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88–536 PDF 2006

S. HRG. 107–1135

SPAMMING

HEARING

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS

OF THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

APRIL 26, 2001

Printed for the use of the Committee on Commerce, Science, and Transportation

(

(II)

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED SEVENTH CONGRESS

FIRST SESSION

JOHN MCCAIN, Arizona, Chairman 

TED STEVENS, Alaska 

CONRAD BURNS, Montana 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN D. ROCKEFELLER IV, West Virginia 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

MAX CLELAND, Georgia 

BARBARA BOXER, California 

JOHN EDWARDS, North Carolina 

JEAN CARNAHAN, Missouri 

MARK BUSE, Republican Staff Director 

MARTHA P. ALLBRIGHT, Republican General Counsel 

KEVIN D. KAYES, Democratic Staff Director 

MOSES BOYD, Democratic Chief Counsel 

SUBCOMMITTEE ON COMMUNICATIONS 

CONRAD BURNS, Montana, Chairman 

TED STEVENS, Alaska 

TRENT LOTT, Mississippi 

KAY BAILEY HUTCHISON, Texas 

OLYMPIA J. SNOWE, Maine 

SAM BROWNBACK, Kansas 

GORDON SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

ERNEST F. HOLLINGS, South Carolina 

DANIEL K. INOUYE, Hawaii 

JOHN F. KERRY, Massachusetts 

JOHN B. BREAUX, Louisiana 

JOHN D. ROCKEFELLER IV, West Virginia 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

MAX CLELAND, Georgia 

BARBARA BOXER, California 

JOHN EDWARDS, North Carolina 

(III)

C O N T E N T S 

Page 

Hearing held on April 26, 2001 .............................................................................. 1

Statement of Senator Allen ..................................................................................... 26

Statement of Senator Burns ................................................................................... 1

Statement of Senator Rockefeller ........................................................................... 16

Prepared statement .......................................................................................... 16

Statement of Senator Wyden .................................................................................. 26

WITNESSES

Buckley, Jr., Jeremiah S., General Counsel, Electronic Financial Services 

Council .................................................................................................................. 32

Prepared statement .......................................................................................... 34

Catlett, Jason, President/CEO, Junkbusters Corp. .............................................. 39

Prepared statement .......................................................................................... 41

Cerasale, Jerry, Senior Vice President, Government Affairs, The Direct

Marketing Association Inc. .................................................................................. 29

Prepared statement .......................................................................................... 30

Goodlatte, Hon. Bob, U.S. Representative from Virginia ..................................... 23

Prepared statement .......................................................................................... 24

Harrington, Eileen, Associate Director of Marketing Practices, Bureau of

Consumer Protection, Federal Trade Commission ............................................ 3

Prepared statement .......................................................................................... 6

McClure, David P., President/CEO, U.S. Internet Industry Association ............ 48

Prepared statement .......................................................................................... 50

Moore, David, President/CEO, 24/7 Media ............................................................ 36

Prepared statement .......................................................................................... 38

Pogust, Esq., Harris L., Partner, Sherman, Silverstein, Kohl, Rose and 

Podolsky ................................................................................................................ 44

Prepared statement .......................................................................................... 46

APPENDIX

Hollings, Hon. Ernest F., U.S. Senator from South Carolina, prepared statement ...................................................................................................................... 61

(1)

SPAMMING 

THURSDAY, APRIL 26, 2001

U.S. SENATE, SUBCOMMITTEE ON COMMUNICATIONS, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:35 p.m. in room 

SR–253, Russell Senate Office Building, Hon. Conrad Burns,

Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF HON. CONRAD BURNS,

U.S. SENATOR FROM MONTANA 

Senator BURNS. We’ve got a Congressman on his way, but I’m 

going to open these hearings this morning, or this afternoon on the 

CAN-spam bill. We welcome everyone today to this hearing, which 

concerns a matter I think of critical importance to the future development of commerce on the Internet. How to control the explosion 

of unsolicited e-mail, or commerce mail known around the industry 

as spam. Specifically, we here are here to address the CAN-spam 

bill that Senator Wyden and I have introduced. Senator Allard of 

Colorado is also a co-sponsor of this bill and I thank him for his 

support. 

The CAN-spam bill would require e-mail marketers and 

spammers to comply with a straightforward set of workable common-sense rules designed to give consumers more control over 

spam e-mail. Specifically, it would require a sender of marketing 

e-mail to include a working return address so that the recipient 

can send a reply e-mail demanding not to receive any more messages. The marketer would be prohibited from sending further messages to that consumer who had informed them they wanted it to 

stop. Further, the bill would also prevent e-mail marketers from 

using deceptive headers or subject lines so the consumers will be 

able to tell who initiated the solicitation. 

The bill includes strong enforcement provisions to ensure compliance. The Federal Trade Commission would have the authority to 

impose steep civil fines up to $500,000 on spammers. This fine 

would be tripled if the violation is found to be intentional. In short, 

this bill provides broad consumer protection against bad actors 

while still allowing Internet advertisers a justified means of flourishing. 

Senator Wyden and I have taken great care to make sure that 

this bill does not harm legitimate advertising. In fact, we are trying 

to help the Internet advertiser by allowing them to reach people 

who want to learn more about their product. If I open up my e-mail 

2

and find 100 messages, and they’re all advertisers, chances are I’ll 

never read one of them. However, if I have 10 that I want to receive their mail, advertisers, they might find a sale there. This is 

how a legitimate system should and would operate under the CANspam bill. 

Spamming is really a problem. And I believe it’s absolutely critical that we address it now so that the Internet is allowed to reach 

it’s full potential. Because of the vast distances in my home state 

of Montana, many of my constituents are forced to pay long distance charges for their time on the Internet. Spam makes it nearly 

impossible for these people to enjoy the experience, and it makes 

it even harder for them to see how this will help rural America 

flourish in the 21st Century. 

Also, Internet service providers are bombarded with spam that 

often corrupts and shuts down their systems. In today’s information age, where beating a competitor to the next sale is absolutely 

critical to survival, these shutdowns can cause real economic damage. We may be in a down-turned American economy, and especially in the high-tech sector, we’re going through a little shake-out 

and nobody has to read a newspaper to find that out. But the efficiencies created through the vast information-sharing are here to 

stay and will help propel our economy to levels beyond our imagination. But in order to reach its potential, we must eliminate the 

bad actors and those who threaten these efficiencies. 

I had initially hoped that the technology would solve the problem 

that it created. However, for every filter, there is a quick response 

by spammers to beat the filter. Where have I heard that argument 

before? I think we were talking about schools and libraries at one 

time and the use of filters. And this is—and we’re finding out that 

it doesn’t take much, just the change of a numerical, a number or 

a letter, and you’re around the filter. It seems like a big game to 

them, and to us it’s a bad game. 

I just recently read, and I would have most of you pick up a Monday, last Monday’s Wall Street Journal which had a big article in 

the journal that says ‘‘You’ve Got Mail’’. And in parenthesis, you 

don’t want. So I think it’s a very creative article, probably laying 

out the problems and the challenges that we face on spamming. 

Spammers—ISP’s who incorporate more sophisticated filtering to 

catch such alterations find that spammers will include 1–800 numbers as graphic files imbedded in an ordinary text message. Such 

telephone numbers would display normally in ordinary e-mail, but 

because they were encoded in the graphics format instead of in ordinary text, Internet filters would miss them entirely. 

I find the analysis of the anti-spamming activist quoted in the 

article quite instructive. They felt that ‘‘the technical methods that 

have just given rise to an arms race situation, where each improvement of the technical means for blocking spam, just drives the creation of new spam means of getting spam past the block. It will 

only be stopped by legislative solutions. When it becomes too much 

of a financial risk for not enough benefit, the spammers will go 

away, and not before.’’

And I couldn’t agree more. The CAN-spam bill will provide 

spammers with the only kind of incentives to get out of the busiVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
3

ness, and they understand stopping it and stop invading on the privacy of consumers. 

I look forward to hearing from the witnesses today, and I call 

them to the table at this time. We have Ms. Eileen Harrington, Associate Director of Marketing Practices, Bureau of Consumer Protection, Federal Trade Commission here in Washington, DC. Ms. 

Harrington, thank you for taking time out of your busy schedule 

and coming to testify before this Committee today. We look forward 

to your remarks. 

STATEMENT OF EILEEN HARRINGTON, ASSOCIATE DIRECTOR 

OF MARKETING PRACTICES, BUREAU OF CONSUMER

PROTECTION, FEDERAL TRADE COMMISSION 

Ms. HARRINGTON. Thank you very much, Mr. Chairman. As you 

said, I am Eileen Harrington of the Federal Trade Commission’s 

Bureau of Consumer Protection. The Commission is very pleased to 

be asked to present its views today and has submitted its testimony to the staff for the record. I will be, of course, happy to answer any questions that you may have, and the answers will be my 

own views and not necessarily those of the Commission. 

The low cost of sending UCE or spam differentiates it from other 

forms of unsolicited marketing such as direct mail or outbound 

telemarketing. 

Those marketing techniques, unlike spam, impose costs on senders that may serve to limit their use. There are no comparable limits on spam, however. Nevertheless, well-known manufacturers and 

sellers of consumer good and services, generally do not send spam. 

Rather, these merchants use requested about available products, 

services and sales. 

For example, consumers may agree in advance to receive information about newly published books on subjects that interest them, 

or weekly e-mails from airlines advising them of discounted air 

fares, giving consumers the ability to choose the information they 

receive over the Internet. Known in the industry now as permission-based marketing, it is likely to create more confidence in its 

content and in the sender. 

This permission-based approach is the model mandated by S. 

630. Not all UCE is fraudulent. Fraud operators, however, are always among the first to exploit any technological innovation, and 

it is no surprise therefore, that they have seized on the Internet’s 

capacity to reach literally millions of consumers quickly and at a 

low cost through spam. 

Not only are fraud operators able to reach millions of individuals 

with one message, but they can misuse the technology to conceal 

their identity. 

Many spam messages contain false information about the sender 

and where the message was routed from. This makes it nearly impossible to trace the spam back to the actual sender. In the same 

vein, spam often contains misleading subject lines and extravagant 

earnings or performance claims about goods and services. These 

types of claims are the stock in trade of fraudulent schemes. 

The Commission has conducted a vigorous law enforcement program against fraudulent or deceptive spam. At least thirty of the 

173 cases the Commission has brought to date against fraud on the 

4

Internet, have targeted fraudulent operations that used spam as an 

essential integral part of their scheme. 

The Commission has also conducted an educational program to 

alert consumers and businesses about the dangers of spam. It has 

published nine consumer publications that relate to spam and more 

than 1.6 million of those documents have been distributed to consumers either through paper copies or via access to the FTC’s 

website. 

I would add the Commission is also probably the only organization in the country that has invited consumers to send us their 

spam. We operate a special spam mailbox, UCE@FTC.gov and to 

date we’ve received over 8 million pieces of unwanted spam from 

consumers. The Commission supports the goals of S. 630 which are 

to help control the additional costs and other potential negative effects that spam can impose, both on Internet service providers and 

Internet users and to strengthen consumer choice in the matter of 

whether to receive spam. 

S. 630 addresses two basic problems that together pose a real 

threat to consumers’ confidence in the Internet as a medium for 

personal electronic commerce. First, there is the problem of fraudulent or deceptive spam. This is addressed by the prohibitions in S. 

630 against false or misleading header information or subject headers. The Commission welcomes these proposals as potential enhancements to its existing authority under the Federal Trade Commission Act. 

The second serious problem addressed by S. 630 is the stress on 

the Internet infrastructure resulting from the sheer volume of 

spam. Spam, even if not deceptive, may lead to disruptions and inefficiencies in Internet services and constitutes a great nuisance to 

consumers and businesses using the Internet. This aspect of the 

problem is addressed by the bill’s opt-out provisions. S. 630 would 

require commercial e-mail messages to contain an opt-out notice 

and a functioning return e-mail address for sending an opt-out request. 

Further, S. 630 would prohibit sending any spam after a recipient has opted out. These provisions are a big step in the right direction to stem the tide of spam by giving consumers more control 

over which commercial e-mail messages they receive. 

Now there are several issues raised by S. 630 that I want to 

mention for your consideration. First, a key term used throughout 

S. 630 is commercial electronic mail message. This term is defined 

in section 3 of the bill. The relevant portion of the definition provides that an electronic mail message shall not be considered to be 

a commercial electronic mail message solely because such message 

includes a reference or link to an Internet website operated for a 

commercial purpose. 

However, in our experience much spam, particularly spam related to pornographic websites consists of nothing more than such 

a reference or link. The definition as currently drafted could potentially be exploited by senders of such spam to evade the requirements of this bill. 

A second concern, the language in section 5 of the bill that prohibits header information that is not legitimately obtained, is ambiguous. To ensure that this language does not create enforcement 

5

problems or engender unintended lawsuits, clarification is essential. 

The third concern that we want to raise concerns the provision 

in S. 630 prohibiting deceptive subject lines. This provision raises 

an issue about the Federal Trade Commission’s authority to challenge deception under the Federal Trade Commission Act. Currently, under the FTC Act, the Commission could challenge a materially false or misleading subject line in a commercial e-mail message by using section 5 of the FTC Act. 

And the Commission could use that section of the FTC Act to 

challenge this type of false or misleading representation or any 

other false or misleading representation. 

The applicable legal standard that the FTC must meet under 

this provision of the FTC Act to demonstrate a deceptive practice 

is that it is likely to mislead consumers acting reasonably under 

the circumstances about a material fact. S. 630 would establish a 

higher standard applicable to subject lines in commercial e-mail 

messeges. It would require a showing that the person who sent the 

e-mail had knowledge that the subject line was likely to mislead 

the recipient about a material fact regarding the contents or subject matter of the message. 

This knowledge requirement, not an element of deception under 

well-established law under the FTC Act, would make it more difficult for the FTC to take action under S. 630 against materially 

false and misleading subject lines. 

As a matter of policy and fairness in enforcement, deceptive 

spam should not be treated differently from other deceptive marketing material. Moreover, the requirement of a showing that the 

subject line was likely to mislead the recipient and not reasonable 

consumer could increase the burden on the Commission to enforce 

this part of S. 630. 

This may require a showing that each individual recipient was 

likely to be misled, which is a very difficult burden to meet especially where millions and millions of consumers have received one 

particular message. Imagine proving that each one of them was 

likely to be misled. 

Because violators of section 5 of S. 630 would be exposed to liability for civil penalties of up to $11,000 per violation, it may be 

appropriate to adopt stringent standards for liability in S. 630 as 

a safeguard against penalties for what could be mere technical violations of the bill. However, the Commission recommends clarifying 

that S. 630 does not affect the FTC’s current ability to bring enforcement actions targeting materially false or deceptive representations in commercial e-mail messages under the FTC Act, pursuant to the criteria of and seeking the remedies currently available 

under that Act. This could be accomplished by broadening the savings clause in section 7a of the bill. 

Additionally, section 7 of S. 630 appears to preclude enforcement 

of most existing federal civil laws that apply to commercial electronic mail such as the FTC Act’s broad prohibition of deceptive advertising, except to the extent specifically provided in S. 630. We 

believe that S. 630 should not supplant other relevant federal law 

and we recommend expanding the savings clause to make this 

point clear. 

6

Before concluding, I do want to note that the enforcement 

scheme laid out by S. 630 and which you describe, Mr. Chairman, 

in your opening statement is modeled on similar schemes Congress 

established for enforcement for the Commission’s 900 number rule 

and the telemarketing sales rule in the statutes that mandated 

promulgation of those rules. 

The Commission’s efforts would be supplemented with those of 

the state attorneys general and possibly by other federal agencies 

with jurisdiction in areas where the FTC has none. 

This type of dual federal/state enforcement scheme has proved 

extremely successful in the past, particularly in challenging deceptive and abusive telemarketing practices and the Commission 

would expect it to work equally well in this context. 

[The prepared statement of Ms. Harrington follows:]

PREPARED STATEMENT OF EILEEN HARRINGTON, ASSOCIATE DIRECTOR OF MARKETING

PRACTICES, BUREAU OF CONSUMER PROTECTION, FEDERAL TRADE COMMISSION

Mr. Chairman, I am Eileen Harrington of the Federal Trade Commission’s Bureau 

of Consumer Protection. The Federal Trade Commission is pleased to provide testimony today on the subject of unsolicited commercial e-mail, the consumer protection 

issues raised by its widespread use, the FTC’s program to combat deceptive and 

fraudulent unsolicited commercial e-mail, and the FTC’s views on the ‘‘Controlling 

the Assault of Non-Solicited Pornography and Marketing Act of 2001’’ (S. 630), 

which Chairman Burns has proposed.1

I. Introduction and Background 

A. FTC Law Enforcement Authority 

As the Federal Government’s principal consumer protection agency, the FTC’s 

mission is to promote the efficient functioning of the marketplace by taking action 

against unfair or deceptive acts or practices, and increasing consumer choice by promoting vigorous competition. To fulfill this mission, the Commission enforces the 

Federal Trade Commission Act, which prohibits unfair methods of competition and 

unfair or deceptive acts or practices in or affecting commerce.2 The Commission’s 

responsibilities are far-reaching. With certain exceptions, this statute provides the 

Commission with broad law enforcement authority over virtually every sector of our 

economy.3 Commerce on the Internet, including unsolicited commercial electronic 

mail, falls within the scope of this statutory mandate. 

B. Concerns About Unsolicited Commercial E-mail 

Unsolicited commercial e-mail—‘‘UCE,’’ or ‘‘spam,’’ in the online vernacular—is 

any commercial electronic mail message sent, often in bulk, to a consumer without 

the consumer’s prior request or consent. The very low cost of sending UCE differentiates it from other forms of unsolicited marketing, such as direct mail or out-bound 

telemarketing. Those marketing techniques, unlike UCE, impose costs on senders 

that may serve to limit their use. 

Generally, well-known manufacturers and sellers of consumer goods and services 

do not send UCE. Rather, such merchants use solicited e-mail to give consumers 

information that they have requested about available products, services, and sales. 

For example, consumers may agree in advance to receive information about newlypublished books on subjects of interest, online catalogues for products or services 

frequently purchased, or weekly e-mails about discounted airfares. 

These examples of bulk commercial e-mail sent at the consumer’s request demonstrate the value of consumer sovereignty to the growth of Internet commerce. Giving consumers the ability to choose the information they receive over the Internet—

known in the industry now as ‘‘permission-based’’ marketing—seems likely to create 

more confidence in its content and in the sender. 

By no means is all UCE fraudulent, but fraud operators, who are often among 

the first to exploit any technological innovation, have seized on the Internet’s capacity to reach literally millions of consumers quickly and at a low cost through UCE. 

Not only are fraud operators able to reach millions of individuals with one message, 

but they can misuse the technology to conceal their identity. Many spam messages 

contain false information about the sender and where the message was routed from, 

making it nearly impossible to trace the UCE back to the actual sender. In the same 

7

vein, UCE messages also often contain misleading subject lines and extravagant 

earnings or performance claims about goods and services. These types of claims are 

the stock in trade of fraudulent schemes. 

Bulk UCE burdens (indeed, sometimes cripples) Internet service providers and 

frustrates their customers. The FTC’s main concern with UCE, however, is its widespread use to disseminate false and misleading claims about products and services. 

The Commission believes the proliferation of deceptive bulk UCE on the Internet 

poses a threat to consumer confidence in online commerce and thus views the problem of deception as a significant issue in the debate over UCE. 

II. The Federal Trade Commission’s Approach to Fraud on the Internet 

In 1994, the Commission filed its first enforcement action against deception on 

the Internet, making it the first federal enforcement agency to take such an action.4

Since that time, the Commission has brought 173 law enforcement actions against 

more than 575 defendants to halt online deception and fraud. The pace of our Internet law enforcement has been increasing, in step with the growth of commerce—

and fraud—on the Internet; over two-thirds of the FTC’s Internet-related actions 

have been filed since the beginning of 1999. 

The Commission brings to the Internet a long history of promoting competition 

and protecting consumers in other once-new marketing media. Recent innovations 

have included 900-number technology and telemarketing. The development of each 

of these advances in the marketplace was characterized by early attempts of fraud 

artists who sought to capitalize on the new way of doing business. In each instance, 

the Commission used its statutory authority under Section 5 of the FTC Act to bring 

tough law enforcement actions to halt specific deceptive or unfair practices, and establish principles for non-deceptive marketing.5 In some instances, most notably national advertising, industry took an aggressive and strong self-regulatory stance 

that resulted in dramatic improvements in advertising and marketing practices.6

In other instances, at the direction of Congress or on its own initiative, the Commission has issued trade regulation rules to establish a bright line between legitimate and deceptive conduct.7

III. The Commission’s Approach to Unsolicited Commercial E-mail 

A. Monitoring the Problem 

The Federal Trade Commission closely monitors the development of commerce on 

the Internet. Since the inception of the Internet as a commercial medium, the Commission has conducted a series of hearings and public workshops so that it could 

have the benefit of views from a wide range of stakeholders.8 In June 1997, at a 

workshop devoted to issues of privacy on the Internet, the Commission heard discussion of three distinct UCE problems: (1) deception in UCE content; (2) economic and 

technological burdens on the Internet and delivery networks caused by the large volume of UCE being sent; and (3) costs and frustrations imposed on consumers by 

their receipt of large amounts of UCE. 

While the Commission has maintained a focus on deception perpetuated through 

UCE, industry and advocacy groups that participated in the privacy workshop directed their attention to the economic and technological burdens caused by UCE. 

Under the leadership of the Center for Democracy in Technology, these groups spent 

a year studying the problem and identifying possible solutions, and in July 1998 

issued their ‘‘Report to the Federal Trade Commission of the Ad-Hoc Working Group 

on Unsolicited Commercial E-Mail.’’ 9 This report recommended the pursuit of technologies and public policies that would provide consumers with more control over 

the UCE they receive. Specifically, the report:

• urged marketers to give consumers a choice to ‘‘opt-in’’ or ‘‘opt-out’’ of receiving 

a UCE solicitation; and

• urged law enforcement to continue to attack fraudulent UCE solicitations, including those with deceptive ‘‘header’’ information.10

On another front, in 1998 the FTC set up a special electronic mailbox reserved 

for UCE in order to assess, first hand, emerging trends and developments. With the 

assistance of Internet service providers, privacy advocates, and other law enforcers, 

staff publicized the Commission’s UCE mailbox, ‘‘uce@ftc.gov,’’ and invited consumers and Internet service providers to forward their UCE to it. The Commission 

also created a database in which all of the forwarded UCE messages are stored. 

Over 8,300,000 pieces of UCE have been forwarded to the Commission since January 1998, and the UCE mailbox receives an average of 10,000 new pieces of UCE 

every day, 7 days a week. UCE received and entered in the database within the preceding 6 months is searchable. Periodically, staff has used the data to supplement 

8

law enforcement and consumer and business education efforts. Commission staff has 

recently made arrangements to purchase new indexing software that will allow staff 

to conduct much more sophisticated searches as well as manipulate the data to determine trends and patterns in the UCE received. 

B. Aggressive Law Enforcement 

The Commission has responded to fraudulent UCE with a vigorous law enforcement program. To date, about 30 of the Commission’s Internet cases have targeted 

scams in which spam was an essential, integral element. Most of these cases have 

been Section 13(b) actions in federal district court. For example, in May 1999, the 

Commission filed FTC v. Benoit.11 This scheme used the ruse of a spam notification 

about charges purportedly to be billed to consumers’ credit card accounts to lure the 

consumers into calling an expensive international telephone number.12 The initial 

spam message purported to inform consumers that their ‘‘orders had been received 

and processed’’ and that their credit card accounts would be billed for charges ranging from $250 to $899. In fact, the consumers had not ordered anything. The spam 

advised recipients to call a specified telephone number in area code 767 with any 

questions about the ‘‘order’’ or to speak to a ‘‘representative.’’ Many consumers were 

unaware that area code 767 is in a foreign country—Dominica, West Indies. But because Dominica is included within the North American Numbering Plan,13 it was 

not necessary to dial 011 or any country code to make the calls. 

Consumers who called to prevent charges to their credit cards, expecting to speak 

to a ‘‘representative’’ about the erroneous ‘‘order,’’ were connected to an adult entertainment ‘‘audiotext’’ service.14 Later, these consumers received charges on their 

monthly telephone bills for the international long-distance call to Dominica, West 

Indies. The defendants shared in the revenue received by a foreign telephone company for the costly international calls. The defendants hid their tracks by using 

forged headers in the spam they used to make initial contact with consumers. 

