product or service.''
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    \109\ That is, the message is not ``goods or services * * * that 
the recipient is entitled to receive under the terms of a 
transaction that the recipient has previously entered into with the 
sender.'' 15 U.S.C. 7702(17)(A)(v).
---------------------------------------------------------------------------

    Based on the record in this proceeding, the Commission has adopted 
the proposed Rule provision with minor changes, including substituting, 
in section 316.3(a)(3)(ii), the phrase ``the commercial advertisement 
or promotion of a commercial product or service,'' in place of the 
phrase ``that advertises or promotes a product or service.'' \110\ 
Finally, the phrase ``at or near'' in section 316.3(a)(3)(ii) is 
replaced by the phrase ``in whole or in substantial part at'' to 
clarify the meaning of the placement factor in the net impression 
analysis.
---------------------------------------------------------------------------

    \110\ As noted, similar modifications have been made in other 
portions of the Rule that describe ``commercial content.'' 
Specifically, in the preamble to 316.3(a)(3), the Commission has 
substituted the phrase ``the commercial advertisement or promotion 
of a commercial product or service'' for the phrase ``advertises or 
promotes a product or service,'' and in 316.3(a)(3)(i), the phrase 
``message contains the commercial advertisement or promotion of a 
commercial product or service'' is substituted for the phrase 
``advertises or promotes a product or service.''
---------------------------------------------------------------------------

    A number of commenters responded to proposed section 
316.3(a)(3)(ii). The general themes that emerged from the comments are 
discussed in detail below. A few commenters supported the approach 
taken in the proposed section 316.3(a)(3)(ii). These commenters 
acknowledged that it is important that the Rule not permit senders of 
e-mail messages to evade CAN-SPAM simply by adding ``padding'' to their 
messages to dilute their commercial nature and thereby escape 
regulation.\111\ AeA noted that its ``member companies generally treat 
e-mails in this category as `commercial,' and would follow CAN-SPAM 
requirements.'' \112\ Some of these commenters, while generally 
supportive of the approach taken in the proposal, recommended 
modification to portions of the net impression component of the 
test.\113\
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    \111\ See, e.g., NFCU: CASRO.
    \112\ AeA (noting, however, its request that the subject line of 
an e-mail message not be independently evaluated in determining the 
primary purpose of the message).
    \113\ See, e.g., NFCU. (NFCU's concern is addressed below in the 
section discussing the net impression criteria.)
---------------------------------------------------------------------------

    The vast majority of commenters who addressed this issue did so 
with at least some reservations.\114\ For example, NFCU endorsed the 
approach, but recommended eliminating the reference to color, graphics, 
type size, and style as factors illustrative of those used in 
evaluating the net impression of a message.\115\ Others noted with 
approval the use of the net impression standard in the proposed Rule, 
but recommended that the test be revamped to focus on the message as a 
whole, rather than singling out the subject line for special 
consideration, and then considering the net impression of the body of 
the message.\116\ As discussed in detail above, the Commission has 
determined that independent evaluation of the subject line of an e-mail 
message is appropriate in determining the primary purpose of the 
message, and has therefore determined to retain this criterion, rather 
than merely including it as one of the factors to be considered under 
the net impression analysis.\117\
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    \114\ One commenter urged that an e-mail message containing 
merely an incidental brand reference in the subject line not be 
deemed to be commercial. The standard set forth in the final Rule 
criterion regarding the subject line makes clear that the content of 
the subject line is evaluated from the perspective of a ``recipient 
reasonably interpreting the subject line of the electronic mail 
message'' and turns on whether such a recipient ``would likely 
conclude that the message contains the commercial advertisement or 
promotion of a commercial product or service.''
    \115\ NFCU (expressing concern that these factors were sometimes 
beyond a sender's control. These arguments are discussed in detail 
below).
    \116\ DoubleClick; TrustE; ESPC.
    \117\ See discussion of subject line criterion above; NPRM, 69 
FR at 50095.
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    Other commenters expressed concern that the net impression test was 
flawed because it depends on the effect of the message on the recipient 
rather than the intent of the sender.\118\ As noted in the NPRM, CAN-
SPAM ``refers to the primary purpose of the message, not of the 
sender.'' \119\ Thus, the Commission is not bound to use a sender 
intent standard in setting forth criteria by which the primary purpose 
of an e-mail message is determined. Moreover, as discussed above, any 
test to determine the intent of a sender would be at least as 
subjective as the reasonable recipient standard.\120\ It also would be 
contrary to the basic approach underlying consumer protection law, 
which typically evaluates the impact of marketing and advertising from 
a reasonable consumer's perspective.\121\ Indeed, marketers have long 
been under an obligation to evaluate their advertising material from 
the reasonable consumer's perspective and determine what impression the 
material makes on consumers. The adoption of a reasonable recipient 
standard in this

[[Page 3121]]

Rule, then, is consistent with Commission precedent.
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    \118\ MBNA.
    \119\ NPRM, 69 FR at 50098.
    \120\ See discussion above of comments proposing that the 
primary purpose of an e-mail message be determined by evaluating the 
sender's intent.
    \121\ NPRM, 69 FR at 50096-97. But see MPAA (expressing the 
concern that relying on the impression of a reasonable recipient is 
vague and subjective).
---------------------------------------------------------------------------

    Some commenters suggested that if the Commission were to retain 
this standard, that a safe harbor be created as well to protect 
companies ``that undertake a good-faith effort to comply with the rules 
* * * \122\ ``The Commission declines to include a safe harbor in the 
final Rule because it is unpersuaded by the record or the circumstances 
that such a provision is warranted and necessary in this instance. A 
safe harbor is appropriate to prevent liability from being unfairly 
applied to an entity, which errs despite its genuine attempts to comply 
with the provisions of a rule, usually due to circumstances beyond its 
control, and would be subject to liability for what essentially amounts 
to a mistake, but for the safe harbor provision.\123\ In the view of 
the Commission, the criteria for determining the primary purpose of an 
e-mail message are set forth with clarity in the final Rule, thus 
making it unlikely that a company striving to be in compliance will err 
in appropriately categorizing the content it sends via e-mail.
---------------------------------------------------------------------------

    \122\ Verizon; Keyspan (incorporate sender's intent as a factor 
in the analysis, as well as adding safe harbor to protect those 
``not purposefully or intentionally trying to evade the CAN-SPAM 
Act.'').
    \123\ See, e.g., 16 CFR 310.4(b)(3) (do not call safe harbor in 
Telemarketing Sales Rule) and 16 CFR 310.4(b)(4) (call abandonment 
safe harbor in Telemarketing Sales Rule).
---------------------------------------------------------------------------

    Finally, MPA criticized the proposal, opining that it will restrict 
senders of commercial and ``other'' content from referring to a product 
or service in the subject line or including third-party advertisements 
at or near the top of the message or in ``exciting eye catching 
graphics and text'' if they intend to avoid regulation as commercial 
messages under the proposed Rule.\124\ MPA further criticized reliance 
on the factors ``irrespective of the overall content of the e-mail when 
viewed in its totality.'' This reflects a misunderstanding of section 
316.3(a)(3)(ii). Indeed, the net impression standard seeks expressly to 
evaluate the message in its totality, looking to the impression the 
entire e-mail message makes on a reasonable recipient. If a sender 
prominently places advertising near the top of the body of an e-mail 
message, and draws attention to this content (over the other content in 
the message), then the net impression of the e-mail message in its 
totality may be that the message is commercial. The consequence of this 
determination is that the message will have to include an opt-out 
mechanism and otherwise comply with CAN-SPAM. However, nothing would 
prohibit the sender from formulating the message in a way that has a 
different result. Although this is necessarily a fact-based analysis, 
the Commission has derived the net impression standard from its 
traditional analysis of advertising under the FTC Act,\125\ and 
believes it is one with which advertisers are already familiar and able 
to comply.
---------------------------------------------------------------------------

    \124\ MPA. See also ABM (seeking clarification that ancillary 
advertising sent along with ``other'' content in an e-mail message 
will not necessarily make a message commercial).
    \125\ 69 FR at 50096.
---------------------------------------------------------------------------

