CAN-SPAM's Primary Purpose Rule: How the FTC Sorts Commercial From Transactional Email

The Question Congress Handed to the Commission

CAN-SPAM's obligations attach to a "commercial electronic mail message," and 15 U.S.C. § 7702(2)(A) defines that term around one idea: a message "the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including content on an Internet website operated for a commercial purpose)." Subparagraph (B) removes transactional or relationship messages from the definition altogether. Subparagraph (D) provides that a reference to a commercial entity, or a link to its website, does not by itself make a message commercial where "the contents or circumstances of the message indicate a primary purpose other than commercial advertisement or promotion."

The statute did not say how primary purpose is to be measured. Subparagraph (C) instead directed the Commission to issue regulations "defining the relevant criteria to facilitate the determination of the primary purpose of an electronic mail message" within 12 months of December 16, 2003. The Commission's answer was published as a final rule at 70 FR 3110 on January 19, 2005, and is codified today at 16 CFR § 316.3. The current Part 316 carries a source note to 73 FR 29677, from the May 21, 2008 rulemaking that reorganized the part with effect from July 7, 2008.

Three Kinds of Content

The rule classifies content before it classifies messages. The FTC's compliance guide names the three kinds an email can contain: commercial content, "which advertises or promotes a commercial product or service"; transactional or relationship content, "which facilitates an already agreed-upon transaction or updates a customer about an ongoing transaction"; and other content, "which is neither commercial nor transactional or relationship." Editorial matter, news and ordinary correspondence belong to the third group.

A message built from one kind of content is straightforward. Section 316.3(a)(1) deems a message consisting exclusively of commercial advertisement or promotion to be commercial, and section 316.3(b) deems a message consisting exclusively of transactional or relationship content to be transactional or relationship. The difficult cases are the combinations, and the rule handles them with two different tests depending on what the non-commercial content is.

The Five Transactional Categories

Transactional or relationship content is a closed list, set out in section 7702(17)(A) of the Act and repeated in section 316.3(c) of the rule. Content qualifies only if it does one of these things:

1. Facilitates, completes or confirms a commercial transaction the recipient previously agreed to enter into with the sender.
2. Gives warranty, product recall, safety or security information about a product or service the recipient used or purchased.
3. In a subscription, membership, account, loan or comparable ongoing relationship, notifies the recipient of a change in terms or features or in the recipient's standing or status, or provides account balance information or statements at regular periodic intervals.
4. Provides information directly related to an employment relationship or related benefit plan in which the recipient is currently involved, participating or enrolled.
5. Delivers goods or services, including product updates or upgrades, that the recipient is entitled to receive under a transaction previously agreed to with the sender.

The compliance guide adds a reading instruction that does not appear in the text: "the law views these categories narrowly." It warns against treating every message to a person with an ongoing relationship as transactional, "including subscribers or recipients who participate in a membership program," and frames the question as whether a reasonable consumer reading the email "would understand that the message's primary purpose fits in one of those categories."

Congress left room to change the list. Section 7702(17)(B) authorizes the Commission to expand or contract the categories by regulation "to the extent that such modification is necessary to accommodate changes in electronic mail technology or practices and accomplish the purposes of this chapter." As set out below, it has been asked to use that power more than once and has not done so.

Promotion Placed Beside Transactional Content

Section 316.3(a)(2) governs a message combining promotion with content from the five categories. Such a message is deemed commercial if either of two conditions is met. The first is that "a recipient reasonably interpreting the subject line" would likely conclude the message contains commercial advertisement or promotion. The second is that the transactional or relationship content "does not appear, in whole or in substantial part, at the beginning of the body of the message." Each condition is sufficient alone, so a promotional subject line makes the message commercial wherever the receipt or statement sits.

The placement wording changed between the proposal and the final rule. The August 2004 proposal asked whether transactional content appeared "at or near the beginning of the message." The 2005 Statement of Basis and Purpose records that some commenters found "at or near the top" insufficiently clear, and that three asked the Commission to refer to the body of the message rather than the message as a whole. The final text adopted both changes, which the Commission described as "an objective standard for e-mail senders to comply with" that "allows for flexibility in message design."

The same document explains that "substantial" is not a length requirement. "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." Its illustration is an account statement: a line giving the current balance at the top would suffice, with recent activity allowed to follow the promotional material, but "merely stating 'Your account' at the beginning of the message would not be sufficiently substantial." A footnote adds that "[a] side-by-side presentation of commercial and transactional or relationship content could satisfy this standard."

The compliance guide works the test through two emails sharing the subject line "Your Account Statement." In the first, a shipment and payment notice leads and a single sentence about a new product line closes the message, and the FTC calls it "most likely a transactional or relationship message." In the second, a "Sizzling Summer Special" leads and the order confirmation is one line at the end. The FTC calls that one "most likely a commercial message" even though its subject line is "generally a sign of a transactional or relationship message."

