With time running out for Congress to pass an anti-spam measure this year, e-mail marketers are preparing to comply with California's new spam law, which takes effect Jan. 1.
The commercial e-mail industry has excoriated the law, reputedly the toughest in the country, for its loose definitions that the industry says leave it open to a flood of unfounded lawsuits. Early hopes for pre-emptive federal legislation have dimmed.
“You cannot ignore California in hopes that we will see federal legislation,” said Trevor Hughes, executive director of the Network Advertising Initiative's E-Mail Service Provider Coalition. “The more time that goes by, the more concerns I have in regards with whether federal legislation will get done.”
The Senate passed the CAN-SPAM Act of 2003 on Oct. 22 in a unanimous vote. The bill, supported by commercial e-mailers, would override the California law and the anti-spam laws in 36 other states. Yet despite early optimism that the House of Representatives would act on either of the similar spam bills before it, the process has slowed to a crawl, leaving industry leaders doubtful federal legislation will pass before Congress's scheduled adjournment Nov. 21.
Jerry Cerasale, chief lobbyist on federal legislation for the Direct Marketing Association, agrees with Hughes's assessment, putting even odds on the House acting on a spam bill in time to head off California's law.
Prabhat Hajela, an aide to CAN-SPAM Act author Sen. Conrad Burns, R-MT, is slightly more optimistic. “We are still very hopeful,” he said.
E-mail marketers abhor the California law. It creates the nation's first opt-in standard, banning unsolicited commercial e-mail. Senders and advertisers are liable in civil lawsuits for sending any commercial e-mail to a recipient that has not given “direct consent” to both the sender and advertiser. The CAN-SPAM Act does not allow for a private right of action.
“I promise you there will be suits filed at 12:01 a.m. on Jan. 1, and you will be the target of those suits,” Emily Hackett, state policy director for the Internet Alliance, told e-mail marketers at Bigfoot Interactive's anti-spam conference in New York last week.
The industry cites its experience in Utah, which enacted a spam measure in May 2002 that included the right for citizens to sue spammers. The law led to the filing of 1,200 lawsuits in a little over a year. Such a scenario in the nation's largest state would strangle the industry, according to Hughes.
“Opening that window is going to be very damaging,” he said.
It appears increasingly unlikely that the California law will be amended before taking effect. California Sen. Kevin Murray's office has spoken with some industry executives about their concerns, but the state senator has put off any action on changing the law.
“We're not moving on anything until Congress either acts on federal legislation or adjourns,” said Michael Mistretta, a spokesman for Murray, D-Los Angeles. He put the chances of amending the law before it takes effect Jan. 1 as “none and nil.” But he added that action could be taken early in the new year, and that Murray is open to changing any unfair aspects of the law.
Mistretta confirmed that Murray has drafted a letter that makes clear the law was not intended to outlaw third-party ads in e-mail newsletters.
“I believe that really was a mistake,” Hackett said of the apparent liability newsletter publishers and advertisers would have under the law.
To head off a nightmare scenario of lawsuits raining down on them in California, e-mail marketers are educating clients on the nuances of the California law.
Quinn Jalli, an executive with San Francisco e-mail service provider Savicom, said he advises clients to document all opt-in information including the recipient's IP address, the time and date of the opt in and the URL where it occurred. He also urges marketers to state directly the frequency and types of messages consumers will receive. When in doubt, he says, marketers should err on the side of too much disclosure.
“In essence, we are saying keep records and be upfront with recipients,” he said.
New York e-mail list provider NetCreations has developed technology to scrub lists of every California address and unknown address. Under California's law, e-mail list rental services like NetCreations would appear to be illegal, since an advertiser does not have the “direct consent” of the consumer.
“We're taking the most conservative approach possible,” said Michael Mayor, chief executive of NetCreations. “We're preparing for any of the possible scenarios.”
Despite such efforts, Hackett said, the lawsuits inevitably would come down on legitimate marketers under the broad language of the law.
“I don't think you can comply with the California bill,” she said. However, she added, “There's no way the California law will stand over time.”
