Research · 7 min read
Who Answers for an Email Someone Else Sent About a Product
A federal statute reaches the business being advertised, not only the sender, where three conditions are met — including that the business took no reasonable action to prevent the message or to detect and report it.
Key takeaways
- 15 U.S.C. 7705 reaches the business being advertised, not only the sender, through the phrase "promote, or allow the promotion of."
- Its three conditions are cumulative: knowledge or what should have been known in the ordinary course of the business, an economic benefit received or expected, and no reasonable action taken.
- The action condition is an alternative — prevention, or detection plus a report to the Commission — so doing nothing is the only way it is met.
- A supplier to a violating business is not liable by default; liability attaches only through greater-than-50-percent ownership or economic interest, or through actual knowledge coupled with an economic benefit.
- Section 7705(c) removes the state attorney general route for this section, leaving enforcement with the Commission under § 7706(a), subject to entity-specific assignments to other regulators in § 7706(b).
- The same intermediary-accountability structure appears in 16 CFR 310.3(b) on substantial assistance, in 16 CFR 310.5(a)(9) on service provider records, and in 16 CFR 314.4(f) on vendor selection, contracting and periodic assessment.
Answer first: the advertiser is named, and the test has three parts
15 U.S.C. 7705(a) is aimed at a company whose product appears in someone else's email. It makes it unlawful "for a person to promote, or allow the promotion of, that person's trade or business, or goods, products, property, or services sold, offered for sale, leased or offered for lease, or otherwise made available through that trade or business, in a commercial electronic mail message the transmission of which is in violation of section 7704(a)(1) of this title" — the provision the section's own heading describes as concerning "false or misleading transmission information" — where that person meets three conditions.
The phrase "or allow the promotion of" is what extends the section past the party that pressed send. A company that did not write the message, did not send it, and did not own the list can still be the person the section describes.
The three conditions are cumulative. The person must know, "or should have known in the ordinary course of that person's trade or business, that the goods, products, property, or services sold, offered for sale, leased or offered for lease, or otherwise made available through that trade or business were being promoted in such a message." The person must have "received or expected to receive an economic benefit from such promotion." And the person must have "took no reasonable action" either "to prevent the transmission" or "to detect the transmission and report it to the Commission."
The third condition is written in the alternative, which is the practical core of the section. Prevention is one route out. Detection followed by a report to the Commission is the other. A company that can show neither is the company the section reaches.
Reading the three conditions closely
The knowledge condition uses a hybrid standard. Actual knowledge is enough, but so is what the person "should have known in the ordinary course of that person's trade or business." That phrase measures the knowledge against the business as it ordinarily runs, not against an unusually attentive version of it. A company whose ordinary course involves paying third parties to generate leads has an ordinary course in which such messages are foreseeable.
The benefit condition is broader than payment received. It covers a person who "received or expected to receive an economic benefit from such promotion." An expectation qualifies, and no money need have changed hands.
The action condition is the only one a company can satisfy prospectively, and it names two distinct kinds of effort. "To prevent the transmission" describes controls applied before the fact — contract terms, approval of creative, restrictions on how a partner may source addresses. "To detect the transmission and report it to the Commission" describes monitoring after the fact, coupled with an affirmative act of reporting.
Two words govern how much is required: "reasonable action." The statute does not specify a program, a frequency or a technology. What it does specify is that doing nothing is not one of the options, since the condition is met only where the person "took no reasonable action" of either kind.
Because the three conditions are joined by "and," a company outside any one of them is outside the section. A business with no knowledge and no reason to have any, or with no economic benefit or expectation of one, or with reasonable prevention or detection-and-reporting measures, is not described by subsection (a).
The limitation for suppliers, and its two exceptions
Subsection (b) addresses a different party: someone who supplies goods or services to the person who violated subsection (a). The general rule is protective. "Except as provided in paragraph (2), a person (hereinafter referred to as the 'third party') that provides goods, products, property, or services to another person that violates subsection (a) shall not be held liable for such violation."