    A few comments focused on the specific factors set forth in the 
proposed Rule as illustrative of those that can be used to determine 
the net impression of an e-mail message. These factors include the 
placement of content that advertises or promotes a product or service 
at or near the beginning of the body of the message; the proportion of 
the message dedicated to such content; and how color, graphics, type 
size, and style are used to highlight the commercial content.\126\ 
CASRO endorsed these factors, stating that ``[t]he structure of an e-
mail message is the clearest and most direct manifestation of the 
sender's intent.'' \127\
---------------------------------------------------------------------------

    \126\ Proposed Rule 316.3(a)(3)(ii).
    \127\ CASRO (but recommending explicitly adding sender intent as 
an additional net impression factor to discourage those who might 
deliberately structure a message to confuse recipients about its 
purpose, such as advertisements designed to look like surveys).
---------------------------------------------------------------------------

    NAR sought clarification of the net impression factor regarding 
placement of content that advertises or promotes a product or service 
at or near the beginning of the body of the message, noting that ``it 
is now commonplace to create an e-mail message that is formatted like a 
Web page using similar multi-layered commercial and noncommercial text. 
Sidebars that contain commercial and noncommercial content and span the 
full length of the e-mail message are regularly used in web-like e-
newsletter messages.'' \128\ Similarly, NRF noted that it is common to 
place banner advertising lengthwise down one side of a dual purpose e-
mail message, and expressed concern about whether the placement of 
these advertisements ``at or near the top'' of the message would mean 
that they would be viewed as commercial rather than transactional.\129\
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    \128\ NAR. But see CASRO (supporting the placement factor).
    \129\ NRF.
---------------------------------------------------------------------------

    As noted above in the section discussing the placement standard for 
e-mail messages containing commercial and transactional or relationship 
content, the Commission wishes to provide the clearest possible 
standards in the final Rule to facilitate compliance. Thus, in response 
to the concerns raised by commenters regarding possible confusion over 
the proposed Rule's ``at or near the top'' placement factor within the 
net impression analysis, the Commission has modified this language. In 
the final Rule, the phrase ``at or near the top'' has been replaced by 
the phrase ``in whole or in substantial part, at * * *.'' In addition, 
as noted above, the term ``commercial'' has been added as a modifier of 
the terms ``advertisement or promotion'' and ``product or service,'' to 
conform the text of the final Rule to that of the Act.
    NAR also sought clarification regarding the net impression factor 
that looks to the proportion of the message dedicated to such content. 
In its comment, NAR urged the Commission to provide compliance guidance 
that would elucidate the proportion of an e-mail devoted to commercial 
advertisement or promotion that would cause an e-mail message to be 
viewed as commercial. As noted in the NPRM, the Commission rejects a 
``rigidly mechanical `proportion' standard for determining the primary 
purpose of a message'' because such a standard could easily be evaded 
by those seeking to avoid regulation under CAN-SPAM.\130\ Nonetheless, 
the Commission believes that the proportion of the message devoted to 
commercial content versus ``other'' non-commercial, non-transactional 
or relationship content is a factor relevant to the analysis a 
reasonable recipient will engage in to determine the primary purpose of 
a message. The greater the proportion of a message devoted to 
commercial advertisement or promotion of a commercial product or 
service, the more likely the balance will tip toward classification of 
the entire message as commercial.
---------------------------------------------------------------------------

    \130\ NPRM, 69 FR at 50098.
---------------------------------------------------------------------------

    NAR also requested clarification regarding the extent to which 
color, graphics, type size, and style will influence the determination 
that a particular e-mail message is commercial, and whether each would 
be considered independently or the factors would be considered as a 
whole.\131\ As with the evaluation of advertising claims under FTC 
jurisprudence, these factors--color, graphics, type size, and style--
will be evaluated as part of ``the

[[Page 3122]]

entire mosaic, rather than each tile separately.'' \132\
---------------------------------------------------------------------------

    \131\ NAR.
    \132\ Cliffdale Assocs. (Deception Statement), 103 F.T.C. at 
181, citing and quoting FTC v. American Home Products, 695 F.2d 681, 
688 (3rd Cir. 1982). Entities subject to the final Rule may also 
find it useful to review the Commission's Dot Com Disclosure Guide 
(available online at http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/) for guidance on the applicability of the Commission's net 
impression standard to online advertising media.
---------------------------------------------------------------------------

    NFCU recommended eliminating this criterion altogether because the 
formatting of the message text is beyond the sender's control in 
instances where, for example, an e-mail message sent in HTML format may 
be converted to plain text by the recipient's e-mail program, altering 
the sender's original formatting. The comments merely asserted that 
conversion of an e-mail message by an ISP or a recipient's e-mail 
program could result in a message that was non-commercial in its HTML 
form becoming commercial once it is converted to plain text. However, 
as NCL points out, ``no matter what media they use, marketers spend 
considerable time and resources trying to anticipate how consumers will 
react to all aspects of their advertisements, including the placement 
of information, type size and style, wording, color, graphics, etc.'' 
\133\ Because senders want to effectively communicate their message to 
recipients, it seems likely that they consider the result if an e-mail 
message in HTML format is converted to plain text. Moreover, if an e-
mail message is sent in HTML format, but then converted to plain text 
by the recipient's e-mail client, the text will be converted to the 
default font, color and size set by the client. There is no evidence to 
support the assertion that this conversion process could result in 
commercial text being emphasized. Thus, the Commission declines to 
eliminate from the net impression test the factor focusing on whether 
commercial content is highlighted.
---------------------------------------------------------------------------

    \133\ NCL.
---------------------------------------------------------------------------

    A small number of commenters also addressed the issue of whether 
the identity of the sender should be considered in determining the 
primary purpose of an e-mail message. CASRO suggested adding the 
identity of the sender to the net impression factors in the Rule noting 
that ``[t]he sender's identity could provide critical information as to 
the nature of its business or non-commercial activities * * * .'' \134\ 
NCL advocated a different approach: if a message containing commercial 
and ``other'' content is sent by a for-profit entity, then the message 
would be automatically deemed commercial, but if it is sent by a not-
for-profit, the primary purpose of the message would be determined by 
the impact of the message on a reasonable recipient.\135\ The 
Commission finds that the comments provide insufficient basis to add an 
express statement in the final Rule that the identity of the sender 
will be a factor in the net impression analysis. However, it bears 
noting that the current factors are illustrative, and that other 
factors, including the identity of the sender, may be considered in 
making a determination as to the net impression of an e-mail message.
---------------------------------------------------------------------------

    \134\ CASRO.
    \135\ NCL.
---------------------------------------------------------------------------

    Finally, some commenters addressed the question of deceptive 
advertising format. In the NPRM, the Commission noted that it declined 
to evaluate the status of an e-mail message based solely on the intent 
of the sender, but highlighted the possibility that sender intent could 
be useful in ensuring coverage when a sender structures a commercial e-
mail message in such a way as to deceive the recipient into believing 
that a message is non-commercial. NetCoalition strongly objected to the 
idea that sender's intent could impact on whether an e-mail message is 
commercial or not, stating ``[s]uch a test is inappropriate, because it 
undermines the Net Impression test, sows enforcement uncertainty, is 
unfair to senders by not rewarding senders who have positive intentions 
when sending messages, and could discourage companies from adopting a 
robust CAN-SPAM compliance program because of the fear that actions 
intended to comply with CAN-SPAM could be wrongly construed as 
`deliberately structuring.' '' \136\ On the other hand, CASRO advocated 
looking at sender intent in this context, noting that some e-mail 
senders deliberately structure their messages to appear to be 
legitimate surveys when, in fact, they are advertising or promoting 
products or services.\137\ After considering the comments, the 
Commission declines to include sender intent as a component of the net 
impression analysis because the benefits of including such a provision 
are outweighed by the risk that such a factor could erroneously cause 
non-commercial messages to be categorized as commercial. For example, a 
bona fide periodical delivered via e-mail consisting of informational 
content sponsored by commercial content likely will not have a 
commercial primary purpose under the final Rule's criteria. If the 
sender's intent was part of this analysis, however, such a message 
could be considered to have commercial primary purpose if the sender 
would not have transmitted the message without the commercial content. 
In such a situation, the commercial content could be considered 
essential, and, thus, it may appear that the sender intended the 
commercial content to be primary.
---------------------------------------------------------------------------

    \136\ NetCoalition.
    \137\ CASRO.
---------------------------------------------------------------------------

