May 01, 1999 | Response Magazine

SPAM Regulated

4 min

Previously published in Response magazine

Those of us who work "inside the Beltway" tend to pay a lot more attention to the workings of the federal government than we do to what's going on in the state capitals. But while those who do business on the Web need to keep one eye on what the Congress, the Federal Trade Commission, and the other folks in Washington, D.C., are up to, they need to keep the other eye on the state governments, which are starting to do things of great significance to the online world.

Take Virginia, for example. Virginia is the home of scores of Internet companies, including America Online, so it's not surprising that the state's governor and its legislature are eager to see e-commerce thrive. Virginia's governor recently proposed comprehensive legislation intended to encourage the growth of the industry and simultaneously protect consumers from a variety of perceived abuses.

That legislation -- known as the "Virginia Internet Policy Act" -- addresses a number of hot-button issues, including consumer privacy protection, security and the role of encryption, regulation of content, and taxation. Recently, the Virginia General Assembly enacted a broad statute dealing with unsolicited commercial e-mail -- which many people call "spam," but which we will refer to by the less pejorative term "UCE."

According to Virginia officials, more than half of all Internet users in the United States use Virginia-based Internet service providers -- a group that includes AOL and CompuServe, as well as many smaller ISPs -- which no doubt explains why that state is sympathetic to the arguments of ISPs that UCE is "computer trespass" that burdens the Internet's infrastructure, slows communications, and can harm networks.

The new Virginia law makes it a crime to send unsolicited bulk e-mail through an e-mail provider located in that state. (Actually, the Virginia law may not make all UCE illegal -- only UCE sent in contravention of an ISP's e-mail policies is prohibited.) Whether the crime is a misdemeanor or a felony depends on the extent of the damages caused by the UCE. Other states (like California) have enacted anti-"spam" legislation recently, but Virginia's is the first to make UCE a criminal matter.

But while it is possible that some e-mailers could go to jail for violating the new law, its civil penalty provisions will likely have more of an impact than the criminal provisions. ISPs based in Virginia will be allowed to seek damages of $10 per e-mail message or $25,000 per day -- whichever is greater -- plus attorney's fees from anyone who sends UCE to their customers. Individuals who receive unsolicited e-mail advertisements also can seek damages.

Whether Congress passes laws providing for federal regulation of UCE may depend not only on the extent to which the states act, but also on the effectiveness of self-regulatory efforts. Earlier in this decade, another interactive technology -- the 900-number pay-per-call technology -- was quickly exploited by unscrupulous marketers. When the industry failed to clean house, Congress stepped in, followed by the Federal Communications Commission, the Federal Trade Commission, and numerous state attorneys general. Telemarketers had a similar experience.

It seems more likely than not that Congress will approach UCE in somewhat the same way it went after the 900-number and telemarketing industry. Any law passed by Congress concerning UCE probably will be fairly general, but will direct the FTC to issue more detailed regulations. The FTC undoubtedly will not ban UCE altogether, but may issue a rule requiring UCE to be clearly and prominently identified as advertising and prohibiting the dissemination of UCE to consumers who have indicated that they don't want to receive any.

In any event, The FTC will continue to prosecute those who send deceptive or fraudulent UCE. That agency has already brought several cases against commercial e-mailers, and more are on the way. In a future column, we will discuss what the FTC is doing to combat deceptive commercial e-mail, and identify the kinds of UCE that are most likely to attract the FTC's attention.