That default matters. A vendor, a platform, a payment processor or a fulfillment company does not acquire liability merely by supplying a company that broke the rule.
Two exceptions displace the default, and they are alternatives. Liability "shall be imputed to a third party" that "owns, or has a greater than 50 percent ownership or economic interest in, the trade or business of the person that violated subsection (a)." The test is stated as ownership "or economic interest," so a controlling economic stake counts even where the corporate ownership is arranged differently.
The second exception requires two things together: the third party "has actual knowledge that goods, products, property, or services are promoted in a commercial electronic mail message the transmission of which is in violation of section 7704(a)(1)," and "receives, or expects to receive, an economic benefit from such promotion." Constructive knowledge is not enough here — the exception says "actual knowledge," which is a narrower standard than the "should have known" language in subsection (a).
Subsection (d) preserves the rest of the chapter: except as provided in one cross-referenced provision, "nothing in this section may be construed to limit or prevent any action that may be taken under this chapter with respect to any violation of any other section of this chapter."
Who enforces this particular section, and who does not
Subsection (c) is headed "Exclusive enforcement by FTC," and it is short: "Subsections (f) and (g) of section 7706 of this title do not apply to violations of this section."
Subsection (f) of § 7706 is the state action. It permits a state attorney general, official or agency, "as parens patriae," to bring a civil action on behalf of residents to enjoin further violations or to obtain damages, with a statutory damages computation at up to $250 per separately addressed unlawful message and a $2,000,000 limitation for most violations. Section 7705(c) removes that route for violations of § 7705. Subsection (g) is a further enforcement provision named in the same sentence; this page does not describe its contents.
What remains is § 7706(a): "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," except as provided in subsection (b).
Subsection (b) is the exception, and it depends on the type of entity. It assigns compliance enforcement to banking regulators for banks and savings associations, to the National Credit Union Administration for federally insured credit unions, to the Securities and Exchange Commission for brokers, dealers, investment companies and registered investment advisers, to state insurance authorities for persons providing insurance, to the Secretary of Transportation for air carriers, to the Secretary of Agriculture for activities under the Packers and Stockyards Act, to the Farm Credit Administration for named farm credit entities, and to the Federal Communications Commission for persons subject to the Communications Act.
Subsection (c) of § 7706 adds that for those agencies "a violation of this chapter is deemed to be a violation of a Federal Trade Commission trade regulation rule," and that each may exercise "any other authority conferred on it by law."
The same structure in two other rules
The idea that a company answers for what its intermediaries do is not confined to email, and two other provisions read this session show the pattern.
16 CFR 310.3(b), in the Telemarketing Sales Rule, makes it a deceptive telemarketing act and a violation of that part "for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates" the rule's core prohibitions. "Consciously avoids knowing" occupies roughly the same ground as "should have known in the ordinary course."
The same rule requires the paper trail that makes such a question answerable. 16 CFR 310.5(a)(9) requires "A record of each service provider a telemarketer used to deliver an outbound telephone call to a person on behalf of a seller for each good or service the seller offers for sale through telemarketing," and states that "For each such service provider, a complete record includes the contract for the service provided, the date the contract was signed, and the time period the contract is in effect," retained "for 5 years from the date the contract expires."
16 CFR 314.4(f), in the customer-information safeguards rule, sets a three-part vendor duty in a different regime: "Taking reasonable steps to select and retain service providers that are capable of maintaining appropriate safeguards," "Requiring your service providers by contract to implement and maintain such safeguards," and "Periodically assessing your service providers based on the risk they present and the continued adequacy of their safeguards."
For a reader looking at a health seller's marketing, the useful residue is a single expectation. Where a company works through affiliates, lead generators, call centers or email partners, the federal rules in more than one area assume the company knows who those partners are, has terms with them, and can say what it does to check on them. A company that describes its partners as unrelated third parties whose conduct is not its concern is describing a posture these provisions do not assume.
