CAN-SPAM Act: 15 U.S. Code § 7706 - Enforcement generally | mrisch | July 31, 2014

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CAN-SPAM Act: 15 U.S. Code § 7706 - Enforcement generally

by mrisch
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(a) Violation is unfair or deceptive act or practice
Except as provided in subsection (b), this chapter shall be enforced by the Commission as if the violation of this chapter were an unfair or deceptive act or practice proscribed under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a (a)(1)(B)).
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(b) Enforcement by certain other agencies
Compliance with this chapter shall be enforced—
(1) under section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818), in the case of—
(A) national banks, and Federal branches and Federal agencies of foreign banks, by the Office of the Comptroller of the Currency;
(B) member banks of the Federal Reserve System (other than national banks), branches and agencies of foreign banks (other than Federal branches, Federal agencies, and insured State branches of foreign banks), commercial lending companies owned or controlled by foreign banks, organizations operating under section 25 or 25A of the Federal Reserve Act (12 U.S.C. 601 and 611), and bank holding companies, by the Board;
(C) banks insured by the Federal Deposit Insurance Corporation (other than members of the Federal Reserve System) and insured State branches of foreign banks, by the Board of Directors of the Federal Deposit Insurance Corporation; and
(D) savings associations the deposits of which are insured by the Federal Deposit Insurance Corporation, by the Director of the Office of Thrift Supervision;
(2) under the Federal Credit Union Act (12 U.S.C. 1751 et seq.) by the Board of the National Credit Union Administration with respect to any Federally insured credit union;
(3) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) by the Securities and Exchange Commission with respect to any broker or dealer;
(4) under the Investment Company Act of 1940 (15 U.S.C. 80a–1 et seq.) by the Securities and Exchange Commission with respect to investment companies;
(5) under the Investment Advisers Act of 1940 (15 U.S.C. 80b–1 et seq.) by the Securities and Exchange Commission with respect to investment advisers registered under that Act;
(6) under State insurance law in the case of any person engaged in providing insurance, by the applicable State insurance authority of the State in which the person is domiciled, subject to section 104 of the Gramm-Bliley-Leach Act (15 U.S.C. 6701), except that in any State in which the State insurance authority elects not to exercise this power, the enforcement authority pursuant to this chapter shall be exercised by the Commission in accordance with subsection (a);
(7) under part A of subtitle VII of title 49 by the Secretary of Transportation with respect to any air carrier or foreign air carrier subject to that part;
(8) under the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et seq.) (except as provided in section 406 of that Act (7 U.S.C. 226227)), by the Secretary of Agriculture with respect to any activities subject to that Act;
(9) under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.) by the Farm Credit Administration with respect to any Federal land bank, Federal land bank association, Federal intermediate credit bank, or production credit association; and
(10) under the Communications Act of 1934 (47 U.S.C. 151 et seq.) by the Federal Communications Commission with respect to any person subject to the provisions of that Act.
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(c) Exercise of certain powers
For the purpose of the exercise by any agency referred to in subsection (b) of its powers under any Act referred to in that subsection, a violation of this chapter is deemed to be a violation of a Federal Trade Commission trade regulation rule. In addition to its powers under any provision of law specifically referred to in subsection (b), each of the agencies referred to in that subsection may exercise, for the purpose of enforcing compliance with any requirement imposed under this chapter, any other authority conferred on it by law.
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(d) Actions by the Commission
The Commission shall prevent any person from violating this chapter in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this chapter. Any entity that violates any provision of that subtitle  [1] is subject to the penalties and entitled to the privileges and immunities provided in the Federal Trade Commission Act in the same manner, by the same means, and with the same jurisdiction, power, and duties as though all applicable terms and provisions of the Federal Trade Commission Act were incorporated into and made a part of that subtitle. [1]
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(e) Availability of cease-and-desist orders and injunctive relief without showing of knowledge