    On the other hand, spammers may try to evade CAN-SPAM by presenting 
the commercial content of their e-mail messages in the guise of 
informational content, deliberately structuring their messages to 
create the mistaken impression in the minds of reasonable recipients 
that the messages do not have a commercial primary purpose. A spammer 
might try to argue that, applying the Commission's criteria, CAN-SPAM 
does not cover such a message, because a recipient reasonably 
interpreting the message would not likely conclude that the primary 
purpose of the message is commercial. The Commission believes this 
strategy may tempt some spammers, although it is unclear whether e-mail 
messages are as conducive to deceptive format ploys as are other 
media.\138\ In any event, if a sender deliberately structures his 
message to create a false impression that the message does not have a 
commercial primary purpose, the message should be considered to have a 
commercial primary purpose under the final Rule's criteria. In the 
Commission's view, if a message's entire design is to disguise 
commercial content as non-commercial content, the message is 
commercial.\139\

[[Page 3123]]

The Commission will use other tools in its law enforcement arsenal, 
specifically section 5 of the FTC Act, to combat the practice of using 
a deceptive advertising format in e-mail.
---------------------------------------------------------------------------

    \138\ In other contexts, such as direct mail marketing, the 
Commission has sued marketers for violating the FTC Act because they 
disguised their sales pitches as informational content. The 
Commission recently filed a complaint against A. Glenn Braswell and 
four of his corporations alleging, among other things, that the 
defendants used deceptive advertising formats (including advertising 
material portrayed as an independent health magazine) to market 
their products. See FTC v. A. Glenn Braswell, et al., No. CV 03-3700 
DT (PJWx) (C.D. Cal. filed May 27, 2004). For other deceptive format 
enforcement actions brought by the Commission, see FTC v. Direct 
Mktg. Concepts, Inc., Civ. No. 04-11136-GAO (D. Mass. filed June 1, 
2004); Mega Sys., Int'l., Inc., 125 F.T.C. 973 (consent order) C-
3811 (June 8, 1998); Olsen Laboratories, Inc., 119 F.T.C. 161 
(consent order) C-3556 (Feb. 6, 1995); Wyatt Mrktg. Corp., 118 
F.T.C. 86 (consent order) C-3510 (July 27, 1994); Synchronal Corp., 
116 F.T.C. 989 (consent order) D-9251 (Oct. 1, 1993); Nat'l. Media 
Corp., 116 F.T.C. 549 (consent order) C-3441 (June 24, 1993); CC 
Pollen Co., 116 F.T.C. 206 (consent order) C-3418 (March 16, 1993) 
(consent order); Nu-Day Enterprises, Inc., 115 F.T.C. 479 (consent 
order) C-3380 (Apr. 22, 1992); Twin Star Productions, 113 F.T.C. 847 
(consent order) C-3307 (Oct. 2, 1990) (consent order); JS&A Group, 
Inc., 111 F.T.C. 522 (consent order) C-3248 (Feb. 24, 1989).
    \139\ See final Rule 316.3(a)(1): ``If an electronic mail 
message consists exclusively of the commercial advertisement or 
promotion of a commercial product or service, then the `primary 
purpose' of the message shall be deemed to be commercial.''
---------------------------------------------------------------------------

a. Alternate Approaches Suggested by Commenters
    A handful of alternative proposals were suggested by commenters. 
MBNA suggested framing the test in terms of when messages are non-
commercial and non-transactional/relationship rather than in terms of 
when they are commercial.\140\ Specifically, MBNA recommended that the 
primary purpose of an e-mail message be deemed to be non-commercial if 
the ``other'' (i.e., non-commercial, non-transactional/relationship) 
content is referenced in the subject line, and begins to appear at or 
near the beginning of the message. The test proposed by MBNA includes 
the inverse of the subject line criterion in the proposed Rule, but 
eliminates the net impression criterion in favor of a placement 
standard, such as that used in evaluating e-mail messages containing 
commercial and transactional or relationship content.
---------------------------------------------------------------------------

    \140\ MBNA.
---------------------------------------------------------------------------

    The final Rule determines whether an e-mail message is commercial 
based on a reasonable recipient's interpretation of the subject line, 
and, if necessary, the net impression made by the body of the message. 
Therefore, if the subject line of a dual-purpose message only 
references the ``other'' content included in the message, then the 
recipient could not reasonably interpret the subject line as 
commercial. Rather, a recipient would reasonably view it as ``other.'' 
Substituting the inverse test proposed by MBNA would not materially 
modify this analysis, but rather would add a duplicative criterion for 
determining when a subject line refers to ``other'' content. The 
Commission declines to add this criterion as it is unnecessary.
    The Commission also rejects MBNA's suggestion regarding the use of 
a ``placement only'' test in lieu of the net impression standard. As 
discussed above, the placement criterion is used to evaluate dual-
purpose e-mail messages that involve commercial content and 
transactional or relationship content. An objective test that focuses 
only on placement of the transactional or relationship content at the 
beginning of the message is proper because Congress identified this 
content as being important to consumers.\141\ Based on the record, the 
Commission does not believe the placement standard is appropriate for 
dual-purpose messages that combine commercial content and non-
commercial, non-transactional/relationship content. In this context, an 
objective placement standard would give spammers the ability to easily 
structure even primarily commercial e-mail messages in a way to evade 
CAN-SPAM. For example, if the sender placed paragraphs of random words 
at the beginning of a message, and then followed them with a one-line 
link to a commercial Web site, under a placement analysis, this message 
would not be commercial. However, under the more flexible net 
impression test, a reasonable recipient would likely conclude that the 
primary purpose of the message is commercial. Therefore, the Commission 
continues to believe that the net impression standard will be a more 
effective means of determining the primary purpose of messages that 
contain commercial and ``other'' content, and therefore, declines to 
make the suggested modification.
---------------------------------------------------------------------------

    \141\ Because these senders have a business relationship with 
their recipients, the likelihood of consumer harm is reduced. See 
NPRM, 69 FR at 50096.
---------------------------------------------------------------------------

    Experian suggested making the test conjunctive by joining the 
subject line and net impression criteria clauses with an ``and'' rather 
than an ``or.'' For this type of dual-purpose message to be considered 
commercial under Experian's proposal, a reasonable recipient would need 
to interpret the subject line of an e-mail message as demonstrating 
that a message is commercial and conclude that the primary purpose of 
the body of the message is the commercial advertisement or promotion of 
a commercial product or service. The Commission declines to frame the 
test in this way, because it believes that the subject line is of 
independent importance to recipients as they review the e-mail they 
receive. As noted in the NPRM, recipients rely upon the content of the 
subject line in determining whether to open and read a message, or 
delete it.\142\ Therefore, the final Rule retains the two-part test for 
evaluating the primary purpose of e-mail messages containing both 
commercial and ``other'' content.
---------------------------------------------------------------------------

    \142\ NPRM, 69 FR at 50095.
---------------------------------------------------------------------------

4. Criteria for E-mail Messages Containing Only Transactional or 
Relationship Content
    As discussed in detail above, the proposed Rule included a 
provision addressing how to determine the primary purpose of an e-mail 
message that contains only commercial content, as well as provisions 
dealing with two types of dual purpose messages: (1) Those containing 
commercial plus transactional or relationship content, and (2) those 
containing commercial plus ``other,'' non-transactional or relationship 
content.\143\ The proposed Rule, however, did not include a provision 
addressing how an e-mail message containing only transactional or 
relationship content would be treated under the Rule.
---------------------------------------------------------------------------

    \143\ See proposed Rule sections 316.3(a)(1) (commercial only); 
316.3(a)(2) (commercial plus transactional or relationship) and 
316.3(a)(3) (commercial plus ``other,'' non-transactional or 
relationship).
---------------------------------------------------------------------------

    A small number of commenters raised this omission, and sought 
clarification regarding the treatment of an e-mail message that 
contains only transactional or relationship content.\144\ In response, 
the final Rule contains an additional provision that focuses 
specifically on those e-mail messages that contain only transactional 
or relationship content. Specifically, section 316.3(b) of the final 
Rule states:
---------------------------------------------------------------------------

    \144\ See, e.g., NetCoalition.

    In applying the term ``transactional or relationship message'' 
defined in the CAN-SPAM Act, 15 U.S.C. 7702(17), the ``primary 
purpose'' of an electronic mail message shall be deemed to be 
transactional or relationship if the electronic mail message 
consists exclusively of transactional or relationship content as set 
---------------------------------------------------------------------------
forth in paragraph (c) of this section.

