There’s a good financial reason that businesses are increasingly focusing on email marketing: according to a study by Pingdom, a well executed email marketing campaign returns just over $44 for every dollar a company invests. Simply buying an email list and firing off thousands of emails, however, will likely land you in legal trouble. So before launching your first email marketing campaign, you should be familiar with the three following U.S. laws that each apply to different aspects of email marketing.
1) CAN-SPAM: Requiring Sender Disclosure
The CAN-SPAM Act is the most on-point law relating to email marketing in the U.S. Enacted in 2003, the purpose was to reduce junk mail primarily by creating disclosure requirements on the part of the sender, and rules governing how your contact list can be created.
Some of CAN-SPAM’s requirements are that commercial emails must affirmatively disclose that the email is an advertisement, have a non-misleading email header, the sender must list a valid postal address in the email, and must have an obvious and functioning unsubscribe option. And with respect to how email addresses are collected, the law requires that they cannot use software to scrape them from websites.
Enforcement: The Federal Trade Commission is governmental organization tasked with enforcing this law. While it has been successful in reducing spam sent by U.S. companies, there is still so much spam sent everyday that the FTC is unable to pursue most complaints, and so they typically only pursue very high volume or high profile violators. When they do prosecute a violator, the penalties can be staggering, up to $16,000 per violating email.
2) FTC: Rules Governing Discount Offers
Most effective email marketing campaigns include a discounted or free product offer. When doing so, however, it’s important to know that you’ll need to comply with the Federal Trade Commission’s rules on deceptive advertising specifically as they apply to free or discounted offers. The FTC requires that discounted or free offers be “special and meaningful” which in laymans terms means that it needs to be a real discount and it needs to be temporary. Specifically, if you’re going to offer something at a discounted rate or as a freebie, you can’t do so for more than six months, without taking a thirty day break in which you offer the product at full price.
Enforcement: As with CAN-SPAM, the enforcement of this law is by the government itself. The FTC has limited resources so in general they wait for cases to be brought to their attention by the public. When they do decide to take action, however, they do so swiftly, and punishments can be severe.
3) Lanham Act: The Private Cause of Action
The Lanham Act dates back to 1946, and is the primary US law regulating all false or misleading advertising, including email marketing, that let’s non-governmental organizations sue for misleading advertising.
The Lanham Act is a US law that, at least in theory, prevents companies from making outright lies in their marketing campaigns. But if you’ve noticed all of the “Lose 30 pounds in a week!” types of campaigns, which are obviously false, you know that it’s not very aggressively enforced.
Enforcement: The reason, is that to be able to bring a lawsuit under the Lanham Act, you can’t just be a customer as you might think logical, but rather you must be a (a) competitor, suing about an ad in a (b) commercial setting, that contains a (c) false or misleading statement, description or representation, and the misleading portion of the ad must be (d) material to a client’s buying decision-making.
Thus, digital advertising that is otherwise compliant with other laws but is blatantly misleading, probably won’t be stopped because the likelihood of a competitor spending their time, energy, and money to bring a lawsuit against your organization isn’t likely.
Email marketing can be one of the most cost-effective forms of advertising for companies to engage in. It is important, however, that you ensure that your email campaigns comply with the applicable U.S. laws. As a general rule, if your emails are sent to willing recipients, transparent as to who they are from, and the offers are honestly made you will be off to a good start.
Originally published Jul 16, 2015, updated Jul 20, 2021