Notwithstanding any other provision of this chapter, in any proceeding or action pursuant to subsection (a), (b), (c), or (d) of this section to enforce compliance, through an order to cease and desist or an injunction, with section 7704 (a)(1)(C) of this title, section 7704 (a)(2) of this title, clause (ii), (iii), or (iv) of section 7704 (a)(4)(A) of this title, section 7704 (b)(1)(A) of this title, or section 7704 (b)(3) of this title, neither the Commission nor the Federal Communications Commission shall be required to allege or prove the state of mind required by such section or subparagraph.
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(f) Enforcement by States
(1) Civil action
In any case in which the attorney general of a State, or an official or agency of a State, has reason to believe that an interest of the residents of that State has been or is threatened or adversely affected by any person who violates paragraph (1) or (2) of section 7704 (a), who violates section 7704 (d), or who engages in a pattern or practice that violates paragraph (3), (4), or (5) of section 7704 (a), of this title, the attorney general, official, or agency of the State, as parens patriae, may bring a civil action on behalf of the residents of the State in a district court of the United States of appropriate jurisdiction—
(A) to enjoin further violation of section 7704 of this title by the defendant; or
(B) to obtain damages on behalf of residents of the State, in an amount equal to the greater of—
(i) the actual monetary loss suffered by such residents; or
(ii) the amount determined under paragraph (3).
(2) Availability of injunctive relief without showing of knowledge
Notwithstanding any other provision of this chapter, in a civil action under paragraph (1)(A) of this subsection, the attorney general, official, or agency of the State shall not be required to allege or prove the state of mind required by section 7704 (a)(1)(C) of this title, section 7704 (a)(2) of this title, clause (ii), (iii), or (iv) of section 7704 (a)(4)(A)of this title, section 7704 (b)(1)(A) of this title, or section 7704 (b)(3) of this title.
(3) Statutory damages
(A) In general
For purposes of paragraph (1)(B)(ii), the amount determined under this paragraph is the amount calculated by multiplying the number of violations (with each separately addressed unlawful message received by or addressed to such residents treated as a separate violation) by up to $250.
(B) Limitation
For any violation of section 7704 of this title (other than section 7704 (a)(1) of this title), the amount determined under subparagraph (A) may not exceed $2,000,000.
(C) Aggravated damages
The court may increase a damage award to an amount equal to not more than three times the amount otherwise available under this paragraph if—
(i) the court determines that the defendant committed the violation willfully and knowingly; or
(ii) the defendant’s unlawful activity included one or more of the aggravating violations set forth in section 7704 (b) of this title.
(D) Reduction of damages
In assessing damages under subparagraph (A), the court may consider whether—
(i) the defendant has established and implemented, with due care, commercially reasonable practices and procedures designed to effectively prevent such violations; or
(ii) the violation occurred despite commercially reasonable efforts to maintain compliance the practices and procedures to which reference is made in clause (i).
(4) Attorney fees
In the case of any successful action under paragraph (1), the court, in its discretion, may award the costs of the action and reasonable attorney fees to the State.
(5) Rights of Federal regulators
The State shall serve prior written notice of any action under paragraph (1) upon the Federal Trade Commission or the appropriate Federal regulator determined under subsection (b) and provide the Commission or appropriate Federal regulator with a copy of its complaint, except in any case in which such prior notice is not feasible, in which case the State shall serve such notice immediately upon instituting such action. The Federal Trade Commission or appropriate Federal regulator shall have the right—
(A) to intervene in the action;
(B) upon so intervening, to be heard on all matters arising therein;
(C) to remove the action to the appropriate United States district court; and
(D) to file petitions for appeal.
(6) Construction
For purposes of bringing any civil action under paragraph (1), nothing in this chapter shall be construed to prevent an attorney general of a State from exercising the powers conferred on the attorney general by the laws of that State to—
(A) conduct investigations;
(B) administer oaths or affirmations; or
(C) compel the attendance of witnesses or the production of documentary and other evidence.
(7) Venue; service of process
(A) Venue
Any action brought under paragraph (1) may be brought in the district court of the United States that meets applicable requirements relating to venue under section1391 of title 28.