    By including this provision, the Commission believes at least two 
purposes are served. First, the mandate of the CAN-SPAM Act is carried 
out. The Act requires that the Commission set forth regulations 
defining the criteria by which the primary purpose of an e-mail message 
may be discerned. This ``primary purpose'' language is found in the Act 
in both the definition of ``commercial electronic mail message'' \145\ 
and the definition of ``transactional or relationship message.'' \146\ 
Therefore, for the sake of symmetry, the Commission has included 
parallel provisions in the final Rule that address both purely 
commercial and purely transactional or relationship messages.
---------------------------------------------------------------------------

    \145\ 15 U.S.C. 7702(2).
    \146\ 15 U.S.C. 7702(17).
---------------------------------------------------------------------------

    Secondly, the inclusion of this provision is directly responsive to 
commenters who expressed concern that, without it, certain 
transactional messages could be mis-categorized as commercial under the 
dual purpose test for commercial plus transactional messages.\147\ The 
text of section 316.3(b) of the final Rule clarifies for industry 
members their obligations when sending messages that contain 
exclusively content that falls into one or more of the

[[Page 3124]]

transactional or relationship categories set forth in section 316.3(c) 
of the final Rule. Specifically, such messages are deemed to have a 
primary purpose that is transactional or relationship and, thus, are 
subject to only the Act's prohibition against false or misleading 
transmission information.\148\ The Commission believes that this 
clarification will ease the compliance burden for those senders who 
transmit exclusively transactional or relationship content, and will 
better effectuate the mandate of the Act.
---------------------------------------------------------------------------

    \147\ See, e.g., NetCoalition; NRF.
    \148\ See 15 U.S.C. 7704(a)(1), which applies equally to 
``commercial electronic mail messages'' and ``transactional or 
relationship messages.'' The Act's other requirements and 
prohibitions are targeted at ``commercial electronic mail 
messages.''
---------------------------------------------------------------------------

    Therefore, the final Rule includes section 316.3(b) to ensure that 
messages containing only transactional or relationship content are 
categorized as such.
5. Commenters' Constitutional Challenges to the Commission's Criteria 
Facilitating the Determination of an e-mail Message's Primary Purpose
    Commenters' constitutional arguments addressed two primary aspects 
of CAN-SPAM's regulation of e-mail messages: whether the Act's 
regulation of e-mail is constitutional, and whether the Commission's 
criteria for determining whether the primary purpose of an e-mail 
message is commercial under CAN-SPAM are constitutional.
a. The Constitutionality of CAN-SPAM
    Some commenters claimed that CAN-SPAM cannot withstand First 
Amendment scrutiny.\149\ In Central Hudson Gas & Elec. Corp. v. Pub. 
Serv. Comm'n of New York, 447 U.S. 557 (1980), the Supreme Court 
established the applicable analytical framework for determining the 
constitutionality of a regulation of commercial speech that is not 
misleading and does not otherwise involve illegal activity. Under that 
framework, the regulation: (1) Must serve a substantial governmental 
interest; (2) must directly advance this interest; and (3) is not more 
extensive than necessary to serve the government's interests \150\--
that is, there must be ``a `fit' between the legislative ends and the 
means chosen to accomplish those ends * * * a fit that is not 
necessarily perfect, but reasonable * * * that employs not necessarily 
the least restrictive means but * * * a means narrowly tailored to 
achieve the desired objective.'' \151\ Three commenters argued that 
CAN-SPAM fails to satisfy any part of this test.\152\ These commenters, 
and others, argued that CAN-SPAM must meet the ``strict scrutiny'' 
First Amendment standard.\153\ According to NAA, under that standard, a 
regulation must identify a compelling government interest and must be 
the least restrictive means of satisfying that interest.
---------------------------------------------------------------------------

    \149\ See EFF; MPA; MPAA; NAA; PMA.
    \150\ Central Hudson, 447 U.S. at 566.
    \151\ Bd. of Trs. of State Univ. of N.Y. v. Fox, 492 U.S. 469, 
480 (1989).
    \152\ See MPA; MPAA; NAA.
    \153\ See EFF; MPA; MPAA; NAA; PMA.
---------------------------------------------------------------------------

    CAN-SPAM regulates commercial e-mail messages, and it does not 
regulate non-commercial e-mail.\154\ The proper standard to assess the 
Act's regulation of e-mail, therefore, is Central Hudson's test, not 
strict scrutiny. CAN-SPAM's regulation of commercial e-mail messages 
clearly satisfies the Central Hudson test. First, as explained in 
section 7701 of the Act, CAN-SPAM addresses two substantial government 
interests that the Supreme Court has recognized: it protects 
individuals' privacy,\155\ and it protects individuals from fraudulent 
and deceptive marketing.\156\ In addition, CAN-SPAM advances another 
interest specifically articulated by Congress: it promotes the 
effectiveness of e-mail as a valuable means of communication.\157\ No 
commenter argued that these are not substantial government interests.
---------------------------------------------------------------------------

    \154\ 15 U.S.C. 7701(b).
    \155\ See Rowan v. Post Office Dept., 397 U.S. 728 (1970) (The 
government has a substantial interest in protecting the privacy of 
individuals in their homes.); Frisby v. Schultz, 487 U.S. 474, 485 
(1988) (``Individuals are not required to welcome unwanted speech 
into their own homes and the government may protect this 
freedom.''); see also Mainstream Mktg. Servs. v. FTC, 358 F.3d 1228 
(10th Cir. 2004) (holding that protecting the privacy of individuals 
in their homes and protecting consumers against the risk of 
fraudulent and abusive solicitation are ``undisputedly substantial 
government interests'').
    \156\ See Watchtower Bible and Tract Soc'y v. Village of 
Stratton, 536 U.S. 150 (2002) (noting that precedents establish that 
prevention of fraud, prevention of crime, and protection of 
residents' privacy are important interests that the government may 
seek to safeguard through some form of regulation); Schaumburg v. 
Citizens for Better Env't., 444 U.S. 620, 637 (1980) (protecting the 
public from fraud, crime, and undue annoyance are indeed 
substantial); see also Mainstream, 358 F.3d 1228.
    \157\ Section 7701(a) (1) and (2) of CAN-SPAM states: 
``Electronic mail has become an extremely important and popular 
means of communication, relied on by millions of Americans on a 
daily basis for personal and commercial purposes. Its low cost and 
global reach make it extremely convenient and efficient, and offer 
unique opportunities for the development and growth of frictionless 
commerce. The convenience and efficiency of electronic mail are 
threatened by the extremely rapid growth in the volume of 
unsolicited commercial electronic mail. Unsolicited commercial 
electronic mail is currently estimated to account for over half of 
all electronic mail traffic, up from an estimated 7 percent in 2001, 
and the volume continues to rise. Most of these messages are 
fraudulent or deceptive in one or more respects.'' 15 U.S.C. 
7701(a)(1) and (2).
---------------------------------------------------------------------------

    Second, CAN-SPAM directly advances these substantial government 
interests. CAN-SPAM protects consumers' privacy by allowing individual 
e-mail recipients to choose whether to opt-out of receiving additional 
commercial e-mail messages from any particular sender and by requiring 
commercial e-mail messages to clearly and conspicuously disclose the 
opt-out mechanism. CAN-SPAM protects consumers from fraudulent or 
deceptive e-mail marketing by prohibiting false, misleading, or 
deceptive transmission or subject line information. In addition, CAN-
SPAM advances the governmental interest in promoting e-mail as a 
communication tool by allowing individual recipients to opt-out of 
future unwanted commercial messages, thus reducing the likelihood that 
wanted electronic mail messages ``will be lost, overlooked, or 
discarded amidst the larger volume of unwanted messages.'' \158\
---------------------------------------------------------------------------

    \158\ 15 U.S.C. 7701(a)(4).
---------------------------------------------------------------------------

    Third, CAN-SPAM is not more extensive than necessary to serve the 
government's interests.\159\ ``The Government is not required to employ 
the least restrictive means conceivable, but it must demonstrate narrow 
tailoring of the challenged regulation to the asserted interest--`a fit 
that is not necessarily perfect, but reasonable; that represents not 
necessarily the single best disposition but one whose scope is in 
proportion to the interest served.' '' \160\ The Act protects 
consumers' privacy by giving e-mail recipients the chance to opt-out of 
future commercial e-mail messages from a particular sender; CAN-SPAM 
does not give this control to the government, and it does not prohibit 
any marketer from sending a commercial e-mail message to any recipient 
until a recipient submits an opt-out request. CAN-SPAM protects 
consumers from fraud and deception by prohibiting misleading 
transmission information and subject lines, and by requiring disclosure 
that the message is an advertisement and disclosure of the sender's 
address. CAN-SPAM promotes e-mail as a communications tool by allowing 
recipients to stop unwanted commercial messages one sender at a time. 
No commenter argued that the fit between these measures and these 
interests is unreasonable. Thus, CAN-SPAM's regulation of commercial e-
mail

