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S. HRG. 108–968 

SPAM (UNSOLICITED COMMERCIAL E-MAIL) 

HEARING 

BEFORE THE

COMMITTEE ON COMMERCE, 

SCIENCE, AND TRANSPORTATION 

UNITED STATES SENATE 

ONE HUNDRED EIGHTH CONGRESS 

FIRST SESSION 

MAY 21, 2003 

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

( 

(II) 

SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION 

ONE HUNDRED EIGHTH 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 H. SMITH, Oregon 

PETER G. FITZGERALD, Illinois 

JOHN ENSIGN, Nevada 

GEORGE ALLEN, Virginia 

JOHN E. SUNUNU, New Hampshire 

ERNEST F. HOLLINGS, South Carolina, 

Ranking 

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 

BARBARA BOXER, California 

BILL NELSON, Florida 

MARIA CANTWELL, Washington 

FRANK R. LAUTENBERG, New Jersey 

JEANNE BUMPUS, Republican Staff Director and General Counsel 

ROBERT W. CHAMBERLIN, Republican Chief Counsel 

KEVIN D. KAYES, Democratic Staff Director and Chief Counsel 

GREGG ELIAS, Democratic General Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on May 21, 2003 ............................................................................... 1 

Statement of Senator Allen ..................................................................................... 10 

Statement of Senator Burns ................................................................................... 8 

Statement of Senator Cantwell .............................................................................. 55 

Statement of Senator McCain ................................................................................. 1 

Letter dated May 21, 2003 from Bill Gates, Chairman and Chief Software 

Architect, Microsoft ....................................................................................... 3 

Letter dated May 20, 2003 from Jerry Berman, President, Center for 

Democracy & Technology ............................................................................. 4 

Statement of Senator Nelson .................................................................................. 17 

Statement of Senator Wyden .................................................................................. 9 

WITNESSES

Dayton, Hon. Mark, U.S. Senator from Minnesota ............................................... 15 

Hughes, J. Trevor, Executive Director, Network Advertising Initiative ............. 76 

Prepared statement .......................................................................................... 78 

Leonsis, Ted, Vice Chairman, America Online, Inc. and President, AOL Core 

Service ................................................................................................................... 58 

Prepared statement .......................................................................................... 61 

Rotenberg, Marc, Executive Director, Electronic Privacy Information Center 

and Adjunct Professor, Georgetown University Law Center ............................ 83 

Prepared statement .......................................................................................... 85 

Salem, Enrique, President and CEO, Brightmail Inc. .......................................... 63 

Prepared statement .......................................................................................... 64 

Scelson, Ronald, Scelson Online Marketing .......................................................... 89 

Prepared statement .......................................................................................... 92 

Schumer, Hon. Charles E., U.S. Senator from New York .................................... 11 

Prepared statement .......................................................................................... 14 

Swindle, Hon. Orson, Commissioner, Federal Trade Commission ...................... 18 

Report dated April 30, 2003 from the Federal Trade Commission’s Division 

of Marketing Practices entitled ‘‘False Claims in Spam’’ ................................. 20 

Prepared statement .......................................................................................... 37 

Thompson, Hon. Mozelle W., Commissioner, Federal Trade Commission .......... 38 

Prepared statement .......................................................................................... 40 

(1) 

SPAM (UNSOLICITED COMMERCIAL E-MAIL) 

WEDNESDAY, MAY 21, 2003 

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

The Committee met, pursuant to notice, at 9:35 a.m. in room SR– 

253, Russell Senate Office Building, Hon. John McCain, Chairman 

of the Committee, presiding. 

OPENING STATEMENT OF HON. JOHN MCCAIN, 

U.S. SENATOR FROM ARIZONA 

The CHAIRMAN. Good morning. Today, the Committee will examine whether there are ways we can effectively deal with the increasing proliferation of spam in America. I commend the Federal 

Trade Commission for its dedication to the complex policy and technical issues involved in putting an end to unwanted spam. I also 

want to strongly commend Senators Burns and Wyden for their 

continued work over the years in trying to address this issue 

through legislation. Literally hundreds of hours have been spent by 

these two Senators and their staffs in trying to address this very, 

very difficult issue. 

Spam means different things to different people. The FTC defines spam generally as unsolicited commercial e-mail, and some 

Americans do not want any of it, other consumers like to receive 

unsolicited offers by e-mail. To them, spam means only unwanted, 

fraudulent or pornographic e-mail that floods their in-box. Many 

American businesses view e-mail as a new medium through which 

to market or communicate more efficiently with consumers. To 

them, that is not spam, but commercial speech protected by the 

First Amendment. 

Internet service providers are caught in the middle, often drawing a distinction between what they, but not necessarily consumers 

perceive as good or bad actors, and permitting some unsolicited emails to pass through their networks to consumers while blocking 

others in their spam filters. Regardless of whether you call all unsolicited commercial e-mail spam, it is rapidly on the rise, and its 

sheer volume is affecting how consumers and businesses use email. E-mail messaging has fundamentally changed the way we 

communicate with family and friends, the way we communicate 

with businesses that provide goods and services, and the way that 

businesses market products to consumers. 

The growing affliction of spam, however, may threaten all of us. 

Less than 2 years ago, spam made up only 8 percent of all e-mail. 

Today, industry experts estimate that more than 45 percent of all 

2 

global e-mail traffic is spam, and many expect it to reach the 50 

percent mark by this summer. AOL estimates that it blocks 80 percent of all its inbound e-mail, nearly 2.4 billion messages each day. 

Managing this influx adds real cost to consumers and businesses. 

There are other costs to Americans, such as the cost to our children, who may be victimized by the nearly 20 percent of spam that 

contains pornographic material, some including graphic sexual images. 

The FTC also tells us that two-thirds of all spam contains deceptive information, much of it peddling get-rich-quick schemes, dubious financial or health care offers, and questionable products and 

services. While most agree that something should be done about 

spam, it is clear that legislation alone will not solve the problem. 

Yesterday’s New York Times had a very interesting article. It 

says—and I will not, obviously, quote the whole article. I will include it in the record, but it said at first, it looked as if some students at the Flint Hill School, a prep academy in Oakton, Virginia, 

had found a lucrative alternative to an after-school job. Late last 

year, technicians at America Online traced a new torrent of spam, 

or unsolicited e-mail advertisements, to the school’s computer network. On further inquiry, though, AOL determined the spammers 

were not enterprising students. Instead, a spam-flinging hacker 

who has still not been found exploited a software vulnerability to 

use Flint Hill’s computers to relay spam while hiding the e-mails’ 

true origins. 

I mention that story because the complexity of this issue is challenging to all of us, and the complexity and the innovative ways 

that spammers are employing make this to some degree an issue 

that has ever-changing challenges. The fact that there may be— 

keeping up with resourceful spammers’ latest technology is not the 

only challenge. Jurisdictional barriers only complicate enforcement, 

and up to 90 percent of all spam may pass through mail servers 

outside of the United States. 

The fact that there may be no silver bullet to the problem of 

spam does not mean, however, that we should stand idly by and 

do nothing at all about it. It is clear we must act, but I ask the 

witnesses to help us define the problem and tell us how, whether 

by technical, legislative, or other means we can be most effective. 

For Congress’ part, we should make no mistake, unless we can effectively enforce the laws we write, those laws will have little 

meaning or deterrent effect on any would-be purveyor of spam. 

Finally, I ask industry to continue to respond to the demands of 

American consumers in doing all that it can to stop the worst part 

of spam. Parents should not have to think twice before encouraging 

their children to use the computer. 

I thank the witnesses, and look forward to the testimony. 

Also, I would like to enter into the record, letters from Mr. Bill 

Gates and also Jerry Berman of the Center for Democracy and 

Technology, basically stating their commitment to working with us 

to try to eliminate this issue. 

[The information referred to follows:] 

3 

MICROSOFT

May 21, 2003 

LETTER FROM BILL GATES TO THE U.S. SENATE COMMERCE COMMITTEE REGARDING

SPAM HEARINGS

Dear Chairman McCain and Ranking Member Hollings: 

Thank you for holding this important and timely hearing on spam. I greatly appreciate the leadership of both you and your Commerce Committee colleagues. I regret that we are unable to participate directly, but would like to take the opportunity to share Microsoft’s perspective on this critical e-commerce and consumer 

issue. 

The torrent of unwanted, unsolicited, often offensive and sometimes fraudulent email is eroding trust in technology, costing business billions of dollars a year, and 

decreasing our collective ability to realize technology’s full potential. According to 

some industry estimates, spam now makes up more than 50 percent of all e-mail. 

To make matters worse, spam often preys on less sophisticated e-mail users, such 

as our children, posing a genuine threat to personal security and privacy and threatening the very utility of e-mail as a viable communication tool. 

Microsoft firmly believes that spam can be dramatically reduced, and that the solution rests squarely on the shoulders of industry and government. There is no silver bullet solution to the problem. Rather, we believe that fully addressing this 

problem for the long-run requires a coordinated, multi-faceted approach that includes technology, industry self-regulation, effective legislation, and targeted enforcement against the most egregious spammers. 