(B) Service of process
In an action brought under paragraph (1), process may be served in any district in which the defendant—
(i) is an inhabitant; or
(ii) maintains a physical place of business.
(8) Limitation on State action while Federal action is pending
If the Commission, or other appropriate Federal agency under subsection (b), has instituted a civil action or an administrative action for violation of this chapter, no State attorney general, or official or agency of a State, may bring an action under this subsection during the pendency of that action against any defendant named in the complaint of the Commission or the other agency for any violation of this chapter alleged in the complaint.
(9) Requisite scienter for certain civil actions
Except as provided in section 7704 (a)(1)(C) of this title, section 7704 (a)(2) of this title, clause (ii), (iii), or (iv) of section 7704 (a)(4)(A) of this title, section 7704 (b)(1)(A) of this title, or section 7704 (b)(3) of this title, in a civil action brought by a State attorney general, or an official or agency of a State, to recover monetary damages for a violation of this chapter, the court shall not grant the relief sought unless the attorney general, official, or agency establishes that the defendant acted with actual knowledge, or knowledge fairly implied on the basis of objective circumstances, of the act or omission that constitutes the violation.
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(g) Action by provider of Internet access service
(1) Action authorized
A provider of Internet access service adversely affected by a violation of section 7704(a)(1), (b), or (d) of this title, or a pattern or practice that violates paragraph (2), (3), (4), or (5) of section 7704 (a) of this title, may bring a civil action in any district court of the United States with jurisdiction over the defendant—
(A) to enjoin further violation by the defendant; or
(B) to recover damages in an amount equal to the greater of—
(i) actual monetary loss incurred by the provider of Internet access service as a result of such violation; or
(ii) the amount determined under paragraph (3).
(2) Special definition of “procure”
In any action brought under paragraph (1), this chapter shall be applied as if the definition of the term “procure” in section 7702 (12) of this title contained, after “behalf” the words “with actual knowledge, or by consciously avoiding knowing, whether such person is engaging, or will engage, in a pattern or practice that violates this chapter”.
(3) Statutory damages
(A) In general
For purposes of paragraph (1)(B)(ii), the amount determined under this paragraph is the amount calculated by multiplying the number of violations (with each separately addressed unlawful message that is transmitted or attempted to be transmitted over the facilities of the provider of Internet access service, or that is transmitted or attempted to be transmitted to an electronic mail address obtained from the provider of Internet access service in violation of section 7704 (b)(1)(A)(i) of this title, treated as a separate violation) by—
(i) up to $100, in the case of a violation of section 7704 (a)(1) of this title; or
(ii) up to $25, in the case of any other violation of section 7704 of this title.
(B) Limitation
For any violation of section 7704 of this title (other than section 7704 (a)(1) of this title), the amount determined under subparagraph (A) may not exceed $1,000,000.
(C) Aggravated damages
The court may increase a damage award to an amount equal to not more than three times the amount otherwise available under this paragraph if—
(i) the court determines that the defendant committed the violation willfully and knowingly; or
(ii) the defendant’s unlawful activity included one or more of the aggravated violations set forth in section 7704 (b) of this title.
(D) Reduction of damages
In assessing damages under subparagraph (A), the court may consider whether—
(i) the defendant has established and implemented, with due care, commercially reasonable practices and procedures designed to effectively prevent such violations; or
(ii) the violation occurred despite commercially reasonable efforts to maintain compliance with the practices and procedures to which reference is made in clause (i).
(4) Attorney fees
In any action brought pursuant to paragraph (1), the court may, in its discretion, require an undertaking for the payment of the costs of such action, and assess reasonable costs, including reasonable attorneys’ fees, against any party.
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Annotated Text Information

August 18, 2014

CAN-SPAM Act: 15 U.S. Code § 7706 - Enforcement generally

CAN-SPAM Act: 15 U.S. Code § 7706 - Enforcement generally

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mrisch

Professor of Law

Villanova University School of Law

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