[[Page 3125]]

messages satisfies Central Hudson's test for regulations addressing 
commercial speech.
---------------------------------------------------------------------------

    \159\ See Central Hudson, 447 U.S. at 566.
    \160\ Greater New Orleans Broadcasting Assoc., Inc. v. United 
States, 527 U.S. 173, 188 (1999) (quoting Bd. of Trs. of State Univ. 
of N.Y., 492 U.S. at 480).
---------------------------------------------------------------------------

b. The Constitutionality of the Commission's Criteria
    Commenters responding to the Commission's proposed criteria in the 
NPRM also argued that the Commission's criteria--as opposed to the Act 
itself--were unconstitutional.\161\ These commenters claimed that the 
criteria would improperly subject non-commercial speech within e-mail 
messages to CAN-SPAM's regulation of commercial e-mail messages. These 
commenters--mostly representing periodical publishers--typically 
requested a blanket exemption from CAN-SPAM for all bona fide 
newsletters and other periodicals delivered via e-mail.\162\ The 
Commission believes that the final Rule's criteria facilitating the 
determination of an e-mail message's primary purpose likely serve to 
exclude bona fide newsletters and other such publications from 
regulation as commercial e-mail messages. Therefore, the Commission 
declines to create a special blanket exemption for any particular group 
of e-mail messages.
---------------------------------------------------------------------------

    \161\ See Courthouse; EFF; MPAA; NAA.
    \162\ See Courthouse; MPA; NAA.
---------------------------------------------------------------------------

    The Supreme Court has articulated its understanding of what 
constitutes commercial speech in various ways in various decisions. For 
example, the speech at issue in Bolger v. Youngs Drug Products 
Corp.,\163\ was deemed commercial where the speech was conceded to be 
an advertisement, the speech referred to a particular product, and the 
speaker had an economic motive. In Virginia State Board of Pharmacy v. 
Virginia Citizens Consumer Council, Inc.,\164\ the speech at issue was 
deemed commercial because it did no more than propose a commercial 
transaction. The Commission believes that the concept embodied in 
section 7702(2) of CAN-SPAM and incorporated in the final Rule's 
``primary purpose'' provisions is consistent with the general 
principles underlying these precedents. At any rate, the Commission 
wishes to emphasize in the strongest possible terms that it does not 
intend for the criteria it is adopting to result in the regulation of 
non-commercial speech as commercial e-mail under the CAN-SPAM 
regulatory scheme. To make this intention as express and as clear as 
possible, the Commission has added the following as footnote 1 in 
section 316.3(a) of the final Rule: ``The Commission does not intend 
for these criteria to treat as a `commercial electronic mail message' 
anything that is not commercial speech.'' The Commission intends that 
the rules it adopts under CAN-SPAM be consistent both with Congress's 
intent regarding the scope of the Act, and with applicable First 
Amendment decisions.\165\
---------------------------------------------------------------------------

    \163\ 463 U.S. 60 (1983).
    \164\ 425 U.S. 748 (1976).
    \165\ There are several statements in the legislative history 
expressing the intentions of members of Congress that CAN-SPAM not 
encroach on transactional or relationship e-mail communications, or 
on fully-protected non-commercial speech. For example, Senator Wyden 
expressed his intent that CAN-SPAM not interfere ``with a company's 
ability to use e-mail to inform customers of warranty information, 
provide account holders with monthly account statements, and so 
forth.'' 149 Cong. Rec. S5208 (Apr. 10, 2003). Similarly, 
Representative Sensenbrenner stated that ``the legislation concerns 
only commercial and sexually explicit e-mail and is not intended to 
intrude on the burgeoning use of e-mail to communicate for 
political, news, personal and charitable purposes.'' 149 Cong. Rec. 
H12193 (Nov. 21, 2003).
---------------------------------------------------------------------------

    As it developed its ``primary purpose'' criteria, the Commission 
was mindful of judicial holdings governing the regulation of 
periodicals. As set forth above,\166\ one criterion for assessing 
messages containing both commercial content and content that is neither 
commercial nor transactional or relationship (e.g., unsolicited 
periodicals) is whether a recipient reasonably interpreting the message 
would likely conclude that the message's primary purpose is commercial. 
That standard must be evaluated against relevant precedent. Two cases 
cited by commenters offer useful guidance.\167\ In Hays County Guardian 
v. Supple,\168\ the court held that a newspaper was not commercial 
speech even when it included advertising matter because it also 
contained matters of highest public concern. In Ad World, Inc. v. 
Township of Doylestown,\169\ the court held that the line between 
commercial and non-commercial speech for First Amendment purposes 
cannot be drawn by some magic ratio of editorial to advertising 
content. The Commission does not intend for its ``net impression'' 
standard for determining the primary purpose of e-mail messages 
containing both commercial content and content that is neither 
commercial nor transactional or relationship to treat bona fide 
newsletters and other periodicals as commercial e-mail messages. On the 
other hand, the Commission cannot, as some commenters insisted, grant a 
blanket exemption to all messages that are ``bona fide newsletters.'' 
As the Commission noted in the NPRM, one of its concerns in this 
proceeding has been that ``spammers not be able to structure their 
messages to evade CAN-SPAM by placing them outside the technical 
definition of `commercial electronic mail message.' A typical example 
is a hypothetical message, unrequested by the recipient, that begins 
with a Shakespearean sonnet (or paragraphs of random words) and 
concludes with a one-line link to commercial Web site.'' \170\ As the 
Commission noted, a recipient of such a message could reasonably 
conclude that the message's primary purpose is commercial.\171\
---------------------------------------------------------------------------

    \166\ Part II C 3 of this Statement of Basis and Purpose.
    \167\ See MPA; NAA.
    \168\ 969 F.2d 111 (5th Cir. 1992).
    \169\ 672 F.2d 1136 (3rd Cir. 1982).
    \170\ 69 FR at 50101 (Aug. 13, 2004).
    \171\ Id.
---------------------------------------------------------------------------

    Commenters advocating a bona fide newsletter exemption offered no 
adequate explanation of how such an exemption could be limited. Most 
importantly, they failed to explain how CAN-SPAM could continue to 
treat as ``commercial'' the ``Shakespearean sonnet'' spam (unsolicited 
messages coupling informational content--such as a Shakespearean 
sonnet, aphorisms, or random words and phrases--with a sales pitch). To 
preserve the protections against unwanted commercial speech that CAN-
SPAM grants, the Commission has determined to subject all messages 
containing commercial content and content that is neither commercial 
nor transactional or relationship to the same standard.

D. Section 316.4--Sexually Explicit Labeling Rule

    This provision of the final Rule is retained from the proposed 
Rule. Section 316.4 of the proposed Rule included the Sexually Explicit 
Labeling Rule. In the August 13, 2004, NPRM, the only change proposed 
to the Sexually Explicit Labeling Rule was to renumber it as section 
316.4. The Sexually Explicit Labeling rule was originally numbered 
section 316.1 when it was promulgated on April 19, 2004. The Commission 
requested comment on this proposed change and did not receive any 
responsive comments.

E. Section 316.5--Severability

    This provision of the final Rule is retained from the proposed 
Rule. The Commission did not receive any comment on this provision in 
response to the NPRM. This provision, which is identical to the 
analogous provision included in the Sexually Explicit Labeling Rule, 
provides that if any portion of the final Rule is found invalid, the 
remaining portions will

[[Page 3126]]

survive. This provision pertains to the entirety of the final Rule.

III. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, 44 U.S.C. 
3506 (``PRA''), the Commission reviewed the proposed and final Rule. 
The Rule does not impose any recordkeeping, reporting, or disclosure 
requirements, nor does it otherwise constitute a ``collection of 
information'' as defined in the regulations implementing the PRA.\172\
---------------------------------------------------------------------------

    \172\ See 5 CFR 1320.3(c).
---------------------------------------------------------------------------

IV. Regulatory Flexibility Act

    The NPRM included an initial regulatory flexibility analysis 
(``IRFA'') under the Regulatory Flexibility Act (``RFA''),\173\ even 
though the Commission did not expect that the proposed Rule would have 
a significant economic impact on a substantial number of small 
entities. In addition, the Commission invited public comment on the 
proposed Rule's effect on small entities to ensure that no significant 
impact would be overlooked.\174\
---------------------------------------------------------------------------

    \173\ 5 U.S.C. 601-612.
    \174\ NPRM, 69 FR at 50103-04.
---------------------------------------------------------------------------

    This Final Regulatory Flexibility Analysis (``FRFA'') incorporates 
the Commission's initial findings, as set forth in the August 13, 2004, 
NPRM; addresses the comments submitted in response to the IRFA notice; 
and describes the steps the Commission has taken in the final Rule to 
minimize its impact on small entities consistent with the objectives of 
the CAN-SPAM Act.

A. Succinct Statement of the Need for, and Objectives of, the Final 
Rule

    The final Rule was created pursuant to the requirement imposed by 
the Controlling the Assault of Non-Solicited Pornography and Marketing 
Act of 2003 (``CAN-SPAM'' or ``the Act'') that the Commission, not 
later than 12 months after December 16, 2003, ``issue regulations 
pursuant to section 7711 [of the Act] defining the relevant criteria to 
facilitate the determination of the primary purpose of an electronic 
mail message.''

B. Summary of Significant Issues Raised by the Public Comments in 
Response to the IRFA

    In the IRFA, the Commission sought comment regarding the impact of 
the proposed Rule and any alternatives the Commission should consider, 
with a specific focus on the effect of the Rule on small entities. The 
public comments on the proposed Rule are discussed above throughout the 
Statement of Basis and Purpose, as are the minor changes that have been 
made in the final Rule. After reviewing the comments, including the 
very small number that specifically addressed the impact of the Rule on 
small entities, the Commission does not believe that the final Rule 
will unduly burden the entities who send commercial electronic mail 
messages or transactional or relationship mail messages.\175\
---------------------------------------------------------------------------

    \175\ The Commission received only a half-dozen comments 
responding to the questions posed in the proposed Rule regarding the 
impact of the Rule on small entities. See ACLI; Schwartz; State 
Farm; Adknowledge; Mattathil. The thrust of the comments is that the 
Commission should take care not to impose burdens on legitimate 
sellers, but rather should focus on reining in senders of bulk 
unsolicited e-mail messages. None addressed with specificity the 
harms that would accrue from the Commission's proposed criteria for 
determining the primary purpose of a commercial e-mail message.
---------------------------------------------------------------------------

C. Explanation as to Why No Estimate Is Available Regarding the Number 
of Small Entities to Which the Final Rule Will Apply

    Determining a precise estimate of the number of small entities 
subject to the proposed Rule, or describing those entities, is not 
readily feasible for two reasons. First, there is insufficient publicly 
available data to determine the number and type of small entities 
currently using e-mail in any commercial setting. As noted in the IRFA, 
the Rule will apply to `` `senders' of `commercial electronic mail 
messages,' and, to a lesser extent, to `senders' of `transactional or 
relationship messages.' '' \176\ Thus, regardless of size, any entity 
that sends commercial e-mail messages containing the commercial 
advertisement or promotion of a commercial product or service,\177\ or 
transactional or relationship messages meeting one of the specific 
categories set forth in the Rule for e-mail messages sent to recipients 
with whom a sender has a prior relationship,\178\ will be subject to 
the Rule. In the IRFA, the Commission set forth the few sources of data 
publicly available to approximate the number of entities that send 
commercial e-mail messages or transactional or relationship messages, 
noting that ``[g]iven the paucity of data concerning the number of 
small businesses that send commercial e-mail messages or transactional 
or relationship messages, it is not possible to determine precisely how 
many small businesses would be subject to the proposed Rule.'' \179\ 
None of the comments provided information regarding the number of 
entities of any size that will be subject to the Rule.
---------------------------------------------------------------------------

    \176\ NPRM, 69 FR at 50103 (explaining that the CAN-SPAM Act's 
structure and definitions were imported into the proposed Rule.)
    \177\ Final Rule, 316.2(c) (definition of ``commercial 
electronic mail message'') and 316.3 (setting forth the criteria by 
which the primary purpose of an e-mail message is determined).
    \178\ Final Rule, 316.2(n) (definition of ``transactional or 
relationship message'') and 316.3 (setting forth the criteria by 
which the primary purpose of an e-mail message is determined).
    \179\ NPRM, 69 FR at 50104.
---------------------------------------------------------------------------

    The second reason that determining a precise estimate of the number 
of small entities subject to the proposed Rule is not readily feasible 
is that the assessment of whether the primary purpose of an e-mail 
message is ``commercial,'' ``transactional or relationship,'' or 
``other'' turns on a number of factors that will require factual 
analysis on a case-by-case basis. Thus, even if the number of entities 
who use e-mail in commercial dealings were known, the extent to which 
the messages they send will be regulated by the Rule depends upon the 
primary purpose of such messages, a determination which cannot be made 
absent factual analysis.

D. Description of the Projected Reporting, Recordkeeping, and Other 
Compliance Requirements of the Final Rule, Including an Estimate of the 
Classes of Small Entities That Will Be Subject to the Requirements of 
the Final Rule and the Type of Professional Skills That Will Be 
Necessary To Implement the Final Rule

    The final Rule sets forth the criteria for determining the primary 
purpose of a commercial e-mail message and, thus, does not itself 
impose any reporting, recordkeeping, or other compliance requirements 
within the meaning of the Paperwork Reduction Act. Indeed, because the 
final Rule imposes no substantive requirements, it is unlikely to 
impose any costs whatsoever. Any costs attributable to CAN-SPAM are the 
result of the substantive requirements of the Act itself--such as the 
requirement that commercial e-mail messages include an opt-out 
mechanism and certain disclosures--not the Commission's interpretive 
final Rule. While one commenter expressed concerns about the additional 
costs that may be associated with implementing the requirements of the 
Rule,\180\ the commenter did not provide specific justification or data 
to support such a concern. Thus, the Commission continues to believe 
that the requirements of the Rule will not create a significant burden 
on persons or entities, including small entities, who initiate 
commercial e-mail messages or transactional or relationship messages.

[[Page 3127]]

The Rule sets forth criteria by which the primary purpose of an e-mail 
message is determined. The Commission has not received any comments 
that necessitate modifying its previous views of projected compliance 
requirements or costs.
---------------------------------------------------------------------------

    \180\ Schwartz.
---------------------------------------------------------------------------

E. Discussion of Significant Alternatives the Commission Considered 
That Would Accomplish the Stated Objectives of the CAN-SPAM Act and 
That Would Minimize Any Significant Economic Impact of the Final Rule 
on Small Entities

    Through the NPRM, the Commission sought to gather information 
regarding the economic impact of CAN-SPAM's requirements on all 
businesses, including small entities. The Commission requested public 
comment on whether the proposed Rule would unduly burden either 
entities who use e-mail to send messages defined as ``commercial'' or 
``transactional or relationship'' messages under the Act and the FTC's 
CAN-SPAM Rule; whether this burden is justified by offsetting benefits 
to consumers; what effect the Rule will have on small entities that 
initiate messages the primary purpose of which is commercial or 
transactional or relationship; what costs will be incurred by small 
entities to ``implement and comply'' with the Rule; and whether there 
are ways the Rule could be modified to reduce the costs or burdens for 
small entities while still being consistent with the requirements of 
the Act.\181\ This information was requested by the Commission in an 
attempt to minimize the final Rule's burden on all businesses, 
including small entities.
---------------------------------------------------------------------------

    \181\ NPRM, 69 FR at 50103-50105.
---------------------------------------------------------------------------

    As explained earlier in the statement of basis and purpose, the 
Commission has considered the comments and alternatives proposed by 
such commenters, and continues to believe that the final Rule will not 
create a significant economic impact on small entities or others who 
send or initiate commercial e-mail messages or transactional or 
relationship messages. The criteria adopted in the final Rule for 
determining the primary purpose of a commercial e-mail message reflect 
the Act's express requirements, which the Commission has no authority 
to waive, as well as its determination that these criteria entail a 
reasonable and relatively minimal compliance burden, when balanced 
against the offsetting benefit of allowing e-mail recipients to choose 
to limit further unwanted commercial electronic mail messages from 
particular senders. The Commission has not received any comments that 
lead it to believe that the final Rule will unduly burden either the 
entities who sell, or those consumers who purchase, commercial products 
and services through e-mail messages.