Sources
- 15 U.S.C. 7705 — Businesses knowingly promoted by electronic mail with false or misleading transmission informationThe full text of subsection (a), including the phrase "promote, or allow the promotion of" and the three cumulative conditions on knowledge, economic benefit and the absence of reasonable action to prevent or to detect and report; the third-party limitation in subsection (b)(1) and its two exceptions in (b)(2) covering greater than 50 percent ownership or economic interest and actual knowledge coupled with economic benefit; the exclusive-enforcement provision in subsection (c) removing subsections (f) and (g) of 15 U.S.C. 7706; the savings provision in subsection (d); and the section's own heading, which is the only characterization of 15 U.S.C. 7704(a)(1) used here.
- 15 U.S.C. 7706 — Enforcement generally (subsections (a), (b), (c) and (f))The Commission's enforcement of the chapter as an unfair or deceptive act or practice under section 18(a)(1)(B) of the FTC Act in subsection (a); the ten entity-specific enforcement assignments in subsection (b); the statement in subsection (c) that a violation is deemed a violation of an FTC trade regulation rule for those agencies and that each may exercise other authority conferred by law; and the state parens patriae action in subsection (f), including the statutory damages computation at up to $250 per separately addressed unlawful message and the $2,000,000 limitation for most violations.
- 16 CFR 310.3(b) and 16 CFR 310.5(a)(9) — Telemarketing Sales Rule (assisting and facilitating; service provider records)The substantial assistance or support provision at § 310.3(b) and its "knows or consciously avoids knowing" standard; and the service provider recordkeeping requirement at § 310.5(a)(9), including the contract, the date signed, the period in effect, and retention for five years from the date the contract expires.
- 16 CFR 314.4(f) — Standards for Safeguarding Customer Information, Elements (oversee service providers)The three-part service provider duty: taking reasonable steps to select and retain providers capable of maintaining appropriate safeguards, requiring those safeguards by contract, and periodically assessing providers based on the risk they present and the continued adequacy of their safeguards.
Frequently asked questions
Can a company be responsible for an email it did not send?
15 U.S.C. 7705(a) reaches a person who promotes, "or allow[s] the promotion of," their business or goods in a commercial email whose transmission violates 15 U.S.C. 7704(a)(1), where three conditions are met together: knowledge or what should have been known in the ordinary course of the business, receipt or expectation of an economic benefit, and having taken no reasonable action to prevent the transmission or to detect it and report it to the Commission.
What counts as taking action?
The statute states the third condition in the alternative: reasonable action either to prevent the transmission, or to detect the transmission and report it to the Commission. It does not prescribe a method, a frequency or a technology, and it is satisfied only where no reasonable action of either kind was taken.
Does a vendor become liable by supplying a company that violates the section?
The default in § 7705(b)(1) is that it does not. Liability is imputed only under one of two exceptions: the third party owns or has a greater than 50 percent ownership or economic interest in the violating business, or it has actual knowledge of the promotion in a violating message and receives or expects an economic benefit from it.
Can a state attorney general bring an action under this section?
Section 7705(c) provides that subsections (f) and (g) of 15 U.S.C. 7706 do not apply to violations of § 7705. Subsection (f) is the state parens patriae action, which is therefore unavailable for this section; the chapter's general enforcement provision at § 7706(a) assigns enforcement to the Commission, subject to the entity-specific assignments in § 7706(b).
Is there a comparable rule outside email?
16 CFR 310.3(b) makes it a violation of the Telemarketing Sales Rule to provide substantial assistance or support to a seller or telemarketer while knowing or consciously avoiding knowing that the rule is being violated. 16 CFR 314.4(f) separately requires covered institutions to select capable service providers, bind them by contract, and periodically assess them.
Do companies have to keep records of the partners they use?
In the telemarketing context, yes. 16 CFR 310.5(a)(9) requires a record of each service provider used to deliver an outbound call on a seller's behalf, including the contract, the date it was signed and the period it is in effect, retained for five years from the date the contract expires.