Promotion Placed Beside Everything Else

A message combining promotion with content outside the five categories falls under section 316.3(a)(3). The subject line test is unchanged. The second test looks at the whole body: the message is commercial if a recipient reasonably interpreting it would likely conclude its primary purpose is commercial advertisement or promotion. The rule offers three illustrative factors, namely whether promotional content appears in whole or in substantial part at the beginning of the body, "the proportion of the message dedicated to such content," and "how color, graphics, type size, and style are used to highlight commercial content." The 2005 document calls this the net impression standard.

Newsletters are where the two tests meet, and the 2005 Statement of Basis and Purpose addressed them expressly. Its starting point is whether the periodical is sent under a subscription. Where it is, delivery falls within the fifth transactional category, the delivery of goods or services the recipient "is entitled to receive under the terms of a transaction," and the Commission wrote that this "is true regardless of whether the periodical consists exclusively of informational content or combines informational and commercial content."

That position carries two limits. Recipients "reasonably expect ... that a newsletter will contain advertising along with informational content," the Commission wrote, but where the requested content "is overwhelmed by commercial content that clearly exceeds what the recipient might reasonably have expected," a sender "cannot persuasively argue" that delivering the agreed content is the primary purpose. And a message that is purely a catalog or other promotion is a single-purpose commercial message even if the recipient asked for it. Without a subscription, an unsolicited newsletter "likely would not be 'transactional or relationship,'" and the net impression criteria apply instead.

What the Classification Changes

The label matters because the Act's duties are not uniform across message types. Section 7704(a)(1), the bar on materially false or misleading header information, applies by its terms to "a commercial electronic mail message, or a transactional or relationship message." The other conduct rules in section 7704(a) are written for commercial messages only: the deceptive subject heading prohibition in paragraph (2), the return address or internet opt-out mechanism in paragraph (3), the restrictions that apply after an objection in paragraph (4), and the advertisement identification, opt-out notice and postal address requirements in paragraph (5).

The compliance guide summarizes the result for a purely transactional email: it "may not contain false or misleading routing information, but is otherwise exempt from most provisions of the CAN-SPAM Act." The 2005 Statement of Basis and Purpose drew the consequence for recipients, observing that "CAN-SPAM does not give e-mail recipients the right to opt-out of important transactional or relationship content, such as billing statements." How the opt-out machinery works once a message is commercial is the subject of a separate explainer on CAN-SPAM opt-out mechanics.

The rule also limits itself by footnote. Footnote 1 to section 316.3 states that "[t]he Commission does not intend for these criteria to treat as a 'commercial electronic mail message' anything that is not commercial speech."

Where the Line Has Been Pressed

The boundary has been tested through rulemaking comments and through at least one enforcement action. In each instance the Commission left the 2005 criteria as they were.

Legally mandated notices, 2008

In the rulemaking concluded at 73 FR 29654 on May 21, 2008, the Commission asked whether an email containing only a notice required by state or federal law should be treated as transactional or relationship. All 13 commenters on the point opposed treating such messages as commercial, citing notices under the Truth in Lending Act, the Gramm-Leach-Bliley Act and the USA PATRIOT Act. The Commission declined both to add a category and to make "a blanket determination" that such notices fit an existing one, because no commenter showed the change was "necessary to accommodate changes in email technology or practices." It added that "in most cases" those notices "likely would be categorized as transactional or relationship messages," determined "on a case-by-case basis depending on the specific content and context of such messages."

Prior relationships, education and invitations, 2019

The Commission's periodic review, concluded at 84 FR 13115 with effect from April 4, 2019, retained the rule without modification. Six commenters addressed the transactional definition. One proposed treating follow-up commercial email to an existing customer as transactional because of the prior relationship; the Commission noted that this would require rewriting both definitions and that the commenter "offered no evidence that this concern is widespread." The Online Trust Alliance asked that informational messages about "news items, site activity, product updates, etc." be treated as transactional, and the Commission responded that product updates and upgrades are already covered.

The American Bankers Association asked for educational emails and event invitations sent to existing customers to be classified. The response is the plainest statement of how fact-bound the categories are: such a message "may be commercial in nature, might be transactional or relationship-related, or might be considered to be 'other content that is not transactional or relationship content,'" and "[g]iven the fact-specific nature of any determination, no rule modification is warranted." The Commission said it would consider revising its compliance guide instead.

An account footer, 2023

The enforcement example is the FTC's August 14, 2023 action against Experian Consumer Services, filed by the Department of Justice on the Commission's behalf with a proposed order requiring a $650,000 payment. According to the release, people who created free accounts to manage their Experian credit information received emails promoting Experian Boost and a free "Dark Web" scan, without an unsubscribe link. The emails carried a footer saying they were sent because they "contain important information about your account." The complaint charged that the emails "are not related to consumers' accounts and instead market or promote products and services," and so required an opt-out mechanism. The release describes allegations resolved by a stipulated order, not a court ruling on how the messages should be classified.

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