November 20, 2003

Legislative Activity

Date:November 20, 2003

To:AAF Members

From:Jeff Perlman, EVP-government affairs
Clark Rector, SVP-state government affairs
Jennifer Akridge, manager-government affairs

Re:Spam Legislation

As Congress enters the home stretch of this year's session, we remain hopeful that effective anti-spam legislation will be enacted before lawmakers go home for the year. It is very important that Congress establish a national standard for spam because California has passed a very harmful law — with severe consequences for marketers nationwide — that is due to go into effect on January 1.

The Senate has unanimously passed S.877, the "CAN SPAM" Act sponsored by Senators Conrad Burns (R-MT) and Ron Wyden (D-OR). The problem cannot be solved by legislation alone, but S.877 is a strong bill that will help give consumers relief from the most egregious spammers, yet let them continue to receive marketing messages from companies with whom they wish to do business.

On the House side, anti-spam legislation has been stalled in the Energy and Commerce Committee where lawmakers have so far been unable to reconcile two competing bills. AAF is working with many of our members and other industry groups to convince House leaders to bring S.877 directly to the floor. AAF grassroots has been engaged and members of the AdCraft Club of Detroit, Ann Arbor Advertising Club and Houston Advertising Federation among others have contacted key players in the House.

Provisions of S.877 include the following:

  • a requirement that senders of marketing e-mail include a return address so the consumer can tell them to stop, clear notification that the message is an advertisement, and a valid physical postal address;
  • a prohibition on false and deceptive headers and subject lines so that consumers can immediately identify the true source of the message, and so that Internet companies can identify the high-volume senders of spam; and
  • a provision to triple the monetary damages imposed on spammers who engage in particularly nefarious spamming techniques, and strong, multi-pronged enforcement by the Federal Trade Commission, state Attorneys General, and Internet service providers (ISPs), with the potential for multi-million dollars judgments.

Perhaps most important for marketers, S.877 would preempt the California law which, if allowed to go into effect, would make it virtually impossible for legitimate marketers to use e-mail without running the risk of up to a million dollars in fines, even if they are making good faith efforts to comply. Harmful provisions of this new California law include the following:

  • a requirement of prior consumer consent to receive commercial e-mail unless there is a prior business relationship;
  • an overly broad and unreasonable definition of what constitutes a California consumer;
  • strict liability against a wide range of players who play some role in the sending of an e-mail advertisement to a California e-mail address, even accidentally. (1) the advertised site, (2) the sender of the e-mail, (3) the e-mail list provider and (4) any other person who "causes" the transmission of the e-mail. With one mistake by any of these players, all can be sued, even if they were not negligent;
  • enforcement by the plaintiffs' bar with hefty statutory damages, including bounties of $1,000 per e-mail sent in violation of the law up to a maximum of $1 million "per incident," plus costs and attorneys' fees;
  • liability even if neither the sender, the advertiser, nor the list provider know that an e-mail is being sent to California. It also imposes liability if e-mail never enters California but is received by an e-mail address "ordinarily accessed" from California.

In the event Congress fails to act, at least one lawsuit is being considered to challenge the California law on First Amendment and other grounds. We will keep you updated on the statues of this important issue. Do not hesitate to contact us if you have any comments or questions.