The final stipulated order that resolved this case includes a provision specifically 

prohibiting the defendants from sending or causing to be sent any e-mail (including 

unsolicited commercial e-mail) that misrepresents the identity of the sender of the 

e-mail or the subject of the e-mail. The Order thus bans the defendants from falsifying information in the ‘‘from’’ and ‘‘subject’’ lines of e-mails, as well as in the 

text of the message. 

Another recent case, FTC v. Martinelli,15 targeted an alleged pyramid scheme 

that centered on spam. The defendants in that case ran an operation called DP Marketing, which was a Connecticut-based pyramid scheme, elaborately disguised as a 

work-at-home opportunity. DP Marketing solicited new recruits through ‘‘spam’’ and 

through newspaper classified ads across the country. The spam contained messages 

such as: ‘‘National Marketing Company seeks individuals to handle office duties 

from home. This is a full or part-time position with a salary of $13.50/hr. The position consists of processing applications for credit, loans or employment, as well as 

online consumer service.’’

Consumers who responded by visiting DP Marketing’s Web site or by calling the 

company received a pitch stating that they could receive $13.50 per hour by just 

processing orders for the company from the comfort of their own homes. The defendants also represented that no experience was necessary, and that for a ‘‘registration 

fee’’ ranging from $9.95 to $28.72 purchasers would be sent everything needed to 

get started, including telephone scripts, product sheets, time sheets and ID numbers. What consumers actually got was a kit instructing them first to place advertisements identical to the ones to which they had responded, and then to read the 

same script to people who responded to their ads. Instead of $13.50 per hour, consumers’ earnings depended on the number of new victims they recruited. 

The FTC complaint alleged that the defendants misrepresented to consumers that 

DP Marketing offers jobs at a specified salary; failed to disclose the material fact 

that they were offering a pyramid work-at-home scheme; and provided to others the 

‘‘means and instrumentalities’’ to commit unlawful and deceptive acts. On November 

14, 2000, the court entered a stipulated final order banning the defendants from future pyramiding, barring them from misrepresenting the availability and profitability of jobs, and requiring the defendants to pay $72,000 in consumer redress. 

The Commission has also brought a number of cases against credit repair scams 

that used spam as an integral aspect of their deception.16 In a particularly pernicious variation on this scheme, consumers are urged to create a new credit identity in order to fix their credit. Using spam messages such as ‘‘BRAND NEW CREDIT FILE IN 30 DAYS,’’ these scammers induce consumers to purchase instructions 

about how one can obtain a federally-issued, employee or taxpayer identification 

number, and use these numbers illegally in place of social security numbers to build 

a new credit profile that will purportedly allow one to get credit that would be deVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00012 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
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nied based on one’s true credit history. In fact, using a false identification number 

to apply for credit is a felony—a point these scammers omit from their solicitations. 

The Commission, either on its own or through the Department of Justice, filed cases 

against seven operations that used this type of deceptive spam.17

More recently, in FTC v. Para-Link International,18 the FTC sued several Floridabased companies that were using spam to market a work-at-home paralegal business opportunity. The Commission’s complaint charged that the defendants use 

spam to induce consumers to purchase the business opportunity for $395–495. The 

spam contained representations such as: ‘‘Make Over $200 An Hour,’’ and ‘‘You Can 

Process Simple Divorces and Bankruptcies From Home and Make Over $200 An 

Hour in as little as 30 Days!!!’’; and urged prospective purchasers to call a toll-free 

number for more information. Defendants promised that the business opportunity 

would include training so purchasers could become at-home paralegals; defendants 

also promised to refer a steady stream of clients to purchasers of the business opportunity for a fee of $25 each. 

According to the FTC’s complaint, few consumers who purchased the business opportunity from the defendants ever realized these earnings. The court entered a 

temporary restraining order (‘‘TRO’’) against the defendants on October 17, 2000, ordering them to cease operations, freezing their assets, and appointing a receiver to 

take charge of the companies. Subsequently, the court issued an order that extended 

the relief granted in the TRO pending issuance of a preliminary injunction. 

Other types of deceptive schemes that use UCE have also been targets of FTC 

enforcement action, such as deceptive business opportunities 19 and deceptive weight 

loss schemes.20 As these cases illustrate, the Commission’s focus has been on the 

deceptive content of UCE messages. 

C. Comprehensive Consumer and Business Education 

The Commission has published nine consumer publications related to UCE, available in paper format and downloadable from the FTC’s Web site. More than 1.6 million of these documents have been distributed to consumers, either through paper 

copies or via access to the Commission’s Web site.21

The first, Phone, E-mail and Pager Messages May Signal Costly Scams, was 

published in 1996. It has been distributed in paper form over 16,000 times and has 

been accessed at the FTC’s Web site more than 18,000 times. Two versions of the 

related Trouble @ the In-Box help consumers identify some of the scams showing 

up in electronic in-boxes and offer tips and suggestions for assessing whether an opportunity is legitimate or fraudulent. These publications also advise consumers 

about how to handle UCE and offer ideas for consumers to control the flow of UCE. 

The publications steer consumers to additional resource materials that can help 

them determine the validity of a promotion or money making venture. To date, over 

87,000 paper copies of the brochures have been distributed, and they have been 

accessed on the FTC’s Web site nearly 53,000 times. 

How To Be Web Ready is a reader’s bookmark that offers consumers tips for 

safe Internet browsing. It provides guidance for consumers on how to safeguard personal information, question unsolicited product or performance claims, exercise caution when giving their e-mail address, guard the security of financial transactions, 

and protect themselves from programs and files that could destroy their hard drives. 

A number of corporations and organizations have provided a link from their Web 

sites to the tips on the FTC’s Web site, including Circuit City, Borders Group Inc., 

Netcom, Micron, and Compaq. More than 94,000 paper copies of the bookmark have 

been distributed, and it has been accessed more than 31,000 times on the FTC’s 

Web site. A related publication, Site-Seeing on the Internet: A Consumer’s 

Guide to Travel in Cyberspace, with similar helpful hints, has been accessed 

nearly a million times on the FTC’s Web site, and over 165,000 papers copies have 

been distributed. 

In July 1998, the FTC launched a public education campaign called Spam’s Dirty 

Dozen: 12 Scams Most Likely to Arrive Via Bulk E-mail to publicize the most 

prevalent UCE scams. The list of scams was culled from a sampling of more than 

250,000 spam messages that consumers had forwarded to the FTC’s spam mailbox 

at uce@ftc.gov. The consumer alert identified the following twelve types of deceptive 

solicitations and described how each operates: business opportunity schemes; bulk 

e-mail programs 22; chain letters; work-at-home schemes; health and diet scams; effortless income; free goods; investment opportunities; cable descrambler kits; guaranteed loans or credit on easy terms; credit repair; and vacation prize promotions. 

More than 24,000 paper copies of this consumer alert have been distributed, and 

it has been accessed more than 100,000 times on the FTC’s Web site. 

In March 2000, the Commission published an alert titled Unsolicited Mail, 

Telemarketing and E-mail: Where to Go to ‘‘Just Say No’’ which provided inVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00013 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
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formation to consumers on how to control junk mail and e-mail. Over 21,000 copies 

of this alert have been distributed in paper form, and it has been accessed over 

20,000 times on the FTC’s Web site. In September 2000, the Commission published 

a consumer alert entitled The Lowdown on Chain Letters in an effort to warn 

consumers about the risks of chain letters that arrive via e-mail. Over 10,000 paper 

copies of this brochure have been distributed, and it has been accessed over 8,200 

times on the FTC’s Web site. 

In January of this year, the FTC published Cracking Down on Mail, E-mail 

and Fax Scams: Project Mailbox that offers tips to consumers about avoiding 

being scammed by mail or e-mail offers. The publication is only available on the 

FTC’s Web site, and has been accessed online nearly 1,300 times to date. 

IV. The Commission’s Views on S. 630, the ‘‘Controlling the Assault of NonSolicited Pornography and Marketing Act of 2001’’ ( the ‘‘CAN Spam Act 

of 2001’’). 

The Commission generally favors the underlying goals of S. 630, which are to help 

control the additional costs and other potential negative effects that UCE can impose on Internet access service providers and other businesses and consumers that 

use the Internet, and to support consumer choice in the matter of whether to receive 

UCE. There are two basic problems that S. 630 addresses. First, there is the problem of fraudulent or deceptive UCE, and second, but also important, is the infrastructure problem that flows from the sheer volume of UCE. UCE, even if not deceptive, may lead to significant disruptions and inefficiencies in Internet services, and 

may constitute a great nuisance to consumers and businesses using the Internet. 

Both of these problems together pose a threat to consumers’ confidence in the Internet as a medium for personal electronic commerce.23

S. 630 mandates the ‘‘permission-based’’ marketing model already adopted by 

many well-known manufacturers and sellers of consumer goods and services, and 

advocated by the Center for Democracy in Technology and other groups in their 

1998 ‘‘Report to the Federal Trade Commission of the Ad-Hoc Working Group on 

Unsolicited Commercial E-Mail.’’ 

Section 5 of S. 630 would make it unlawful to initiate transmission of a commercial e-mail message that does not contain specified items of information designed to 

enable consumers to identify UCE and to prevent future receipt of it from that sender. These disclosures, required to be clear and conspicuous, are: an identification 

that the e-mail is an advertisement or solicitation; a notice of the opportunity (mandated by the bill) to decline to receive further UCE from the sender to the recipient; 

a functioning return e-mail address to which a recipient may send a reply to the 

sender to indicate a desire not to receive further e-mails from that sender; and a 

valid physical postal address of the sender. Section 5 of S. 630 would also make it 

unlawful:

• for a sender, or any person acting on behalf of the sender, to initiate the transmission of UCE to any recipient after that recipient has sent to the e-mail address provided by the sender a request not to receive further e-mail from that 

sender;

• for any person to initiate the transmission of a commercial e-mail message that 

‘‘contains, or is accompanied by, header information that is materially or intentionally false or misleading, or not legitimately obtained;’’ or

• for any person to initiate the transmission of a commercial e-mail message 

‘‘with a subject heading that such person knows is likely to mislead the recipient about a material fact regarding the contents or subject matter of the message.’’

S. 630 includes a multi-faceted enforcement scheme. First, Section 5 of the bill, 

described above, would be enforceable by the FTC, and any violation of it would be 

treated as if it were a violation of an FTC Trade Regulation Rule adopted pursuant 

to Section 18 of the FTC Act, 45 U.S.C.§ 57a. This means that each such violation 

would subject the violator to a maximum civil penalty of $11,000 in an enforcement 

action by the FTC.24

Second, the bill would allow other federal agencies that have jurisdiction over industries whose activities are wholly or partially exempt from the FTC’s jurisdiction, 

such as banking and common carriers, to enforce the bill. Third, both providers of 

Internet access service and the Attorneys General of the various states would have 

enforcement authority to obtain injunctions against violations of Section 5 of the 

bill, and to recover damages.25

In addition to civil enforcement of Section 5 of S. 630, Section 4 of the bill would 

establish liability for criminal fines or up to one year imprisonment for anyone who 

11

‘‘intentionally initiates the transmission of any unsolicited commercial electronic 

mail message . . . with knowledge that such message contains or is accompanied 

by header information that is materially or intentionally false or misleading.’’

S. 630 specifically provides that it would have no effect on the ability of providers 

of Internet access service to enforce their anti-UCE policies. Finally, the bill would 

mandate a study by the Commission within 18 months that would provide a detailed analysis of the effectiveness and enforcement of the bill’s provisions. 

The Commission’s views, set forth below, on the provisions of S. 630, are informed 

by workshops and other discussions the Commission has had with interested members of the Internet and marketing industry, as well as the Commission’s law enforcement experience in the area of UCE, and in related areas, such as the ‘‘Do Not 

Call’’ provision of the Telemarketing and Consumer Fraud and Abuse Prevention 

Act.26 Where useful, the Commission also sets forth its views on H.R. 718, another 

legislative proposal dealing with UCE that is similar to S. 630.27

A. The Definition of the Term ‘‘Commercial Electronic Mail Message’’ [§ 3(2) of S. 

630]. 

A key term used throughout S. 630 is ‘‘commercial electronic mail message’’; this 

term is defined in Section 3 of the bill. The relevant portion of the definition provides that ‘‘an electronic mail message shall not be considered to be a commercial 

electronic mail message solely because such message includes . . . a reference or 

link to an Internet web site operated for a commercial purpose.’’ Commission staff 

has observed that much UCE—particularly UCE related to pornographic web 

sites—consists of nothing more than such a reference or link. The definition as currently drafted could potentially be exploited by senders of such UCE to evade the 

requirements of the bill. As a practical matter, it may be difficult to demonstrate 

to a court that an e-mail consisting of nothing more than a URL and perhaps a 

statement such as ‘‘check this web site!’’ falls within the bill’s definition of ‘‘commercial electronic mail message’’—i.e,. that its ‘‘primary purpose . . . is to advertise or 

promote, for a commercial purpose, a commercial product or service’’—when the definition apparently demands more than a reference or link to an Internet web site 

operated for a commercial purpose to bring an e-mail message within the scope of 

the bill’s coverage. The House Bill currently under consideration, H.R. 718, avoids 

this problem by employing a definition of the term that tracks the definition in S. 

630 but excludes the final problematic clause. 

B. The Prohibition Against Header Information That Is Materially or Intentionally 

False or Misleading, or Not Legitimately Obtained [§ 5(a)(1) of S. 630)]. 

This provision would likely benefit consumers. Chief among consumer complaints 

about UCE is that consumers do not know who sent the UCE, and therefore do not 

know to whom they can send a request not to receive more UCE. In addition, false 

routing information can cause UCE messages to clog the e-mail systems of providers 

of Internet access service, thereby slowing service to consumers trying to dial into 

the Internet through those providers of Internet access service or even completely 

shutting down the providers’ systems. Indeed, some providers have had to devote 

significant resources and staff to dealing with the sometimes overwhelming tide of 

UCE. These costs likely are passed on to consumers. The Commission is aware of 

no legitimate reason for using false header information. 

The provision prohibiting falsification of routing information would allow a consumer to know who sent him or her the UCE. It could also help providers of Internet access service better handle the flow of both solicited and unsolicited commercial 

e-mail, because valid routing information is more easily handled by the Internet access service providers’ e-mail servers. This could result in fewer impairments to consumers’ Internet service, and possibly fewer costs passed on to consumers. 

The provision strikes an appropriate balance by specifying that header information that is ‘‘materially . . . false or misleading’’ violates Section 5 of S. 630, while 

technically false header information not meeting the standard of ‘‘materiality’’ would 

be actionable only if it could be shown that the falsehood was intentional. This appropriately ensures that inadvertent and relatively minor mistakes in header information will not trigger enforcement action or private lawsuits. 

The language in the provision specifying that header information ‘‘not legitimately 

obtained’’ violates Section 5 of the bill appears ambiguous. To ensure that this language does not create enforcement problems or engender unintended lawsuits, clarification would be helpful. 

This provision would impose few if any additional costs on senders of commercial 

e-mail. Further, the benefits to providers of Internet access service, recipients of email, and Internet users generally who desire and expect optimum convenience, 

likely outweigh any additional costs. Also, these provisions could make the use of 

12

commercial e-mail a more effective marketing tool, because consumers likely would 

be more willing to trust the contents of a piece of UCE if they know the source of 

the e-mail. 

C. The Prohibition Against a Subject Heading That Such Person Knows Is Likely 

To Mislead the Recipient About a Material Fact Regarding the Contents or Subject Matter of the Message [§ 5(a)(2) of S. 630]. 

Consumers also complain about being misled by false subject lines of UCE. These 

misrepresentations lead them into believing that the contents are about one thing, 

but when they open the e-mail, they discover that it is about something else entirely. For example, many senders of UCE that advertises pornography will use benign subject lines such as ‘‘Thanks for lunch’’ or ‘‘An old friend’’ that the average 

e-mail recipient might believe are messages from someone he or she knows. In fact, 

to the consumer’s surprise, such UCE advertises pornographic Web sites. A subject 

line that non-deceptively described the contents of the UCE would allow a recipient 

to make an informed decision about whether to open the message. 

The Commission is aware of no legitimate reason for using false subject heading 

information and supports this provision. Prohibiting deceptive subject lines would 

impose few, if any, additional costs on legitimate companies that use commercial email to promote their goods and services. Benefits to individual consumer recipients 

of e-mail and to Internet users generally would outweigh any costs. As with the provisions discussed above, this provision could make the use of commercial e-mail a 

more effective marketing tool, because consumers likely would be more willing to 

trust the contents of a piece of UCE if they could rely on representations made in 

the subject to accurately and truthfully reflect the message’s contents. 

This provision of S. 630, however, raises an issue about the Commission’s authority to challenge deception under Section 5 of the FTC Act. Currently, the Commission could challenge a materially false or misleading subject line in a commercial 

e-mail message under Section 5 of the FTC Act, as it could any other deceptive representation. The applicable legal standard that must be met to demonstrate a deceptive practice is that it is ‘‘likely to mislead consumers acting reasonably under the 

circumstances about a material fact.’’ 28 S. 630 would establish a higher standard 

applicable to subject lines in commercial e-mail messages by requiring a showing 

that the person who sent the e-mail had knowledge that the subject line was likely 

to mislead the recipient about a material fact regarding the contents or subject matter of the message. The scienter requirement—not an element of deception under 

Section 5 of the FTC Act—would make it more difficult for the Commission to take 

action under S. 630 against materially false and misleading subject lines. As a matter of law enforcement, deceptive UCE should not be treated differently from any 

other deceptive act or practice. Moreover, the requirement of a showing that the 

subject line was likely to mislead the recipient, and not a reasonable consumer, 

could increase the burden on the Commission in any action targeting materially 

false or deceptive representations made in subject lines of commercial e-mail messages. This may require a showing that each individual recipient was likely to be 

misled, a very difficult burden to meet. 

Because violating Section 5 of S. 630 would expose a person to liability for civil 

penalties of up to $11,000 per violation, the Subcommittee may believe it appropriate to adopt stringent standards for liability in S. 630 to protect against penalties 

for what could be mere technical violations of the Bill.29 However, the Commission 

believes that it would be useful for S. 630 to make clear that it does not affect the 

FTC’s current ability to bring enforcement actions targeting materially false or deceptive representations in commercial e-mail messages under Section 5 of the FTC 

Act, pursuant to the criteria of, and seeking the remedies available under, that 

Act.30 This could be accomplished by broadening the savings clause in Section 7(a) 

of the bill.31 Therefore, clarification of an intent to leave intact the Commission’s 

powers under the FTC Act with respect to deceptive representations in subject lines 

of commercial e-mail messages would be helpful. 

D. The Requirement of an E-mail Address to Which Consumers Can Request to No 

Longer Receive UCE, and the Requirement That Senders of UCE Honor Such 

Requests [§§ 3 & 4 of S. 630]. 

These provisions would also likely benefit consumers. A major frustration among 

recipients of commercial e-mail, and particularly with UCE, is that often any reply 

to the sender’s e-mail address ‘‘bounces back’’ and is never received by the sender. 

In such a case there is nothing the consumer can do to avoid receipt of additional 

commercial e-mail from the same sender. 

The provision requiring senders of commercial e-mail messages to include a valid 

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mail, and requiring senders to honor such requests, would go a long way in helping 

consumers control the amount of commercial e-mail, both solicited and unsolicited, 

they receive. However, it would likely impose some burdens on senders of commercial e-mail. S. 630 would require every sender of commercial e-mail to set up and 

maintain an e-mail account to which consumers could send requests, and senders 

would have to monitor and update their mailing lists at least as often as every 10 

days. Nevertheless, the benefits of such a requirement would likely outweigh the 

costs to the senders. 

E. The Requirement of an Identifier, Opt-out Opportunity, and Physical Address of 

the Sender in Each UCE Message. 

S. 630 would require that every UCE message contain an identifier indicating 

that the message is an advertisement or solicitation. This provision would benefit 

consumers by enabling them to immediately recognize UCE messages as advertisements. It also may allow consumers to employ software that would filter UCE into 

a separate folder, or block UCE messages entirely. This provision would thus help 

empower consumers to control the amount of UCE they receive. Notice that a message is an advertisement or solicitation would impose few, if any, additional costs 

on senders of UCE; they would merely have to add a few words (or even a few letters) to each message sent. Unlike print or broadcast communications, additional 

words in e-mail messages do not add to their cost. 

S. 630 would also require each UCE message to contain a clear and conspicuous 

notification of an opportunity for the recipient to decline to receive further UCE 

from the sender. This requirement would benefit consumers by helping them realize 

that they have a choice about whether they wish to receive additional UCE from 

a particular sender. Again, this requirement would impose few, if any, additional 

costs on senders of UCE; as with the identifier requirement, they would only have 

to add a few words to each message sent. It might also lower the overall volume 

of unwanted UCE on the Internet, thereby lowering certain cost burdens imposed 

on providers of Internet access service and potentially passed on to consumers. 

Finally, S. 630 would require that each UCE message include the physical location of the sender. This provision might produce benefits in the form of enhanced 

consumer confidence in the legitimacy of senders. In cases where the UCE eventually leads to a transaction, the consumer would have an additional means of contacting the seller if the goods or services are not provided in accordance with the 

consumer’s understanding, or, where applicable, if the consumer wishes to go to a 

seller’s store. It is noteworthy that this provision of S. 630 is consistent with the 

guidelines of the Organization for Economic Co-operation and Development, which 

recommend that online businesses disclose their physical address. The Commission 

has endorsed those guidelines.32

F. The Enforcement Scheme. 

The enforcement scheme laid out by S. 630 likely would work well. It is modeled 

on similar schemes Congress established for enforcement for the Commission’s 900-

Number Rule and the Telemarketing Sales Rule in the statutes that mandated promulgation of those Rules.33 The enforcement provisions would allow the Commission 

to treat violations of S. 630 as violations of a rule under Section 18 (15 U.S.C. § 57a) 

of the FTC Act regarding unfair or deceptive acts or practices. Moreover the Commission’s efforts would be supplemented with those of the state Attorneys General, 

and possibly by other federal agencies with jurisdiction in areas where the FTC has 

none. This type of dual federal-state enforcement scheme has proved extremely successful in the past, particularly in challenging deceptive and abusive telemarketing 

practices, and the Commission would expect it to work equally well in this context. 

G. The Effect on Other Laws [§ 7 of H.R. 630]. 

S. 630 provides an express savings clause for specific enforcement provisions of 

the Communications Act of 1934 and for federal criminal statutes. This express 

clause appears to preclude enforcement of most existing federal civil laws that apply 

to commercial electronic mail, such as the FTC Act’s broad prohibition of deceptive 

advertising, except to the extent specifically provided in S. 630. The Commission believes that S. 630 should not supplant other relevant federal law, and recommends 

expanding the savings clause to make this clear. 

H. The Provision That Within 18 Months the Commission Conduct A Study of the 

Effectiveness and Enforcement of S. 630’s Provisions.34

A study of the effectiveness and enforcement of S. 630, if enacted with a requirement for such a study, would be based largely on the consumer complaint data from 

the Commission’s UCE database. This database holds more than eight million UCE 

messages forwarded by consumers and providers of Internet access service. The 

14

Commission uses this database to assess the current state of UCE, spot emerging 

trends, and target its law enforcement efforts on the most serious problems. The 

Commission would be able to conduct a study on the effectiveness and enforcement 

of S. 630’s provisions. However, 18 months may be too short a time frame for the 

Commission to effectively research and develop such a study. To meaningfully measure the effect of S. 630, it may be necessary to assess the situation before it goes 

into effect, and then gather data and information after it goes into effect and businesses have had time to come into compliance. The Commission therefore urges that 

the time frame for the study be extended to 24 months, in order to enhance the 

value of the study. 

The Commission appreciates the opportunity to provide its views on S. 630 and 

on its efforts against deceptive UCE. I would be happy to answer any questions. 

END NOTES 1The views expressed in this statement represent the views of the Commission. 

My responses to any questions you may have are my own. 2 15 U.S.C. § 45(a). The Commission also has responsibilities under more than 45 

additional statutes, e.g., the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq.,

which establishes important privacy protections for consumers’ sensitive financial 

information; the Truth in Lending Act, 15 U.S.C. §§ 1601 et seq., which mandates 

disclosures of credit terms; and the Fair Credit Billing Act, 15 U.S.C. §§ 1666 et seq., which provides for the correction of billing errors on credit accounts. The Commission also enforces over 35 rules governing specific industries and practices, e.g., the 

Used Car Rule, 16 CFR Part 455, which requires used car dealers to disclose warranty terms via a window sticker; the Franchise Rule, 16 CFR Part 436, which requires the provision of information to prospective franchisees; and the Telemarketing Sales Rule, 16 CFR Part 310, which defines and prohibits deceptive telemarketing practices and other abusive telemarketing practices. 3The FTC has limited or no jurisdiction over specified types of entities and activities. These include banks, savings associations, and federal credit unions; regulated 

common carriers; air carriers; non-retail sales of livestock and meat products under 

the Packers and Stockyards Act; certain activities of nonprofit corporations; and the 

business of insurance. See, e.g., 15 U.S.C. §§ 44, 45, 46 (FTC Act); 15 U.S.C. § 21 

(Clayton Act); 7 U.S.C. § 227 (Packers and Stockyards Act); 15 U.S.C. §§ 1011 et seq.

