FTC Gets Mixed Support Over New Report on Spam

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The Direct Marketing Association supported the conclusions of a report released last week on unsolicited bulk commercial e-mail written for the Federal Trade Commission.

Citing free-speech concerns, the report stopped short of calling for a ban on spam but recommended that companies be prohibited from disguising the content or origin of their messages, a practice employed by unscrupulous marketers to avoid returned e-mail and consumer backlash.

The report, written by the Center for Democracy and Technology (CDT), Washington, a free-speech advocacy group, outlined costs such as productivity losses and other nuisances of handling unsolicited e-mail for companies and recipients.

The report recommended the pursuit of a combination of technological filtering, private-sector standards setting and continued self-regulatory efforts to quell the problem. It also recommended increased efforts to eliminate e-mail fraud and the use of "misleading header information be considered an attempt to defraud consumers."

The report recognizes that "government regulation should focus on fraud and restricting the unique practices of bad players," said Jerry Cerasale, senior vice president of government affairs at the DMA, which was one of the organizations in the ad hoc group convened by the FTC to craft the report.

Not all participants praised the report's conclusions. The Coalition Against Unsolicited E-Mail (CAUCE), Washington, released a statement reaffirming its support for Rep. Christopher Smith's (R-NJ) "Netizens Protection Act of 1997" (H.R. 1748), which would ban transmission of unsolicited ads by e-mail.

"While the parts of this report dealing with the costs of [spam] are quite compelling, some of the policy conclusions reflect the sometimes contradictory views of the participants," said Ray Everett-Church, a co-founder of CAUCE. The report "recites the marketing industry's flawed argument that a ban on [spam] is unconstitutional."

CAUCE asserts that legislation banning unsolicited advertising sent by fax sets a precedent for banning spam as well.

Deirdre Mulligan, staff counsel for the CDT and author of the report, said that in order for a sweeping communications ban on any medium "to pass constitutional muster -- even in a commercial context -- first, there has to be very specific findings that it is the least intrusive method of dealing with the problem. As someone who cares a lot about the First Amendment potential of the Internet, I don't want to suggest that any law developed in any other medium should be dumped upon the Internet without very specific findings that support it. There are much narrower ways to curb abuses. You don't want to start with a sledgehammer."

Citing estimates that as much as 50 percent of spam contains fraudulent advertising that already is illegal, Mulligan said, "we don't have a problem with a lack of law. We need more enforcement."

The DMA agreed. "Banning the use of an entire medium for a specific type of speech is a drastic measure," Cerasale said. "Given the constitutional issues at stake, proposals to regulate [spam] should be pursued cautiously."

In related news, the FTC last week issued a "Dirty Dozen" list of e-mail scams. Topping its list of "tip-off-to-a-rip-off" e-mails were business opportunity scams, or pyramid schemes made to look like something else. Other top scams, in descending order: make money by sending bulk e-mailings, chain letters, work-at-home schemes, health and diet scams, easy money, free offers, investment opportunities, cable descrambler kits, guaranteed loans or credit on easy terms, credit repair scams and vacation prize promotions.

According to the FTC, the list was culled from a sample of more than 250,000 e-mail messages that consumers sent to an FTC e-mail complaint box. The FTC said it is receiving more than 1,000 complaints a day.

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