California Sends Toughest Anti-Spam Bill to GovernorSent to Gov. Gray Davis' desk with barely a peep from the press late last week, California's newest anti-spam bill would be the toughest in the nation.
It bans unsolicited commercial e-mail unless the sender has a pre-existing business relationship with the recipient. It gives individuals the right to sue. It has possible ramifications for advertisers for whom spam is sent, rather than just the spammers themselves.
And it may lead federal legislators to consider strengthening their anti-spam measures, according to a national expert on the topic.
"I suspect this will cause Congress to reconsider the watered-down anti-spam legislation that they are currently considering," said David Kramer, a partner with high-tech law firm Wilson Sonsini Goodrich & Rosati, Palo Alto, CA.
Though the various spam-related bills pending in Congress take aim at some of spammers' more egregious practices, such as using false headers and subject lines and hiding the sources of their blasts, none would outlaw unsolicited commercial e-mail.
"If I'm a congressman or congresswoman, I would give this issue a second look and say to myself, 'Do I really want to go on record as anti-consumer?' because that's the way a vote [for] that kind of legislation is going to be perceived," said Kramer, who gave expert testimony at the Federal Trade Commission's three-day spam forum in April. He advocates a federal anti-spam law modeled on existing junk fax legislation.
The Direct Marketing Association supports opt-out-based spam legislation, or a law that would let marketers e-mail people until they revoke permission. The DMA maintains that advertising is often about making people aware of new ideas, a concept that by definition requires some unsolicited contact.
Davis has until Oct. 11 to sign S.B. 186 and is expected to do so, said Michael Mistretta, spokesman for the bill's author, Sen. Kevin Murray, D-Los Angeles.
"He [Davis] hasn't said anything negative about it, which is good," Mistretta said.
Also, it seems that the recall issue won't complicate matters now that the U.S. Court of Appeals for the Ninth Circuit postponed the state's historic recall vote, which had been scheduled for Oct. 7.
Importantly for marketers, the bill takes aim at companies whose wares are advertised in spam, rather that just spammers.
"There is a need to regulate the advertisers who use spam, as well as actual spammers, because actual spammers can be difficult to track down," the bill states. "The true beneficiaries of spam are the advertisers who benefit from the marketing derived from the advertisements."
The bill states that no one may "[i]nitiate or advertise in an unsolicited commercial e-mail" either sent from California or to a California e-mail address. The language raises the possibility that marketers could be sued over spam from their affiliates or marketing partners. Affiliate marketing, where online merchants pay a bounty for leads and sales generated by other marketers, is a major source of spam.
The bill defines pre-existing relationship as one where "the recipient has made an inquiry and has provided his or her e-mail address, or has made an application, purchase or transaction, with or without consideration [money], regarding products or services offered by the advertisers."
The bill would require that all commercial e-mail let recipients opt out of future mailings either by sending a return e-mail or by calling a toll-free number.
Marketers who expressly forbid their affiliates from spamming may be protected, but they still might end up in California court if affiliates spam on their behalf, Kramer said.
"There isn't any clarity on this in the statute, but if you are an advertiser and you have an express prohibition in your referral program on the use of unsolicited commercial e-mail, and nevertheless some third party sends out e-mails containing your advertisement without your authorization ... I think you'd have a good argument that you are not liable under this statute, but you'd end up having to litigate that question," Kramer said.
The bill would let individuals and California's attorney general sue violators for $1,000 per e-mail up to $1 million.
Consumer groups maintain that letting individuals sue is necessary for any anti-spam legislation to have teeth. Business groups contend that letting individuals sue would invite class-action litigation and have an unnecessary chilling effect on merchants who otherwise would market via e-mail.
Kramer's sole criticism of S.B. 186 is that it may invite abusive class-action lawsuits.
"This statute doesn't contain any express limitation," he said. "You don't need to sue a marketer for $50 million to get the message across that spam is a bad idea, particularly where the spam doesn't cause injury."