The true cost of CASL to the Canadian Economy

Open letter to the Canadian government and all who care about small business in Canada

The true cost of CASL to the Canadian Economy

The Canadian Anti-Spam Law (CASL) came into force on July 1, 2014 and proponents claim that it will rid Canadian inboxes of unwanted messages. It will do nothing of the sort as almost all the nasty messages we receive originate outside of Canada, where the law can’t reach the senders. What I haven’t seen anyone talk about is the enormous cost of this legislation to the economy.

Enforcement could suck over $30 Billion out of the economy and result in tens of thousands of jobs lost annually

In the first three days of the law being in force, the CRTC announced that they had received over 1,000 complaints already. The head of the CRTC has publicly stated that they will be vigilant in enforcing the law and aims to enforce the steep penalties that it contains. The first day that the law was in force was a national holiday, so it is not a stretch to assume that this pace of complaints will be maintained. Using 360 days to make the math easier, there would be 120,000 complaints in the first year.

If we assume that only 50% of those complaints result in a penalty (and the rate could be much higher), and the average fine is $500,000 (the maximum fines are double to twenty times this amount), the government will issue a total of $30 billion in fines in the first year! This is a massive drain out of the economy.

Where will this money come from? Mostly from hard working small businesses and individuals who certainly can’t afford this level of penalty. It will result in tens of thousands of lost jobs. Tens of thousands of families will be forced into bankruptcy as a result. Social services will have to pick up the slack. Good thing the government will have tens of billions to help them out.

Families will be devastated

The law is draconian in nature in terms of what is considered a “commercial electronic message”, the term they came up with because they can’t even define what spam really is. Here’s an example. Nancy, the coach of a girl’s soccer team receives an email from Andrea, another coach in the league about a scheduling issue. Nancy uses her iPhone to reply to the email. Nancy has just broken the law. How? By default, the reply emails on an iPhone contain the phrase “Sent from my iPhone”, a clear commercial message under CASL since it refers to a product. If someone reports this to the CRTC, Nancy could be hit with a $1 million fine. That means her family will lose their home and all their possessions, be thrown out onto the street and have their wages garnisheed for years. Just because Nancy, like millions of people who use a smartphone or a free e-mail service, didn’t know that she needed to change the default signature when replying to emails. This is what the government thinks is good policy.

Banks will stop lending to small businesses

By banning the use of email to communicate with prospective customers, small businesses will have a much harder time building their business. When banks look at lending money to a small business, they will take this into account. They will discount the prospects of this business surviving, and they will decline their loan application. CASL will be a great excuse for banks to stop lending to the businesses that are responsible for almost all the growth in the Canadian economy.

Canadian entrepreneurs will be forced to target the US market

How can Canadian small businesses survive? The only businesses that will survive will be those who can develop a service or product that can be primarily marketed to US customers. There will be no cost-effective way to market products and services to Canadian customers. I have already advised one startup to target US customers and they have stopped their e-mail campaign to let Canadian businesses know about the innovative new service they will be launching. I would advise other startups to do the same. I have been in business for over 15 years and have a good mix of business in the US and Canada, but I will be targeting the US from now on, especially for public workshops where reaching new potential customers is key.

Canadian businesses and consumers will be left behind

Since the government has decided that Canadian businesses and consumers should not be allowed to know about any new products or services unless the business behind it has deep pockets, our local economy will suffer. New products, services, methods of work, and other productivity gains will be delayed until we find out about them when a US-based competitor starts taking business away using the innovation first created by a Canadian startup that wasn’t allowed to market by e-mail to Canadians. I can’t see how this benefits the Canadian economy.

This sort of law won’t work – how well has the “Do Not Call” law worked?

The “Do Not Call” registry was supposed to cut down on telemarketers calling with commercial messages. How has that worked? Do you get regular calls about duct cleaning? Sure you do. Those calls aren’t originating in Canada, despite your call display showing a local phone number. They are from overseas call centres using technology to make it look like the call is local. Canadian businesses who want to build a legitimate business have never used these sleazy methods on the phone or by e-mail. It is foreign entities that deliver over 90% of the true spam every day, and this law won’t work against them.

This problem has already been solved

The problem of volumes of unwanted mail was solved years ago by e-mail providers and services. Most people get very little of what most would consider true spam – the diet pills, sex offers, and such. That’s because the marketplace already put in place filters to weed out this garbage years ago. The customers demanded it and the companies and providers stepped up. For a government that claims they believe that the market can solve most problems, in this case, the solutions that are already working have been ignored and unnecessary legislation has been imposed to solve a problem that no longer exists.

Businesses are being told how to run their business – what will the government impose next?

This law sets a very dangerous precedent. The government is now telling businesses how they can run their business in a new area that has nothing to do with safety or fairness, the traditional realms of government regulation. Who knows what the government will tell businesses they can’t do next?

Canada Post is the beneficiary

Who benefits from this law? Canada Post. The government is forcing businesses to use their services to deliver marketing messages to businesses and consumers. The government is scared that they will end up on the hook for the huge unfunded pension liability if Canada Post goes bankrupt, so they just found a new revenue source for this crown corporation. Too bad most small businesses can’t afford the high costs of direct mail advertising.

To level the playing field, ban advertising of any kind on TV, radio, or websites

If the law is intended to stop Canadians from being interrupted by commercial messages, the government must ban advertising on radio, TV, and all websites. These blatant commercial messages interrupt our enjoyment of entertainment or information. Unlike e-mail messages that usually contain an unsubscribe link and are easy to delete if we don’t want to read them, we are forced against our will to listen or watch ads on TV, radio, or websites. If the government is serious about unwanted commercial electronic messages, they must immediately move to ban these ads. I doubt they will. Those lobby groups are too powerful. Again, the small business and consumer get the shaft on this one.

CASL must be repealed or drastically altered

Why would a law so massively flawed be allowed to come into force? Because the people who created it have never had to build a business before. They are bureaucrats that have a guaranteed job for life and a gold plated pension. They frankly don’t care if tens of thousands of people lose their jobs, families lose their homes, and billions are sucked out of the economy. They still have their job, go home to a warm house in winter, and have money to buy groceries for their family.

If you care about the biggest engine of the Canadian economy, small business, send this to your MP, the Prime Minister, and other small business owners. CASL must be repealed or drastically altered before it has devastating consequences on the Canadian economy.

 

Originally published July 8, 2014