(McCarran-Ferguson Act). 4FTC v. Corzine, CIV–S–94–1446 (E.D. Cal. filed Sept. 12, 1994). 5Section 5 of the FTC Act, 15 U.S.C. § 45, authorizes the Commission to prohibit 

unfair or deceptive acts or practices in commerce. The Commission may initiate administrative litigation, which may culminate in the issuance of a cease and desist 

order. It can also enforce Section 5 and other laws within its mandate by filing actions in United States District Courts under Section 13(b) of the FTC Act, 15 U.S.C. 

§ 53(b), seeking injunctions, consumer redress, disgorgement, and other equitable relief. Section 18 of the FTC Act, 15 U.S.C. § 57a, authorizes the Commission to promulgate trade regulation rules to prohibit deceptive or unfair practices that are 

prevalent in specific industries. Courts may impose civil penalties of up to $11,000 

per violation of Commission trade regulation rules. 6For example, the National Advertising Division of the Council of Better Business 

Bureaus, Inc., operates the advertising industry’s self-regulatory mechanism. 7For example, the Rule Concerning Cooling-Off Period for Sales Made at Homes 

or at Certain Other Locations (the ‘‘Cooling-Off Rule’’), 16 CFR Part 429; the Mail 

or Telephone Order Merchandise Rule, 16 CFR Part 435; the Trade Regulation Rule 

Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992 (‘‘The 900-

Number Rule’’), 16 CFR Part 308; and the Telemarketing Sales Rule Pursuant to 

the Telemarketing and Consumer Fraud and Abuse Prevention Act, 16 CFR Part 

310. 8The first of these was held in the fall of 1995, when the Commission held four 

days of hearings to explore the effect of new technologies on consumers in the global 

marketplace. Those hearings produced a staff report, Anticipating the 21st Century: 

Consumer Protection Policy in the New High-Tech, Global Marketplace (May 1996). 9This report is available at www.cdt.org/spam. 10 ‘‘Header’’ information, at minimum, includes the names, addresses, or descriptions found in the ‘‘TO:’’, ‘‘FROM:’’, and ‘‘SUBJECT:’’ lines of an e-mail. It also includes the technical description of the route an e-mail has traveled over the Internet 

between the sender and recipient. 11FTC v. Benoit, No. 3:99 CV 181 (W.D.N.C. filed May 11, 1999). This case was 

originally filed under the caption FTC v. One or More Unknown Parties Deceiving 

Consumers into Calling an International Audiotext Service Accessed Though Telephone Number (767) 445–1775. Through expedited discovery, the FTC learned the 

15

identities of the perpetrators of the alleged scam by following the money trail connected to the telephone number. Accordingly, the FTC amended its complaint to 

specify the defendants’ names. 12 A similar scheme that used spam was targeted in FTC v. Lubell, No. 3–96–CV–

80200 (S.D. Ia. 1996). In that case, the spam urged consumers to call an expensive 

international number to hear a message that purportedly would inform them about 

discount airline tickets and how to enter a sweepstakes. 13See http://www.nanpa.com/home. 14The term ‘‘audiotext services’’ describes audio information and entertainment 

services offered over the telephone through any dialing pattern, including services 

accessed via 900-number, as well as international and other non-900-number, dialing patterns. 15FTC v. Martinelli, No. 399 CV 1272 (CFD) (D. Conn. filed July 7, 1999). Other 

alleged pyramid schemes that utilized spam have been targets of FTC enforcement 

action. See, e.g., FTC v. Nia Cano, No. 97–7947–IH–(AJWx) (C.D. Cal. filed Oct. 29, 

1997); In re: Kalvin P. Schmidt, Docket No. C–3834 (final consent Nov. 16, 1998). 16FTC v. Consumer Credit Advocates, No. 96 Civ. 1990 (S.D.N.Y. filed Mar. 19, 

1996); FTC v. Dixie Cooley, d/b/a DWC, No. CIV–98–0373–PHX–RGS (D. Ariz. filed 

March 4, 1998). 17FTC v. Cliff Cross and d/b/a Build-It-Fast, Civ. No. M099CA018 (W.D. Tex. 

filed Feb. 1, 1999); FTC v. Ralph Lewis Mitchell, Jr., No. CV 99–984 TJH (BQRx) 

(C.D. Cal. filed Jan. 29, 1999); FTC v. Frank Muniz, No. 4:99–CV–34–RD (N.D. Fla. 

filed Feb. 1, 1999); U.S. v. A. James Black, No. 99–113 (M.D. Fla. filed Feb. 2, 1999); 

FTC v. James Fite, d/b/a Internet Publications, No. CV 99–04706JSL (BQRx) (C.D. 

Cal. filed April 30, 1999); U.S. v. David Story, d/b/a Network Publications, 3–

99CV0968–L (N.D. Tex. filed April 29, 1999); and FTC v. West Coast Publications,

LLC., CV 99–04705GHK (RZx) (C.D. Cal. filed April 30, 1999). 18FTC v. Para-Link International, No. 8:00–CV–2114–T–27E (M.D. Fla. filed Oct. 

16, 2000). 19 FTC v. Internet Business Broadcasting, Inc., No. WMN–98–495 (D. Md. filed 

Feb. 19, 1998); United States v. PVI, Inc., No. 98–6935 (S.D. Fla. filed Sept. 1, 1998). 20TrendMark International, Inc., Docket No. C–3829 (final consent Oct. 6, 1998) 21The distribution and access numbers for these consumer education materials 

are accurate as of March 31, 2001. 22These schemes claim that one can make money sending one’s own solicitations 

via bulk e-mail. They offer to sell one lists of e-mail addresses or software to allow 

one to make the mailings. What they don’t mention is that the lists are of poor quality and that sending bulk e-mail violates the terms of service of most providers of 

Internet access service. 23See Unsolicited Commercial E-mail: Hearing Before the Subcomm. on 

Telecomm., Trade and Consumer Protection of the House Comm. on Commerce,

106th Cong. (Nov. 1999) (statements of various providers of Internet access service 

detailing costs and loss of goodwill caused by UCE); Serge Gauthronet & Etienne 

Drouard, Unsolicited Commercial Communications and Data Protection (Jan. 2001), 

p. 9. (finding, in this study undertaken by the Commission of European Communities, that the global cost to Internet users may be conservatively estimated at 10 

billion Euros ($8.943 billion) annually); See generally the 1998 Report to the Federal 

Trade Commission of the Ad-Hoc Working Group on Unsolicited Commercial E-Mail

(citing several types of costs imposed on consumers and businesses by UCE—intrusion on consumers’ privacy, lost opportunity costs, Internet infrastructure costs, access and storage fees, and reputational harms) (available at www.cdt.org/spam). 24 An action seeking civil penalties for violation of a Trade Regulation Rule promulgated under Section 18 must be forwarded by the Commission to the Department of Justice for filing and litigating. If the Department of Justice declines to file 

the complaint within 45 days, the Commission, through its own attorneys, may file 

and litigate the matter. 45 U.S.C. § 56(a). Pursuant to Section 13(b) of the FTC Act, 

45 U.S.C. § 53(b), however, the Commission may file and litigate, through its own 

attorneys, any action seeking injunctive relief, consumer restitution, disgorgement 

of ill-gotten gains or other equitable remedies without first forwarding the matter 

to the Department of Justice. 25Successful plaintiff states or providers of Internet access service could recover 

an amount equal to actual damages or statutory damages of up to $10 for each separately addressed unlawful message received by the states’ residents, with a maximum of $500,000, and in cases of willful and knowing violations, three times this 

amount. Recovery of costs and reasonable attorneys’ fees would be authorized. Section 6(e) of S. 630 would establish an affirmative defense in cases brought by providers of Internet access service or the states where a defendant can show that it 

16

has established and implemented compliance policies and procedures, and that any 

violation occurred despite good faith efforts to follow those policies and procedures. 26 5 U.S.C. § 6102(a)(3)(A). 27This bill was introduced on January 3, 2001 by Rep. Heather Wilson, and is 

titled the ‘‘Unsolicited Commercial Electronic Mail Act of 2001.’’ 28 Cliffdale Associates, Inc., 103 F.T.C. 110, 165, appeal dismissed sub nom., Koven v. F.T.C., No. 84–5337 (11th Cir. 1984). 29 It is noteworthy that Section 5(m)(1) of the FTC Act, 15 U.S.C. § 45(m)(1), requires the Commission, in actions to recover civil penalties for violations of trade 

regulation rules, to prove that the defendant violated the rule ‘‘with actual knowledge or knowledge fairly implied on the basis of objective circumstances that such 

act is unfair or deceptive and is prohibited by such rule.’’ Moreover, this provision 

requires courts, in assessing civil penalties for rule violations, to ‘‘take into account 

the degree of [the defendant’s] culpability, any history of prior such conduct, ability 

to pay, effect on ability to continue to do business, and such other matters as justice 

may require.’’ 30 In enforcement actions under Section 5 of the FTC Act the Commission can not 

seek civil penalties; instead it can seek administrative cease and desist orders, or, 

in the case of actions in district court under Sections 5 and 13(b) of the FTC Act, 

equitable remedies—injunctions, disgorgement, or restitution for consumer victims. 31 In a related context, Congress ensured, in enacting the Telemarketing and Consumer Fraud and Abuse Prevention Act, that the Commission’s ability to challenge 

deceptive telemarketing practices under the FTC Act would remain intact by including a broad savings clause: ‘‘Nothing contained in this chapter shall be construed 

to limit the authority of the Commission under any other provision of law.’’ 15 

U.S.C.§ 6105(c): 32See, http://www.ftc.gov/opa/1999/9912/oecdguide.htm. 33Telephone Disclosure and Dispute Resolution Act of 1992 (codified in relevant 

part at 15 U.S.C. §§ 5701 et seq.) and the Telemarketing and Consumer Fraud and 

Abuse Prevention Act (codified in relevant part at 15 U.S.C.§§ 6101–6108). 34The House bill, H.R. 718, contains a provision substantially similar to the mandatory study provision of S. 630.

Senator BURNS. Thank you very much. We’ve enjoyed your testimony and I have some questions for you. We’ve been joined on the 

Committee by Senator Rockefeller. Do you have a statement? 

STATEMENT OF HON. JOHN D. ROCKEFELLER IV,

U.S. SENATOR FROM WEST VIRGINIA 

Senator ROCKEFELLER. I’m going to put it in the record. 

[The prepared statement of Senator Rockefeller follows:]

PREPARED STATEMENT OF HON. JOHN D. ROCKEFELLER IV,

U.S. SENATOR FROM WEST VIRGINIA

Thank you Mr. Chairman for holding this hearing. As we all know from our constituents, junk e-mail is a serious problem. It is costly to consumers; it is costly to 

Internet service providers; and it often puts pornography or fraudulent material into 

our in-boxes. 

We should find a way to reduce the costs of junk e-mail, while respecting the First 

Amendment, and the rights of legitimate marketers. 

I applaud your efforts to bring this matter before the Committee again this year, 

and to reintroduce legislation. However, I feel that for legislation to be successful 

it must include several things that are not yet in the bill we are considering. 

First, we should give regular Americans and businesses the ability to protect 

themselves from junk e-mail. The bill includes a ‘‘private right of action’’ for Internet service providers, but leaves regular Americans and businesses without the ability to go to court if they are injured in violation of the bill. 

I agree that we should give Internet service providers the right to sue, but why 

leave the everyday people who have to suffer through junk e-mail everyday with no 

way to seek redress? That doesn’t make sense. 

Second, we should listen hard to what Mr. Catlett on the second panel has to say 

about how effective the proposed bill would be in actually stopping illegitimate junk 

e-mail. This bill should be about consumers—Internet users—first and foremost. If 

we do not give consumers the tools to stop e-mails they don’t want, then the bill 

will not work. 

17

I think that we should start by requiring that every commercial e-mail contain 

the word ‘‘advertisement’’ in the subject line. That way consumers can use technology to filter for them if they wish. Mr. Catlett has several other ideas that we 

should pay close attention to. 

I am sorry that I cannot spend more time at the hearing today and I look forward 

to working with all of you on moving this bill forward.

Senator BURNS. You’re going to put your statement in the record 

and I’m—Ms. Harrington, do we need legislation to enable you to 

do the things that should be done with regard to spamming? 

Ms. HARRINGTON. I think that this proposed bill greatly enhances 

the FTC’s current statutory authority. We don’t need legislation to 

give the FTC the authority to bring enforcement action against deception. However, this legislation makes very specific that certain 

practices are deceptive so that lightens our prosecutorial burden, if 

you will, by establishing that as a matter of law it is a deceptive 

practice to fail to do certain things. And in addition, there are provisions in S. 630, for example the requirement of opt-out, and the 

requirement that there be a valid return e-mail address and a 

physical address that probably—that certainly wouldn’t be natural 

remedies that we could obtain in a lawsuit under the FTC Act, so 

yes, I think there is a need. 

Senator BURNS. How close are you to being up to speed for enforcement of this Act? 

Ms. HARRINGTON. We’re ready. 

Senator BURNS. You’re ready. Any additional dollars you’ll need? 

Ms. HARRINGTON. I don’t do dollars. 

[Laughter.] 

Ms. HARRINGTON. Let me tell you that the FTC has been the 

leading federal enforcement agency in the area of Internet fraud 

both in terms of the dollar volume of fraud stopped, the numbers 

of actions taken. We’ve done that on a lean budget. Our people are 

well-trained and ready to go. We have, as I mentioned, an existing 

database of over 8 million pieces of spam. That is a searchable 

database and we can search that database to find spam that is not 

in compliance with certain provisions of this statute if it becomes 

law, and we’re ready to go. 

Senator BURNS. I found the Wall Street Journal article the other 

day very interesting and pretty eye-opening too. It seems like as 

soon as the ISPs and the consumers come up with ways to filter 

out spam, it doesn’t take spammers very long to circumvent that 

other technology. Can you comment right now, the cat and mouse 

game, and if there’s anything the FTC can do and again, do you 

have the tools to do it? 

Ms. HARRINGTON. We have decades of experience with fraudsters 

using new technologies and they are very good at innovating to get 

around laws and other blocks to their bad practices. I cannot tell 

you that we can stay a step ahead of them. 

Senator BURNS. We’re also running into a lot of spamming in the 

wireless situation. 

Ms. HARRINGTON. Right. 

Senator BURNS. Are you equipped there? 

Ms. HARRINGTON. I think that——

Senator BURNS. Is the spamming in the wirless a little bit different than in the wire lines. 

18

Ms. HARRINGTON. It is. It’s interesting you ask. I just came back 

from a meeting of an organization called the International Marketing Supervision Network which is a group of consumer protection authorities from over 30 OECD and related countries. I was 

talking to our colleagues in Scandinavia where wireless is a far 

more pervasive form of communication technology and I was talking to them specifically about this issue, about wireless spam. 

I think we have a steep learning curve to get up to speed. We’re 

working on it. We had a workshop about 9 months ago on this 

issue at the FTC, where we invited industry and law enforcement 

and consumer groups to come in and talk with us about the technology, about business plans and business models that might use 

that technology for marketing. I would tell you that the legitimate 

businesses, both the communications companies and the innovators 

who are seeking to use the technology, have been very forthcoming 

and helpful in helping us understand this. But I think we’ve got 

a steep learning curve. 

We can always use more resources. When I say I don’t do dollars, 

I run an enforcement program. We have done everything that we 

can do to stretch every person’s time and every dollar that the Congress has provided to us. I think wireless poses a whole new set 

of issues again and I think that if there are additional resources 

to be had, we would make good use of them. And I can also tell 

you that with the resources we currently have, we are working 

very hard to understand and stay on top of the technology. 

Finally, I would say that one difference between our approach to 

the Internet and now wireless and to the fraudulent and deceptive 

applications of new technologies—one difference between our approach at the FTC and practically everyone else’s approach, I 

think, is that our decision was to train the entire staff, all of the 

attorneys, all of the investigators, all of the paralegals on these 

technologies. 

So rather than having a unit that is only devoted to the Internet, 

everybody knows about the Internet, has access to our lab and our 

tools. And that means we can shift our people really quickly from 

telemarketing to Internet to wireless back to telemarketing because 

everybody’s trained up. 

Senator BURNS. You mentioned the fact that you had over 8 million complaints on spamming and examples of spamming. Can you 

give me any kind of a figure on the number or the percentage of 

those complaints which were out and out fraudulent pieces of 

spam? 

Ms. HARRINGTON. Whew, there are two ways of looking at it. 

Number one, what does the spam say. And I would say that the 

overwhelming majority of those 8 million pieces of spam make blatantly false statements about earnings, about product performance, 

something like that. 

On the other hand, and much to my gratification and ours, we 

find that the people who forward this spam to us generally don’t 

fall for it. There are certainly exceptions where consumers have 

lost significant money relying on these spams but we also find that 

lots and lots and lots of people don’t believe it. But they send it to 

us because we’ve asked—you know: give us your tired, your poor 

and your spam. We want this. We want to see what’s coming into 

19

consumers’ mailboxes. We want to organize it and search it, so that 

we can keep track of what’s going on with this marketing medium. 

Senator BURNS. Senator Rockefeller. 

Senator ROCKEFELLER. Thank you Mr. Chairman. 

Senator BURNS. You’re welcome. 

Senator ROCKEFELLER. We’re very courteous to each other. We’re 

good friends. 

I get a lot of these complaints too from my folks in West Virginia 

and actually it would be interesting to know the percentage of your 

folks versus my folks that have home computers, et cetera. We’ll 

compare that at a later date. You’re not responsible for that, Ms. 

Harrington. 

But one of the concepts which has been put forward is the idea 

of tagging, you know, labeling something in advertisements and I’m 

trying to think around in my mind what—you know, I turn on AOL 

and it sort of—do you have to say something’s an advertisement or 

do people kind of inherently know it’s an advertisement just by the 

way it looks? 

For example, when I put on AOL I cannot put on AOL without, 

you know, I hear the you’ve got mail thing only after I’ve gotten 

rid of what is clearly an advertisement for one reason, it’s not AOL, 

which one obviously recognizes. Then second, it looks like an advertisement. If it walks like a duck, et cetera. 

So my question to you would be, and ISPs I would have to assume might be against that, either because they think it’s inconvenient. They get revenue from it although, on the other hand, 

they also get swamped by it, or some people do, you know, trying 

to push all this stuff through. 

Do you think that tagging or labeling something in advertisement, the argument being that while—what is your view on that? 

Ms. HARRINGTON. With respect to unsolicited commercial e-mail, 

the proposed bill requires a label that would indicate that it is an 

advertisement or it is a commercial e-mail. 

Senator ROCKEFELLER. It would say advertisement. 

Ms. HARRINGTON. It doesn’t specifically say that it has to say advertisement I don’t believe. 

Senator ROCKEFELLER. Well that’s what I am trying to get from 

you. In other words, isn’t—I mean there are all kinds of users. I 

mean it’s like, one of the people that I work with and I were talking over here about people using cell phones, and we were trying 

to figure out how many unnecessary phone calls are made because 

there are things called cell phones in this world, and we came up 

with a mutual conclusion of about 50 percent of the phone calls 

that were made really don’t have to be made, but they are there 

because everybody’s got a phone. So, everybody’s got an advertisement. 

My assumption is that they would recognize that. That may be 

only because I use the Internet and therefore am in a position to 

recognize it and others might not and might be subject to it, particularly the ones that pop up, you know, in the corner of your 

screen. They tend to have a special kind of a nature. Then you read 

them, you don’t look for the tag, you just—you look for the body 

of information to the extent that your eye stays over there, and you 

know it’s an advertisement. So, I just want to get a sense of whethVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00023 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
20

er you think it’s necessary to label it as such, where those who 

don’t use it as much might be less—or it’s fine without it. 

Ms. HARRINGTON. Well you raise the issue of blurring. And that’s 

an issue that has been central to all media as it becomes used more 

and more for advertising. We have issues with newspapers in blurring, and you now see in print media typically, that text that looks 

like it could be editorial text is labeled, advertisement when it is 

such. We saw that issue with television in blurring——

Senator ROCKEFELLER. It’s the same principle there actually, because it’s like—I obviously did mean to interrupt you or else I 

wouldn’t have done it. But for example, sometimes countries whose 

kings or prime ministers are coming over here, do sections. And 

you’re right. In the newspaper, advertisement will be written 

across the top. But you don’t need to see that to know that. It looks 

like that, because it’s got a picture of the king or the prime minister or whatever it is and some beautiful ocean. So, you know it’s 

an advertisement without looking. So I, again, I just want to hone 

in on the tagging thing. 

Ms. HARRINGTON. But—one of the beauties of the Federal Trade 

Commission Act is that it focuses on the reasonable consumer, and 

what a consumer reasonably understands is something that 

changes with time, with experience. You posed the question from 

the standpoint of the consumer who is less familiar with the Internet. And when a medium is new, I think that we need to assume 

that most consumers are less familiar. So at one point in time, it 

is deceptive to fail, or it may be deceptive to fail to indicate that 

something is, in fact, an advertisement, when consumers are very 

unfamiliar with that. 

You raised the example, or point to the example of the pop up 

screen. And you know, I know that we’ve all seen pop up screens 

that are in the Microsoft Windows warning or error message format, that are actually advertisements. Are you familiar with that 

format? And so when you click on the red X to close it out, instead 

of closing it out, it may take you to an advertisement. Now my 

view is that, at this point in time, the reasonable consumer who 

sees a Microsoft Window warning message format in a pop up 

screen, the reasonable consumer thinks that that is an error or a 

warning message and doesn’t think that it’s an advertisement. Now 

5 years from now, the reasonable consumer may know, ah-hah. You 

know, that could be anything. And so, the reasonable consumer is 

less likely to be misled or deceived. 

So it really—that is really one of the great strengths of the Federal Trade Commission Act. It’s flexible because it focuses in part 

on what the reasonable consumer understands a representation or 

a situation to mean, and that changes, as media change, as circumstances change, as times change. 

Senator ROCKEFELLER. Do you think that this legislation would 

benefit from sort of a pop up part? 

Ms. HARRINGTON. Well this legislation is about unsolicited commercial e-mail, and I think that that’s a different matter than pop 

up screens and windows and other——

Senator ROCKEFELLER. No, I’m talking about pop ups that are 

advertisements. 

Ms. HARRINGTON. Right. 

21

Senator ROCKEFELLER. Not that are something else, you know, or 

a chat room or anything of that sort. I’m talking about a real advertisement. And you know the way they place those, you go to 

Netscape and all of a sudden you have something that you’re looking at and then you have this great—this perpendicular rectangle 

hits you in the face and you’ve got to get rid of it before you can 

go on. And that’s an enormous inconvenience. 

Ms. HARRINGTON. I think the pop up screens raise a lot of the 

same issues of deception that false header and router information 

raises. I think that the method of delivery is different. Spam is delivered one way and pop up screens are programmed really differently and they’re programmed to appear on a particular website 

rather than to be sent out as e-mail. So, I think that the method 

of delivery is different, and I’m not sure that there is a logical way 

to marry those two methods of delivery in one bill. That’s my, like 

off the top of my head answer. 

Senator ROCKEFELLER. As a matter of philosophy are you an optin or an opt-out person? 

Ms. HARRINGTON. Well the Commission’s position here is that it 

supports the opt-out provision in S. 630. 

Senator ROCKEFELLER. No, but that’s not what I asked. I’m trying to get underneath that. I mean, I’m an opt-in person. I think 

that you have to specifically say I am willing to do this. I want 

this, as opposed to you’re getting it and then, oh, by the way, I 

think I’ll decide to opt-out if I happen to understand what it is. I 

mean I’m just trying to get it at——

Ms. HARRINGTON. I think that the ISPs offer consumers the 

choice of—that is depending on which ISP I select, if I’m an optin person, I can select an opt-in ISP. If I’m an opt-out person, I can 

select an opt-out ISP. I personally have selected an opt-in ISP. 

Senator ROCKEFELLER. OK. Thank you. Now one more question. 