In terms of technology, Microsoft is committed to providing customers with the 

best solutions available, and engaging on every level to find new and better technical means to stop spam. To date, Microsoft’s investments in anti-spam technologies have already paid off for businesses and consumers through innovations 

available in new versions of our products, such as MSN, Hotmail, Exchange and 

Outlook. 

The industry is building better filters every day, and is investing heavily in research and development to open the door to greater innovation. We need filtering 

technologies that are easier for consumers to use, and more effective at determining 

which e-mail messages are spam and which are desired communications. This differentiation will greatly reduce the risk of falsely misidentifying legitimate e-mail 

as spam. 

While we and others have made significant advances in anti-spam technology, we 

recognize there is still much work to be done. But technology is not the only answer. 

Effective and complementary self-regulation efforts by the industry are crucial. 

Specifically, we support the establishment of an independent trust authority or 

authorities around the globe that could spearhead industry best practices, and then 

serve as an ongoing resource for e-mail certification and customer dispute resolution. In short, these authorities could provide mechanisms to identify legitimate email, making it easier for consumers and businesses to distinguish wanted mail 

from unwanted mail. Of course, any technology designed to establish the identity 

of legitimate commercial firms and associate them with a trusted sender ‘‘seal’’ 

should be based on open standards and developed with broad input from affected 

industries. 

But in order for the self-regulation and technology efforts to be successful, they 

need to be supported by strong Federal legislation that prohibits fraudulent and deceptive spamming practices, and empowers consumers without threatening the vitality of legitimate e-commerce. 

Specifically, Federal legislation should create incentives for e-mail marketers to 

adopt best practices, and to certify themselves as trusted senders who can be more 

easily identified by consumers and filters alike. One way to encourage marketers 

to adopt e-mail best practices is to provide a Safe Harbor for those companies who 

are members of an FTC-approved self-regulatory organization. Under this approach, 

safe harbor participants would be entitled to avoid the burden of additional labeling 

requirements (such as ‘‘ADV:’’ to identify e-mail advertisers) while enjoying other 

regulatory benefits based upon their compliance with specific sender guidelines. 

Thus, Federal legislation should identify the basic components that industry 

guidelines must address, such as notice and choice obligations, but permit the industry to take the lead in developing the specific guidelines within these parameters. 

Microsoft believes other elements of Federal legislation should include: 

4 

• Effective Internet service provider (ISP) enforcement that allows ISPs to prosecute spammers on behalf of their customers; 

• Meaningful definitions to capture all bad actors involved in sending unlawful 

spam, including those who knowingly assist in the transmission of unlawful 

spam; 

• Provisions that permit state Attorneys General to enforce violations of Federal 

law, as well as existing state contract and trespass laws, in order to further increase the pressure on persistent spammers; 

• Express language that preserves the right of ISPs to combat spam (i.e., provisions that make it clear that the Federal anti-spam law does not impose an obligation on ISPs to block or carry certain types of e-mail messages, and does not 

impair an ISP’s ability to enforce its anti-spam policies); and 

• Federal preemption of state statutes that regulate the sending of commercial email messages provided the Federal anti-spam law contains strong substantive 

requirements. Because ISPs rely heavily on state contract and trespass laws, as 

well as laws relating to computer fraud and theft, in their fight against 

spammers, Federal preemption in any anti-spam law should include a carve-out 

for such state laws. 

The recent increase in anti-spam legislative activity both domestically and internationally is encouraging, and we commend you for the important work you are 

doing in this area. Current U.S. state laws already make it possible for the industry 

to begin taking action against spammers who are illegally targeting customers. Enforcement efforts across the industry to date have been successful, and more will 

come. ISPs including Microsoft, AOL and Earthlink have already begun to file lawsuits, as have the Federal Trade Commission and many state Attorneys General, 

in an effort to increase the costs of sending spam, thereby reducing its volume. 

As a leader in the industry, Microsoft is committed to using its resources to help 

address this problem from every perspective: technology, self-regulation, legislation 

and enforcement. We have started to see progress on all fronts, but much more work 

needs to be done. 

We pledge our support to your legislative effort, and look forward to sharing our 

proposals and working with others toward a viable solution. When industry, government and technology come together to solve the spam problem, we will truly be able 

to offer consumers a trustworthy, safe and more productive e-mail experience. 

Sincerely, 

BILL GATES, 

Chairman and Chief Software Architect. 

CENTER FOR DEMOCRACY & TECHNOLOGY

Washington, DC, May 20, 2003 

Chairman JOHN MCCAIN, Senate Committee on Commerce, Science, and Transportation, 

United States Senate, 

Washington, DC. 

Dear Chairman McCain: 

The Center for Democracy and Technology is continuing its activity to help find 

effective solutions to the problem of unsolicited commercial e-mail—also known as 

‘‘spam.’’ We welcome the Committee’s inquiry into this important issue, and look forward to working together towards a solution that will protect the Internet and its 

users from the choking effects of unwanted e-mail, while maintaining the openness 

and innovation that makes the Internet so valuable. 

As per your request, we have attached our recent report ‘‘Why Am I Getting All 

This Spam?’’ which we ask you to consider in the Committee’s hearings on this 

issue. In the report, CDT explored the ways in which spam was received by over 

two hundred and fifty e-mail addresses spread all over the Internet. In six months, 

we received over eight thousand unsolicited e-mail messages to addresses that had 

been posted on the Web, used in newsgroups, or disclosed to Internet businesses. 

From that research, CDT created a series of tips for users to take steps to shield 

themselves from spam. Those tips, as well as the rest of our report, are attached. 

Based on our research and further discussions, CDT believes that the spam problem merits targeted Federal legislation to help alleviate the burdens spam causes 

for consumers, businesses, and ISPs. While spam is undeniably a major problem for 

the future of the Internet, we must be careful to craft legislation that can be effective and does not run counter to freedom of speech and other concerns. 

5 

A prerequisite to narrow and effective spam legislation is open dialogue among 

policymakers, industry, and Internet users—a dialogue that is only beginning to 

occur. This committee has an important role to play in creating the kind of open 

discussion that will lead to the best path forward. We look forward to continued 

work with you on this important issue. 

Sincerely, 

JERRY BERMAN, 

President. 

LexisNexis 

Copyright 2003 The New York Times Company 

The New York Times—May 20, 2003 Tuesday Correction Appended Late Edition—Final 

SECTION: Section A; Column 1; Business/Financial Desk; Pg. 1 

LENGTH: 1835 words 

HEADLINE: TECHNOLOGY; E-MAIL’S BACKDOOR OPEN TO SPAMMERS 

BYLINE: By SAUL HANSELL 

BODY: 

At first, it looked as if some students at the Flint Hills School, a prep academy 

in Oakton, Va., had found a lucrative alternative to an after-school job. Late last 

year, technicians at America Online traced a new torrent of spam, or unsolicited email advertisements, to the school’s computer network. 

On further inquiry, though, AOL determined that the spammers were not enterprising students. Instead, a spam-flinging hacker—who still has not been found— 

had exploited a software vulnerability to use Flint Hills’ computers to relay spam 

while hiding the e-mail’s true origins. 

It was not an isolated incident. The remote hijacking of the Flint Hills computer 

system is but one example among hundreds of thousands of a nefarious technique 

that has become the most common way for spammers to send billions of junk e-mail 

messages coursing through the global Internet each day. 

As spam has proliferated—and with it the attempts by big Internet providers to 

block messages sent from the addresses of known spammers—many mass e-mailers 

have become more clever in avoiding the blockades by aggressively bouncing messages off the computers of unaware third parties. 

In the last two years, more than 200,000 computers worldwide have been hijacked 

without the owners’ knowledge and are currently being used to forward spam, according to AOL and other Internet service providers. And each day thousands of additional PC’s are compromised at companies, institutions and—most commonly of 

all—homes with high-speed Internet connections shared by two or more computers. 

‘‘The spammers have mutated their techniques,’’ said Ronald F. Guilmette, a computer consultant in Roseville, Calif., who has developed a list of computers that are 

forwarding spam. ‘‘Today, if you are trying to do a really mass spamming, it is de 

rigueur to do it in an underhanded manner.’’ 

Just last Thursday, 17 law enforcement agencies and the Federal Trade Commission issued a public warning about some of the ways spammers now commandeer 

computers to evade detection. The officials translated the warning into 11 languages 

because many of the exploited computers are known to be in China, South Korea, 

Japan and other countries with heavy Internet use. 

Mostly, the spammers are exploiting security holes in existing software, but increasingly they are covertly installing e-mail forwarding software, much like a computer virus. For some, hacking is no longer about pranks, but making a profit. 

‘‘This is not about a hacker trying to show off, or give you a hard time,’’ said William Hancock, chief security officer for Cable and Wireless, the British telecommunications company. ‘‘This is about money. As long as there are people who want spam 

to go out, this is not going to go away.’’ 

Spam fighters say that some software is too easy to exploit and should be fixed. 

Moreover, computer users can take technical precautions to safeguard their machines. But not everyone will bother to take those steps, even if he or she discovers 

having been dragooned into the spammers’ global army. 

