On July 1, 2014 Canadian & US brands with Canadian customers will be required to comply with a revised set of digital communication laws which have been created to stop spam related communications which have become increasing abrasive. Previously known as Bill C-28, the Canadian Anti-Spam Legislation (CASL) advances the previous regulations and requires strict adherence to both opt-in and opt-out protocols, as well as minimum of standards of transparency about the sender of the message and its nature, for all digital channels. For the purpose of this blog we will be focusing on CASL as it pertains to customer referral programs which have a specific set of requirements based on the nature of their communications.
To understand the regulations as they pertain to referral programs we must first define what a customer referral program is and how it operates. A customer referral program is an initiative designed by brands to reward existing customers to recommend their product or services to trusted relationships. Programs vary drastically in design, but the basic premise is that customers are provided with set channels in which they can make referrals; e-mails, social network sites, SMS text messages, paper forms and verbal or in-person referrals are all common channels used in referral programs. Sophisticated referral programs have mechanisms for tracking referrals; however, all programs will aim to connect the referral of a customer to a purchase being made by a new customer so that rewards can be issued.
“Opt-out” protocols built into digital channels have been a staple in the marketing tool kit of best practices for many years. The basic idea of having the ability to opt-out is that the recipient may not want to receive communications any longer, or had never signed up to receive them in the first place. CASL aims to eliminate the latter scenario by requiring all recipients of commercial electronic messages sent by brands to have previously opted-in to receiving them. Referral programs were designed to be used by customers who had previous relationships with the people they refer, thus their common name, “refer-a-friend.” CASL has provided certain exceptions for referral programs based on the fact that the communication is between people who have an existing relationship, therefore they do not need consent to send them a commercial electronic message; essentially opt-in is implied. However, CASL requires both the acknowledgement and agreement from the user that they will only refer people with whom they have an existing relationship. CASL also requires measures to ensure that spamming does not occur between those with existing relationships, so the program must have the ability to stop secondary referral messages from being sent electronically to the same recipient.
The content of the messages generated by the referral program are of equal importance in relation to being CASL compliant. Because exemptions have been provided to referral programs on the assumption that the sender has an existing relationship, the message itself has to adhere to strict guidelines to ensure the recipient understands who is sending it, what the purpose of the message is and that it is being sent on behalf of a commercial entity. With all of this information provided the recipient can then decide whether or not they wish to participate based on the offer, consider who is sending it and have full disclosure of whom they would be doing business with if they accept.
Of course these are not the only requirements of CASL in regards to referral programs, however they are the most significant changes from the previous legislation. Whether your brand has a referral program that needs to be amended or you are designing one to launch after July 1 it is critical that you understand all of the requirements, as the penalties for non-compliance to CASL are substantial.