And that is, the obvious one. Regarding ISPs—fundamentally, computers and the use of them is about consumers. And it’s like saying 

is a car about General Motors or is a car about somebody who 

drives it. And I tend to think a car is about somebody who drives 

it, buys it, because it’s their property. So the General Motors consideration is there, but it’s secondary, to me at least. So that gets 

you to the so-called, the right to sue thing. And I know that can 

be an overblown question, and a stereotypical question, but nevertheless it’s an interesting one because—and I think that Senator 

Burns and Senator Wyden and others, Senator Breaux, when they 

introduced this bill, they introduced it as a platform, not as a final 

product, because that’s the way they usually do things, to get a discussion going and then to try and look at a bill that would be useful. But, isn’t that right reserved to ISPs. That is, the right to sue. 

Shouldn’t that be available to consumers and if—and I’m not asking, saying you have to agree with me, but I’d like to hear your 

kind of arguments on both sides. Some people say that you would 

be endlessly lost in litigation and all the rest of it, but I’d just be 

interested in your views. 

Ms. HARRINGTON. Well on the one hand, I think that there is no 

group that has both a stronger interest and greater strength in 

protecting the interest against spam, unwanted spam, than the 

ISPs do. And so, unlike your General Motors analogy where there 

22

may be a divergence of interest between General Motors’ interest 

and the product owner and driver’s interest, I think that the ISP 

and its customers may have a unified interest here in keeping unwanted e-mails out of consumers’ mailboxes. The basis of the unified interest may be different. With the ISP, it goes to the economics and efficiency and reputation of their company. For the consumer, it’s the time and nuisance factor of getting all this stuff. 

But I think the interest is the same. 

And so on the pro side, you asked me to argue both sides. On 

the pro side, I would say that here, the ISPs have the same interest as consumers. It’s rooted in something different, but the ISPs 

have more resources to take that interest to court and litigate it. 

I also think that there is greater efficiency in having the ISP bring 

the action, because then we have one lawsuit, not 10,000. 

Senator ROCKEFELLER. And I understand that. But if one of the 

things about this problem is that it is so incredibly cheap for advertisers. I mean it’s just the cheapest thing in the world. You push 

a button and millions of things go out across the world. Nevertheless, if you’ve gotten 8 million—I mean the aggregation of that begins to add up to quite a lot, and that implies therefore, revenue. 

And that revenue, even though it may be much smaller than television or radio or newspapers, nevertheless accrues to the ISPs. So 

is there anything to be said there? 

Ms. HARRINGTON. I’m not sure that there is revenue that accrues 

to the ISPs from the sending of bulk spam. I don’t know that. I 

think, though, to argue the other side of it, that is that there ought 

to be a right of action on the part of the individual, I would look 

at a couple of things first. The Telephone Consumer Protection Act 

of 1991 and 1992, which is enforced by the Federal Communications Commission gives individual consumers a cause of action in 

State Small Claims Court against telemarketers who call them 

after they have indicated to the telemarketer that they don’t wish 

to receive calls. 

So I would take a look at what the experience has been with that 

statute. I think that that is one of the first or few federal statutes 

that provides individuals with a right of action to vindicate their 

rights as consumers in state court, and my belief is that there has 

not been a glut of lawsuits brought in small claims courts on the 

part of individual consumers to enforce their rights under that statute. 

You know, one concern is well, gee, we are opening the floodgates. The FTC does all of its law enforcement work in federal 

courts and so I have a selfish interest because we are all trying to 

get speedy resolution of our lawsuits to benefit consumers and get 

money back. I have a selfish interest in arguing against opening 

the federal courts to private rights of action by individual consumers because I think that that slows, that that would not be 

workable. 

But you know, in this instance, Senator, I think that, that the 

ISPs and the customers who don’t want spam really have an identical interest, and for myself personally, Star Power is my ISP at 

home, and I’d rather have them go to court to keep spam out of 

my mailbox than me spending time going to court on my own. 

23

Senator ROCKEFELLER. If they would do that, and you indicate 

you think they would? Yes. It doesn’t—it still—if there is a precedent to do so, if there is a precedent by saying consumers can’t. 

Ms. HARRINGTON. Can or cannot? I am sorry. 

Senator ROCKEFELLER. Cannot, in this bill, and one has to deal 

with that at some point. But I understand what you are saying, 

and I appreciate your answers. Thank you, Mr. Chairman. 

Senator BURNS. Senator, the state’s attorney generals can do it. 

And each of the states can do it. On behalf of the consumers—we 

have been joined by Senator Allen of Virginia. And it is nice to 

have you here today. Ms. Harrington—and Senator Wyden, where 

have you guys been all day? 

Senator ALLEN. I was at the Foreign Relations Committee meeting. 

Senator BURNS. Good heavens. And we have been joined by Representative Goodlatte of Virginia, and who is working this legislation through the House side and if you would come forward and 

want to make a statement, why, we would sure entertain that. 

Senator Wyden, do you have questions for Ms. Harrington? 

Senator WYDEN. Mr. Chairman, since I just walked in, we were 

negotiating on a variety of the other tech questions, let me catch 

up a little bit so I am not repetitive, and I’ll have some in a moment. 

Senator BURNS. OK. Thank you very much. Ms. Harrington, we 

look forward to working with you and thank you for bringing some 

specifics that you think are necessary to make the legislation a little bit better and as far as you are concerned and the FTC. We appreciate those suggestions and we look forward in working with 

you as we get the final, the final bill out of Committee and move 

it on. So thank you for coming today, and we look forward to working with you. Thank you. 

We are joined now by Representative Goodlatte of Virginia, who 

is working his will or the will of this legislation through the House 

of Representatives. We welcome you here today, Congressman, and 

we look forward to your comments. 

STATEMENT OF HON. BOB GOODLATTE,

U.S. REPRESENTATIVE FROM VIRGINIA 

Mr. GOODLATTE. Thank you, Mr. Chairman. Would that that 

were so, directing my will. I do appreciate the opportunity to testify 

before the Committee. It is good to be back. You have been generous in inviting me to testify before, and I do have a statement 

to make a part of the record, and I would offer part of it. 

Senator BURNS. Without objection, so ordered. 

Mr. GOODLATTE. Unsolicited e-mail, especially commercial e-mail 

such as advertisements, solicitations, or chain letters has become 

the junk mail of the information age. Jupiter Communications reported that in 1999 the average consumer received 40 pieces of 

spam. By 2005, that organization estimates that the total is likely 

to soar beyond 1,600 pieces to the average consumer. These numbers are astounding and while it costs the spammer almost nothing 

to send, it results in damage to a protected computer and would 

be punishable by a fine under Title 18 or by imprisonment for up 

to 1 year. 

24

I want to commend you, Mr. Chairman, on the introduction of 

your own spam legislation that takes a balanced approach to combatting spam by including strong monetary penalties, but does not 

include a private right of action, an area in which we should proceed with caution in that it could have the effect of discouraging 

the use of electronic commerce. 

Because of the complexity surrounding all e-commerce issues like 

spam, legislation must be carefully balanced to ensure that enforcement mechanisms address real harms without causing damage to 

the unique advantages provided by the Internet. 

S. 630 provides law enforcement with the tools they need to combat spam without opening the floodgates to frivolous litigation. 

Legislation addressing the problem of unsolicited commercial email is greatly needed during this legislative session to protect consumers and Internet service providers from victimization by spam. 

I look forward to continuing to work with representative Heather 

Wilson, who has another important bill dealing with this issue in 

the House, as well as with you, Chairman Burns, and Senator 

Allen and Senator Wyden, who I know have a great interest in this 

legislation as well to achieve our common goal of reducing the burden of unwanted e-mail on consumers and Internet service providers, and I thank you for allowing me the opportunity to testify 

today. 

Senator BURNS. Just, you know, not only I think are we interested in protecting the ability of legitimate commercial entities. I 

guess financial institutions come to mind that sometimes they use 

e-mail to inform their clients and customers of changes and updates in company policies. These are actually mandated by law. 

Would your bill affect their ability to do that in any way? 

Mr. GOODLATTE. Absolutely not. This is designed to facilitate the 

ease with which businesses do that. Now, there are some concerns 

raised about other legislation and while I am very supportive of the 

efforts to push forward in that area with that legislation, I do think 

there is some fine tuning that needs to be done so that companies 

can effectively communicate with their customers, policyholders 

and so on without fear of violating the law. 

Senator BURNS. Well, we thank you for your statement today. We 

appreciate that very much. I understand you have been spammed, 

and I think we all have or whatever. I was back in 1955 in the 

United States Marine Corps, but—those, that is water under the 

bridge. 

Mr. GOODLATTE. It is great. 

[The prepared statement of Mr. Goodlatte follows:]

PREPARED STATEMENT OF HON. BOB GOODLATTE,

U.S. REPRESENTATIVE FROM VIRGINIA

Thank you, Mr. Chairman, for holding this very important hearing. I appreciate 

the opportunity to appear before the Subcommittee to testify about the need for legislation to address the growing problem of mass unsolicited e-mail, also known as 

‘‘spam.’’

The Internet is a revolutionary tool that dramatically affects the way we communicate, conduct business, and access information. Electronic-mail has become a powerful medium for commerce and communication by offering an affordable way for 

people to reach one another with rapid speed and reliable delivery. 

Marketers have learned to take advantage of this new capability to reach consumers. Many consumers choose to communicate via e-mail with their financial inVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00028 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
25

stitutions, favorite retailers and other companies with which they form relationships. Millions of individuals and businesses opt to receive communications and notices by e-mail. In order for the Internet to continue to thrive and grow as a medium 

for commerce, legitimate businesses must be able to responsibly communicate with 

their customers or consumers who wish to do so. 

However, unsolicited e-mail, especially commercial e-mail such as advertisements, 

solicitations or chain letters, has become the ‘junk mail’ of the information age. Jupiter Communications reported that in 1999 the average consumer received 40 

pieces of spam. By 2005, Jupiter estimates that the total is likely to soar to 1,600 

pieces of spam. These numbers are truly astounding. While it costs the spammer 

almost nothing to send, unsolicited e-mail messages burden consumers by slowing 

down their e-mail connections, and cause big problems for the small business owner 

who is trying to compete with larger companies and larger servers. 

Even more disturbing are the numerous examples that I receive from my own constituents of the increasing amount of spam that is pornographic in nature. This pornographic spam, opened innocently by the recipient, often disguises the subject of 

the e-mail and includes a link that takes the recipient to a pornographic web site. 

E-commerce will never reach its full potential if consumers and their children cannot utilize e-mail without the fear of being unwillingly transported into the seamier 

side of the Internet. 

Consumers are not the only ones victimized by spam. In recent instances, unsolicited e-mail transmissions have paralyzed small Internet Service Providers (ISPs) by 

flooding their servers with unwanted e-mail. Excessive e-mail tie up network bandwidth and monopolize staff resources. This has the potential to do great damage to 

small ISP companies and the communities they serve. 

Currently, ISPs are developing programs that require the individual sending the 

unsolicited message to include a valid e-mail address, which can then be replied to 

in order to request that no further transmissions be sent. Under these programs, 

once the individual sending the original e-mail receives a request to remove an address from their distribution list, they are required to do so. However, offending 

spammers get around this requirement by using the e-mail address of an 

unsuspecting user to spam others. 

To address the problem of fraudulent unsolicited e-mail, I have introduced legislation in the House to give law enforcement the tools they need to prosecute individuals who send unsolicited e-mail that clog up consumers’ in-boxes: H.R. 1017, the 

Anti-Spamming Act of 2001. 

The Anti-Spamming Act would amend the criminal code to address fraudulent unsolicited electronic mail. It would add to the substantive conduct already prohibited 

under the law, by prohibiting both the intentional and unauthorized sending of unsolicited e-mail that is known by the sender to contain information that falsely identifies the source or routing information of the e-mail. 

This legislation would subject those who commit such prohibited conduct to a 

criminal fine equal to $15,000 per violation or $10 per message per violation, whichever is greater, plus the actual monetary loss suffered by victims of the conduct. In 

addition, prohibited conduct that results in damage to a ‘‘protected computer’’ would 

be punishable by a fine under Title 18 or by imprisonment for up to one year. 

I commend you, Chairman Burns, on the introduction of your own spam legislation which takes a balanced approach to combating spam by including strong monetary penalties, but does not include a private right of action, an area in which we 

should proceed with caution in that it could have the effect of discouraging the use 

of electronic commerce. 

Because of the complexity surrounding all e-commerce issues like spam, legislation must be carefully balanced to ensure that enforcement mechanisms address 

real harms without causing damage to the unique advantages provided by the Internet. S. 630 provides law enforcement with the tools they need to combat spam without opening the floodgates to frivolous litigation. 

Legislation addressing the problem of unsolicited commercial e-mail is greatly 

needed during this legislative session to protect consumers and Internet Service 

Providers from victimization by spam. I look forward to continuing to work with 

Representative Heather Wilson and others in the House as well as with you, Chairman Burns, here in the Senate to achieve our common goal of reducing the burden 

of unwanted e-mail on consumers and Internet Service Providers. 

Again, I thank you Mr. Chairman for allowing me the opportunity to testify today 

and for your continuing efforts to curb spam.

Senator BURNS. Senator Wyden. 

26

STATEMENT OF HON. RON WYDEN,

U.S. SENATOR FROM OREGON 

Senator WYDEN. Thank you, Mr. Chairman. It is good to have 

our friend Bob Goodlatte, who I have had a chance to work with 

often over the years and I think you know Senator Burns and I 

have been prosecuting this cause, like you have, for a number of 

years, and that our bill really tracks your thinking, I think, very 

closely. I thought we were going to get it passed last session. We 

didn’t quite get it there. 

I am curious in terms of the House, what is taking place in terms 

of trying to reconcile the approach that Senator Burns and I have, 

which you are also very interested in with the Wilson bill and what 

is the progress of discussions in the House to get that done? 

Mr. GOODLATTE. Well, I think there is a lot of open-mindedness 

on the part of Congresswoman Wilson, and myself and others on 

the two Committees, the Commerce Committee and the Judiciary 

Committee, which have jurisdiction over this issue. The Commerce 

Committee has passed her bill out of the Committee. The Judiciary 

Committee is on a 60-day secondary referral of her bill, and it also 

has my bill before it because my bill is primarily focused on Title 

18, which is the jurisdiction of the Judiciary Committee. 

So it is my hope that in the very near future, we are going to 

come up with a bill that is agreeable to all sides because I think 

the differences that divide us are not that great. The private right 

of action is certainly the biggest thing that we have got to work 

out. 

Senator WYDEN. We will be working closely with you. It just 

seems to me what CAN-Spam has been trying to get done, what 

you have been trying to do is to set out some rules that if you want 

to send unsolicited marketing e-mail, you have got to play by a set 

of principles, rules that allow consumers to see where the messages 

are coming from and to tell the sender to stop. 

So this is ultimately about consumer empowerment and Senator 

Burns and I have made that point again and again. We are not interested in interfering with the legitimate e-commerce, the core 

business activities that are so important in the digital economy, so 

we will be working with you. 

Good luck with negotiations because those are essentially the 

same sort of talks we are having here, and hopefully, we can all 

hit pay dirt quickly and get this bill on the way to the President. 

Mr. GOODLATTE. Well, I appreciate that, Senator. We look forward to working with you as well, and you are right, commercial 

e-mails have great potential value to people who want to receive 

them and we don’t want to interfere with that but we do want to 

have the abusers live by the rules of the road, and that is basically 

what this is about and giving law enforcement some more tools and 

Internet service providers some more tools to combat that I think 

are important. 

Senator BURNS. Senator Allen. 

STATEMENT OF HON. GEORGE ALLEN,

U.S. SENATOR FROM VIRGINIA 

Senator ALLEN. Thank you, Mr. Chairman, and let me commend 

you, Mr. Chairman, for your leadership on this matter. I am very 

27

pleased to be a co-sponsor of S. 630 and I associate myself with the 

bill and the comments from the Senator from Oregon, Mr. Wyden, 

and it is good to see my good friend from Virginia, Congressman 

Bob Goodlatte, who is a leader on technology in matters on the 

House side, and it is important that we all work together on this, 

and I think this House Resolution 1017 is the closest House companion to your measure in my brief review of the key provisions 

in the various measures in the House versus your measure. 

Now, unsolicited commercial e-mail or spam has been a consumer issue for a long time. I thought it only was around since the 

1980’s, but since you were getting spammed you said in 1950’s, I 

guess you might have——

Mr. GOODLATTE. I think his had pineapple on it, though. 

Senator ALLEN. Pineapple with some bread around it, or maybe 

he invented the Internet. 

Senator BURNS. The first CAN-Spam. 

Senator ALLEN. They probably didn’t bother to take it out of the 

can if they were throwing it at you because otherwise it wouldn’t 

have any great effect, but nevertheless, the modern term of 

spamming is an aggravation. I think anybody who has the Internet 

has been spammed to one extent or another, and it is so aggravating. You log on to your e-mail account and it says you have got 

mail and of course what you have gotten mail from is some person 

or entity you have no idea who they are trying to sell you something that you don’t want. 

And then you, of course, have done that after wasting time opening up this irrelevant attachment and also usually, not usually, but 

a great number of times they say you have Hot Mail, they are saying your account size is too large, and if you do not delete things, 

they are going, do they give you a list of all the things that you 

are going to delete? Usually things that you would actually want 

to have kept in there. Some of them you would almost wish they 

would delete some of these others. 

There is always e-mail from your brother or a friend that you 

would like to keep just for your archives but at any rate, apart 

from the annoyance of having to delete the piles of unwanted solicitation, Spamming can and does create a lot of problems, cause 

problems for servers and networks throughout the country. It is 

also a waste of time. It is a waste of our time at home and it is 

a waste of time in our offices. 

The nation—in our nation, our capacity for electronic mail is not 

unlimited. It is not limitless. That is why you say your account 

sizes are too large and why it does slow down certain networks. 

The best example or the worst example from my experience is 

right here in the U.S. Senate, where e-mail is often delivered late 

or maybe not at all due to heavy e-mail traffic and its impact on 

the Senate server, so right here that is the situation. Now, I know 

the Senate is not unique. And maybe not quite as up to date as 

some law firms and folks in the private sector, but that happens 

in the private sector as well where because of these unsolicited, unwanted commercial e-mails it is slowing down productivity in the 

office, in the businesses, especially a pain for small businesses, and 

obviously what you have is people wasting time which is wasting 

28

lost productivity and you are wasting the capacity, the capacity 

with these unsolicited junk mails. 

Now, for these reasons, these are the reasons and I think it is 

a very balanced approach that the Chairman has taken here on 

this measure. I chose to co-sponsor what you call the CAN-Spam 

Act and our esteemed Chairman is obviously fighting a good battle, 

and here are the key things that that Act will do if we pass it in 

the Senate and in the House. 

It will force spammers to act honestly. Now, who could be 

against that? If you send an unsolicited commercial e-mail you 

must include true and accurate contact information so consumers 

can opt-out and stay out. One of the frustrating aspects of this as 

I said, well, if you don’t want any more e-mails or any more solicitations, please click such and such and fill out your information 

and we won’t send it to you any longer. Well, in researching this, 

that is exactly what they want you to do so then they know hey, 

this is a live e-mail address so now we can continue pestering that 

person so it is very aggravating to even have to fill all that stuff 

out in the first place, and it is particularly annoying if it is actually 

counterproductive. 

Second, this CAN-Spam Act will stop the practice of collecting emails for the sole purpose of spamming or so-called spotter programs. It will also add enforcement to these provisions to help ensure that an effective deterrent includes severe penalties under the 

law and I think the legal approaches you are taking is the right 

approach and very balanced and really, that is the point. 

This CAN-Spam Bill seeks to balance the interest of Internet 

consumers with the interests of legitimate e-commerce businesses 

seeking to utilize online opportunities. I am one who very much 

likes people to be completely without a lot of regulations, a lot of 

limits. I very much dislike limits. Nevertheless, you should have 

honesty. You do need to have consumers informed and people in 

their own homes ought to be able to control to the best they can 

what is coming in and clogging up and pestering them on their 

Internet. 

And indeed by way of analogy in 1991, the Telephone Consumer 

Protection Act by law stopped unsolicited junk fax advertising, so 

in my view by analogy if we can protect fax machines, why not 

computers as well? 

So again, Mr. Chairman, I am very happy that you are having 

this, this hearing. I think you will have a lot of support from people 

all across America, and I look forward to working with you, Mr. 

Chairman and other Members, Senator Wyden and others to effectuate a good common sense approach with good balances on privacy, on commerce, but also make sure there is honesty and recourse for people who don’t care to be pestered, annoyed or have 

their e-mail mailbox clogged up. Thank you. 

Senator BURNS. Thank you, Senator. Any more statements? We 

are going to have our next panel come forward if we could. 

Mr. Jerry Cerasale, Senior Vice President of Government Affairs, 

Direct Marketing Association. Mr. Jeremiah S. Buckley, General 

Counsel, Electronic Financial Services Council here in town. David 

Moore, President and CEO of 24/7 Media. And Jason Catlett, President and founder, Junkbusters and Harris Pogust of Sherman, SilVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
29

verstein, Kohl, Rose and Podolsky from New Jersey and David 

McClure. All make their way to the table and we’ll start this discussion. 

It should be a lively one, and if you could keep your statements 

to 5 minutes or so or less, if you possibly can, I know you can’t 

limit these Senators. I’ll guarantee you that. They get started and 

then we’ll have a few questions. Mr. Cerasale. Thank you for coming today. 

STATEMENT OF JERRY CERASALE, SENIOR VICE PRESIDENT, 

GOVERNMENT AFFAIRS, THE DIRECT MARKETING

ASSOCIATION INC. 

Mr. CERASALE. Thank you very much, Senator Burns, and I appreciate the opportunity to be here. I am Jerry Cerasale from the 

Direct Marketing Association and I ask that my written statement 

be included in the record. 

Senator BURNS. All of your full statements will be made part of 

the record today. 

Mr. CERASALE. Thank you very much. I want to first start out 

by thanking you and Senator Wyden and your staffs for putting together this bill, S. 630. We think you put a lot of thought into it, 

and we think that it is an excellent starting point. 

Let me start with what the DMA is. It has been around since 

1917. How we look at the Internet. The Internet is basically another medium, another way to try and reach customers and reach 

potential customers, so as we look at it, let’s, I want to raise where 

the DMA guidelines have been for all marketing that our members 

must use. 

The first thing that you have to do is you don’t lie. You tell people who you are. And I think your bill does that. 

You tell people that you are trying to sell them something, and 

that is also in your bill. If consumers tell you I don’t want to hear 

any more from you, you have to honor that. That is also in S. 630. 

And we have gone a little farther at the DMA way back starting 

in 1972. We had a mail preference service for people who didn’t 

want to receive mail. In 1985, we began a telephone preference 

service for people who don’t want to receive telephone calls and in 

2000, we began an e-mail preference service for people who do not 

want to receive unsolicited e-mail. Our members must use those 

three services if they happen to use those medium or those media 

to reach consumers. 

And so we have a situation where the Direct Marketing Association members believe and use an opportunity for individuals to say 

I don’t want to receive further solicitation. So we think that the 

basic premises, we think. We know the basic premise in S. 630 is 

right along the lines of where the DMA has been for a long, long 

time and we applaud you for that. 

We specifically also believe in a strong federal standard. This is 

a borderless communications medium, and we think that a strong 

federal standard is what makes sense and having the FTC enforce 

that is an excellent idea, along with allowing the state’s attorneys 

general a role to support in either federal or state court to enforce 

this bill as well. We think that the strong penalties for fraud are 

very important. 

30

One of the things that happens, especially in an emerging medium, as Eileen Harrington said, is that get rich quick schemes are 

probably the first to try and reach and use the medium, and we 

think that anti-fraud devices are very, very important to try and 

protect confidence in the medium, so we support that. 

We think that in looking at enforcement, the idea of an opt-out 

in every commercial e-mail message makes sense. The idea of saying who you are, the idea of not lying in the headers or in the subject line is very, very important. 

We believe that your bill also protects permission-based marketing, which we think is an emerging response to consumer needs 

and desires on the Internet. We do have some areas where we 

think we can tweak that a little bit and we’ll gladly be working 

with your staffs on that to keep permission-based marketing open 

and free to consumers. The Internet is important. It is a new medium. It is not the answer. It is not going to eliminate other forms 

of marketing. It has to be integrated within the American economy 

and system. It can help strengthen the economy. We think marketers have to learn to use it and keep their practices and the principles the same regardless of medium. We think this bill goes along 

in that way, and we appreciate all your efforts in this endeavor, 

and I am happy to answer any questions you may have. 

[The prepared statement of Mr. Cerasale follows:]

PREPARED STATEMENT OF JERRY CERASALE, SENIOR VICE PRESIDENT, GOVERNMENT

AFFAIRS, THE DIRECT MARKETING ASSOCIATION INC. 