To begin with, most users do not see much effect when their computer has been 

co-opted. Surfing the Web from the victimized computer may be slower than usual 

but that is not always easy to detect. In most cases, the owners’ e-mail addresses 

are not added to the spammed messages, so there is no need to worry that friends 

6 

and associates will think the PC owners have suddenly started peddling herbal 

Viagra. 

Indeed, the only way most users even become aware of such hijackings is when 

they receive telephone calls or e-mail from their Internet service providers saying 

a piece of spam was traced back to their machines. 

‘‘People are shocked,’’ said Bobby Arnold, a network abuse engineer at Earthlink, 

the big Internet provider. ‘‘Someone will say, ‘I thought my computer was running 

a little slow, but I had no idea it was being used to send spam.’ ’’ 

Some of the victims of the hidden spammers are revolted to learn, Mr. Arnold 

said, that they are aiding the hucksters and pornographers responsible for what 

many Internet users consider the medium’s great blight. The truly offended rush to 

safeguard their machines. 

But others, who see no direct impact to themselves, simply shrug off the problem, 

Internet providers say. Intent on reducing their network clutter, the providers then 

often try to cajole them into cooperating—and, if that fails, will sometimes cut off 

a user’s service. 

Sometimes people do find that someone has been sending spam and using their 

e-mail address as the sender, but this does not mean that their computers were 

used. Nothing on the Internet verifies that an e-mail message was actually sent by 

the person listed in the ‘‘From’’ address, which is one reason fighting spam is so 

hard. 

And spammers like to send e-mail that appears to be from their enemies or names 

chosen at random. The legitimate owners of those addresses are often left to clean 

out hundreds or thousands of complaints from their e-mailboxes. 

When a computer receives an e-mail message, it does record a code number, called 

an Internet protocol address, that can be traced to the computer that is connecting 

to it. But often e-mail is passed from one machine to another and the identity of 

the original sender cannot be verified. 

Indeed, the rapid rise in the number of spammers trying to hijack innocent computers is a direct result of their desire to hide their own Internet protocol addresses 

from spam blockers. Most commonly, they are taking advantage of a backdoor in 

much of the software that office users or people with high-speed connections at 

home often install to share an Internet link among several computers—or so-called 

proxy servers. Some other types of e-mail and Web surfing software, typically run 

by larger companies, can also be taken advantage of if security features are not 

properly set up. 

Because it essentially enables one computer to masquerade as another, a proxy 

server is an ideal tool for anyone seeking to use the Internet anonymously. So proxy 

servers are used by people in some countries to visit websites blocked by government censors. They are also used by hackers trying to attack other machines. And 

they are perfect for spammers trying to avoid filters. 

None of these uses would be possible if the owners of the proxy servers made sure 

to configure them for access only by authorized users. But whether from laziness 

or ignorance, many users of proxy servers leave them open to anyone on the Internet. 

AnalogX Proxy, a free proxy-server program that has been downloaded by more 

than a million people, is automatically in the open state when it is first installed. 

Mark Thompson, the author of AnalogX, said he had rebuffed the requests of many 

antispam activists to distribute the software with the security features already activated because doing so would make it harder to set up. 

‘‘The biggest plug for the proxy is it is really easy to get it running,’’ he explained. 

Mr. Thompson said he did try to achieve a compromise by revising the program to 

give people a warning about security problems every time it starts. 

Even so, Wirehub, a Dutch Internet service provider, says that 45,000 of the 

150,000 open proxy servers it has identified as sending spam appear to be using 

AnalogX. 

To find all these vulnerable machines, spammers and other hackers deploy computers that do nothing more than try to connect to millions of computers across the 

Internet, looking for open proxy servers to exploit. 

At the Flint Hills School, ‘‘it was pretty amazing how fast our vulnerability was 

picked up by the spammers,’’ Robert Hampton, the school’s director of technology, 

said recently. Once the problem was identified, the school was able to fix it immediately. 

Spammers and hackers trade or sell lists of open proxy servers on dozens of 

websites. And other sites sell software a would-be spammer can use to find new 

servers. 

7 

In the last six months, an increasingly common trick has been for spammers to 

attach rogue e-mail-forwarding software to other e-mail messages or hide it in files 

that are meant to emulate songs on music sharing sites like KaZaA. 

As with all such hacker contraptions, and much spam, it is difficult to figure out 

who is behind these programs. But there is some evidence that one of the major 

spam-sending programs, known as Jeem, originated in Russia, which has been a fertile ground for both spammers and hackers. 

Last October, Michael Tokarev, a Russian computer programmer active in the 

worldwide antispam effort, noticed a lot of spam in Russian that offered bulk-mailing services. The messages were identical, but they came from many different computers. He investigated and found they were forwarded by a program, calling itself 

Jeem, that had not been seen before. 

Mr. Tokarev said that in December, a Russian forum for spammers called 

Carderplanet.com contained a posting offering to sell the Internet addresses of open 

proxy servers, for $1 each, that appeared to be machines infected with Jeem. ‘‘Since 

the last week of December, several big U.S. spammers started to use those Jeems, 

too,’’ Mr. Tokarev wrote in an instant message interview last week. 

Machines infected with Jeem, which is especially hard to find because it keeps 

switching its identity on the computers it borrows, seem to be used these days mostly by spammers selling pornography, David Ritz, a volunteer spam fighter, said. 

Using a software monitoring tool he helps run, Mr. Ritz last week examined the 

messages sent to Internet news groups from just one home computer infected with 

Jeem. On one day last week, this computer sent 773 pornographic news postings 

with subjects like ‘‘Lolita paradise’’ and ‘‘N.U.D.E—L,O,L,I,T,A,S.’’ 

‘‘Open proxies are the single greatest threat to the integrity of the network that 

we see now,’’ he said. 

AOL, which has made fighting spam a central part of its marketing thrust, is taking what some see as radical action against open proxy servers. It will no longer 

accept any incoming e-mail sent directly from the computers of individual home 

users with high-speed service. This will not affect most home users because they 

typically do not run e-mail servers on their own computers but connect their e-mail 

programs to servers run by their Internet providers. But a handful of advanced 

users and small businesses do run their own e-mail servers connected to high-speed 

lines, and they no longer can send e-mail to AOL users. 

Road Runner, the high-speed service of Time Warner cable, is taking a different 

approach. It is actively running the same sort of scanning program used by the 

spammers to find out whether any of its customers have open proxy servers. Those 

that do are asked to close them. Many other service providers shy away from such 

scanning because it appears to be an invasion of privacy. 

‘‘It’s a race,’’ said Mark Harrick, Road Runner’s director of network security. 

‘‘There are malicious individuals scanning our users looking for vulnerabilities every 

day, and we want to find them first.’’ 

CORRECTION-DATE: May 21, 2003 

CORRECTION: 

A front-page article yesterday about mass e-mailers who bounce spam off the computers of unwitting third parties misspelled the name of a prep school in Virginia 

whose network was used to send spam. It is Flint Hill, not Hills. 

The article also misspelled the surname of the director of security for Road Runner, which is scanning its customers’ systems to determine whether they are vulnerable. He is W. Mark Herrick Jr., not Harrick. 

GRAPHIC: Chart: ‘‘Close the Door To Spammers’’ To avoid having their e-mail 

ads blocked, spammers are increasingly relaying their messages covertly through 

computers of home and office Internet users. The users are often unaware that their 

computers have been hijacked. Measures to prevent spammers from commandeering 

a computer will also make for a safer Internet connection. ERECT A FIREWALL 

A firewall program governs what programs may connect to the Internet and can 

block the forwarding of rogue e-mails. Firewalls come both as software programs 

and built into routers, devices used to share a connection. USE ANTIVIRUS PROTECTION This software protects against infiltration by a covert spam-relaying program. Keep this software updated, as hackers are prolific. BEWARE OF 

DOWNLOADS Many malicious programs are distributed in the form of attachments 

to e-mails, or files to download, as from a music-sharing website. LIMIT PROXY 

SERVERS If using proxy-server software instead of a router to share an Internet 

connection, make sure it is set to share only with computers on the local area network, not the entire Internet. Common proxy-server programs include AnalogX 

Proxy and Wingate. (pg. C6) 

8 

The CHAIRMAN. I would like to ask Senator Burns, if that is OK, 

Senator Burns and then Senator Wyden, and then we will welcome 

our two colleagues. 

STATEMENT OF HON. CONRAD BURNS, 

U.S. SENATOR FROM MONTANA 

Senator BURNS. Thank you, Mr. Chairman, and I think you hit 

the nail on the head a little while ago. I want to thank my colleague, Senator Wyden, and you mentioned him spending many 

hours on this issue, and we have for the last 4 or 5 years, but I 

also want to commend you for your patience in putting up with us. 

We have been involved in this issue quite a while now, and now 

we are finally coming down to a product I think we can present to 

the American people with pride, and I think also the Chairman’s 

acknowledgement that legislation alone will not take care of this 

problem. It will, however, facilitate industry and law enforcement 

people, especially the FTC, to get down to business and look at it 

seriously, as if we have the technology to prevent this unwanted 

commercial e-mail, if you want to call it that, and do something 

about it, because it is the cost to businesses and individuals are escalating, and they are wide-ranging. 