List of Subjects in 16 CFR Part 316

    Advertising, Business and industry, Computer technology, Consumer 
protection, Labeling.


0
Accordingly, for the reasons set forth in the preamble above, the 
Commission amends title 16, Chapter I, Code of Federal Regulations, by 
revising part 316 to read as follows:

PART 316--RULES IMPLEMENTING THE CAN-SPAM ACT OF 2003

Sec.
316.1 Scope.
316.2 Definitions.
316.3 Primary purpose.
316.4 Requirement to place warning labels on commercial electronic 
mail that contains sexually oriented material.
316.5 Severability.

    Authority: 15 U.S.C. 7701-7713.


Sec.  316.1  Scope.

    This part implements the Controlling the Assault of Non-Solicited 
Pornography and Marketing Act of 2003 (``CAN-SPAM Act''), 15 U.S.C. 
7701-7713.


Sec.  316.2  Definitions.

    (a) The definition of the term ``affirmative consent'' is the same 
as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(1).
    (b) ``Character'' means an element of the American Standard Code 
for Information Interchange (``ASCII'') character set.
    (c) The definition of the term ``commercial electronic mail 
message'' is the same as the definition of that term in the CAN-SPAM 
Act, 15 U.S.C. 7702(2).
    (d) The definition of the term ``electronic mail address'' is the 
same as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 
7702(5).
    (e) The definition of the term ``electronic mail message'' is the 
same as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 
7702(6).
    (f) The definition of the term ``initiate'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(9).
    (g) The definition of the term ``Internet'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(10).
    (h) The definition of the term ``procure'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(12).
    (i) The definition of the term ``protected computer'' is the same 
as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(13).
    (j) The definition of the term ``recipient'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(14).
    (k) The definition of the term ``routine conveyance'' is the same 
as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(15).
    (l) The definition of the term ``sender'' is the same as the 
definition of that term in the CAN-SPAM Act, 15 U.S.C. 7702(16).
    (m) The definition of the term ``sexually oriented material'' is 
the same as the definition of that term in the CAN-SPAM Act, 15 U.S.C. 
7704(d)(4).
    (n) The definition of the term ``transactional or relationship 
message'' is the same as the definition of that term in the CAN-SPAM 
Act, 15 U.S.C. 7702(17).


Sec.  316.3  Primary purpose.

    (a) In applying the term ``commercial electronic mail message'' 
defined in the CAN-SPAM Act, 15 U.S.C. 7702(2), the ``primary purpose'' 
of an electronic mail message shall be deemed to be commercial based on 
the criteria in paragraphs (a)(1) through (a)(3) and (b) of this 
section: \1\
---------------------------------------------------------------------------

    \1\ The Commission does not intend for these criteria to treat 
as a ``commercial electronic mail message'' anything that is not 
commercial speech.
---------------------------------------------------------------------------

    (1) If an electronic mail message consists exclusively of the 
commercial advertisement or promotion of a commercial product or 
service, then the ``primary purpose'' of the message shall be deemed to 
be commercial.
    (2) If an electronic mail message contains both the commercial 
advertisement or promotion of a commercial product or service as well 
as transactional or relationship content as set forth in paragraph (c) 
of this section, then the ``primary purpose'' of the message shall be 
deemed to be commercial if:
    (i) A recipient reasonably interpreting the subject line of the 
electronic mail message would likely conclude that the message contains 
the commercial advertisement or promotion of a commercial product or 
service; or
    (ii) The electronic mail message's transactional or relationship 
content as set forth in paragraph (c) of this section does not appear, 
in whole or in substantial part, at the beginning of the body of the 
message.
    (3) If an electronic mail message contains both the commercial

[[Page 3128]]

advertisement or promotion of a commercial product or service as well 
as other content that is not transactional or relationship content as 
set forth in paragraph (c) of this section, then the ``primary 
purpose'' of the message shall be deemed to be commercial if:
    (i) A recipient reasonably interpreting the subject line of the 
electronic mail message would likely conclude that the message contains 
the commercial advertisement or promotion of a commercial product or 
service; or
    (ii) A recipient reasonably interpreting the body of the message 
would likely conclude that the primary purpose of the message is the 
commercial advertisement or promotion of a commercial product or 
service. Factors illustrative of those relevant to this interpretation 
include the placement of content that is the commercial advertisement 
or promotion of a commercial product or service, in whole or in 
substantial part, at the beginning of the body of the message; the 
proportion of the message dedicated to such content; and how color, 
graphics, type size, and style are used to highlight commercial 
content.
    (b) In applying the term ``transactional or relationship message'' 
defined in the CAN-SPAM Act, 15 U.S.C. 7702(17), the ``primary 
purpose'' of an electronic mail message shall be deemed to be 
transactional or relationship if the electronic mail message consists 
exclusively of transactional or relationship content as set forth in 
paragraph (c) of this section.
    (c) Transactional or relationship content of e-mail messages under 
the CAN-SPAM Act is content:
    (1) To facilitate, complete, or confirm a commercial transaction 
that the recipient has previously agreed to enter into with the sender;
    (2) To provide warranty information, product recall information, or 
safety or security information with respect to a commercial product or 
service used or purchased by the recipient;
    (3) With respect to a subscription, membership, account, loan, or 
comparable ongoing commercial relationship involving the ongoing 
purchase or use by the recipient of products or services offered by the 
sender, to provide--
    (i) Notification concerning a change in the terms or features;
    (ii) Notification of a change in the recipient's standing or 
status; or
    (iii) At regular periodic intervals, account balance information or 
other type of account statement;
    (4) To provide information directly related to an employment 
relationship or related benefit plan in which the recipient is 
currently involved, participating, or enrolled; or
    (5) To deliver goods or services, including product updates or 
upgrades, that the recipient is entitled to receive under the terms of 
a transaction that the recipient has previously agreed to enter into 
with the sender.


Sec.  316.4  Requirement to place warning labels on commercial 
electronic mail that contains sexually oriented material.

    (a) Any person who initiates, to a protected computer, the 
transmission of a commercial electronic mail message that includes 
sexually oriented material must:
    (1) Exclude sexually oriented materials from the subject heading 
for the electronic mail message and include in the subject heading the 
phrase ``SEXUALLY-EXPLICIT:'' in capital letters as the first nineteen 
(19) characters at the beginning of the subject line; \2\
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    \2\ The phrase ``SEXUALLY-EXPLICIT'' comprises 17 characters, 
including the dash between the two words. The colon (:) and the 
space following the phrase are the 18th and 19th characters.
---------------------------------------------------------------------------

    (2) Provide that the content of the message that is initially 
viewable by the recipient, when the message is opened by any recipient 
and absent any further actions by the recipient, include only the 
following information:
    (i) The phrase ``SEXUALLY-EXPLICIT:'' in a clear and conspicuous 
manner; \3\
---------------------------------------------------------------------------

    \3\ This phrase consists of nineteen (19) characters and is 
identical to the phrase required in section 316.4(a)(1).
---------------------------------------------------------------------------

    (ii) Clear and conspicuous identification that the message is an 
advertisement or solicitation;
    (iii) Clear and conspicuous notice of the opportunity of a 
recipient to decline to receive further commercial electronic mail 
messages from the sender;
    (iv) A functioning return electronic mail address or other 
Internet-based mechanism, clearly and conspicuously displayed, that--
    (A) A recipient may use to submit, in a manner specified in the 
message, a reply electronic mail message or other form of Internet-
based communication requesting not to receive future commercial 
electronic mail messages from that sender at the electronic mail 
address where the message was received; and
    (B) Remains capable of receiving such messages or communications 
for no less than 30 days after the transmission of the original 
message;
    (v) Clear and conspicuous display of a valid physical postal 
address of the sender; and
    (vi) Any needed instructions on how to access, or activate a 
mechanism to access, the sexually oriented material, preceded by a 
clear and conspicuous statement that to avoid viewing the sexually 
oriented material, a recipient should delete the e-mail message without 
following such instructions.
    (b) Prior affirmative consent. Paragraph (a) of this section does 
not apply to the transmission of an electronic mail message if the 
recipient has given prior affirmative consent to receipt of the 
message.