I. Introduction 

Good afternoon, Mr. Chairman, and thank you for the opportunity to appear before your Subcommittee as it examines unsolicited commercial electronic mail. I am 

Jerry Cerasale, Senior Vice President of Government Affairs for The Direct Marketing Association, Inc. (‘‘The DMA’’). 

The DMA is the largest trade association for businesses interested in direct, database, and interactive marketing and electronic commerce. The DMA represents 

more than 4,500 companies in the United States and 54 foreign nations. Founded 

in 1917, its members include direct marketers from 50 different industry segments, 

as well as the non-profit sector. Included are catalogers, financial services, book and 

magazine publishers, retail stores, industrial manufacturers, Internet-based businesses, and a host of other segments, as well as the service industries that support 

them. The DMA’s leadership also extends into the Internet and electronic commerce 

areas through the companies that are members of The DMA’s Internet Alliance and 

the Association for Interactive Media. 

The DMA member companies, given their track record in delivering high quality 

goods and services to consumers, have a major stake in the success of electronic 

commerce, and are among those most likely to benefit immediately from its growth. 

The healthy development of electronic commerce depends on consumer trust. It is 

imperative that the e-mail communications medium earns that trust. 

The DMA commends the drafters for this legislation. While it is not clear that 

legislation is imperative at this juncture, we support the efforts of Senators Burns 

and Wyden. We think that S. 630 takes the appropriate approach for legislation regarding UCE. S. 630 contains many of the elements of what successful legislation 

in this area should look like. We believe that the requirement that senders of unsolicited commercial electronic mail identify themselves truthfully and provide individuals the ability to opt-out of unsolicited commercial electronic mail messages is essential. Likewise, The DMA is very supportive of maintaining the ability for businesses to send messages to those individuals who have provided affirmative consent 

and those individuals with which a business has a pre-existing business relationship 

without such messages being treated as unsolicited commercial electronic mail. We 

also believe that providing criminal penalties for sending unsolicited commercial 

electronic mail that contains fraudulent routing information should prove very useful in limiting egregious unsolicited messages. We continue to have some concerns 

31

with the definitions of ‘‘initiator’’ and ‘‘affirmative consent’’ and look forward to 

working with the members and staff on these issues. 

There are several topics I wish to focus on in more detail in my testimony today. 

These are:

• The DMA’s self-regulatory program the e-Mail Preference Service;

• The need for strong penalties against entities that send fraudulent messages;

• Federal Trade Commission enforcement of a uniform federal standard; and

• Permission-based communications.

The DMA welcomes this congressional inquiry into these important matters. 

II. The DMA’s e-Mail Preference Service Empowers Consumers With Choice 

Concerning Receipt Of Unsolicited Commercial E-Mail 

Mr. Chairman, The DMA is a long time leader in self-regulation and peer regulation. We believe that in the borderless world of electronic commerce self-regulation 

with effective choice to consumers is the best means of empowering consumers regarding receipt of unsolicited commercial electronic mail, creating and maintaining 

opportunity for the many exciting new benefits of legitimate marketing in the interactive economy. 

For this reason, since publishing our electronic commerce guidelines almost 5 

years ago, we have supported an industry standard of notice and opt-out for electronic mail marketing communications. More recently, last year we created and 

launched the e-Mail Preference Service (‘‘e-MPS’’). The e-MPS allows individuals to 

remove their e-mail addresses from Internet marketing lists. This ambitious undertaking is aimed at empowering consumers to exercise choice regarding receipt of 

UCE, while creating opportunity for the many exciting new benefits of legitimate 

marketing in the interactive economy. 

The e-MPS is based on The DMA’s very successful Mail Preference Service 

(‘‘MPS’’) and Telephone Preference Service (‘‘TPS’’) self-regulatory initiatives. Both 

of these initiatives represent The DMA’s response to consumers’ request for choice 

in the amount of mail and telephone solicitations that they receive. In developing 

responsible marketing practices for the Internet age, we have adapted this important concept of consumer choice to the Internet medium through the development 

of e-MPS. 

As of January 2000, consumers have been able to register for the e-MPS at a special DMA web site. Consumers can use this service, at no cost, to place their e-mail 

addresses on a list indicating that they do not wish to receive UCE. This service 

affords consumers with flexibility to determine the types of solicitations they receive. Through this service, individuals can opt-out of business-to-consumer UCE, 

business-to-business UCE, or all UCE. 

The e-MPS is part of The DMA’s ‘‘Privacy Promise to American Consumers,’’ 

which became effective July 1, 1999. The Privacy Promise requires as a condition 

of membership in The DMA, that companies, including online businesses, follow a 

set of privacy protection practices. As part of this promise, all DMA members who 

wish to send UCE to consumers are required to remove the e-mail addresses of 

those consumers who have registered with the e-MPS from their lists of consumers 

to whom they send e-mail solicitations. Those consumers on the e-MPS list will receive no e-mail from DMA members unless they have an established online business 

relationship with that company. This service also is available to companies that are 

not members of The DMA so that they too may take advantage of this innovative 

service and respect the choice of those consumers who choose not to receive UCE. 

III. Strong Penalties Should Exist To Combat Fraudulent Messages 

The DMA is particularly sensitive to the practice of sending fraudulent electronic 

mail messages in which some individuals are engaged, and fully supports a prohibition on this practice. This practice includes the sending of messages with false or 

fictitious header information. The use of such fraudulent e-mail has no place in a 

healthy and robust Internet. The sending of bulk fraudulent messages has crashed 

the networks of Internet service providers. 

In addition to deceiving consumers, fraudulent e-mail diminishes the reputation 

of the entire medium, particularly messages sent from the responsible marketers 

that make up our membership. Ultimately, we believe the sending of fraudulent 

messages is an area in which legislation is critical, as it is more difficult to prevent 

fraudulent messages. 

32

IV. Sending Of Commercial Messages When Consumer Permission From 

The Consumer Exists Should Be Outside The Scope Of Any Legislation 

Consumers often give permission to a company, or request that it pass along their 

e-mail address to receive information and offers from other service providers in a 

given category, such as financial services. These consumers have requested information and granted permission, but it may not be specific to a particular initiator. For 

example, I might indicate that I would like to receive mailings on sales of men’s 

clothing. A variety of different businesses could then send me messages when they 

have sales at their stores. Such marketing is very beneficial to consumers and to 

the free flow of commerce. Any legislation should allow such communications. It 

would burden the free flow of information to such consumers to require that they 

give specific permission to each ‘‘initiator.’’ 

V. Any Legislation Should Provide Enforcement Of A Uniform Federal 

Standard 

The DMA supports the approach taken in the legislation that preempts state law 

by providing a uniform federal standard. Strong preemption is the appropriate approach in the electronic environment. Differing state regulatory standards for communicating via electronic mail could have the effect of eliminating the inherently 

global characteristics of the communications, which are in large part responsible for 

its extraordinary success. It would be impossible for businesses to comply simultaneously with different and potentially inconsistent laws in multiple jurisdictions 

where individuals to whom they send messages may be located. Often, the business 

is unaware of the location of the recipient of the message. If businesses were required to comply with the different laws of the 50 states, it would be a tremendous 

burden on the Internet and could have the result of limiting business offerings. 

Moreover, a patchwork of state laws, particularly as they affect interstate communications, may ultimately be found unconstitutional. 

Likewise, we are heartened by the decision not to create a private right of action. 

Creating a private cause of action would impose substantial burdens on ISPs, resulting in the expenditure of resources both in terms of time and money to defend litigation. Such an approach is unnecessary in light of the fact that the FTC would be 

empowered to protect consumer rights. Inclusion of a consumer cause of action 

would create a very substantial bounty for class action lawyers that would produce 

very substantial damage awards wholly unrelated to the costs imposed by UCE. The 

legislation must foreclose the possibility of class actions. 

VI. Conclusion 

We thank the Members of Congress who have introduced legislation in this area 

for their thoughtful consideration of such an important issue. We also thank the 

Chairman and the Subcommittee for the opportunity to express the views of The 

DMA. We know that Congress and this Subcommittee will continue to monitor this 

issue closely and we look forward to working with you.

Senator BURNS. Thank you very much. Jeremiah Buckley, General Counsel, Electronic Financial Services Council. Thank you for 

coming today. 

STATEMENT OF JEREMIAH S. BUCKLEY, JR., GENERAL 

COUNSEL, ELECTRONIC FINANCIAL SERVICES COUNCIL 

Mr. BUCKLEY. Thank you very much, Mr. Chairman. My name 

is Jeremiah Buckley, and I am a partner in the Washington office 

of Goodwin, Procter. I serve as general counsel of the Electronic Financial Services Council, which is an association of technology companies and financial services firms interested in promoting the 

electronic delivery of financial services. We are pleased to be here 

and have an opportunity to comment on S. 630. 

Thinking back to the passage of the E-Sign Act last year, we 

know this Committee and its staff appreciates the importance of 

federal legislation in promoting e-commerce. 

We have enjoyed working with you, Senator Burns, and with 

you, Senator Wyden, in the past, and we look forward to working 

with you to make this an excellent piece of legislation. We support 

33

the fundamental premise of S. 630, that is that offensive, fraudulent or otherwise harmful UCEs should be prohibited and that consumers should have the ability to control the flow of their e-mail 

traffic. Achieving these goals is an important step toward assuring 

that consumers feel comfortable doing business in the electronic 

medium, a goal that we all share. 

We believe that the UCE legislation should fit into the framework created by previous e-commerce legislation. Congress has repeatedly endorsed the vision of e-commerce as a national resource. 

The E-Sign Act recognizes that the Internet is a borderless medium 

for which it is desirable to have uniform federal rules. S. 630 recognizes that legal uniformity is an important part of e-commerce. It 

includes a provision in Section 7(b) preempting inconsistent state 

law. 

This preemption provision, however, does contain a number of 

exceptions. In particular, it does not apply to any state trespass, 

contract or tort law. These types of exceptions, we would caution 

the Committee, do run the risk of swallowing up the preemption 

itself. If S. 630 is to fashion a uniform national standard for dealing with spam, it should occupy the field. It should not leave room 

for the development of a patchwork of legislative and judicial pronouncements at the state level creating a compliance jigsaw puzzle 

which only the most sophisticated players can solve. 

Having established that uniform standard, we believe it is appropriate that federal agencies be the ones assigned the responsibility 

for enforcement policy, and it seems to us this is best because in 

the course of enforcement, the policies that Congress has articulated will be fleshed out, and we think it is best that agencies 

which are under the jurisdiction and direction of the Congress have 

the responsibility for establishing that enforcement policy. States 

would, of course, continue to have the authority to adopt uniform 

unfair deceptive acts and practices legislation, as they do now, and 

under those statutes, they could declare that violations of the provisions of S. 630 constitute violations of state law. If they do, they 

could also assign to their state attorney general, to private parties, 

or to other agencies within the state the responsibility for enforcement of their state law. 

But we think it is wise to keep a demarcation between federal 

law and state law, between federal enforcement and state enforcement, and we think it is respectful of the legislatures in the states 

to allow them to establish who will enforce the law within their 

states. 

Now let me turn to an issue that legislation does not address, 

but which we think is vital, preserving the reliability of e-mail communications. Last year’s E-Sign Act was a vote of confidence by the 

Congress in the predictability and reliability of electronic communications. E-Sign would envision that individuals and businesses 

would be able to contract and conduct their ongoing business electronically. 

In the nonelectronic world, a third party cannot arbitrarily disrupt contractual arrangements between parties, and E-Sign envisions that this would not happen in the e-commerce world either. 

However, we are concerned about reports that ISPs in their eagerness to help their subscribers avoid receiving unwanted UCEs may 

34

block, in fact, there is evidence that they are blocking, e-mails that 

subscribers not only want but have specifically contracted to receive as a part of the electronic business relationship created pursuant to E-Sign or prior legislation. 

This will have a significant negative impact on the potential 

growth of electronic delivery of financial services and other relationships with e-commerce. S. 630 currently does nothing to prevent this from happening. It is in the interest of all who seek to 

promote e-commerce to preserve the sanctity of electronic contracts. 

If the electronic message, which is not a UCE, and is not going to 

be delivered, at a minimum both the sender and the recipient 

should be notified by the ISP. We hope to work with the ISPs and 

with your Committee as appropriate to develop standards to assure 

reliable delivery of permission-based electronic communications, 

and we believe this is a goal that is complementary to and as important as getting rid of spam. 

Certain provisions of your legislation could, as we say in our 

written testimony, benefit from clarification. If time permitted, I 

would go into those, and I would be happy to answer questions. We 

are very pleased to have had the opportunity to comment on this 

legislation and look forward to working as we have in the past with 

the Committee staff and with you Senators to perfect this bill. 

Senator BURNS. We are looking forward to working with you 

also. And we like the idea of bringing specifics to the table, because 

that is the way we solve some of the problems as this legislation 

moves along. 

[The prepared statement of Mr. Buckley follows:]

PREPARED STATEMENT OF JEREMIAH S. BUCKLEY, JR., GENERAL COUNSEL, 

ELECTRONIC FINANCIAL SERVICES COUNCIL

My name is Jeremiah S. Buckley. I am a partner in the Washington office of the 

law firm of Goodwin Procter, and I serve as general counsel to the Electronic Financial Services Council. The EFSC is an association of technology companies and financial service providers dedicated to promoting the availability and delivery of financial services through electronic commerce. Given this mission, the EFSC is intensely interested in federal legislative developments that could have an effect on 

e-commerce. For this reason, we are pleased to have the opportunity to comment 

this afternoon on S. 630, the CAN-spam Act of 2001. 

The EFSC recognizes that federal legislation is not merely helpful, but sometimes 

necessary to resolve legal uncertainties and unleash the economic potential inherent 

in our new e-commerce environment. Thinking back to the passage last year of the 

Electronic Signatures in Global and National Commerce Act (‘‘E-Sign’’), we know 

that this Committee shares our belief in the benefits of appropriate legislation. We 

have enjoyed working with Senators Burns and Wyden in the past, and we look forward to working with the Committee and its staff once again in dealing with the 

very significant issue of unsolicited commercial electronic mail (‘‘UCE’’). 

We agree with the fundamental premise underlying S. 630—that consumers 

should be protected from misleading, offensive, fraudulent or otherwise harmful 

UCEs, and that the ability of consumers to control the flow of their e-mail traffic 

should be respected. Achieving these goals is an important step in assuring that 

consumers feel comfortable using the electronic medium as a preferred way of doing 

business, a goal we all share. 

UCE Legislation Should Fit Into the Framework Created by Previous

E-Commerce Legislation 

Congress has repeatedly endorsed a vision of e-commerce as a national resource. 

Last year’s passage of E-Sign legislation established the parity of electronic and 

non-electronic communications under federal law. E-Sign recognized that the Internet is a borderless medium, for which federal regulation and uniform federal standards are appropriate. Our specific comments reflect our strong support for this viVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00038 Fmt 6633 Sfmt 6621 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
35

sion of e-commerce as a national resource appropriately subject to a set of uniform 

national rules designed to encourage the development of e-commerce to its fullest 

potential. 

S. 630 recognizes that legal uniformity is important to e-commerce, and for that 

reason it includes a provision—Section 7(b)—preempting inconsistent state laws. 

The preemption provision, however, has a number of exceptions: in particular, it 

does not apply to any state trespass, contract or tort law. This type of exception, 

we would caution the Committee, runs the risk of swallowing the preemption provision itself. If S. 630 is to fashion a uniform national standard for dealing with spam, 

it should occupy the field. S. 630 should not leave room for the development of a 

patchwork of state legislative or judicial pronouncements using tort or trespass 

theories to create a compliance jigsaw puzzle which only the most sophisticated 

players can solve. 

Having established a uniform federal standard, we believe that the appropriate 

course is to assign to federal agencies the responsibility for enforcing that standard. 

To the extent that enforcement policy shapes or clarifies the meaning of the provisions of S. 630, it seems to us best to leave that power with agencies which are subject to the jurisdiction and direction of Congress. State attorneys general and private parties should not be assigned enforcement responsibilities in this area as a 

matter of federal law. 

While the authority of a state to enact legislation inconsistent with S. 630 would 

be preempted, states would, of course, continue to have the power to enact unfair 

and deceptive acts and practices (‘‘UDAP’’) statutes, or interpret their current UDAP 

statutes, so as to define violations of S. 630 as unfair and deceptive practices under 

state law. In this context, the states would be free to assign enforcement responsibilities for their UDAP statutes to their state attorneys general or such other 

agencies or private parties as they deem appropriate. It seems to us that this course 

of action has the advantage of providing a clear line of demarcation between state 

and federal law and is more respectful of the right of state legislatures to determine 

how state law will be enforced within a state’s boundaries. 

Need for Clear Definitions 

Section 5(a)(5)(A) of S. 630 requires that a UCE contain a ‘‘clear and conspicuous 

. . . identification that the message is an advertisement or solicitation.’’ Because of 

the centrality of this requirement to the purposes of S. 630, we believe that the 

Committee should consider a more precise definition of what constitutes clear and 

conspicuous identification. It might be worthwhile for the Committee to consider 

creating a standard indentifier to appear in the e-mail subject line, to serve as a 

universal signal that the e-mail is an advertisement. This requirement could then 

be included in the legislation itself, or provided as an example in the Committee’s 

report. In the absence of such clear guidance, senders of UCEs will be left uncertain 

as to the efficacy of their compliance efforts. 

Likewise, we would counsel against the use of undefined terms, such as ‘‘primarily’’ to determine the amount of advertising content that defines a ‘‘commercial 

electronic mail message.’’ If, in a communication relating to a transaction with its 

customers, a firm includes an electronic ‘‘statement stuffer’’ alerting the customer 

to other products or features available to the customer, S. 630 does not establish 

how much such material will render the communication ‘‘primarily’’ advertising. We 

would recommend that, to avoid this problem, any communication related to a 

transaction or relationship with an existing customer be excluded from the definition of a ‘‘commercial electronic mail message.’’

Preserving the Reliability of E-Mail Communications 

Last year’s E-Sign Act was a vote of confidence by the Congress in the predictability and reliability of electronic communications. E-Sign envisions that individuals and businesses will be able to contract freely through electronic media, without 

having to worry about the enforceability of contracts that they enter into electronically. It also envisions that business will continue to be conducted electronically 

after the initial contracts have been signed, with records being freely transmitted 

in fully electronic relationships if the parties so desire. In the non-electronic world 

a third party cannot arbitrarily disrupt a contractual arrangement between two parties, and E-Sign envisions that this should not be able to happen in e-commerce either. However, we are concerned about reports that ISPs, in their eagerness to help 

their subscribers avoid receiving unwanted UCEs, may block e-mails that the subscribers not only want, but have specifically contracted to receive as part of an electronic business relationship. This result would have a significant negative impact 

on the potential growth of electronic delivery of financial services. S. 630 does nothing to prevent this from happening, and does not even require ISPs to give notice 

36

to consumers they intend to block, or that they have blocked, the transmission of 

e-mail either in general or from particular senders. 

It is in the interest of all who seek to promote e-commerce to preserve the sanctity 

of electronic contracts. If an electronic message which is not a UCE is not going to 

be delivered, at a minimum both the sender and the recipient should be notified by 

the ISP. We hope to work with ISPs and with your Committee, as appropriate, to 

develop standards that assure reliable delivery of permission-based electronic communications. 

We appreciate the opportunity to share our views on S. 630 and the willingness 

of the sponsors of this legislation and their staffs to work with us and others to assure that the CAN-spam legislation will create clear and workable standards to regulate the transmission of UCEs.

Senator BURNS. Mr. David Moore, President and CEO of 24/7 

Media. New York. 

STATEMENT OF DAVID MOORE,

PRESIDENT/CEO, 24/7 MEDIA 

Mr. MOORE. Good afternoon. I am David Moore. I am the CEO 

of 24/7 Media, and I’d like to thank Chairman Burns, the Ranking 

Member, Senator Hollings, Senator Wyden, and Members of the 

Committee for inviting 24/7 Media to participate today. 

I would like to begin by commending Senators Burns and Wyden 

for their leadership in crafting the Unsolicited Commercial E-mail 

Act of 2001. This bill represents a responsible, common-sense approach to establishing standards for commercial e-mail practices 

and is an important first step in helping to protect consumers and 

legitimate marketers from the abuses of spammers. 

As a leading provider of online marketing and advertising solutions and services, 24/7 Media’s clients have included such notable 

businesses as Reuters, The Economist, USA Today, American Express, Law.com, MSNBC, General Motors, Verizon, AT&T, and The 

Financial Times, to name a view. We provide a valuable service to 

consumers by delivering content that they have requested, such as 

news, newsletters, real-time stock quotes, and other information. 

The success of the interactive industry lies in the confidence of 

the relationship among content publishers, service providers, marketers, advertisers, and consumers. We support permission-based 

communications that empower consumers with notice and choice. 

The interactive marketing industry has been tainted by the actions of disreputable marketers who use deceptive practices in 

sending unsolicited commercial electronic e-mail. These marketers, 

or spammers, should not be allowed to infringe upon or negatively 

influence the need for legitimate commerce to prosper in the online 

world. The Committee and Congress should focus on legislation 

this year that specifically addresses the problem of fraudulent, misleading, forged, and inaccurate e-mail communications. These practices are an encroachment on the rights and privacy of consumers. 

24/7 Media, along with other companies, has worked diligently 

over the past year to establish and to put into effect guidelines and 

practices that will enable the Internet to prosper as the world’s 

leading communication, educational, and information tool. 

24/7 Media has an interest in minimizing spam. We maintain 

one of the largest, permission-based e-mail databases and generate 

a significant portion of our revenue from list management and brokerage, as well as from our e-mail service bureau, 24/7 Exactis. We 

37

recognize that respecting the privacy rights of consumers will help 

us sustain our long-term business model. 

Let me tell you more specifically how we conduct our business. 

We don’t spam. We don’t allow our clients to spam. We include a 

functioning return e-mail address in all e-mail deliveries. We don’t 

use deceptive subject headings. We always provide clear and conspicuous notice for consumers to opt-out. We don’t do business with 

any business that distributes pornography. 

I am proud to say that 24/7 Media’s level of accuracy in delivering the appropriate content to the consumer is exceptional. During a 6-month period last year, 24/7 Exactis received 1 complaint 

for every 16,000 e-mails delivered. That is .000625 percent. Most 

client lists in fact generated no complaints at all. We also found 

that in most instances, if there was a complaint, the complaint was 

resolved soon after the subscriber was reminded of how the marketer obtained their e-mail address. 

From 24/7 Media’s point of view, the Burns-Wyden bill appropriately focuses on e-mail abuse. These spammers devalue our own 

efforts and weaken the consumer confidence that is so important 

for all online businesses to succeed and flourish. We also believe 

that enforcement mechanisms should deter spammers from encroaching on the privacy of consumers and not penalize legitimate 

markets who are adhering to the standards. 

In announcing the introduction of this bill on March 27th, Chairman Burns said, for many people, spam is ruining their online experience and their ability to use e-mail. It is high time for Congress 

to act to protect consumers from overzealous marketers. I agree 

with that sentiment, and I invite the rest of our industry to stand 

behind this effort to support responsible practices and continue to 

provide value to the consumer. Mr. Chairman and the Committee, 

I thank you again for the opportunity to participate in today’s hearing. This is a complex policy challenge that must accommodate 

evolving technologies and business models. We look forward to 

working with you to fine tune this legislation. 24/7 Media remains 

committed to engaging lawmakers on key policy issues and recognizes that regulation of commercial e-mail practices is only one of 

many key decisions this Committee will have to sort through in the 

future. 

We look forward to continuing to work with you and to be a resource to you as you consider Internet-related policy and work toward our common objective of protecting the rights and privacy of 

all consumers while at the same time ensuring the long-term viability of the Internet and legitimate web-related businesses. Again, 

thank you for your time and I look forward to your questions. 

Senator BURNS. Thank you very much. We appreciate your testimony here today, Mr. Moore. What is it 24/7 Media covers 24 hours 

a day, 7 days a week? 

Mr. MOORE. We are always in business. 

Senator BURNS. Always in business. You know, up in Montana, 

you know, on the shield of the state patrol is 3–7–77, 3-day, 7-day, 

77. We don’t know what that stands for. But I will tell you this. 

It is not a bad idea. That was the number the vigilantes used years 

ago before we were a state. We were a territory, vigilantes made 

the law and if you came home and that number was written on 

38

your door, you had 24 hours to shuffle along. You know. And they 

weren’t kidding either. They were pretty serious about it. Thank 

you for coming today. 

[The prepared statement of Mr. Moore follows:]

PREPARED STATEMENT OF DAVID MOORE, PRESIDENT/CEO, 24/7 MEDIA

Good Afternoon, I am David Moore, CEO of 24/7 Media. 