Businesses lose money when employees take more time to wade 

through their e-mails, individuals who pay long distance charging 

to ISPs end up footing the bill while their inbox is filled with unsolicited messages. Servers all over the country have difficulty blocking spam, all while spammers work to find more and more ways 

to circumvent the latest software server or individual blocking systems. 

I want to specifically, really, at this point thank my colleague, 

Senator Wyden, who has been working tirelessly for years. Last 

month, Senator Wyden and I reintroduced the CAN–SPAM bill, 

which passed unanimously out of this Committee last year. I thank 

the cosponsors of the bill, particularly those on this Committee and 

here today, including Senators Stevens, Breaux, Nelson, and, of 

course, Senator Schumer, and we will hear from him later. 

The CAN–SPAM bill empowers consumers and grants additional 

enforcement authority to the FTC to take action against spammers. 

The bill will provide additional tools to end this online harassment 

by allowing users to remove themselves from the mass e-mail lists 

and impose steep fines up to $1.5 million on those spammers. For 

particularly flagrant offenders, the CAN–SPAM bill carries criminal penalties, including up to a year in jail for those who disguise 

their identities and use false and misleading subject lines. In short, 

this bill provides broad consumer protection against bad actors, 

while still allowing legitimate Internet advertising as a justified 

means of flourishing. 

While it is obvious to anyone with an e-mail account that the 

scourge of spam has continued to worsen, the trends are becoming 

more apparent by the day, and even more alarming. According to 

a recent article in The Washington Post, spam currently accounts 

for 40 percent of all the e-mail traffic. The number is estimated to 

exceed that this summer. America Online alone is blocking 2.4 billion spam messages every day. That seems almost unbelievable. If 

9 

current trends continue and nothing is done, the toxic sea of spam 

is threatening to drown the very medium of e-mail. 

The digital dreck of spam is particularly poisonous in rural 

areas. Because of the vast distances in Montana, many of my constituents are forced to pay long distance charges for their time on 

the Internet. Spam makes it nearly impossible for those in rural 

America to realize the tremendous economic and educational benefits of the online era. In today’s information age, where beating the 

competitor to the next sale is absolutely critical to survival, spamrelated slow-downs and shutdowns are causing real economic damage. According to one study done by a consulting group, spam will 

cost U.S. businesses $10 billion this year alone. 

The true impact of spam is seen is individual stories. A constituent of mine, Jeff Smith, who built a cutting-edge cyber hotel 

in Missoula, Montana, he has calculated that spam has cost his 

business $300,000 a year. Nearly half of the bandwidth he buys is 

sucked up by unwanted messages. His entire company is only 

worth $2.5 million, so clearly, a loud clarion call for Federal legislation has gone forth, and the Committee should heed this call. 

Just weeks ago the New York Times mentioned it, as was cited 

by our Chairman today, and understanding the peril that we are 

in is drowning something that actually a lot of folks have thought 

to be one of the great tools that we have in this country especially 

in areas we might call remote. 

So thank you, Mr. Chairman, for having this hearing. Thank you 

for your patience. Thank you for understanding the problem that 

we are facing. 

The CHAIRMAN. Thank you, Senator Burns. Senator Wyden. 

STATEMENT OF HON. RON WYDEN, 

U.S. SENATOR FROM OREGON 

Senator WYDEN. Thank you, Mr. Chairman. I will just make a 

few comments. Senator Burns and I have been prosecuting this 

case against spam now for more than 4 years, and he has said it 

very well, and I have been really proud to have been his junior 

partner in this cause all these years, and we appreciate the fact 

that you are willing to hold this hearing. 

Mr. Chairman, it just seems to me what this issue is all about 

is giving consumers control over their inbox. At this point, there 

are few, if any, consequences for those who have chosen to abuse 

the open and low-cost nature of e-mail, and that is what Senator 

Burns and I have been trying to change all these years, and I 

wanted to take just a minute to put a bit of perspective on this, 

because as we have been at this now for several Congresses, what 

would always happen is that we would get favorable reactions from 

people, citizens and others who are frustrated with spam, but we 

always heard a number of arguments that now was not the time 

for congressional action. 

People would say, well, the problem is not so serious, it is just 

an annoyance. They would say, you can use the delete key, that is 

the only solution that anybody needs, it is overkill to have a variety 

of enforcement tools, and what seemed particularly ironic in this 

Committee, since we led the effort for the Internet Tax Freedom 

Act, people said that spam legislation would stunt the growth of EVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00013 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
10 

commerce. Well, I do not think those arguments hold much weight 

any more, given the fact that we have got this tidal wave of spam, 

and the question now is to look at the good ideas. 

Senator Burns and I think that we have come up with an approach that is going to work, but we know our colleagues have a 

number of good ideas, and we are anxious to look at those as well, 

but begin to change the odds. The people who are spamming are 

not technological simpletons. These are very sophisticated, savvy 

people, and what we need to do is to change the odds, and we believe in our legislation, by producing a tiered approach on enforcement—Senator Burns and I have criminal penalties, we give the 

Federal Trade Commission civil authority to bring action, we give 

the state Attorneys General the authority to bring action, and we 

give the ISPs, the Internet service providers the authority to bring 

action, and we believe that if you bring a modest number of enforcement actions using that kind of authority, you send a message 

to those scamming spammers and people who want to abuse the 

system that the odds are going to change. The odds are more likely 

that this is going to be treated as a serious problem and you are 

going to have some consequences. 

The last point that I would make, Mr. Chairman, is that I think 

you absolutely have to have a tough enforceable national law, because the alternative is, the country will have a crazy quilt of state 

laws. The spammers will play the states off against each other, and 

I think the problems will continue to proliferate. What this really 

comes down to is, in our country, we think that the consumer 

ought to have a right to know where e-mail is coming from, and 

they ought to have a right to tell the spammer to stop. We are anxious to move forward finally, welcome our colleagues. They have 

good ideas, and several of our other colleagues do as well. Let us 

move to examine them and then pass legislation here in this Committee. 

And I thank you. 

The CHAIRMAN. Thank you. I would like to welcome both of our 

colleagues, Senator Schumer and—Senator Allen, did you have an 

opening comment? 

STATEMENT OF HON. GEORGE ALLEN, 

U.S. SENATOR FROM VIRGINIA 

Senator ALLEN. If I may, Mr. Chairman. Thank you, and I want 

to thank all of our witnesses for appearing this morning on this important topic. In fact, I was with a group of people—I will not mention who; it is political, but I said we have to leave here because 

we have got a hearing on spam, and everyone said go, great, get 

rid of it, and so this is a good bipartisan issue that I think all 

Americans care about. Obviously, for e-mail and Internet to continue, it has to be efficient, and unfortunately—and you will get all 

the testimony here—it is becoming that you spend more time deleting unwanted messages, and that is one thing personally, it is another thing for a business, and I will also speak briefly on a few 

points here. 

I know that Commissioners Swindle and Thompson will be testifying, the FTC Commissioners, and I want to commend you all for 

the effort you have been making particularly enforcing against eVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00014 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
11 

mail that is fraudulent or containing deceptive information. That 

is very important, and I commend you. The goal here, as we see 

it, is to empower consumers or provide them with a choice while 

preserving legitimate E-commerce business activities that are important for the growth of our economy and businesses. I do think 

that the costs, though, associated with spam far outweigh the benefits of it. 

This is a balance we have to strike here, and consumers—and I 

will say this as a parent—are becoming increasingly concerned 

about the spam that is coming through to our children, not just disruptive to the family, but children, and people will talk about that. 

I will say from personal experience now, using AOL as my Internet 

service provider compared to previous ISPs, it is much better in 

blocking this unwanted spam. You may have to click off a few ads, 

which you have always had to do, but as far as blocking this unwanted spam, it is far, far better in that regard, and I know that 

Mr. Leonsis will testify on AOL’s efforts. 

Finally, I want to commend this legislation that Senator Burns 

and Senator Wyden have. I think it is a good bill pending before 

our Committee, Mr. Chairman, as it relates to the issue of state 

preemption, which is an important matter for Virginia, and we 

have just passed a very good law. It strikes the right balance as 

far as enforcement and preserving certain causes of action as far 

as fraud, so I think ultimately, an approach which incorporates the 

good legislation like the Burns-Wyden legislation, as well as effective Government enforcement, and let us also couple it with technology advancements and solutions, and improved business practices. We will strike that appropriate balance needed to empower 

consumers while maintaining e-mail as a viable commercial communications tool, and I thank you, Mr. Chairman, for having this 

very timely, needed hearing. 

I thank all the leaders and our colleagues for their leadership, 

and look forward to reading and hearing the testimony of our witnesses. 

The CHAIRMAN. Thank you. Welcome to our colleagues, Senator 

Schumer and Senator Dayton. 

Senator Schumer. 

STATEMENT OF HON. CHARLES E. SCHUMER, 

U.S. SENATOR FROM NEW YORK 

Senator SCHUMER. Thank you, Mr. Chairman. First, I want to 

thank you for holding these timely hearings and for your leadership on so many consumer issues. I think people who have problems with all sorts of different new technological and other industry problems look to you as a beacon, and once again, you are Johnny-on-the-spot, and we very much appreciate it. I also want to—I 

did not even—the double entendre was not intended. 

[Laughter.] 

