Spam a Hot Topic at FTC Workshop and on The Hill

On April 30-May 2, the Federal Trade Commission hosted a three-day workshop to address "spam." The workshop consisted of 12 panels: (1) discussions on the definition of spam, (2) e-mail address gathering, (3) falsification in e-mail messages, (4) use of open relays and open proxies to send messages, (5) the economics of spam, (6) blacklists, (7) best practices, (8) wireless spam, (9) potential legislative solutions, (10) the international dimension of the problem, (11) litigation challenges, and (12) technological solutions.

Themes

• Several themes emerged from this very informative and thought provoking workshop.
• Spam is threatening to destroy the benefits of e-mail as a communications and commercial medium.
• Spam creates significant economic costs on a broad range of entities, including ISPs that carry the traffic, business networks and their employee e-mail accounts, legitimate marketers, consumers, and others that use e-mail as a communications medium.
• The pace at which spam is increasing requires efforts on various fronts to limit this threat.
• There is not an agreed upon definition of what "spam" is, and such a definition is not likely to emerge.
• There are, however, types of e-mail that all would agree fall within the scope of spam. This includes messages that are falsified or fraudulent, those sent through open relays and open proxies to avoid identification of the sender, and those sent to e-mail addresses that have been surreptitiously harvested. Somewhere in the range of 40 percent to 90 percent of all e-mail that is sent falls within these agreed upon "outlaw spam" categories.
• The international dimension to this problem limits the effectiveness of domestic enforcement and legislative efforts.
• In the United States, legal approaches can help reduce the problem. These include significant governmental enforcement of current law. Moreover, there are legislative proposals that can create a framework to bolster such enforcement efforts.
• There can be effective technological solutions to fighting spam. Such solutions must, however, not have the effect of "over-blocking" legitimate communications as has occurred with some filters and blacklists.

Chairman Muris, Commissioner Thompson, and Commissioner Swindle each provided his perspective of the spam problem in remarks that began each day of the program. Chairman Muris indicated that spam is threatening the benefits of e-mail communications. He indicated that fighting the spam problem is an FTC priority. He stated that an announcement regarding further FTC prosecutions will occur on May 15th in Dallas involving abusers of open relays to send spam. Chairman Muris described the results of an FTC study made public on the eve of the workshop that indicated that more than 40 percent of e-mail that the FTC had identified as spam contained an element of fraud/ falsity, suggesting that an overwhelming amount of spam violates existing law. Chairman Muris distinguished this large percentage from that of telemarketing, which he indicated was conducted primarily by legal and legitimate means. He added that only 2 percent of all messages contained an "ADV" in the subject line, a requirement in many state laws for unsolicited commercial e-mail, further demonstrating that most spam violates existing law.

Commissioner Swindle stated that consumers are fed up with spam. He expressed his belief that it if there is a failure to solve the problem, there will be a significant impact on the use of e-mail as a communications medium. He indicated his belief that the medium is closer to failure with consumers, and stated that there are potential solutions, including technological.

Commissioner Thompson, in his remarks, emphasized that the nature of the spam problem "depends on where you sit," highlighting the difficulty in obtaining consensus solutions to the problem.

Throughout the workshop, authors of proposed legislation spoke describing their legislative proposals. Senators Conrad Burns (R-MT) and Ron Wyden (D-OR) discussed their legislation, which they have been working on for several congressional sessions. Senator Burns emphasized that his legislation is intended to reduce spam while not curtailing legitimate marketing opportunities. He indicated that his legislation would prohibit deceptive subject lines and header information and require a clear and conspicuous "opt-out." Senator Wyden supplemented Senator Burns' comments, indicating that a tough national law is necessary in order to avoid a "crazy quilt" of state laws. Senator Wyden also indicated his belief that spammers will move offshore and that there should also be a priority on a global basis to reduce the problem. Finally, he indicated that he believed that legislation alone will not solve the problem and that technological innovation in the private sector should be encouraged.

Representative Zoe Lofgren (D-CA) discussed her bill, which was introduced last week. Her bill would require an "ADV" labeling requirement similar to that which exists in many state laws. She also introduced a new concept to the discussion that would create a "bounty" for individuals who report spammers that lead to prosecutions.

Senator Charles Schumer (D-NY) discussed several proposals that he plans to announce in the next few weeks in efforts to reduce spam. He indicated that his legislation would (1) impose tough criminal penalties; (2) create a do-not-spam registry that would be similar to the recently announced Federal Trade Commission do-not-call registry; (3) ban the harvesting of mail addresses; (4) require that domain names of those that send commercial e-mail be accurate; (5) require that all commercial e-mail contain an ADV in the subject line; and (6) require that all commercial e-mail have the ability to unsubscribe. Senator Schumer stated that it was his belief that 90 percent of all spam was being sent by only about 150 spammers. He indicated that his legislation would provide significant resources to the FTC for enforcement, and that this would not be an unfunded mandate.

The panel on legislation presented a range of views on whether legislation could be effective and what elements should be included in legislation. John Patrick, chairman of the Global Internet Project, expressed his belief that the problem is international in scope and that legislation would not solve the problem and should not be enacted. Chuck Curran of America Online indicated that enforcement can serve as an effective deterrent to bad actors and that legislation could help with enforcement efforts. David Kramer, an attorney with Wilson Sonsini, expressed his belief that there must be effective private cause of action such as that set forth in the Telephone Consumer Protection Act, the Federal law that bans fax solicitations sent without permission, which effectively allows consumers to bring an action in small claims court.

Paula Selis of the Washington State Office of the Attorney General stated that a group of 44 attorneys general had sent a letter to Senators Burns and Wyden describing problems that they have with their proposed legislation. However, during the discussion, it emerged that only three of the 29 states that have enacted spam legislation have prosecuted spam cases. Jerry Cerasale of The Direct Marketing Association pointed out that legislation needs to combat the problem of fraud, where a majority of the problem is occurring. The potential for abuse resulting from a private right of action was described, citing the Utah law where plaintiffs™ lawyers are attempting to settle with hundreds of large companies for $6,000 apiece for alleged technical violations of the statute.

This article is intended to provide clients with information on recent legal developments. It should not be construed as legal advice or legal opinion on specific facts. Pursuant to applicable Rules of Professional Conduct, it may constitute advertising.