I’d like to thank Chairman Burns and the Ranking Member, Senator Hollings and 

Members of the Committee for inviting 24/7 Media to participate today and would 

like to begin by commending Senators Burns and Wyden for their leadership in 

crafting the ‘‘Unsolicited Commercial E-mail Act of 2001’’. This bill represents a responsible, common-sense approach to establishing standards for commercial e-mail 

practices and is an important first step in helping to protect consumers and legitimate marketers from the abuses of spammers. 

As a leading provider of online marketing and advertising solutions and services, 

24/7 Media’s clients have included such notable businesses as Reuters, The Economist, USA Today, American Express, Law.com, MSNBC, General Motors, Verizon, 

AT&T, The Financial Times, and Disney to name a few. We provide a valuable service to consumers by delivering content they have requested such as news, real-time 

stock quotes, and other information. 

The success of the interactive industry lies in the confidence of the relationship 

among content publishers, service providers, marketers, advertisers, and consumers. 

We support ‘‘permission-based’’ communications that empower consumers with notice and choice. 

The interactive marketing industry has been tainted by the actions of disreputable marketers who use deceptive practices in sending unsolicited commercial electronic mail. These marketers, or spammers, should not be allowed to infringe upon 

or negatively influence the need for legitimate commerce to prosper in the online 

world. The Committee and Congress should focus on legislation this year that especially addresses the problem of fraudulent, misleading, forged and inaccurate e-mail 

communications. These practices are an encroachment on the rights and privacy of 

consumers. 24/7 Media, along with other companies, has worked diligently over the past year 

to establish and put into effect guidelines and practices that will enable the Internet 

to prosper as the world’s leading communication, educational and information tool. 

24/7 Media has an interest in minimizing spam. We maintain one of the largest, 

permission-based e-mail databases and generate a significant portion of our revenue 

from list management and brokerage as well as from our e-mail service bureau, 24/

7 Exactis. We recognize that respecting the privacy rights of consumers will help 

sustain our long-term business model. 

Let me tell you more specifically how we conduct our business:

We don’t spam. 

We don’t allow our clients to spam. 

We include a functioning return e-mail address in all e-mail deliveries. 

We don’t use deceptive subject headings. 

We always provide clear and conspicuous notice for consumers to opt-out. 

We don’t do business with any business that distributes pornography.

I am proud to say that 24/7 Media’s level of accuracy in delivering the appropriate 

content to the consumer is exceptional. During a 6 month period last year, 24/7 

Exactis received 1 complaint for every 16,000 e-mails delivered. Most client lists, in 

fact, generated no complaints at all. We also found that in most instances, if there 

was a complaint, the complaint was resolved soon after the subscriber was reminded 

of how the marketer obtained their e-mail address. 

From 24/7 Media’s point-of-view, the Burns-Wyden bill appropriately focuses on 

e-mail abuse. These spammers devalue our own efforts and weaken the consumer 

confidence that is so important for all online businesses to succeed and flourish. We 

also believe that enforcement mechanisms should deter spammers from encroaching 

on the privacy of consumers and not penalize legitimate marketers who are adhering to the standards. 

In announcing the introduction of this bill on March 27, Senator Wyden said: 

‘‘. . . Spam could have a significant negative impact on how consumers use Internet 

Services and e-commerce. This legislation strikes at unscrupulous individuals who 

use e-mail to annoy and mislead’’. I agree with that sentiment and I invite the rest 

of our industry to stand behind this effort to ‘‘strike out at the unscrupulous’’, support best industry practices and continue to provide value to the consumer. 

39

Mr. Chairman and the Committee, I thank you again for the opportunity to participate in today’s hearing. This is a complex policy challenge that must accommodate evolving technologies and business models. We look forward to working with 

you to fine-tune this legislation. 

24/7 Media remains committed to engaging lawmakers on key policy issues and 

recognizes that regulation of commercial e-mail practices is only one of many key 

decisions this Committee will have to sort through in the future. We look forward 

to continuing to work with you and to be a resource to you as you consider Internetrelated policy and work toward our common objective of protecting the rights and 

privacy of all consumers while at the same time ensuring the long-term viability of 

the Internet and legitimate web-related businesses. 

Again, thank you for the time and I look forward to your questions. 

Thank you.

Senator BURNS. Mr. Jason Catlett, President and CEO of 

Junkbusters. Yes, Junkbusters. There you go. Thank you for coming today. 

STATEMENT OF JASON CATLETT,

PRESIDENT/CEO, JUNKBUSTERS CORP. 

Mr. CATLETT. Thank you, Senator. And it is a pleasure to be back 

before you and Senator Wyden again. I’d like to begin with two 

issues that you raised. 

First, the technology arms race that is going on between 

spammers and largely ISPs who are using technological means to 

try to abate the amount of spam from their networks before it 

reaches the spammer’s intended recipients. That is a silent battle 

that goes on continuously and if it were stopped as we have heard 

earlier testimony suggesting a measure that might do it, this would 

cause an enormously greater amount of spam to reach the end consumers, so technological means for automatically spam filtering are 

tremendously important and do a lot of good. 

However, you are absolutely correct that this is not a solution to 

the problem. And that ultimately it is essential to have laws to stop 

the attempts of the spam to be inserted into the network. 

We heard from Senator Rockefeller about the question of labeling. Is it sufficient to label the material? Well, I can tell you as 

someone who has written scientific papers on automatic text classification that those methods are always imperfect and even if the 

spammers were perfectly honest in their labeling of the material, 

it would still impose an unacceptable burden on the network to try 

and reject each article after checking the appropriate label. 

The second point I would like to raise is the issue of wireless 

spam which indeed has been a problem, particularly in Europe 

where the technology is at a later stage of adoption, but also in 

states such as Arizona, where a class action suit on that is underway. 

I would like to note that trade associations with the wireless industry have come out strongly in favor of an opt-in criteria that 

you should never receive commercial solicitations to your cell phone 

unless you have deliberately requested them, and I think that is 

an admirable position for them to take. 

I’d like to commend you on the hard work that you have done 

on spam over a long period of time, and I am sorry to say that in 

its present form, I don’t think that the bill will achieve the goals 

that it sets out to do. I don’t think it will significantly reduce the 

amount of junk e-mail that is sent, and that two modifications 

40

would be necessary in order to have a spam bill that really deserves the name of CAN-spam, and those two were issues raised 

by Senator Rockefeller. 

The first is opt-in. The appropriate criterion for e-mail solicitation is opt-in. You should only get e-mail, commercial e-mail if you 

ask for it, and that is what the majority of people online believe 

are appropriate. It is also what a large number of consumer groups 

believe to be appropriate, and it is also the practice as we have 

heard from David Moore from 24/7 Media is the common industry 

practice only to send e-mail to people who have asked for it. 

Almost no legitimate established marketer sends unsolicited commercial e-mail because it is despised by consumers and it is actually against the terms of services of most ISPs. So the first suggestion I would have to you is to make the criterion opt-in. This has 

worked very well with the Telephone Consumer Protection Act as 

we have heard discussed for junk faxes and I think that the success of that bill should be an example to us, particularly the provision to do with my second point, which is a private right of action 

for consumers. The idea of a waterfall of frivolous litigation simply 

isn’t borne out in practice under the Telephone Consumer Protection Act. There is very little litigation on junk faxes. But it is a sufficient amount to discourage businesses systematically violating the 

law. 

The idea of not allowing consumers the opportunity to protect 

their interests and hoping that the ISPs, some of whom are going 

bankrupt, will spend additional money to go to court for their individual consumers, I think it is very naive. 

The appropriate thing to do is to give individuals the means to 

protect their own interests, and that is being done with the junk 

faxes because of the same situation. This is postage due marketing. 

Senator BURNS. You believe in the vigilantes, too, huh? 

Mr. CATLETT. The consumers should be able to act with the authority of law in an appropriate manner. Some spams do make me 

want to go to the vigilante state. In fact, I would like to read you 

a particular spam that I picked out almost at random under a specific criterion. It is a little bit like at a hearing on locust plagues 

to bring along a single grasshopper and hold it up for the Committee and say this is the problem, but imagine multiplied a million times the problem. It is in the, my prepared statement, but I’ll 

read you briefly this spam. Sex sells really works. ‘‘Why pay to belong to an adult website? When you can own your own for less than 

the cost of a membership. Anyone with an Internet connection can 

own an adult website for less than the cost of the next dinner. No 

experience required. Anyone can sell sex on-line in just minutes.’’

I’ll spare you the details of how to sign up for this offer, but I’d 

like to draw your attention to the footer of this e-mail, which is 

very common. This message is sent in compliance of the new e-mail 

bill, section 301 paragraph (a)(2)(C) of Senate 1618. It again gives 

a URL for the website of your colleague, Senator Mikulski. 

I would like you to imagine perhaps with your folks back at 

home in Montana when a mother discovers that her teenage son 

has received this solicitation to establish a pornographic website 

from the comfort of his own bedroom and then they, this person 

clicks through to Senator Mikulski’s site and sees, this is the legisVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00044 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
41

lation, this is in fact Mikulski’s bill. It did not pass but spammers 

still use it and if you pass a junk e-mail bill along the lines of an 

opt-out, you will get exactly the same situation. 

You will get the mother saying is it the policy of the United 

States that spammers may spam? They are going to click through 

to your website, then click on contact us, and you are going to get 

questions and letters from your constituents and I wonder how you 

are going to answer them. 

With the current form of the Senate bill, would you have to, 

when the mother asks you, is it true, is what this spammer says 

true, that it is Okay for him to send this e-mail, would you have 

to answer something like yes, the spammer can send you as much 

e-mail as he wants until you tell him to stop, and if they don’t stop, 

if they keep on doing it, then you can’t do anything about it yourself. You have to either get your ISP to do something or you have 

to get the Federal Government department to do something. 

Now, I don’t think that is an answer that your constituents 

would want to hear. The answer that I think you would want to 

be able to give to them is something like this. The spammer is 

lying. My bill made spamming illegal. And it gives you the right 

to sue people who spam you if they break the law. 

So the correct policy, I think, and I have made the two key 

points, is to have an opt-in policy and to have a private right of 

action for consumers. So the question of opt-in versus opt-out and 

the private right of action really comes down to if your name goes 

on this bill and it becomes law, do you want it associated in the 

spams that are sent out in this case with so much spamming? 

Senator BURNS. Thank you very much. And your full statement 

will be made part of the record. 

Mr. CATLETT. Thank you, sir. 

[The prepared statement of Mr. Catlett follows:]

PREPARED STATEMENT OF JASON CATLETT, PRESIDENT/CEO, JUNKBUSTERS CORP. 

My name is Jason Catlett, and I am President and CEO of Junkbusters Corp. I’m 

grateful for this opportunity to speak with you again. 

Junkbusters is a for-profit company whose mission is to free people from unwanted commercial solicitations through media such as e-mail, physical mail, telephone, and faxes. Since our web site launched in 1996, millions of people have 

turned to us for information, services and software for stopping junk messages, particularly e-mail. I have worked advising government departments and legislators on 

e-mail and other privacy issues since 1997. 

As a technologist—my Ph.D. was in Computer Science—my initial inclination 

years ago was towards solutions based on technology and administrative processes. 

But years of practical experience with large numbers of consumers have led me to 

believe that the essential requirement for the collective protection of privacy is 

strong rights for the individual. Thanks to the private right of action in the Telephone Consumer Protection Act of 1991, junk faxes are today rare compared to junk 

e-mail, a result achieved without any vast government bureaucracy, and with little 

frivolous litigation. In contrast, billions of unwanted e-mail solicitations are sent 

each day, vexing hundreds of millions of people who feel unable to stop it. This reduces participation in online commerce and erodes the considerable benefits that responsible e-mail marketing offers to consumers and businesses. What is needed to 

reverse this harm to consumer confidence in the medium is a law establishing an 

opt-in standard for commercial e-mail, and a private right of action for recipients 

and network operators. S. 630 would establish an opt-out standard and lacks a private right of action, and in my opinion would not improve the situation it addresses. 

Before focusing on the specifics of spam, I would like to briefly review the unhappy recent history of online privacy more generally. In the 11 months since I appeared before you in May, the prevailing level of privacy on the Internet appears 

42

to have lowered. (Space allows only a few brief examples, for greater detail see 

http://www.junkbusters.com/testimony.html on the Web.)

• Ever more intrusive collection technologies are being rolled out. Profiling companies are continuing development of their Consumer Profile Exchange technology without any committment to observe fair information practices in their 

use of it.

• Most ‘‘privacy policies’’ offered by companies still offer little privacy, and appear 

to be getting even worse, according to one longitudinal study by Enonymous.

• In September Amazon.com substantially weakened its privacy policy.

• The standards proposed by DoubleClick and a few other online advertising companies and sanctioned by the FTC in July are deplorably low.

• P3P, which has been billed by some as the pot of privacy gold at the end of 

the technological rainbow, is now being used by Microsoft as an excuse not to 

fix the default settings on its next browser that allows tens of millions of web 

bugs to gather click streams in volumes of billions of clicks per day.

• At a public workshop run by the Federal Trade Commission in March, the 

major profiling companies refused to allow people access to their own profiles, 

or even to provide example profiles.

With this background, and with spam as a regular reminder to consumers of the 

ease with which personal information can be misused and the difficulty of individual 

redress, few would be surprised by the conclusion that privacy concerns have severely dampened the growth of e-commerce (certainly not any Member of this Committee). Over the past year, its spectacular triple digit growth has dropped to such 

disappointing levels that many online merchants are struggling to break even, finding difficulty attracting investment, or filing for bankruptcy. Yesterday’s Wall Street 

Journal reported that most U.S. households have never made a purchase online. Of 

consumers who place items in online shopping carts, the majority are still abandoning the transaction before checkout. Online merchants have known for years 

that the number one concern here is fear for privacy. Furthermore, Forrester Research has found in extensive polling that concerns about privacy are not being assuaged as people gain more years of experience online. In my own discussions with 

online marketers whom I know from consulting engagements or from industry conferences, spam is despised as the major cause of damage to consumer confidence and 

participation. 

The failure to control spam is the greatest economic tragedy of the Internet age. 

E-mail marketing conducted in a fair, consensual manner offers enormous benefits 

to consumers and businesses alike, particularly to small businesses who could not 

afford the expense of traditional media. As e-mail marketing becomes synonymous 

with spam—a tragedy because this is unnecessary and avoidable—many consumers 

are deciding simply not to participate. The right public policy for spam, as with all 

privacy law, is to give people who participate rights to ensure their personal information is not used unfairly. This promotes both greater participation and better 

business practices. 

Almost no reputable marketer routinely sends e-mail on an opt-out basis. (A few 

have occasionally done so in error; this is perhaps the reason some companies oppose a private right of action, which would hold them accountable for such mistakes.) It is deplorable that certain trade associations such as the Direct Marketing 

Association are trying to hold the door open for spamming. H. Robert Wientzen, 

President and CEO of the DMA addressed members at the organization’s 1998 conference with the following words: ‘‘Let me begin by recognizing that bulk unsolicited 

commercial e-mail is not real popular with consumers. And to date, very few of you 

are employing it. However, we also feel that most of those who push for an opt-inonly regime have very little understanding of the incredibly negative impact it 

would have on the future use of e-mail as a marketing tool.’’ The DMA continues 

to indulge in its fantasy of cyberspace as a world of free paper, free printing and 

postage-due delivery of solicitations, failing to realize that if it had its way, consumers would rebel or flee. 

Opt-in is the right policy for marketing by e-mail, and is consistent with successful legislation on marketing by fax. As in the TCPA, the definition of a commercial 

message should of course be carefully limited to avoid any impact on non-commercial speech, such as speech about religion or politics. The opt-in approach taken in 

the TCPA for faxes, cellphones and 800 numbers has as its basis the fact that the 

recipient may incur costs for receiving the unsolicited message. This is also the case 

for spam, so the opt-in criterion is therefore equally appropriate. The fact that in 

43

some situations recipients appear to incur negligible incremental costs from a specific spam does not change the fundamental fact that spam is postage-due marketing. 

The TCPA’s prohibition against telemarketing calls to cellular telephones is not 

qualified any exemption for situations such as when the carrier offers the first incoming minute free or where the subscriber has excess minutes available for the 

particular month. That would be as silly as a spam law that said that people whose 

Internet service plans include unlimited hours are disqualified from monetary damages. Nor is there any exemption in the TCPA for fax-modems where no paper is 

consumed, a situation closely resembling junk e-mail. Despite the fact that a spam 

recipient often cannot produce a specific line item from a bill relating to the spam, 

costs are being incurred by individuals, as well as being diffused among consumers. 

Of course in many situations the cost can be quantified, such as on certain usagebased tariffs, or when dialing up from a hotel room. In some cases these direct costs 

exceed the cost of paper for a junk fax or 15 seconds on an 800 number. 

Furthermore, spam imposes a hidden tax on all Internet users by increasing network capacity requirements and requiring additional administrative costs at ISPs. 

I estimate this cost at around one dollar per month for the average subscriber, and 

billions of dollars per year including institutional buyers of network services. Because ISPs absorb this as a cost of doing business, this expense is not visible to individual consumers, but it is certainly passed on to them. An opt-in policy would reduce this spam-subsidizing tax, lower the cost of Internet access, and stimulate demand for Internet services and e-commerce. 

A opt-out policy that allows each spammers one free spam is like permitting 

shoplifters to steal items until each store requests that they cease thieving. It imposes unfair burdens: in both cases, even people who are not directly victimized 

incur costs through higher prices. More than a million businesses have Internet access; if even 10 percent of them sent a single message to half of online U.S. households over a period of 5 years, the American homes would receive an average of 27 

spams per day. The opt-out model is simply inappropriate and unsustainable for the 

Internet. If opt-out spam were to prevail, e-mail, the killer application of the Internet, would become the application that killed the Internet. 

Consider an excerpt from an actual spam and imagine the reaction of a constituent in Alaska reading after downloading it via a toll call. (Of course, it’s also 

important to remember that billions like it may have been sent to millions of people, 

so focusing on a single specimen is rather like examining a single dead grasshopper 

at a Senate hearing on locust plagues, but imagine your reaction multiplied to an 

appropriate scale.) Here is the spam: 

SEX SELLS!!! REALLY WORKS!!! 

‘‘Why Pay To Belong To An Adult Web Site When You Can Own Your Own For 

Less Than The Cost Of The Membership?’’ 

‘‘Anyone With An Internet Connection Can Own An Adult Web Site For Less 

Than The Cost Of Their Next Dinner!’’ 

‘‘No Experience Required! Anyone Can Sell Sex Online In Just Minutes!’’ 

[extraneous detail deleted] 

This message is sent in compliance of the new e-mail bill: Section 301. Per Section 

301, Paragraph (a)(2)(C) of S. 1618, http://www.senate.gov/∼murkowski/

commercialemail/

Claims of compliance such as the one at the end of this spam have become all 

to familiar to Internet users, and have been examined in the Wall Street Journal. 

A key goal of spammers is to gain an appearance of legitimacy, and many have 

turned to boasting their compliance even with bills that never became law. Some 

bills from the current congress may already have been used in this manner. The 

sponsors of these bills may want to consider how they will respond to irate voters 

who click through to their congressional web sites. When you receive a letter from 

a constituent angered by the solicitation sent to her teenage son to become a pornographer from the comfort of his own bedroom, how will you answer her question ‘‘Is 

this junk e-mail really obeying your law?’’ The answer will depend on the kind of 

bill you pass. As S. 630 stands, you would have to answer something like this: ‘‘Yes. 

Every spammer can send you at least one spam, and it’s up to you to tell each separate spammer to stop. If they don’t, you can’t do anything about it yourself, you 

have to hope that a government agency will do something for you.’’ Is that answer 

likely to please your constituents? A better answer, which you could give if you pass 

an amended or different bill, would be ‘‘The spammer is lying. My bill made 

spamming illegal, and it gives you the right to sue the spammer if they break the 

law.’’

44

Of course spammers are less likely to draw the attention of their victims to such 

a law. But if you pass a weak spam bill, the bill number and your name will surely 

be cited in vast numbers of junk e-mails for years to come. So when you consider 

the key questions of opt-in vs opt-out and whether to include a private right of action, think of these two alternatives: Do you want your name to be remembered as 

the lawmaker who said ‘‘spamming is wrong’’? Or do you want it to become the 

name that launched a trillion spams? 

I appreciate the opportunity to speak before you today. Now I would be pleased 

to answer your questions.

Senator BURNS. Mr. Harris Pogust. Looks like a law firm to me. 

Mr. POGUST. That’s correct, Mr. Chairman. 

Senator BURNS. From New Jersey. Thank you for coming today. 

Thank you for joining us. 

STATEMENT OF HARRIS L. POGUST, ESQ., PARTNER, 

SHERMAN, SILVERSTEIN, KOHL, ROSE AND PODOLSKY 

Mr. POGUST. I am an attorney from Pennsauken, New Jersey. I 

work in a small firm which represents over 2000 small businesses 

in the Philadelphia and southern New Jersey area. Over the last 

several years, my practice has focused on technology-related issues. 

It is only because of the disturbing rise in spamming which has 

begun to cost my clients valuable time and expense that I have become involved with this issue. 

I am here today, Senators, representing those small business 

men and women who had suffered commercial loss and other economic damages as a result of the conduct of entities that transmit 

thousands upon thousands of junk e-mails on a daily basis. This 

junk mail clogs the Internet and takes up valuable space on my clients’ computer systems. Takes up valuable employee time and costs 

my clients hundreds and in some instances thousands of dollars a 

year in unnecessary and unwanted expenses. 

As the Internet has grown, the problem of unsolicited e-mail has 

increased to the point of where it has become an intolerable burden 

on my clients, as well as myself. I commend you for identifying this 

issue as an important concern for the Subcommittee’s oversight 

agenda, yet this is not the first time that Congress has had to address the problem associated with the introduction of new technologies in the workplace. Ten years ago when fax machines first 

became increasingly prevalent in the offices across the country and 

on Capitol Hill, Congress enacted the Telephone Consumer Protection Act in response to the overwhelming volume of unsolicited 

faxes being sent. The TCPA prohibits any person from using any 

telephone, fax machine, computer or other device to send an unsolicited advertisement to a telephone fax machine. 

Among other provisions, the law provides a private right of action and there is a broad consensus that the TCPA has certainly 

curtailed the volume of junk faxes received in this country. 

In spite of some predictions to the contrary, when this piece of 

legislation became law, it did not result in a proliferation of litigation. What did occur was that millions of unwanted junk faxes 

were no longer being sent as the deterrent effect of a private right 

of action took hold. The concerns addressed in the TCPA are the 

identical concerns that S. 630 is seeking to address. The TCPA has 

saved businesses millions of dollars in unwanted overhead expenses and has been a valuable tool in fighting unwanted faxes by 

45

allowing a private right of action for damages, as well as injunctive 

relief. 

The threat of possible litigation in and of itself has clearly been 

a deterrent to those whom have thought about violating the junk 

fax law. While I applaud this Subcommittee’s effort to attempt to 

curb this latest abuse of technology, spam, there is one aspect of 

the bill that I, along with others, would like to see changed. 

I am concerned that this bill does not provide a private right of 

action for many small businesses and individuals who have faced 

lost time or money due to these unsolicited e-mails filling their in 

boxes. 

While I believe Congress must approach this issue in a balanced 

fashion and I support the comprehensive enforcement measures already proposed in S. 630, I also believe that there will be some 

cases in which an individual or business must directly seek recovery to address the economic harm they have suffered. 

The largest Internet service provider, AOL, has estimated that 

30 percent of its e-mail is spam. What is the effect of this abuse 

on the Internet? One result is the system-wide drag on the entire 

information highway costing the users the most valuable asset they 

have, their time. Another result is the millions of dollars citizens 

are collectively paying to their Internet service provider for the increased usage time that is required to read and delete these unwanted e-mails. 

Unfortunately, under the proposed legislation, there is no way for 

these businesses and individuals to recoup the money that they 

have lost and continue to lose related to spam. It is my hope that 

with further consideration the Subcommittee will provide such a 

remedy as was done in the case of the TCPA. 

It may be that on first impression one might surmise that the 

ISPs are the ones that are most damaged by junk e-mails. They 

suffer the increased expense in trying to filter out these unwanted 

e-mails and are required to spend money to provide additional 

bandwidth to provide optimal service to their end users. 

But these ISPs already have a way to recoup these additional expenses. They charge their end users. This is exactly what many of 

the ISPs have done. Netcom Online communications services, a 

mid-sized Internet service provider, has stated that a conservative 

estimate of the cost to our customers to support spam is approximately 10 percent of their monthly bill. 

Customers also pay fees to the ISPs for the additional connect 

time, as Senator Burns stated in his statement. It is a long distance phone call and the additional time costs the consumer money. 