Senator SCHUMER. Sometimes these things just slip out. It is not 

so bad. Worse things have been said about people. 

In any case, I also want to thank Senators Burns and Wyden. 

They have been true trailblazers and leaders on this issue, and I 

know as we try to come together on legislation that their proposals 

12 

and their thoughts on this will help us dramatically in Congress 

solve this problem. 

Now, it is no secret, Mr. Chairman, we are under siege. Armies 

of online marketers have overrun e-mail inboxes across the country 

with ads for herbal remedies, get-rich-quick schemes, and pornography. Today’s spam traffic is growing at a geometric rate, causing 

the superhighway to enter a state of virtual gridlock. What was a 

simple annoyance last year has become a major concern this year, 

and could cripple one of the greatest inventions of the 20th Century next year if we do nothing. 

As a result, Mr. Chairman, a revolution against spam is brewing 

as the epidemic of junk e-mail exacts an ever-increasing toll on 

families, businesses, and the economy. A number of us in the Senate have proposed legislation aimed at curbing the spread of spam. 

I have proposed a no-spam list, criminal penalties for spammers, 

and several other initiatives geared toward reducing the number of 

unwanted e-mails we get in our inboxes, and obviously there are 

many other solutions out there, and we know that there is no silver 

bullet; that not any one solution is going to solve this problem, because as you mentioned, the technology—you have offensive and 

defensive warfare, and every time a defensive warfare does some 

good, the offense uses the same technology to get ahead. 

But there is one fact that is very encouraging, and that is that 

90 percent of spam, it is estimated, is caused by about 250 users, 

such as the fellow they just caught in my state, in Buffalo. That 

means that legislation, while it will not eliminate spam, can really 

go after the worst users. So can enforcement, and we can make a 

real dent and turn the tide, so instead of the number of spam messages every one of us gets going up each week, it will go down and 

down until it is back to being just an annoyance. 

So today I am going to discuss these measures, but I also want 

to talk about one other thing, because spam grows so exponentially, 

and that is the need for an international effort in the war on spam 

to occur at the same time we seek to deal with the problem here 

in the United States. The simple fact of the matter is that so many 

of the problems that have come about in the digital age are inherently global. Spam is no exception. 

Spam is truly an international issue, because the Internet is a 

global resource, and stemming the rising tide of spam is essential 

if the Internet is to continue to be an effective medium of communication and commerce. It would not do us much good if we went 

after the spammers here in the United States and they set up shop 

in another country and just did the same thing. 

Other countries are beginning to deal with spam, Korea and Australia among them. Their governments are considering anti-spam 

measures, and collaboration with these and other Nations is crucial 

if the U.S. is to be effective, so that is why today I am proposing 

an international agreement, a treaty to fight spam. A global agreement will ensure that anti-spam standards protecting American 

computers are enforceable both here and abroad. 

An international agreement will become more important as new 

regulations and law enforcement efforts in the U.S. cause the most 

prolific spammers to flee to other countries. We know that is what 

they do. We have experience with money laundering, digital piracy, 

13 

child pornography. We know that as soon as we tighten up our 

laws here and institute vigorous enforcement, those who want to 

violate our laws move abroad to avoid prosecution. 

The bottom line is that the second we tighten up enforcement 

here at home, rogue actors go overseas to continue their activities. 

If we are just focused on curbing spam here at home, we will be 

unsuccessful, but that does not mean we should sit on our hands 

until we get our fellow countries on board with these efforts. There 

is a lot of work that needs to be done here, and that is why so 

many interested parties, including the Direct Marketing Association, have come around to the view that the Federal Government 

can play a meaningful role in stopping spam. They know that effective anti-spam legislation makes it more likely that consumers will 

read legitimate marketing messages. 

We also have the problem of pornography, which is really a serious one. Let me illustrate this point with a story. My wife and I 

have two wonderful children, one of whom is just about to complete 

her first year at college, and the other, a 14-year-old girl, Alison, 

is an absolute whiz on the Internet. She spends far more time on 

the Internet than she does watching television, which until recently 

we thought was great, considering what is on television. 

Well, as parents we do our best to make sure the Internet is a 

positive experience for her, a device to help her with her school 

work, learn about events taking place around the world, maybe 

even a way to order the latest N Sync CD. You can imagine my 

wife’s and my anger and dismay when we discovered that not only 

was she a victim of spam, but like all e-mail users, much of the 

junk mail she was receiving advertised pornographic websites, 

things I would not want to see, let alone have my child see. That 

is another reason that we have to move, and we have to move 

quickly. 

So let me just discuss the solution that I have proposed. Criminal 

penalties, and we really need stiff jail time for repeat offenders. We 

can warn them once, fine them significantly second, but if they 

keep doing this, we should give them jail time, and I am working 

with my colleagues on the Judiciary Committee. We will have to 

work in concert with the Commerce Committee, which has primary 

jurisdiction, in terms of criminal penalties. We can hunt down the 

spammers one by one using these penalties, and again, because so 

much of spam is caused by so few people, it should make a real 

difference. 

Another idea I have offered is the national no-spam registry. A 

list maintained by the FTC would be a gigantic database of people 

who can call in or e-mail in and opt out of receiving unwanted 

spam by submitting their mail addresses to the list. The list is 

modeled on the highly successful do-not-call registries that have 

been used to ward off telemarketers. It has been very successful in 

telemarketing. Admittedly, it is a little harder with spam, because 

it is a lot cheaper than having somebody make a phone call, but 

again, given the small number of people who do this, it can make 

a real and dramatic difference. 

Although a similar list for e-mail addresses poses security challenges that must be addressed before implementation, I am hopeful 

that this list, in conjunction with ADV labeling, safeguards for 

14 

those who employ best practices, might be one way we can give 

consumers control over their inboxes. 

In conclusion, Mr. Chairman, this is a very important issue. The 

technology which has blessed our lives and accounted for so much 

of the prosperity we have seen in the last two decades is at risk, 

a very real part of it, and I am glad that you are Chairman of this 

Committee and look forward to working with you, Senator Burns, 

and Senator Wyden to come up with a good, strong, comprehensive 

bill. At the same time, I hope we can all work together to get our 

country to start talking to other countries about a treaty, so when 

we solve things here, they do not just go right overseas and we 

have to start all over again. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Schumer follows:] 

PREPARED STATEMENT OF HON. CHARLES E. SCHUMER, 

U.S. SENATOR FROM NEW YORK

Chairman McCain, Senator Hollings, Colleagues, Good morning. 

Mr. Chairman, I want to thank you for holding this hearing to address Unsolicited Commercial e-Mail or spam. I also want to commend Senators Burns and 

Wyden for their leadership and hard work on this issue. 

I believe we are under siege. Armies of online marketers have overrun e-mail 

inboxes across the country with advertisements for herbal remedies, get-rich-quick 

schemes and pornography. 

As you are all aware, spam traffic is growing at a geometric rate, causing the Superhighway to enter a state of virtual gridlock. 

What was a simple annoyance last year has become a major concern this year and 

could cripple one of the greatest inventions of the 20th century next year if nothing 

is done. 

Way back in 1999, the average e-mail user received just 40 pieces of unsolicited 

commercial e-mail—what we call spam—each year. This year, the number is expected to pass 2,500. I know that I’m lucky if I don’t get 40 pieces of spam every 

couple of days! 

As a result, a revolution against spam is brewing as the epidemic of junk e-mail 

exacts an ever increasing toll on families, businesses and the economy. 

Let me illustrate this point with a story. My wife and I have two wonderful children, one of whom is just about to complete her first year at college. The other, a 

14 year-old girl, is an absolute whiz on the Internet who loves sending and receiving 

e-mail. 

As parents, we do our best to make sure she has good values and that the Internet is a positive experience for her—a device to help her with her schoolwork or 

learn about events taking place around the world and, maybe even a way to order 

the latest N Sync CD. 

You can imagine my anger and dismay when I discovered that not only was she 

a victim of spam like myself, but, like all e-mail users, much of the junk e-mail she 

was receiving advertised pornographic websites. 

I was and remain virtually powerless to prevent such garbage from reaching my 

daughter’s inbox. 

The frustration I feel in the battle against spam is one that I think business owners and Internet Service Providers across that nation can identify with. 

According to Ferris Research, spam costs businesses in the United States $10 billion each year in lost productivity, consumption of Information Technology resources 

and help-desk time. 

With surveys showing that over 40 percent of e-mail traffic qualifies as spam, 

ISPs spend millions of dollars each year on research, filtering software and new 

servers to deal with the ever expanding volume of junk e-mail being sent through 

their pipes. 

And, if the spam itself isn’t enough, spammers often engage in crimes such as 

identity theft and fraud to secure e-mail addresses and domain names from which 

to send millions of pieces of junk e-mail. 

All of this demonstrates that it’s time to take back the Internet from the 

spammers. And why I am joining you today in saying that enough is enough. 

15 

We all know that spammers use a variety of tools and methods to send millions 

of e-mail messages each day. In order to be effective, I believe spam solutions will 

have to be as creative and varied as the spammers’ efforts. 

We should give law enforcement officials, ISPs and others a wide variety of tools 

to fight spam. 

