Is This the End of Spam as We Know It?

Andrew B. Lustigman

Source: DMNEWS

You've just received another offer to take advantage of a bulk e-mail service: targeted lists, no postage or printing costs and immediate delivery. Does it make sense to jump onto the spam bandwagon or are the risks too great in sending unsolicited commercial e-mail?
Since the opening of the Internet to the public, spam has been the bane of Internet users and Internet Service Providers, such as America Online and CompuServe. For some reason, users have no problem looking at banner advertisements on nearly every page; but are horrified to receive an e-mail that they can simply delete with the same ease as throwing away unsolicited commercial standard junk mail. ISPs complain that spam not only annoys its users, but also costs the providers substantial sums to carry and deliver the traffic.

Recent developments have heightened the stakes to marketers who wish to use spam to market their products and services. Legislation in at least three states, most notably California, have set up roadblocks to this form of marketing. Second, through some novel legal arguments, the ISPs have become successful in challenging marketers who send spam to their users.

* States Getting Tough. Four states have enacted anti-spam legislation (Nevada, Washington, California and Maryland). Washington prohibits unsolicited commercial e-mail to Washington residents that uses a false return address or a misleading subject line. Nevada law requires unsolicited commercial e-mail be readily identifiable as an advertisement, contain the legal name, street address and electronic mail address of the person transmitting the e-mail and provide an opt-out method for future e-mail. Maryland has enacted a vague statute that may or may not apply to spam; it prohibits the use of e-mail sent with intent to harass, but permits "peaceable activity intended to express political views or provide information to others." Nearly a dozen other states have considered (but not passed) anti-spam legislation with various restrictions ranging from outright prohibition to permitting them under certain guidelines. Those states include New York, Connecticut, Kentucky, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Rhode Island, Virginia and Wisconsin. On the federal level, at least three pieces of legislation were submitted. The key piece sought to require the same type of requirements as found in the Nevada statute. I am not aware of any federal legislation introduced as of yet, but the year is still young.

* California: National Implications. California has the toughest anti-spam law on the books, which took effect on Jan. 1. The law makes it a crime to knowingly use another person's Internet domain in connection with sending e-mail without that person's consent. Moreover, California requires that senders of unsolicited commercial e-mail observe ISPs with equipment located in California policies prohibiting or restricting unsolicited commercial e-mail. Senders with actual knowledge of the ISPs anti-spam policy are liable for $50 per message, up to $25,000 per ISP involved, plus attorneys fees. Thus, sending such e-mail to California Internet subscribers can now result in severe legal sanctions.

The new California law is designed to make it unfeasible to send spam nationwide. The California statute will be implicated even if one suppresses users located in California (if this is even possible). If any ISP's equipment used to deliver e-mail is located in California (regardless of the location of the recipient), the provider is authorized to sue for specific sums. The California law is designed to stifle e-mail on a national basis because the trigger for the law is whether the e-mail server equipment is located in California, not whether the recipient must necessarily be a California resident.

As a practical matter, it may be possible to send a few e-mails before receiving notice of the ISP's policy. Also, it is not clear whether e-mail lists can be created or modified so that no e-mail address in the list will use any e-mail servers located in California.

* ISPs Get Tough In Court. Several ISPs around the country have been aggressive in taking spammers to court for damages purportedly arising from the processing of unwanted e-mail, under theories of fraud, trademark infringement, trespass, and theft of services. As previously reported in DM News (December 28, 1998) America Online Inc. won three lawsuits against spammers on theories of fraud and trademark infringement. The trademark infringement claim was based on the unauthorized use of the domain name in the e-mail. By proceeding under a trademark infringement claim, AOL can pursue treble damages and attorney's fees. The fraud claims were based on the spammers methods to bypass AOL's spam filtering technology. CompuServe has also been aggressive in pursuing spammers. It has succeeded in challenging the practice on theories of trespass.

While commercial e-mail has great potential both in terms of cost savings and response, the atmosphere surrounding spam requires careful thought about using this marketing method. Given the success of ISPs in the courtroom coupled with increasingly severe state and possibly federal legislation, legitimate marketers who intend to use unsolicited commercial e-mail as a long-term marketing method need to carefully consider their future plans.

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