Pursuant to S. 630, the ISPs are not only permitted to recoup 

their additional expenses from the end users, but they are also entitled to sue the entity which sent the unwanted e-mails. Yet what 

incentive would the ISP have to spend potentially hundreds of 

thousands of dollars in legal expenses to go after the spammer 

when they can just charge the end users for this additional cost of 

doing business? 

Who is left holding the bag and paying for the millions of dollars 

in damages which spamming causes? My business clients and the 

millions of other citizens throughout the country who use the Internet. What recourse did they have for footing this bill? I think the 

46

answer is none. The question I have is why? If the concern is that 

every Internet user will race to the courthouse and file suit against 

a spammer, such a concern is misplaced. As noted above, the TCPA 

resulted in a significant reduction in the number of junk e-mails 

sent without a rush to the courts. Moreover, the Act only provides 

for recovery of actual damages suffered unless egregious conduct is 

involved. 

In May of last year, Senator Lieberman stated spam undermines 

the viability of the Internet by burdening service providers who are 

forced to pass on the cost of funding spam to consumers. Our objective is not to strangle the Internet with government regulation or 

ban spam outright. Rather, we simply set out to give individuals 

control of their own e-mail accounts and to address the cost shifting problem brought by the proliferation of spam. 

In this situation, it is critical that consumers be allowed to recover their full actual damages, whether that is the cost to replace 

a computer, a computer program that has been damaged as a result of excessive spamming or lost earnings resulting from clogged 

e-mail systems. These are concrete improvable damages. They are 

not speculative in the least. 

Since it is impossible for Congress to predict the full range of 

possible damages suffered by consumers and small businesses, 

these damages should not be limited and just as in the TCPA to 

deter egregious behavior, the bill should also include some type of 

financial penalty for violations of this anti-spam bill. Without such 

a penalty, the entity sending these unsolicited e-mails might determine that it is financially worthwhile it continue to violate the law 

so long as they do not reach a volume likely to damage most computers or software. 

Mr. Chairman, Senator Wyden, thank you again for allowing me 

to testify here today. I salute your consideration of this important 

issue and hope it will be possible to ensure that businesses and individual users of the Internet are not made to suffer economic 

harm without fair and balanced redress. I would be happy to answer any questions you may have. 

Senator BURNS. Thank you and we appreciate your testimony 

today. 

[The prepared statement of Mr. Pogust follows:]

PREPARED STATEMENT OF HARRIS L. POGUST, ESQ., PARTNER, SHERMAN, 

SILVERSTEIN, KOHL, ROSE AND PODOLSKY

Chairman Burns, Senator Hollings and distinguished Senators, it is an honor to 

appear before you here today. 

My name is Harris Pogust, and I am an attorney from Pennsauken, New Jersey. 

I work at a small firm which represents over 2,000 small businesses in the Philadelphia and Southern New Jersey areas. Over the last several years my practice has 

focused on technology-related issues. It is only because of the disturbing rise in 

spamming, which has begun to cost my clients valuable time and expense, that I 

have become involved with this issue. 

I am here today, Senators, representing those small businessmen and women who 

have suffered commercial loss and other economic damages as a result of the conduct of entities that transmit thousands upon thousands of junk e-mails on a daily 

basis. This junk mail clogs the Internet and takes up valuable space on my clients’ 

computer systems, takes up valuable employee time, and costs my clients hundreds, 

and in some instances thousands of dollars a year in unnecessary and unwanted expenses. As the Internet has grown, the problem of unsolicited e-mails has increased 

to the point of where it has become an intolerable burden on my clients as well as 

47

myself. I commend you for identifying this issue as an important concern for this 

Subcommittee’s oversight agenda. 

This is not the first time Congress has had to address the problems associated 

with the introduction of new technologies in the workplace. Ten years ago, when fax 

machines first became increasingly prevalent in offices across the country, and on 

Capitol Hill, Congress enacted the Telephone Consumer Protection Act (‘‘TCPA’’) (47 

U.S.C. § 227) in response to the overwhelming volume of unsolicited faxes being 

sent. At that time, Congress decided to draw the line and let the senders of these 

unwanted faxes (in the form of solicitations and other questionable promotions) 

know that they could not continue their intrusive practices, which were clogging fax 

lines and wasting costly paper and employee time at small and large businesses 

alike. 

The TCPA prohibits any person from using any telephone fax machine, computer 

or other device to send an unsolicited advertisement to a telephone fax machine. 

Among other provisions, the law provides a private right of action and there is 

broad consensus that the TCPA has certainly curtailed the volume of junk faxes received in this country. In spite of some predictions to the contrary, when this piece 

of legislation became law, it did not result in a proliferation of litigation. What did 

occur was that millions of unwanted junk faxes were no longer being sent as the 

deterrence effect of a private right of action took hold. The concerns addressed in 

the TCPA are the identical concerns that this legislation is seeking to address. The 

TCPA has saved businesses millions of dollars in unwanted overhead expenses and 

has been a valuable tool in fighting unwanted faxes by allowing a private right of 

action for damages and injunctive relief. The threat of possible litigation in and of 

itself has clearly been a deterrent to those who may have thought about violating 

the junk fax law. 

The TCPA allows any person to bring suit in state court to enjoin a violation of 

the Act and to recover their actual monetary losses from such violations or they may 

seek a $500.00 penalty for each violation, whichever is greater. Additionally, the 

courts are authorized to award treble damages for egregious conduct—that is, where 

there are willful or knowing violations. Unfortunately, the pending legislation provides no such remedy to small businesses and individuals that suffer actual commercial consequences from junk e-mails filling their online mailboxes. 

While I applaud this Subcommittee’s efforts to attempt to curb this latest abuse 

of technology—spam—there is one aspect of this bill that I, along with others, would 

like to see changed. I am concerned that this bill does not provide a private right 

of action for the many small businesses and individuals who have faced lost time 

or money due to these unsolicited e-mails filling their inboxes. While I believe Congress must approach this issue in a balanced fashion—and I support the comprehensive enforcement measures already proposed in S. 630—I also believe that there will 

be some cases in which an individual or business must directly seek recovery to address the economic harm they have suffered. 

The largest Internet service provider, America Online, has estimated that 30 percent of its e-mail is spam. America Online has stated that it was receiving 1.8 million spams per day from one company called Cyber Promotions. This continued until 

AOL obtained an injunction to stop this practice. Assuming that it takes the normal 

user 10 seconds to identify and discard a message, the end user was required to 

pay for 5,000 hours per day of connect time. What is the effect of this abuse of the 

Internet? One result is the system-wide drag on the entire information highway 

costing users the most valuable asset they have—their time. Another result is the 

millions of dollars citizens are collectively paying to their Internet service providers 

for the increased usage time that is required to read and delete these unwanted emails. 

Unfortunately, under the proposed legislation, there is no way for these businesses and individuals to recoup the money they have lost and continue to lose related to spam. My hope is that, with further consideration, the Subcommittee will 

provide such a remedy, as was done in the case of the TCPA. 

It may be that, on first impression, one might surmise that the JSPs are the ones 

that are most damaged by junk e-mails. They suffer the increased expense in trying 

to filter out these unwanted e-mails, and are required to spend money to provide 

additional bandwidth to ensure optimal service to their end users. But, these ISPs 

already have a way to recoup these additional expenses: charge their end users. 

This is exactly what many of the ISPs have done. Netcom On-Line Communication 

Services, a mid-sized Internet service provider, has stated that: ‘‘A conservative estimate of the cost to our customers to support spam is approximately 10 percent of 

their monthly bill.’’

Pursuant to 8.630, the ISPs are not only permitted to recoup their additional expenses from the end user, but they will also be able to sue the entity which sent 

48

the unwanted e-mails. Yet, what incentive will the ISPs have to spend potentially 

hundreds of thousands of dollars in legal expenses to go after the spammer when 

they can just charge their end users for this additional cost of doing business? Who 

is left holding the bag and paying for the millions of dollars in damages which 

spamming causes? My business clients and the millions of other citizens throughout 

the country who use the Internet. What recourse do they have for footing this bill? 

None. The one question I have is: ‘‘Why’’? If the concern is that every Internet user 

will race to the courthouse and file suit against spammers, such a concern is misplaced. As noted above, the TCPA resulted in a significant reduction in the number 

of junk e-mails sent, without a rush to the courts. Moreover, that Act only provides 

for recovery of actual damages suffered unless egregious conduct is involved. 

In May of last year, Senator Lieberman stated that: ‘‘Spam undermines the viability of the Internet by burdening service providers who are forced to pass on the 

costs of fighting spam to consumers. Our objective is not to strangle the Internet 

with government regulation or to ban spam outright. Rather, we simply set out to 

give individuals control of their own e-mail accounts and to address the cost-shifting 

problems wrought by the proliferation of spam.’’

In this situation, as well, it is critical that consumers be allowed to recover their 

full actual damages—whether that is the costs to replace a computer or computer 

program that has been damaged as a result of excessive spamming, or lost earnings 

resulting from a clogged e-mail system. These are ‘‘concrete’’ and ‘‘provable’’ damages—and not speculative in the least. Since it is impossible for Congress to predict 

the full range of possible damages suffered by consumers and small businesses, 

these damages should not be limited. And just as in the TCPA, to deter this egregious behavior, this bill should also continue to include some type of financial penalty for violations of this anti-spam bill. Without such a penalty, the entities sending these unsolicited e-mails might determine it is financially worthwhile to continue to violate the law, so long as they do not reach a volume likely to damage 

most computers or software. 

Mr. Chairman and Senator Hollings, thank you again for allowing me to testify 

here today. I salute your consideration of this important issue and hope it will be 

possible to ensure that business and individual users of the Internet are not made 

to suffer economic harm without fair and balanced redress. I would be happy to answer any questions that you may have.

Senator BURNS. And now we will hear from Mr. David McClure, 

President and CEO of U.S. Internet Industry Association here in 

town. 

STATEMENT OF DAVID P. MCCLURE, PRESIDENT/CEO, U.S. 

INTERNET INDUSTRY ASSOCIATION 

Mr. MCCLURE. Chairman Burns, Senator Wyden, it is a pleasure 

to be here to discuss with you the subject of unsolicited commercial 

e-mail and to express the support of our members for S. 630, the 

CAN-spam Act. I am especially pleased to note that this legislation 

is the product of two of the most respected technology legislators 

in the Senate today, yourself and Senator Wyden. We know from 

our work with you in previous issues that this has always resulted 

in the creation of well crafted and sensible Internet policy. 

My name is David McClure. I am President of the U.S. Internet 

Industry Association, and we are the largest and oldest trade association representing Internet commerce, content and connectivity. 

For the past 3 years, much of our effort has been taken up with 

the subject of UCE. In a white paper authored by Jim Butler and 

Andrew Flake, we outlined the problems that we encountered when 

we attempted to craft a legislative solution to spam and also the 

type of legislation that we believe is going to help bring relief to 

the situation. 

I don’t need to tell you how serious the problem of spam is. Congress already knows this. The Congressional Management Foundation this month released a report that said last year, Congress reVerDate 0ct 09 2002 12:26 Jan 05, 2006 Jkt 088536 PO 00000 Frm 00052 Fmt 6633 Sfmt 6601 S:\WPSHR\GPO\DOCS\88536.TXT JACK PsN: JACKF
49

ceived 80 million pieces of e-mail, most of it unsolicited bulk e-mail. 

That is double the previous year. 

Nonetheless, while I don’t need to tell you how serious the problem is, I think we do need to discuss the problems inherent in a 

legislative solution, and there are really two that we need to address up front. The first is that in terms of sending a single piece 

of unsolicited commerce e-mail, there is nothing really illegal in the 

Act, and we may well have some constitutional considerations in 

attempting to flatly ban it. 

The second is more interesting in that we really can’t define 

what it is that we are talking about when we say unsolicited commercial e-mail. We think we know what the term ‘‘e-mail’’ means, 

based on today’s technology. It will change. I am not certain that 

we can satisfactorily define what ‘‘unsolicited’’ means or even what 

‘‘commercial’’ means. 

And a couple of quick examples. Does it mean that Girl Scouts 

who send out notices to their friends and neighbors of cookies for 

sale should be sent to jail? Does it mean perhaps that when the 

Red Cross sends an emergency notice of a need for O positive blood 

that they are in violation of the law? These are very difficult, difficult questions to answer, and we have struggled with them for 3 

years. 

Nonetheless, in the absence of a legislative solution, without the 

guidance of the law, we are left in a very difficult situation in 

which abuses do take place in which trade associations have their 

electronic newsletters to members routinely blocked, in which 

members who provide services—and this was referred to in the financial services industry—that they are required under contract 

and under law to provide, can find those communications blocked 

in the absence of any guidance. 

More problematical from our standpoint are the actions of some 

black listers whose policies have in the past been somewhat arbitrary and have resulted in people being literally blocked from any 

kind of e-commerce. Good legislation is going to resolve that. 

In our white paper, we identified what we considered to be four 

important things the legislation must do. First, it has to let the 

marketplace do its job. The greatest problem with UCE from our 

perspective is that it damages the network through its sheer bulk 

and its timing, but these are mechanical problems that can be resolved. And we believe that these are economic situations that can 

be resolved, and the market will eventually move to the kind of feebased process that will resolve the damage to the networks. Once 

that happens, we expect to see—when e-mail is no longer free for 

bulk mailers—we will expect to see the volume decline. 

Second, let’s crack down on fraud. It is estimated that over 90 

percent of spam is fraudulent. There is no excuse for this. We have 

laws and we’ll have now a stronger national bill that requires people to identify who they are, where they come from, to use real 

header information and real subject information. 

There are always going to be people who will not obey the law. 

Let’s turn the cold light of daylight on every commercial message 

and woe be to the wicked. I believe that those people who do not 

obey this law should be punished without mercy. Third, support 

the acceptable use policies of ISPs. These are well crafted policies. 

50

They are contracts that need to be supported, and when that happens, we believe that you’ll see ISPs segregate themselves. Some 

will aggressively filter out all bulk e-mail and their terms of use, 

their acceptable use policies will notify consumers that that is what 

they wish to do. Consumers then will have the choice of whether 

they wish to use this or another ISP. 

Finally, help marketers understand the word no. One of the 

problems with direct marketing is that in spite of the very best and 

well intentioned of legitimate marketers, there is always somebody 

who doesn’t know the meaning of the word no. Opt-out should be 

simple, pervasive, and permanent. 

Mr. Chairman, Senator Wyden, we are delighted to see that you 

have crafted legislation that meets all four of these points, and we 

believe that it is very important for the Committee now to pass this 

legislation on to the floor of the Senate to get it passed and move 

on to the House and put this legislation into effect. We don’t believe that it needs extensive rewriting. It doesn’t require good-faith 

exemptions or private rights of action or other major amendments. 

It needs only the support of this Committee and of the Senate. 

Thank you. 

[The prepared statement of Mr. McClure follows:]

PREPARED STATEMENT OF DAVID P. MCCLURE, PRESIDENT/CEO, U.S. INTERNET

INDUSTRY ASSOCIATION

Chairman Burns, and Members of the Communications Subcommittee, 

It is my great honor to be invited to testify before you on the subject of Unsolicited Commercial Electronic Mail, and to express the support of our members for S. 

630, the ‘‘CAN-spam Act.’’ I am particularly pleased to note that this legislation is 

the product of two of the most respected technology legislators in the United States 

today, Senator Conrad Burns and Senator Ron Wyden. Our work with these distinguished Members of the Senate on other issues has always resulted in the creation 

of well crafted and effective Internet legislation. 

My name is David McClure, and I am President of the U.S. Internet Industry Association, the oldest and largest trade association representing stakeholders in the 

Internet industry. USIIA was founded by leading companies in the online services 

industry to represent the interests of individuals and companies that do business 

on the Internet. 

Our diversified membership includes Internet service providers from global and 

national ISPs to small providers serving remote areas nationwide; Internet backbone companies, telephone companies; hardware and software vendors involved in 

the technologies of the Internet; electronic commerce sites, and service providers to 

those sites. Our charter is to promote the growth of electronic commerce, content 

and connectivity through sound public policy and business support. 

The issue of SPAM 

For the past 3 years, much of our effort in public policy has focused on the issue 

of unsolicited commercial electronic mail. In a white paper authored by Jim Butler 

and Andrew Flake, we outlined the problems encountered in efforts to stop Spam 

with a legislative solution, and the scope of legislation that we believe will help 

bring relief. 

I do not need to tell you how serious the problem of Spam is today. According 

to a report by the Congressional Management Foundation, the Congress itself suffered from more than 80 million pieces of electronic mail last year, the majority of 

those being unsolicited bulk mailings that interfered with the operations of Congressional offices and caused real damage to the communications capabilities of this 

body. 

A Gartner survey released last week found that on average an employee spends 

49 minutes of each work day simply managing e-mail. That is 10 percent of the 

workday for every employee in every office in America. 

In spite of this, and in spite of our personal experiences, and the outcry from consumers and their advocates here today, efforts to legislation against unsolicited commercial e-mail suffer from two problems.

51

1. There is nothing illegal about sending UCE, and it may in fact be largely protected by the First Amendment; and 

2. We don’t know exactly what the term ‘‘unsolicited commercial e-mail’’ means. 

Certainly, we think we know what ‘‘e-mail’’ is—though advancing technology may 

render even our belief obsolete. I can assure you that we are unable to determine 

exactly what ‘‘commercial’’ should mean in this context, or ‘‘unsolicited,’’ either.

Does it mean that girl scouts who send notices to their neighbors at cookie time 

should face jail time? Should the American Red Cross be punished for soliciting 

emergency donations of O-positive blood? We in this room would all agree that these 

are not the intent of the law. We, after all, only wish to stop the ‘‘bad spam.’’

But I can assure this Committee that even in the absence of such laws, anti-spam 

efforts are abused every day, causing irreparable damage to legitimate businesses. 

These include trade associations whose newsletters to their own members are routinely blocked by Spam filters. They include one of our member companies that 

gives more than one million consumers advance warning of viruses and security 

threats—but find themselves open to liability suits because those warnings are 

blocked in the name of preventing Spam. 

Self-appointed spam blacklisters do not even wait until Spam is sent—they will 

blacklist your domain, and all of its customers, if they believe that at some future 

point your service might possibly be used to send Spam. It is vigilante law at its 

worst. 

Solutions 

What then, can this Committee do? 

Must we abandon all efforts to stop unsolicited commercial e-mail in order to protect the First Amendment? Or must we accept the inefficiency and abuses inherent 

in efforts to stop any message that any person doesn’t wish to read? In short, do 

we see efforts at a legislative solution fail, as they have for the past 3 years, because 

we cannot agree on a solution? 

No. 

In our white paper of 3 years ago, our association outlined the steps that would 

provide legislative relief without stumbling over the legitimate rights of communicators or corporations. There are four steps that I would re-state today:

• Let the marketplace do its job. The greatest problem with UCE from an infrastructure standpoint is that it damages the network through its sheer bulk 

and poor timing. These are both, though, economic issues. Marketers who want 

to send their messages through an ISP’s servers should pay for the privilege. 

This is a contractual issue that the market is quite capable of managing. And 

frankly, once e-mail is no longer free and easy to send, its volume will decrease 

substantially.

• Crack down on fraud. It is estimated that over 90 percent of SPAM today 

is fraudulent. There is no excuse for this. We should have laws that force mailers to identify themselves, using real e-mail addresses, real header information 

and real contact information whenever they send a solicitation. Shine the daylight on every commercial message, and woe be to the wicked. Punish the 

lawbreakers without mercy.

• Support the acceptable-use policies of ISPs. Some ISPs will aggressively 

filter commercial messages as a service to their subscribers, and those subscribers who desire this service will flock to those ISPs. Others may choose not 

to block the information, and subscribers will receive what they wish. That is 

how an open, competitive market works, and the desires of all consumers can 

be met in this manner.

• Help marketers understand the word, ‘‘No.’’ One of the problems with direct marketing is that in spite of the very best and well-intentioned efforts of 

legitimate marketers, there is always someone who can’t understand the word. 

Opt-out should be simple, pervasive and permanent. 

Conclusion 

Mr. Chairman, and Members of the Subcommittee, I could ask you to craft the 

kind of legislation that would cover these four points. But that work is already done. 

In S. 630, we have a very good piece of legislation that will reduce unwanted commercial e-mail and resolve the outstanding legal issues, while still supporting consumer choice and the rights of service providers to run their businesses. 

We are here today to ask that you give your support to S. 630 as it is today. It 

does not require re-writing—the industry has had ample time to give input to its 

52

authors. It does not require ‘‘good faith’’ exemptions, or private rights of action, or 

any other major amendment. It needs only your support. 

Mr. Chairman, on behalf of USIIA and its members, and of the Internet community at large, thank you for the opportunity to express our views on this issue. I 

would be honored to answer any questions you might have at this time. 

The Effective Control of Unsolicited Commercial E-mail

An Internet Policy White Paper

By James W. Butler, III and Andrew Flake 

Introduction 

As commonly used, the pejorative ‘‘spam’’ refers to bulk electronic mailings of a 

commercial character, and the practice of ‘‘spamming’’ is positioned squarely at the 

center of contemporary debate over the Internet’s commercial development, Internet 

etiquette and individual privacy. 

For Internet service providers (‘‘ISPs’’) especially, the bandwidth commandeered 

by spamming and the resultant slowdowns in service represent an infrastructure expense of increasing dimensions. At the same time, the law of the Internet remains 

in some disarray, although courts and even some states have taken initial stabs at 

regulating spam. 

This White Paper presents a discussion of the problems inherent in direct electronic marketing from the perspective of both consumers and of the online community and concludes with modest recommendations for salient legislative initiatives. 

Historical Overview 

Spam is only one of a host of new legal issues that have arisen around electronic 

mail, and the term itself has had several incarnations in the online and Internet 

communities. 

During the Internet’s pre-commercial days, amid the perception of the need to 

minimize utilization of servers and message traffic to conserve acaUCEic and research resources, ‘‘spamming’’ referred to the act of posting an individual message 

to numerous UseNet Newsgroups. The exact path by which it did so is not known, 

but at some point the earlier, rather clean definition of ‘‘spam’’ evolved to encompass 

commercial or marketing messages as well. 

One of the more critical events in the term’s migration came with the infamous 

postings of an attorney who initiated a massive e-mailing in the hopes of soliciting 

green-card business among immigrants. His multi-posting efforts gained him the 

permanent enmity of Internet and UseNet users, as did his unwillingness to cease 

the effort once informed of his breach of Internet manners, or ‘‘Netiquette.’’ That 

violation occurred simultaneously with explosive growth of Internet use among consumers: as they poured onto the Internet in 1994–1996, the sheer number of new 

users overwhelmed the online community and made the maintenance of the tightlyintegrated Internet culture virtually impossible. 

Despite very strong efforts by experienced Internet users to maintain their traditions and definitions, the communication became garbled, and two Internet conventions (one barring messages with commercial content, the other barring multi-posting of messages) were generally commingled into the general heading ‘‘spam.’’

The Terminology of Electronic Messaging 

Whatever its traditional definitions and usage, the term ‘‘spam’’ may today be 

taken or mistakenly referred to as any one of the following sorts of messages: a message with commercial or marketing content; one that the recipient does not wish to 

receive, or which is unsolicited; one that the recipient has not specifically authorized 

in advance of its transmission; or, a message posted multiple times to a single or 

multiple newsgroups. 

Accepting the Internet’s transition into a commercial entity in which some forms 

of marketing and sales messages will be accepted and essential, imprecise definitions are counterproductive and serve to limit the development of electronic commerce. Although it is not the intent of this White Paper to alter Internet culture 

or common usage of terminology, the confusion and imprecision associated with the 

word ‘‘spam,’’ suggest that a more precise labeling would be beneficial. 

This White Paper will use the term Unsolicited Commercial Electronic mail 

(‘‘UCE’’) to describe the process of directing a commercial message via electronic 

mail to a selected group of recipients. 

53

Scope of the Problem 

Measured by volume of use, electronic mail is fast approaching more traditional 

means of communication, including letter-writing and telephone communications. 

Though abuse of the UseNet messaging system on the Internet is both rampant and 

detrimental, the current controversy over electronic communication more frequently 

centers on unsolicited commercial e-mail. UCE is a problem for the Internet, for five 

reasons:

• It is inefficient. Presently, with no controls or costs attached to UCE, it is as 

cost-effective to drop one million pieces of UCE onto an ISP as it is to drop 

one—though the costs to the ISP are substantial. No production cost is involved 

in the creation of e-mail intended for UCE distribution—no brochures, artwork, 

printing or other mechanical costs. In effect, unchecked UCE is a ‘‘free ride’’ for 

marketers and provides them with a disincentive to research, focus or target the 

list of recipients to insure interest in the products or services presented.