Among the possible solutions that are exist—and this is not an exhaustive list— 

are pending legislation in the Senate and the House the would enact anti-e-mail 

harvesting provisions and special e-mail labeling requirements; stipulate valid 

unsubscribe features; and prohibit false and fraudulent header, router and subject 

line information. 

And that’s just a start. As I said before, because of the dramatic challenges we 

face in stemming the spam flood, we need a multi-pronged approach. 

In particular, I believe stiff criminal penalties—including jail time for repeat offenders—are warranted. I am working with my colleagues on the Judiciary Committee on a bill to create these new penalties. 

We will hunt down spammers one by one, using criminal penalties to show what 

will happen to those who continue to send junk e-mail. 

Another idea I have offered is a National No-Spam Registry. This list, maintained 

by the Federal Trade Commission, would be a gigantic database of people who have 

‘‘opted out’’ of receiving spam by submitting their e-mail addresses to the list. 

The list is modeled on the highly successful Do-Not-Call registries that have been 

used to ward off telemarketers. 

Although a similar list for e-mail addresses poses security challenges that must 

be addressed before implementation, I am hopeful that this list might be one way 

we can give consumers control over their in-boxes. 

None of these solutions will be the silver bullet that stops all spam. But a multifaceted approach has a better chance of reducing the ever-growing amount of spam 

than a solitary solution. 

And stemming this rising tide is essential if the Internet is to continue to be an 

effective medium of communication and commerce. 

If spam continues to grow, people will rely on their e-mail less and less. Right 

now, consumers are becoming so frustrated at the junk e-mail bombardment that 

they delete legitimate commercial e-mail as if it were spam. 

This is why so many interested parties, including the Direct Marketing Association, have come around to the view that the Federal Government can play a meaningful role in stopping spam. 

They know that effective Federal anti-spam legislation will make it is more likely 

that consumers will read legitimate marketing messages. 

I think we can all agree that spammers must not be allowed to bog down the vast 

potential of e-mail and the Internet. 

It is my hope that the impressive roster of panelists you have assembled here 

today will stimulate ideas to stop spammers in their tracks. I look forward to hearing their testimony and working with all of you to bring and end to the current junk 

e-mail epidemic. 

The CHAIRMAN. Thank you very much, Mr. Schumer. Thank you 

for coming. 

Senator Dayton. 

STATEMENT OF HON. MARK DAYTON, 

U.S. SENATOR FROM MINNESOTA 

Senator DAYTON. Thank you, Mr. Chairman. I thank you for the 

opportunity to testify before you this morning, and I commend you 

for your leadership in this whole area, and I certainly commend 

Senators Burns and Wyden also for their leadership and the legislation that they have introduced. 

I want to just at the outset, on behalf of the state of Minnesota 

and the good Minnesota Company, Hormel, voice an objection to 

the use of the word, ‘‘spam’’ to characterize all of this activity. You 

know that spam was, for a half-century, the bane of existence of 

servicemen and women and others, and it came to define a certain 

low point in some people’s view of things, but I think it has actually gotten much lower if that is the case. 

16 

Senator Burns and I had the opportunity—I ate over in South 

Korea at the DMZ—to eat my third MRE, and I must say, Spam 

at any temperature is a lot better than the MRE that I ate—— 

[Laughter.] 

Senator DAYTON.—however automatically warmed in its pouch, 

and now we have this form of spam, which is, you know, very, very 

different from the Hormel version. For one, with Hormel, you get 

to choose whether or not you want it. Second, it is not forced down 

anyone’s throat. 

[Laughter.] 

Senator DAYTON. The source is clearly identified, and the contents, too. You can ask Hormel what they put in their Spam, and 

they will just tell you right up front it is everything but the kitchen 

sink. 

[Laughter.] 

Senator DAYTON. And in what proportions, and what—it is left 

to your imagination, but my anti-spam proposals are incorporated 

in the legislation I have introduced as 563, which is the Consumer/ 

Owner’s Bill of Rights, and it is broader than just the anti-spam, 

but I will focus on that point alone this morning, and it is a starting point, not an end product at all, and I recognize going into this 

that the great appeal of the Internet is that it has been unregulated and it has been free. 

I have met many who have enjoyed it that way and used it that 

way and want to keep it that way, but unfortunately, individual 

freedom becomes, in a larger and ever-larger social system, a form 

of anarchy. In that process comes a form of Darwinism, where everyone is on his or her own. The strongest, the smartest, the most 

aggressive tend to take over and dominate, and that is the situation with spam today. 

There are 31 billion messages being transmitted through cyberspace today, each day. That is an estimate, but it is enormous and 

ever-expanding, and these 31 billion messages are transmitted freely and free. They are unregulated, they are unrestricted, and they 

are largely unwatched, and everyone who is involved in that system must individually then protect themselves; the individuals, 

businesses, and the like, which is great for the software industry, 

who has not created this problem, but has tried to help deal with 

it. 

There are all sorts of software that you can buy to prevent spam 

and pop-ups and ads and all sorts of things, which range from 

nuisances at best, but then increasingly, invasions of people’s lives, 

spies, identity theft, credit card theft, and spam also becomes a carrier of viruses, worms, trojan horses, which are even more destructive and costly to individuals and to businesses. 

McAfee’s anti-virus unit estimates that there are 62,000 virus 

threats today, and these numbers that I am throwing out are ones 

that other sources would have quite different, which is part of the 

function of the expansion of this, and rapidly growing aspect of this 

whole realm, is that I have seen numbers that deviate quite a bit 

from one another, but one virus alone, the Code Red worm in the 

year 2001 was estimated by Computer Economics, an independent 

research firm, to have a worldwide cost of $2.62 billion, one virus, 

and it is expanding, and some would say it is even exploding. SenVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00020 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
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ator Schumer referenced Howard Carmack, who was recently arrested. It is estimated that he issued himself 825 million pieces of 

spam last year, one individual in 1 year. 

Write Mail, the spam blocker firm, estimates, and others have 

said, some 40 percent of all Internet e-mail today is spam. I have 

seen figures that estimate that percentage is higher, but the percent share of the e-mail is increasing, I think everyone would 

agree. Legislation will not solve this, as others have said, but the 

situation will not improve without legislation. In fact, it will get 

worse, and I think this is a case where the perfect becomes the 

enemy of the good. This is going to be a moving target. It is going 

to be ongoing. It is sort of going to be like the Mad Magazine Spy 

v. Spy, where they will be ever-dueling, one escalating and outsmarting and outwitting the other, and the other needing to respond. 

So whatever we design has to be flexible, the process must be 

nimble, and it has to be dynamic. It has to keep up with these 

ever-new developments, and so I would recommend something 

along the lines of what Robert Kennedy said up in the Department 

of Justice years ago, the Anti-Organized Crime Task Force, a 

SWAT team, a team that would drive this effort, carry out congressional mandates, and would interact with industry, with users, 

with leaders in Congress, but we have to have something that is 

as dynamic as the industry itself, and as inventive as the spam 

producers themselves. 

My own legislation suggests a national registry, where people 

can opt out one time. Another is to make every e-mail sent to someone in the United States be identified as to its source, and finally, 

I think it is worth looking at—I am not prepared to propose this 

now, but some very, very small charge to every e-mail that is sent, 

so small that it would not be onerous for an individual or a business that has regular use, but it would add up and be a financial 

deterrent for those who are sending millions and even billions of 

these e-mails all over the world. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Mr. Dayton. Senator Nelson has an opening comment, and we will leave and go vote and 

come right back. As soon as you finish, we will take a quick break. 

STATEMENT OF HON. BILL NELSON, 

U.S. SENATOR FROM FLORIDA 

Senator NELSON. And it will be short, Mr. Chairman. I just want 

to throw on the table another approach, and the approach would 

be to have an opt-out provision—— 

If all of you leave, that means I am chairing the Committee. 

[Laughter.] 

Senator NELSON. We will take up the Nelson bill right now. 

[Laughter.] 

Senator NELSON. The approach is virtually along the same lines. 

It would be more, instead of the implied consent that Senator Wyden’s bill indicates, there would be more of a consumer protection. 

The message would have to have an opt-out provision where the 

consumer could say, I do not want any more of this, and if we are 

really going to put teeth into this, that this violation, both criminal 

18 

penalty with jail time and/or fines, would be the first element 

showing the conspiracy or continuum of activities that would activate the RICO Act, which is the Racketeer Influenced and Corrupt 

Organization Act, which then gives prosecutors the tools to go after 

the criminal enterprise and to confiscate the assets. 

Now, that is starting to put some bite into the legislation, and 

so I want to offer that, and that will be a part of the discussion 

as we get in and tinker with this legislation, trying to fit and design a solution so that consumers can start using their e-mail. I 

mean, it is just unbelievable. 

A week ago, I was in my Tampa office. The press had come in. 

We were just going to shoot the breeze, and I happened to punch 

up on the computer to see what messages were there. In 1 day, I 

had a normal letter-size piece of paper, single-spaced, full of unwanted e-mail messages, two of which were pornographic. Now, if 

that is happening to a United States Senator, you can imagine 

what is happening to our citizens all across the country, and they 

do not want this, and it is time for the Government to do something to stop it. 

