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Legal Review: Appellate Court Ruling Changes Game for E-mail Campaigns

1 May, 2012 By: Jeffrey D. Knowles, Venable LLP’s Advertising, Ari N. Rothman Response

Knowles_RothmanA recent California appellate court decision, Balsom v. Trancos, has serious implications for companies — and their service providers — using commercial E-mail to market products and services. The ruling requires that commercial E-mails sent from or received in California must contain in the “from” line a domain name that is registered to the sender that can be determined by performing a WHOIS look-up, or the name of the sender or marketer on whose behalf the E-mail was sent.

Therefore, direct marketers — and the companies they hire, including affiliate networks — can no longer send commercial E-mail that contains both a generic “from” line and is sent from a proxy/privately registered domain name. Direct marketers nationwide must take immediate action to ensure compliance with this latest development in anti-SPAM law, including implementing oversight and monitoring programs of the companies they hire to drive sales using commercial E-mail.

California Anti-Spam Statute Mirrors CAN-SPAM

A section of the California Business and Professions (B&P) Code prohibits commercial E-mail that “contains or is accompanied by falsified, misrepresented, or forged header information.” This section is substantially similar to a section of the federal CAN-SPAM law, prohibiting commercial E-mail “that contains, or is accompanied by, header information that is materially false or materially misleading.”

The plaintiff in Trancos sued an E-mail marketer under this section of the California B&P Code for sending commercial E-mail advertisements on behalf of marketers that hired the E-mail marketer. Before sending the E-mails, the E-mail marketer privately registered the domains it used to send the E-mails with a proxy service.

The proxy service, in turn, displayed the proxy service’s contact information on the domain name registration records instead of the E-mail marketer’s contact information. That way, according to the plaintiff, a recipient seeking to determine who sent the E-mails could not determine the sender because a WHOIS look-up (a publicly available service that allows users to determine persons associated with domain names) would reveal the proxy service’s contact information and not that of the E-mail marketer. The plaintiff alleged that the E-mails and the “from” lines were false and deceptive because they used generic phrases that did not identify the sender or the marketer.

The trial court found that all but one of the E-mails violated the section of the B&P Code in question because the sending domains and “from” names failed to adequately identify the sender.

Appellate Court Confirms Initial Decision

The appellate court affirmed the trial court’s decision in all respects. Applying CAN-SPAM’s definition of header information and noting CAN-SPAM’s parallel provision to the section of California’s B&P Code, the court agreed that, “The senders’ domain names in the E-mails did not represent a real company and could not be readily traced back to Trancos, the owner of the domain names and true sender of the E-mails, constituted falsification or misrepresentation for purposes of the statute.”

The Court also held, “Where, as in this case, the commercial E-mailer intentionally uses privately registered domain names in its headers that neither disclose the true sender’s identity on their face nor permit the recipient to readily identify the sender … such header information is deceptive and does constitute a falsification or misrepresentation of the sender’s identity.” Likewise, “from” lines that “misrepresented the sender’s identity” were found unlawful.

Fallout From the Decision

The Trancos decision’s greatest impact is that each commercial E-mail advertisement must have, in the “from” line, either a domain name registered to the sender which can be determined by performing a WHOIS look-up, or the name of the sender or marketer on whose behalf the E-mail was sent. Direct marketers nationwide using companies to send commercial E-mail advertisements should now revise and update their E-mail protocols, and ensure their service providers are compliant with this latest development.

About the Author: Jeffrey D. Knowles

Jeffrey D. Knowles

About the Author: Ari N. Rothman

Ari N. Rothman

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