Sec.  316.5  Severability.

    The provisions of this part are separate and severable from one 
another. If any provision is stayed or determined to be invalid, it is 
the Commission's intention that the remaining provisions shall continue 
in effect.

    By direction of the Commission, Commissioner Leibowitz not 
participating.
Donald S. Clark,
Secretary.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.



List of Commenters and Acronyms--August 13, 2004 CAN-SPAM NPRM

AAM--American Association of Museums
AAMFT--American Association for Marriage and Family Therapy
ABM--American Business Media
ACA--ACA International
ACB--America's Community Bankers
ACLI--American Council of Life Insurers
Adknowledge--Adknowledge, Inc.
Administrative--Administrative Systems, Inc.
AE--Association Enterprise, Inc.
AeA--AEA--American Electronics Association
AFP--Association of Fundraising Professionals
AGSES--Association of Girl Scout Executives Staff
AHQI--Association Headquarters, Inc.
AIA--American Insurance Association
Almeida--Almeida, E
AMP--AMP Management Services
AMR--AMR
AMS--Alternative Management Solutions, Inc.
Amri--Amri, Joyce
Anast--Anast, Dave
AMGR--Association Management Resources
ASAE--American Society of Association Executives
ASM--Association & Society Management, Inc.
ASMI--Association and Society Management International, Inc.
Assoc-SG--Association Services Group
Assoc-Mgmt--Association Management Specialists
Associations--Group of Associations
Bahn--Bahn, William
Baker--Baker & Hostetler LLP
BofA--Bank of America Corporation
Beneteau--Beneteau, Rick
Bihl--Bihl, Thomas

[[Page 3129]]

Blake--Blake, Tammy
BLF--BLF Management
BMI--Broadcast Music, Inc.
Boock--Boock, Jeff
Brenner--Brenner, Mary Jane
Bronkema--Bronkema, Dawn
Cantrall--Cantrall & Associates
Cap--Cap, Eric
CASRO--Council of American Survey Research Organizations
CBA--Consumer Bankers Association
CIPL--Center For Information Policy Leadership
Clarion--Management Clarion Resources
Cleaver--Cleaver, Jack
CMOR--Council for Marketing and Opinion Research
Colman--Colman, Heather
Comerica--Comerica Incorporated
Cook--Cook, Jim
Courthouse--Courthouse News Service
Cullom--Cullom, Randy
CUNA--CUNA & Affiliates
Declined--declined4privacy
Dickert--Dickert, Don
Dietetic--American Dietetic Association
DiMarzo--DiMarzo, James
DMA--Direct Marketing Association, Inc.
DMA-NF--DMA Nonprofit Federation
Donahue--Donahue
Dotson--Dotson, Lloyd
DoubleClick--DoubleClick Inc.
Dunham--Dunham, David
Easter--Easter Associates, Inc.
Edge--Edge, Ronald D
EDI--Executive Director Incorporated
EFF--Electronic Frontier Foundation
Elliott--Elliott, LuAnn
Y. Elliott--Elliott, Yank
ECFCU--Empire Corporate Federal Credit Union
Entomological--Entomological Society of America
ERA--Electronic Retailing Association
ESPC--e-mail Service Provider Coalition
Evans--Evans, Neal
Experian--Experian Marketing Solutions
Fenlason--Fenlason, James
Fernley--Fernley & Fernley
Figg--Figg
Fraser--Fraser
French--French, Walt
Friesen--Friesen, Ruth Marlene
Frontline--Frontline Public Strategies Inc.
Frost--Frost, William
Fuller--Fuller, David
Gasser--Gasser, Charles
Geer--Geer, David
Goff--Goff, Cheryl
Harrington--Harrington Company
Harte--Harte-Hanks, Inc.
Hatcher--Hatcher, Clarence
Heywood--Heywood, Pamela
Hopkins--Hopkins, Richard
Hudson--Hudson, Ed
IAAMC--International Association of Association Management Companies
ICC--Internet Commerce Coalition
ICOP--International Council of Online Professionals
Incentive--Incentive Federation, Inc.
Independent--Independent Sector
Internomics--Internomics, Inc.
ITAA--Information Technology Association of America
Jack--Jack, James
JMP--JMP Productions
Johnson--Johnson, David
Katz--Katz, Max
Kellen--Kellen Company
Kemp--Kemp, Steven
Kempner--Kempner
Kershner--Kershner, Richard
KeySpan--KeySpan Energy Delivery New York and KeySpan Energy 
Delivery Long Island
Krueger--Krueger, Jan
Krzyzak--Krzyzak
Lathrop--Lathrop, Paul
Lee--Lee, Paul
Macfarlane--Macfarlane, Jaye
MPA--Magazine Publishers of America
Major--Major, Harmony
MAM--Milti-Association Management
MasterCard--MasterCard International
Mattathil--Mattathil, George
Mattice--Mattice, Charles
MaxPatch--MaxPatch Services Inc.
MBA--Mortgage Bankers Association
MBNA--MBNA America Bank, N.A.
Melson--Melson, Dianna
Merlby--Merlby, Cameron & Hull
Midway--Midway Publishing, Inc.
Montgomery--Montgomery, Marvin
MPAA--Motion Picture Association of America
Mullins--Mullins
MultiService--MultiService Management Company
Murray--Murray, Russell
NAA--Newspaper Association of America
NADA--National Automobile Dealers Association
NAEDA--North American Equipment Dealers Association
NAEMSP--National Association of EMS Physicians
NAR--National Association of Realtors
NATCO--Organization for Transplant Professionals (North American 
Transplant Coordinators Organization)
NatureLiving--NatureLiving Company
NBC--National Business Coalition On E-Commerce And Privacy
NCA--National Club Association
NCL--National Consumers League
Nelson--Nelson, Ralph
NetCoalition--NetCoalition
Nevins--Nevins, Jeri
NFCU--Navy Federal Credit Union
NNA--National Newspaper Association
NonProfit--NonProfit Team, Inc.
NRF--National Retail Federation
OEI--OEI
Parker--Parker, Cynthia
Payton--Payton, Marianne
PCUA--Pennsylvania Credit Union Association
Peters--Peters, James
PMA--Promotion Marketing Association
Pollock--Pollock, Duncan
Porter--Porter
Proctor--Proctor, Colleen
Quattromani--Quattromani, Renee
Reardon--Reardon, Dale
Recognition--National Association for Employee Recognition
Reed--Reed Elsevier Inc.
REM--REM Association Services
Resource--Resource Center for Associations
Ressler--Ressler, Ronald
Richard--Richard
Ringin--Ringin, Robert
Robbins--Robbins
Robson--Robson, Joe
Robstan--Robstan Group, Inc.
Rossbauer--Rossbauer, Richard
Roth--Roth, Martin
Rothman--Rothman, Andrew
Russell--Russell, Karin
Ryall--Ryall, Carol
Rygiol--Rygiol, John
Satchell--Satchell, Stephen
Schomaker--Schomaker
Schwartz--Schwartz & Ballen LLP
Shepperd--Shepperd, Steven
Sheridan--Sheridan, Mary
Shickle--Shickle, Don
Shiny--Shiny Apple Inc.
SIA--Securities Industry Association
SIIA--SIIA--Software & Information Industry Association
Silkensen--Silkensen, James
Smith--Smith, Mark
Solutions--Solutions for Associations, Inc.
Spriet--Spriet, Dennis
Sprint--Sprint Corporation
State Farm--State Farm Mutual Automobile Insurance Company
T-Team--T-Team Management
Talley--Talley Management Group, Inc.
THM--THMgmt, Inc.
Time Warner--Time Warner, Inc.
Tincher--Tincher
Triad--Triad Apartment Association
Truste--TRUSTe
Turner--Turner, Carsten
R. Turner--Turner, Russell
VCU--Virginia Credit Union, Inc.
Verizon--Verizon
Visa--Visa USA Inc.
Wachovia--Wachovia Corporation
Wanner--Wanner Associates
Watts--Watts
Wells Fargo--Wells Fargo & Company
Wemett--Wemett, Thomas
Westlake--Westlake, Randy
Weston--Weston, Rex
White--White, Mary
Yermish--Yermish, Aimee
Zeni--Zeni, Craig

[FR Doc. 05-974 Filed 1-18-05; 8:45 am]
BILLING CODE 6750-01-P