Another interesting change is that the major network providers 

in the past have been quite skittish about any kind of interference 

with this new form of communication, but they have come around 

now because we are starting to see that there is so much of an interference with the normal communication lines that the Government is going to have to step in and do something about this, perhaps with the FTC, but also very likely with legislation. 

And I will just close my comments and dash off to vote, to say 

this. Since I had that conversation in my Tampa office, the media 

wrote about it, and that has been in Florida, and I will tell you, 

everywhere I have gone in Florida since, people keep coming up to 

me and saying, thank you for being willing to do something about 

this, because it has gotten to the point that we are fed up and we 

have had enough, so I hope that we will do something about it. 

The Committee will stand in recess. 

[Recess.] 

The CHAIRMAN. We will resume the hearing. The witnesses in 

the first panel are Hon. Orson Swindle of the Federal Trade Commission and Hon. Mozelle Thompson, also with the Federal Trade 

Commission. Welcome, gentlemen. Since one of you has white hair 

and one of you has no hair, we will begin with the white-haired Mr. 

Swindle. 

[Laughter.] 

Mr. THOMPSON. I am just follically challenged. 

[Laughter.] 

Mr. SWINDLE. I would win if we did this on looks, too. 

[Laughter.] 

The CHAIRMAN. Mr. Thompson. 

[Laughter.] 

STATEMENT OF HON. ORSON SWINDLE, COMMISSIONER, 

FEDERAL TRADE COMMISSION 

Mr. SWINDLE. Thank you, Mr. Chairman and Members of the 

Committee, for this timely discussion of spam and the threat it 

poses to potential benefits of information technology. Consumers 

19 

must have trust and confidence and comfort with technology and 

its uses, particularly when it comes to their privacy and security 

of personal and sensitive information. Spam undermines consumer 

trust and confidence. It represents a significant and rapidly growing threat to web-based services. The Commission’s prepared testimony provides the Committee with an excellent overview of our efforts to combat spam. 

What is spam? We have heard it discussed several times this 

morning. The FTC defines spam as any commercial electronic mail 

message that is sent, typically in bulk, to consumers without the 

consumers’ prior request or consent. I think the Chairman’s term, 

unwanted, may be perfect. 

There are at least four major concerns caused by spam. First, the 

volume is increasing at astonishing rates. Current estimates indicate that at least 40 percent of all e-mail is spam. Second, recent 

studies by the FTC indicate that spam has become the weapon of 

choice of those engaged in fraud and deception. Nearly 66 percent 

of the spam we examined appeared to contain falsity and deception. 

I would ask that our False Claims in Spam Report be included as 

part of the record, Mr. Chairman. 

The CHAIRMAN. Without objection. 

[The information referred to follows:] 

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36 

Mr. SWINDLE. Third, the sheer volume of spam, coupled with its 

capacity to transmit viruses, trojan horses and other damaging 

code, threatens to do major damage to the Internet and our critical 

infrastructure. 

Fourth, there is no easy solution. No one silver bullet that will 

solve the problem. Solutions must be pursued from many directions. These concerns represent enormous cost to businesses, the 

economy, consumers, and society. 

Two specific problems demand attention by policymakers and industry leaders. First, there is the complex combination of technology, market forces, and public policy that will be evolving for 

years to come. The second problem is one that I characterize as 

being heavily influenced by the emotions of consumers, small businesses, and home users by the millions who are literally fed up 

with spam. I am concerned that spam is about to kill the killer app 

of the Internet, specifically consumer use of e-mail and E-commerce. If consumers lose confidence in web-based services and turn 

away, tremendous harm will be done to the economic potential of 

information technology. Solving these problems will require innovation, resources, and time. 

However, dealing with the emotional reaction to spam by millions of users will demand immediate attention before it gets out 

of hand. Internet service providers, software manufacturers, and 

those engaged in designing operating systems must empower consumers with better control over their incoming e-mail. Easing the 

spam burden on consumers would help to shore up trust and confidence. 

Surely consumer empowerment is possible today. Why has industry not solved this problem? Frankly, to date I am not convinced 

that industry has made the commitment or really wants to empower consumers by giving them easy-to-use tools for personal control. 

I read a book last summer, Tuxedo Park, by Jennet Conant, a 

fascinating account of Alfred Loomis, a wealthy financier from the 

1920s. He funded a private research laboratory at his Tuxedo Park 

estate, attracting the greatest scientists of the day. They were instrumental in the rapid development of radar, which enabled us to 

keep the supply lines open to England in early World War II. Wartime crisis demanded that creative minds quickly find technical solutions to complex problems. Loomis and his friends were up to the 

task. It occurs to me that we have a crisis today. We must avoid 

major setbacks to the potential of information technology. We need 

great minds to quickly find solutions to spam. Empowering consumers would be a good first step. Is industry motivated to do the 

right thing, and do it now? 

The FTC’s law enforcement efforts against spam are aggressive, 

but finding the guilty parties is resource-intensive and a difficult 

technical challenge. We give consumer education high priority at 

the commission. Our information security website and private sector partnerships continue to expand our reach. Recently, we released findings from three studies to better understand the magnitude of the spam problem, how spam is proliferated, and how 

consumers and users are victimized. 

37 

Our recent 3-day spam forum aimed to better inform the dialogue and find the best possible solutions to the spam problem. The 

forum was remarkable in its discussions and participation, over 

400 participants and some 80 or so panelists. I would like to share 

some of the forum’s revelations, as well as some personal observations about the realities of spam. First and foremost, the private 

sector must lead the way to finding the solution. We likely will not 

find the perfect solution. The target will be constantly moving as 

technology evolves. More laws are not necessarily the right answer. 

I heard little universal enthusiasm from participants for currently proposed legislation. Laws bestowing competitive advantage 

to larger firms over smaller firms are questionable. Unenforceable 

laws will have little real effect. Overreaching laws will have unintended adverse consequences. Passing legislation to mandate best 

practices for the good actors will not help us track down the bad 

actors engaged in fraud and deception. We must work together. 

Consumers, users, and civil society organizations must be a part 

of our continuing dialogue to find solutions. Awareness and safe 

computing practices by all participants are essential, and developing a culture of security where all participants work to minimize 

our many vulnerabilities is an imperative, not an alternative. Our 

efforts to solve the spam problem and secure our information systems and networks is not a destination. We are embarked upon a 

journey. 

I thank you, Mr. Chairman. 

[The prepared statement of Mr. Swindle follows:] 

PREPARED STATEMENT OF HON. ORSON SWINDLE, COMMISSIONER, 

FEDERAL TRADE COMMISSION

Thank you Mr. Chairman and members of the Committee for this timely discussion of SPAM and the threat it poses to the potential benefits of information technology. 

Consumers must have trust, confidence and comfort with technology and its uses, 

particularly when it comes to their privacy and the security of personal and sensitive information. 

SPAM undermines consumer trust and confidence. It represents a significant and 

rapidly growing threat to web-based services. The Commission’s prepared testimony 

provides the Committee with an-excellent overview of our efforts to combat SPAM. 

What is SPAM? The FTC defines unwanted and unsolicited SPAM as ‘‘any commercial electronic mail message that is sent-typically in bulk-to consumers without 

the consumers prior request or consent.’’ 

There are at least four major concerns caused by SPAM. 

First, the volume is increasing at astonishing rates, current estimates indicate at 

least 40 percent of all e-mail is SPAM. 

Second, recent studies by the FTC indicate that SPAM has become the weapon 

of choice of those engaged in fraud and deception. Nearly 66 percent of the SPAM 

we examined appeared to contain falsity and deception. I would ask our False 

Claims in Spam report be included as part of the record. 

Third, the sheer volume of SPAM—coupled with it’s capacity to transmit viruses, 

trojan horses, and other damaging code—threatens to do major damage to the Internet and our critical infrastructure and the Internet. 

Fourth, there is no easy solution—no one silver bullet that will solve the problem. 

Solutions must be pursued from many directions. 

These concerns represent enormous costs to businesses, the economy, consumers 

and society. 

Two specific problems demand attention by policy makers and industry leaders. 

First, there is the complex combination of technology, market forces and public policy that will be evolving for years to come. The second problem is one that I characterize as heavily influenced by the emotions of consumers, small—businesses and 

home users by the millions who are literally fed up with SPAM. 

38 

I am concerned that SPAM is about to kill the ‘‘killer app’’ of the Iinternet—specifically—consumer use of e-mail and e-commerce. If consumers lose confidence in 

web-based services and turn away, tremendous harm will be done to the economic 

potential of information technology. 

Solving these problems will require innovation, resources and time. However, 

dealing with the emotional reaction to SPAM by millions of users, demands immediate attention before it gets out of hand. 

Internet service providers, software manufacturers, and those engaged in designing operating systems must empower consumers with better control over their incoming e-mail. Easing the SPAM burden on consumers would help to shore up trust 

and confidence. Surely, consumer empowerment is possible today. Why has industry 

not solved this problem? 

Frankly, to date, I am not convinced that industry has made the commitment or 

really wants to empower consumers by giving them easy-to-use tools for personal 

control. 