• It disrupts service. A major mechanical drawback with UCE is that it arrives 

on the Internet without notice. It slows service for other users, often during 

peak use hours. In some cases, it has caused wholesale failures of Internet networks. This disruption is frequently aggravated by the fraudulent use of incorrect or non-existent return addresses, which causes the outraged responses of 

recipients to bounce across the network multiple times as the system attempts 

to deliver messages that cannot be delivered.

• It is frequently fraudulent. An Internet culture protective of user anonymity 

has the unfortunate side effect of creating an environment in which unscrupulous purveyors of UCE can operate. Messages are sent directly to an electronic 

mailbox, and marketers need not provide information, e.g., business name, 

physical address, telephone and fax numbers, that would enable consumers to 

assess the validity of companies. Without greater certainty about company legitimacy, Internet consumers quite rationally become wary of even legitimate marketers. These concerns have contributed to decisions by ISPs to seek judicial 

protection.

• There is no effective ‘‘opt-out’’ procedure. In the offline world, marketers 

operate a system that enables consumers to remove themselves from direct marketing lists. While the system is not completely effective, it does exist. In the 

online world, no such system exists, although numerous efforts to create one 

have been undertaken.

• There is no compensation for service. In the offline world, direct marketing 

subsidizes the U.S. Postal Service and/or telephone companies, effectively paying for itself. In the online world, UCE currently benefits only the originator 

of the message and does not pay for the burdens it places on the system. UCE 

provides very little value, e.g., convenient shopping, entertainment value, or 

consumer information, and Internet service providers bear the brunt of the resource outlay for the infrastructure that enables UCE. Realistically, a mechanism that shares the economic burdens of UCE will more closely mirror the offline world, and will produce stronger efficiencies in the way UCE is handled on 

the networks. A ‘‘pay as you go’’ system would compensate the ISP’s who provide the on-and-off ramps for the UCE traffic. 

Combating the Growth of UCE 

In recent years, significant progress has been made toward understanding and 

dealing with the problems associated with UCE. Sanford Wallace, the self-proclaimed ‘‘king’’ of the UCE business, stepped down and joined the ranks of those 

opposing unchecked direct electronic marketing. Major Internet providers such as 

Earthlink and AOL successfully secured court orders against perpetrators of unwanted UCE. Nonetheless, the current legal situation remains far from clear, and 

debate rages on among those impacted by and involved with Internet service provision. 

On one side are individual consumers who do not wish to have their time wasted 

by having to open and read the first few lines of countless messages in which they 

have no interest. ISP customers who fall into this group are supported by consumer 

advocacy groups, as well as by those whose loyalty to the old Internet culture of 

non-commercialism eschews marketing of any sort. On the other side are the marketers, who believe that they have a clear right to communicate with current and 

potential customers, regardless of legal trends to the contrary. These marketers are 

supported by customers who wish to have product and service information, as well 

54

as by the Direct Marketing Association and its legion progeny, who fought for similar rights in the use of the mails and in direct telephone solicitation. 

Individual ISPs straddle the line and await some clear resolution while attempting to cope with UCE’s associated costs—these are the online and Internet services 

that suffer both the wear on their systems from dumping of UCE messages, along 

with the wrath of the subscribers incensed over wasted time and service slowdowns. These service providers seek additional sources of revenue to keep costs competitive as their business grows, but fear the network damage and other consequences of opening their systems to unwanted UCE. 

Unsuccessful Initiatives 

While the two camps (and the companies and individuals stuck in the middle) 

have generated significant public dialogue, attempts to deal with the very real and 

escalating problems of UCE have been only partially successful, and generally only 

in the event that the originator of the UCE can be identified. Initiatives that have 

proven unsuccessful include:

• Attempts to claim ownership of the electronic mailbox. Unlike the offline world, 

where the U.S. Postal Service rather than the consumer owns the mail box, the 

online industry assumes that each individual owns his or her e-mail box. Although such ownership has not been legally established, the constitutionality of 

so-called ‘‘receiver restrictions,’’ in which consumers are given the right to 

refuse certain mailings, has been upheld.

• ‘‘Right to privacy’’ claims. There is a perceived ‘‘right’’ of consumers to not have 

to view anything they elect not to view, although no case law substantiates this 

position. By the same token, however, constitutional free speech does not mean 

that an individual is obligated to view particular subject matter.

• Extension of laws prohibiting marketing via facsimile. See, e.g., ‘‘Netizens Protection Act of 1997,’’ H.R. 1748, 105th Cong., 1st Sess. (1997). Although the laws 

that were used to prohibit direct marketing via fax automatically are sometimes 

believed to extend to electronic mail, this concept overlooks some very fundamental differences in the two systems. For one, fax machines use expensive resources, where electronic mail normally does not, and efforts to build a case 

based on the time wasted in reading unwanted e-mail have largely been countered by advances in message preview technology and by the move to flat-rate 

rather than per-minute pricing for Internet and online services.

• An ‘‘opt-in’’ solution, no matter how desirable, may be impractical. Much of the 

discussion of consumer rights to date has focused on whether UCE should be 

sent only to those who have specifically requested communications—an ‘‘opt-in 

only’’ solution. This approach, however, would severely limit communication 

with persons who have not given advance written consent.

• An ‘‘opt-out’’ solution needs strong enforcement mechanisms. The ability of consumers to quickly and easily ‘‘opt-out’’ of receiving UCE, will only work if there 

is a sufficient incentive to keep the opt-out list well-maintained, well-promoted 

and easily accessible by consumers.

• Efforts to delineate UCE based on the content of the messages has proven impractical. For example, even the most liberal definitions of ‘‘commercial’’ e-mail 

would prevent announcement to parents of what an elementary school is serving for lunch, since this would clearly be an advertisement of a product for sale.

• Use of mandatory ‘‘header’’ information is counter-productive. Many suggestions 

have been made regarding an identifying mark or phrase that could be placed 

in the subject line or at the head of any commercial message, thus allowing email filters to more easily identify and eliminate UCE. While this idea is appealing, it suffers from the definitional problems because filtering systems, at 

their current level of sophistication, cannot differentiate between UCE and otherwise valid customer mailings. Attempting to have any body, organization or 

regulation define exceptions to the rule would be unwieldy, and use of extensive 

identifying information in the first lines of the message would render useless 

the preview screen technology used by many consumers to rapidly screen messages and their content.

• Use of a ‘‘pre-existing relationship’’ test may not be sufficient. It has been assumed by many in the online community that such a test may be implemented 

in the near future, under which electronic mailings would be permitted to those 

customers and other groups with whom the mailer has a ‘‘pre-existing relationship.’’ This assumption, however, has led virtually every business that has a 

55

web site or advertises via electronic mail to scramble to collect personal information about users as a hedge to show such a relationship. The rampant collection of data in order to prove the relationship has created another crisis in the 

area of privacy, as was noted by the Federal Trade Commission in its efforts 

to enforce Internet privacy guidelines. 

Developing A Framework 

To merely legislate or regulate UCE out of existence is neither Constitutional nor 

necessary. Though not yet tested, even unsolicited commercial messages would be 

subject to constitutional protections if Congress acted to prohibit their dissemination. 

Such restrictions are better left to Internet service providers, which as private actors may ban distribution of UCE messages on their networks. Still, the industry’s 

efforts with respect to UCE have so far proved only moderately successful. From 

these efforts, however, has emerged a sense of a viable framework to address its 

inherent problems.

• Fraud Prevention Legislation. The extension of regulations and legislation 

related to fraud to UCE. The trend at the state level is clearly toward regulating the practice of UCE. State legislation, however, must be carefully drafted 

to avoid constitutional challenge, as the experience of Georgia’s UCE fraud statute indicates.

• Measured Common Law Development. Recognition by the courts that UCE 

as presently practiced creates a strong adverse impact on the Internet. Specifically, the channeling of hundreds of thousands of pieces of electronic mail 

through an Internet system at a single time significantly degrades the performance of the network and interferes with other forms of Internet access and communications.

• Continued Industry Initiatives. The growth of filtering technology for electronic mail. While still crude and relatively ineffective for the larger body of 

electronic messages, filtering technology has assisted ISPs in taking the first 

steps toward empowering consumers to automatically reject unwanted solicitations.

Any proposed framework will at best be preliminary, with additional time and 

consideration required for its full effectiveness, but reasoning from the current experience of the online industry, it is certain that the following will be factors in any 

consistent legislative approach to UCE:

• The first step is to eliminate fraudulent mailings. The most critical elements 

of a framework for control of UCE will be unsuccessful if unscrupulous operators are able to flaunt the rules with impunity. At a minimum, electronic mailers should be required to divulge their real identities and return addresses, as 

well as compliance with other consumer protections laws as appropriate. Although a number of ISPs have imposed guidelines prohibiting the use of their 

services for the sending of UCE messages, such efforts are far from universal, 

and the individual policies of an ISP provide no protection against external 

sources of UCE.

• The solution must include relief for stress on the networks. Consumer irritation aside, the damage done to the Internet by UCE is very real, and its elimination of this damage must be a central consideration in proposed legislation. 

At the minimum, a requirement for contractual notification of the Internet service or provider prior to transmission of UCE should be put in place; the market 

would be best served, however, by an industry-wide financial arrangement, 

similar to the postage system, to compensate all carriers of the message traffic. 

A compensation system would have the additional benefit of providing a barrier 

to entry for unscrupulous spammers.

• The right of the states to impose more stringent consumer protections

should be preserved. State and local laws have provided some of the strongest 

protections against abusive UCE to date, in part because they have more extensive protections available against business interference and detrimental business practices. The framework for the future should include some assurance 

that state and local considerations on behalf of Internet services and consumers 

not be preempted, to the extent that they are more solicitous of consumer interests than any federal statutory cause of action. Federal initiatives should provide a base level of protection for consumers and ISPs, to circumvent the possibility of inconsistent regulation of an entity, the Internet, that is not bounded 

by geography. 

56

Conclusion 

The continuing popularity of electronic mail (‘‘e-mail’’) as a medium of personal 

and business communication has brought in its wake a host of novel legal issues, 

among them the extent to which the practice of unsolicited commercial e-mail 

(‘‘UCE’’) may be limited. 

A compelling need to protect Internet users from unwanted, unnecessary and 

fraudulent commercial message traffic, as well to protect the infrastructure of the 

Internet from the problems created by massive postings of messages, either commercial or otherwise, has already seen some courts and state legislatures move to prohibit the practice in its various forms. 

This White Paper has set forth in summary fashion the historical and legal 

underpinnings of the debate over UCE, and its conclusion is that federal legislation 

should be enacted that would (1) provide a minimum of protection for consumers 

against fraudulent electronic mailings by marketers; and (2) promote a more reasonable allocation of the costs of legitimate UCE toward the direct marketers that are 

its source. 

Appendix A: USIIA Policies 

The U.S. Internet Industry Association opposes any action, program, system or 

endeavor that corrupts the legitimate use or integrity of the channels of electronic 

communication. This policy is explicitly stated in paragraph 7 the USIIA Code of 

Standards, which reads as follows: 

‘‘Members shall not knowingly create, acquire, distribute or allow intentional distribution of materials that violate the legitimate use or integrity of the channels of 

electronic communication, online services, computer systems or their contents.’’

Consistent with this policy, USIIA does not support the practices of Multiposting 

of Messages or Off-Topic Posting of Messages. It is the belief of the Association that 

persons who deliberately engage in these practices should have their access to the 

UseNet and other online lists, discussion groups or message bases terminated. This 

policy is not intended to affect the legitimate act of Cross-Posting of Messages. Similarly, USIIA does not support or condone the communication of information that is 

deliberately misleading or fraudulent. This is stated in the USIIA Code: 

‘‘Members shall not knowingly disseminate false or misleading information and 

shall act promptly to correct erroneous communications for which he or she is responsible, or which originated from or resides on his or her system.’’ USIIA Code of Professional Standards, #8. 

This section of the Code is interpreted to include messages in which an attempt 

is made to disguise the commercial nature of the message, those which are fraudulent, those which misrepresent the origination of the sender, and those which are 

violations of the law at the point of origination. Nothing within the Code, the Bylaws of the Association, its Mission Statement or the will of its members specifically 

prohibits or discourages the legitimate commercial uses of electronic mail or messaging.

Senator BURNS. Thank you, Mr. McClure. 

Senator WYDEN. Thank you. 

Mr. Chairman, I think it is striking now. You and I have put an 

enormous amount of time into this issue now over the last Congress and this Congress and we thought we were going to get there 

at the end of the last session, and suffice it to say, I have got a 

number of questions I want to ask, but my biggest concern here is 

that we need to act, because people are tired of this. And to just 

go round and round the mulberry bush with everybody having their 

own difference just doesn’t seem to me to be very constructive. 

I mean, I would say to Mr. Pogust you know since my days as 

director of the Gray Panthers, my background has been consumer 

law and consumer rights. 

I find it pretty hard to see a private right of action here for a 

handful of unsolicited e-mails, but to tell you the truth, I could see 

how you would differ. In other words, something reasonable people 

can differ on. The problem is that if we just go round and round 

on all of these, we are never going to get anything done in this 

57

Congress so what I want to do is ask just a couple of questions in 

hopes that we can get a bill here and actually signed into law. 

Do any of you think that the Burns-Wyden bill is not better than 

the status quo? Mr. Moore? Do you think that Burns-Wyden is better than the status quo? 

Mr. MOORE. Absolutely. No question about it. 

Senator WYDEN. Mr. Buckley? 

Mr. BUCKLEY. Yes. 

Senator WYDEN. Mr. Pogust? 

Mr. POGUST. Yes, but I believe it needs a little work. 

Senator WYDEN. I am going to still just take the yes. 

Mr. CATLETT. I think there is a risk it will worsen the problem 

rather than improve it, so I am sorry to say. 

Mr. CERASALE. Senator, yes. 

Senator WYDEN. OK., so we got almost everybody saying that 

Burns-Wyden, even though we all have differences——

Senator BURNS. One-and-one. That is better than all in one. 

Senator WYDEN. All right. That is encouraging. Anybody think 

that you ought to be able to falsify headers? I can’t believe that 

anybody is in favor of that? I will take that as a United Nations 

opinion. 

Everybody here, even though there are differences on the role of 

opt-out/opt-in thinks that opt-out is a useful pro-consumers principle? Mr. Catlett, you can take the floor. We recognize you are for 

opt-in and I understand that, but opt-out is better than nothing for 

the consumer, isn’t it? 

Mr. CATLETT. It is better than nothing in an individual case. 

However, if you apply broadly an opt-out policy, particularly if you 

preempt state law on this, you will actually increase the number 

of unwanted solicitations, most likely, so applied broadly, an optout policy with preemption may well make the problem worse. 

Senator WYDEN. I am not going to belabor it. I think that is pretty far-fetched. To me, any way you slice it, when people are opting 

out, they are going to get fewer of those communications, but 

again, reasonable people can differ and let me just kind of keep 

going on this. 

For the DMA folks and Mr. McClure, any sense on what the 

Burns-Wyden bill would cost to comply with? I mean, we think that 

these are pretty modest costs, and they would be consistent with 

free enterprise, you know, principles. Do you all disagree with 

that? 

Mr. CERASALE. Not at all. As a matter of fact, our members, if 

someone says do not send me any more solicitations, they have to 

follow it already, so that I would say that this fits pretty tight 

within what our members already have to do. 

Mr. MCCLURE. We are in agreement, sir. We don’t see significant 

costs. We do, if I may quickly, address the issue that has been 

raised here repeatedly, and that is that somehow ISPs would not 

aggressively go after spammers because it costs too much money 

for them to sue. Certainly if it is going to cost them hundreds of 

thousands of dollars to sue, it would not cost much less for individual consumers to do so. 

We believe that ISPs have a very strong record of suing 

spammers when they have the law on their side. And therefore, we 

58

believe that this is a good bill for ISPs and it needs to be passed. 

We have gone 3 years, sir. It is time to get a bill passed. 

Senator WYDEN. You are singing from my hymnal. Question for 

the financial services folks. I think you know, I think you all have 

raised legitimate concerns and to some extent they are not unlike 

what happened with the electronic signatures bill at the end because this is all new. 

I mean, if you sat around the Senate Commerce Committee 20 

years ago, you never debated this kind of stuff. You were talking 

about an economy where people in Montana and Oregon were 

doing the physical movement of goods and you got up in Missoula 

at 5 o’clock in the morning you ate about 20,000 calories at 5 

o’clock in the morning and you did physical labor so this is all new 

stuff, so we are trying to be sensitive to your concerns. 

You have indicated you have got some concerns about the enforcement issue, and we are going to try to address those, the role 

of the Federal Trade Commission and the states and I think we 

can, we can do that and as you know, some of those issues came 

up in the electronic signatures bill as well, the role of the Federal 

Government and the states, but the one that I would like to see 

if we can make progress on is on the definitions. I want to find out 

if we are talking about some technical stuff or are we talking about 

things where there is really a philosophical question. 

You suggest, for example, that being clear may require, for example, a universal signal that the e-mail is an advertisement, a kind 

of universal signal. The reason we have taken the approach that 

we have, Senator Burns and I, Chairman Burns and I, is we are 

trying to give business a lot of flexibility because we thought that 

is what business folks were interested in is trying not to have this 

one-size-fits-all and everybody in Washington, DC running around 

saying we have got all of the wisdom. 

Mr. BUCKLEY. I understand your frustration, Senator, as you 

say——

Senator WYDEN. We are trying to be responsive. 

Mr. BUCKLEY. You say ‘‘let’s try to give people flexibility’’ and 

that is something people often want, but in compliance statutes we 

find clear definition of responsibility is important. I practice law 

and defend lawsuits and try to advise clients on how to remain 

compliant. It is a good idea to try to give people a model. It doesn’t 

necessarily eliminate flexibility—you could both retain flexibility 

and give a model saying ‘‘do it this way and you can be sure to 

have complied.’’ You still have flexibility to comply otherwise, but 

in an area like this, using standards like ‘‘clear and conspicuous,’’ 

without further definition of what you are talking about. 

This notice is something that is going to be fairly universal and 

I hope fairly simple, but you know when you get into what is clear 

and conspicuous, what’s the size of type, where does it have to be 

located, maybe we ought to have some discussion about that. You 

know, I don’t want to pin people in other industries down where 

they feel that they need flexibility, but it is awfully helpful to know 

exactly what Congress has in mind. There is a class action bar 

lurking out there, and if we don’t get some of the changes we have 

asked with respect to enforcement, we may have challenges to 

whether something is ‘‘clear and conspicuous’’ or not. Even the FTC 

59

may conclude we don’t agree with your understanding of what clear 

and conspicuous is. 

So we think tightening down on the meaning of ‘‘clear and 

conspicious’’ would be helpful. I know precision is not what people 

are always asking for, but that seems best in this case in our judgment. 

Senator WYDEN. Well, we will work with you and I know Senator 

Burns has some questions, but I think we ought to get this, get this 

bill to the White House for signing, for a signing ceremony. I think 

I have met with almost all of you individually, the financial services folks here recently, Senator Burns has done exactly the same 

thing, and you know, look, I think the American people say getting 

spam in their in box is like getting that unidentified stuff in your 

lunch box, and you didn’t order it. You don’t know where it comes 

from, and you are really ticked off. 

So work with us here to try to resolve these remaining issues because even at this table there is a whole lot more common ground 

here than there are reasons to go off in your respective corners and 

come out swinging, which was why I asked that question about the 

status quo, and we will do our best to be responsive to your concerns and Senator Burns, like a pen from President Bush when 

this bill gets signed into law, and I would, too, and I thank you, 

Mr. Chairman. 

Senator BURNS. All I need is one more pen. You bet. All I have 

is one more question, and I am going to throw it out on the table 

and let everybody take a shot at it. I referenced the article in the 

Wall Street Journal on Monday. And it had to do with mass harvesting. 

Spammers can’t survive without a plentiful supply of e-mail addresses, and as I understand it, businesses have sprung up to fulfill 

that need. They have technology that intrudes on popular websites 

and gathers thousands and thousands of e-mail addresses to 

spammers. And they sell and rent those addresses to spammers. 

The result is that someone who has posted a comment in a chat 

room or made a winning bid on an online auction, and I am an auctioneer, and I want to sell spurs so they don’t send me much, they 

get on a spam list and they are flooded, absolutely flooded with unwanted messages. And I will tell you, I did sell a pair of spurs on 

eBay and boy, as soon as that happened, I’ll tell you, I just threw 

my old computer away. I changed my name and everything. 

That individual’s privacy has been invaded and they don’t know 

how it happened. It sours them on the entire business of e-commerce. Do we need to do something about this business of harvesting and do we, and is there a way to amend or how would you 

recommend that we deal with this situation of harvesting? Mr. 

Catlett? 

Mr. CATLETT. Thank you, sir. Unfortunately, to ban harvesting 

would not be effective for the following reason. There is a technology employed now called dictionary spamming which is based on 

the age-old sales method of guessing so a spammer, for example, 

has an e-mail address John42@aol.com so they try sending a spam 

to John43@aol.com and the mail server tells them no such address 

or yes, that is a live one, then they go into John45 and so on and 

so forth. They also try John43@earthlink.com and because people 

60

tend to use e-mail addresses which are easy to remember for their 

friends, they hit on a large number of deliverable addresses. So as 

deplorable as the practice of scavenging e-mail addresses is, to ban 

it, even if completely effective, would not solve the core problem. 

Senator BURNS. Any other comments? How do we, how do we 

deal with these folks who break into commercial organizations and 

take their list? 

Mr. CATLETT. Well, the Computer Fraud and Abuse Act would already make that illegal, I believe, sir. I am not a lawyer, but——

Senator BURNS. Is that correct? Well, that is about all the questions and Senator Wyden and the way you covered this thing, we 

will, we want to work with you and to move this thing out and find 

a way that we can find some similar ground on this thing. 

Senator Allen had some questions, and I am going to allow him 

to submit those in writing and you can respond either to the Senator or to the Committee. We would appreciate that. And then I 

have a couple more, but it is getting close to 4:30 and I never work 

past 4 o’clock. And we have already gone overtime. 

But I want to thank you for your testimony today. We invited 

AOL and Yahoo today and they declined to come and before we 

can, before we can solve some of these problems, we are going to, 

we have got to have a good, strong representation of the giants of 

the industry, and I am disappointed in that but nonetheless, we’ll 

be meeting with those folks and continue our communications with 

you as we work it through the Senate. But I am like Senator 

Wyden. It is time to move this thing and we plan to do just that 

as soon as we can. Thank you for coming today. We appreciate it. 

These proceedings are closed. 

[Whereupon, at 4:35 p.m., the hearing was adjourned.] 

(61)

A P P E N D I X 

PREPARED STATEMENT OF HON. ERNEST F. HOLLINGS,

U.S. SENATOR FROM SOUTH CAROLINA

Today’s hearing examines a bothersome consumer issue—that of unsolicited commercial e-mail, also referred to as junk e-mail or spam. With the growth of commerce over the Internet, consumers are being bombarded with junk e-mail advertising various products and services, including get-rich-quick schemes, phone sex 

lines, and pornographic websites. In light of the bothersome and at times costly nature of junk e-mail, I believe it is appropriate for Congress to address this issue. 

Since junk e-mail imposes real costs on recipients, it is important that we act to 

resolve this issue and not simply balance the concerns of competing business interests. For example, an ISP or a business has to expend money and resources when 

its network crashes because it cannot handle the volume of junk e-mail. Consumers 

have to expend time and money to delete junk e-mail from their accounts or inform 

the sender that they do not want to receive future junk e-mails. 

An opt-out approach in which the recipient has to respond to every junk e-mail 

and ask the sender not to send any additional junk e-mail is riddled with loopholes. 

This approach is problematic because in the online world, spammers often do not 

provide correct addresses and header information. An opt-out system also requires 

electronic marketers to keep a well-maintained list for all consumers who have 

opted-out, provide clear information to consumers about what they need to do to optout, and ensure that consumers know that they can opt-out of receiving junk e-mail. 

An opt-out approach also presents difficult questions such as if a consumer opts-out 

of receiving information from the Gap does that mean that Old Navy, a store owned 

by the same parent company, can send the consumer junk mail? Also, where a consumer has multiple e-mail addresses, must the consumer opt-out for each e-mail address? 

I also believe it is important that all consumers have some legal recourse when 

they are harmed. This means that when a business or consumer suffers damages 

from having their computer and Internet systems go down because of the volume 

of junk e-mail, they are able to recover damages. The threat of a lawsuit will help 

to ensure that senders of junk e-mail take the requisite care when they send junk 

e-mail. 

This is an important issue and Congress should take the time to get it right. I 

welcome the witnesses and look forward to hearing their testimony.

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