I read a book last summer, Tuxedo Park, by Jennet Conant—a fascinating account 

of Alfred Loomis, wealthy financier from the 1920s. He funded a private research 

laboratory at his Tuxedo Park estate, attracting the great scientists of his day. They 

were instrumental in the accelerated development of radar which enabled us to keep 

supply lines open to England early in WWII. War time crisis demanded that creative minds quickly find technical solutions to complex problems. Loomis and 

friends were up to the task. 

It occurs to me that we have a crisis today—we must avoid major set backs to 

the potential of information technology. We need great minds to quickly find solutions to SPAM. Empowering consumers would be a good first step. Is industry motivated to do the right thing and do it now? 

he FTC’s law enforcement efforts against SPAM are intensifying, but finding the 

guilty parties is resource intensive and a difficult technical challenge. 

We give consumer education high priority at the Commission. Our information Security website and private sector partnerships continue to expand our reach. 

Recently, we released findings from three studies to better understand the magnitude of the SPAM problem, how SPAM is proliferated, and how consumers and 

users are victimized. 

Our recent three-day SPAM Forum aimed to better inform the dialogue and find 

the best possible solutions to the SPAM problem. The Forum was remarkable in its 

discussions and participation—over 400 participants and 80 panelists. 

I would like to share some of the Forum’s revelations—as well as some personal 

observations—about the realities of SPAM. 

First and most essential—the private sector must lead the way! 

We likely will not find the perfect solution. The target will be constantly moving 

as technology evolves. 

More laws are not necessarily the right answer. 

I heard little universal enthusiasm from participants for currently proposed legislation. 

Laws bestowing competitive advantage to larger firms over smaller competitors 

are questionable. 

Unenforceable laws will have little real effect: Overreaching laws will have unintended adverse consequences. 

Passing legislation to mandate best practices for ‘‘good actors’’ will not help us 

track down the ‘‘bad actors’’ engaged in fraud and deception. 

We must work together. Consumers, users, and civil society organizations also 

must be a part of our continuing dialogue to find solutions. 

Awareness and safe computing practices by all participants are essential. 

Developing a culture of security where all participants work to minimize our 

many vulnerabilities is an imperative, not an alternative. 

Our efforts to solve the SPAM problem and secure our information systems and 

networks is not a destination—we are embarked upon a journey! 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Commissioner Thompson, welcome. 

STATEMENT OF HON. MOZELLE W. THOMPSON, 

COMMISSIONER, FEDERAL TRADE COMMISSION 

Mr. THOMPSON. Thank you, Mr. Chairman. I thank you for this 

opportunity to appear before you today and talk about the issue of 

39 

spam, bulk unsolicited commercial e-mail. At the outset, I would 

like to praise this Committee and its Members for holding this 

hearing and the work that it has done over the years to focus attention on this important subject. Spam is a complex issue that 

resonates with consumers, businesses, and Governments alike. The 

FTC, along with Members of this Committee, have been interested 

in this issue for a long time. 

In 2001, the Committee asked this Commission’s views on the 

CAN–SPAM Act, S. 630, sponsored by Senators Burns and Wyden. 

At that time, we unanimously supported the bill, stating the Commission generally favors the underlying goal of the legislation, and 

as set forth in our written testimony submitted today, the FTC has 

already brought over 50 cases against deceptive and fraudulent 

spam. While these cases are important, they focus on only one aspect, fraud and deception, of what has grown to be a much larger 

problem. For this reason, 3 weeks ago, the Commission held a 3- 

day workshop to get a better insight on the problem of spam. 

My observation is that it was a unique event. It was a unique 

week. It is not every day that an FTC workshop draws over 400 

attendees for 3 days to pose questions to 87 panelists representing 

a wide perspective on one issue. At the same time, three of America’s largest ISPs announced a voluntary business initiative and 

three new legislative proposals were introduced, and there have 

been more since then. 

In addition, representatives from numerous countries, including 

Australia, Canada, Japan, and the European Union, also attended 

and participated in those discussions. We are just beginning to digest all of this information, so we have not reached conclusions 

about how this information may affect our views, but like Commissioner Swindle, I would like to share at least some of my observations. 

One key lesson we learned from our spam workshop is the scope 

of the spam problem appears to have changed significantly. It is no 

longer simply a matter of consumer annoyance at receiving unwanted e-mail. We have some very significant problems. First, that 

through fraud and deception across international borders, there is 

an undermining of consumer confidence, as shown by this chart 

here, that how much of the spam has falsity in its face. 

Second, that it threatens business, because the volume of e-mail 

places a choke-hold on E-commerce. It was the first time I had actually heard a large group of witnesses claim that spam constitutes 

a threat to the future of the Internet, and you can just see from 

this chart the growth from 8 percent to 45 percent this year, and 

projected to 2007, that it could constitute up to 70 percent of email. 

Finally, we heard a lot about areas that Commissioner Swindle 

has worked in, talking about security issues, including spam used 

to spread viruses, and the very disruption of service caused by volume that could impact the activities of consumers, businesses, and 

Governments on the Internet. What that tells me is that the problem of spam has become broader. It has evolved, and the scope of 

possible solutions may also have to expand. Clearly, strong law enforcement is an important part of this. 

40 

1The views expressed in this statement represent the views of the Commission. Commissioners’ oral statements and responses to any questions you may have represent their own 

views, and not necessarily the views of the Commission or any other Commissioner. 

To address fraud and deception, we also have to work with other 

countries’ law enforcers for cross-border actions, and I know the 

Committee is aware that the FTC has submitted some legislative 

proposals this year to enable us to have better tools to work cooperatively with other governments to root out fraud and deception, 

but there also has to be a business answer, with business initiatives and best practices that distinguishes good actors from bad, 

and we also want to ensure that there continues to be incentives 

to develop technological tools that provide consumers with means 

to address and manage their e-mail. Finally, there has to be strong 

consumer and business education to enable consumers to make better choices, and to protect themselves. 

The interesting challenge for all of this is, all of it has to take 

place within a backdrop, or an umbrella that accommodates a desire for a timely solution, one that has ongoing flexibility, because, 

as was alluded to earlier, there are very clever people out there, 

and we have to have a mechanism to be as clever as they are, and 

finally, First Amendment concerns, because the Supreme Court, we 

know, is now considering what are the boundaries of commercial 

speech. 

Now, I would like to conclude by saying that, to recognize the importance of what this Committee does and how we respond to 

spam, that as you all are aware, I spend also a lot of time internationally as Chair of the OECD Consumer Policy Committee, 

where we are talking about this issue and how to address it internationally. We are also talking about how to address this bilaterally. 

I can tell you that, although other countries have looked at legislation, some have passed it, they have tried various enforcement 

tools, around the world people are looking to the United States for 

leadership on how we address this problem, how we can provide 

consumers with a good experience, how we can make this tool useful to businesses and consumers alike and still provide a free flow 

of information. It is an interesting challenge for us, but I am sure 

it is one the Committee is well-equipped to meet. 

Thank you. 

[The prepared statement of Mr. Thompson follows:] 

PREPARED STATEMENT OF THE FEDERAL TRADE COMMISSION

Mr. Chairman, the Federal Trade Commission appreciates this opportunity to provide information to the Committee on the FTC’s efforts to address the problems that 

result from bulk unsolicited commercial e-mail. This statement discusses the Commission’s law enforcement efforts against spam, describes our efforts to educate consumers and businesses about the problem of spam, and focuses particularly on the 

Commission’s recent Spam Forum and several studies on the subject that the Commission’s staff has undertaken in recent months.1

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

mission is to promote the efficient functioning of the marketplace by acting 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 

41 

2The 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). 3 A summary listing of these cases is attached as Appendix A. 

4 E.g., FTC v. 30 Minute Mortgage, Inc., No. 03–60021 (S.D. Fla. filed Jan. 9, 2003). 5 No. SACV 02–1026 DOC (C.D. Cal. filed Nov. 2002). 

6 No. 032–3030 (N.D. Ill. filed Apr. 15, 2003). 

7 ‘‘Spoofing’’ involves forging the ‘‘from’’ or ‘‘reply to’’ lines in an e-mail to make it appear that 

the e-mail was sent from an innocent third-party. The third party then receives bounced-back 

undeliverable messages and angry ‘‘do not spam me’’ complaints. 8FTC v. NetSource One, No. 022–3077 (W.D. Ky. filed Nov. 2, 2002). 9FTC v. Cyber Data, No. CV 02–2120 LKK (E.D. Cal. filed Oct. 2002); FTC v. Internet Specialists, No. 302 CV 01722 RNC (D.Conn. filed Oct. 2002). 

or deceptive acts or practices in or affecting commerce.2 Commerce on the Internet, 

including unsolicited commercial e-mail, falls within the scope of this statutory mandate. 

Unsolicited commercial e-mail (‘‘UCE’’ or ‘‘spam’’) is any commercial electronic 

mail message that is sent—typically in bulk—to consumers without the consumers’ 

prior request or consent. The extreme speed, anonymity and negligible cost of sending spam differentiate it from other forms of unsolicited marketing, such as direct 

mail or telemarketing. Those marketing techniques, unlike spam, impose costs on 

marketers that limit their use. 

There are two basic problems with spam. First, deception and fraud appear to 

characterize the vast majority of spam. Indeed, spam appears to be the vehicle of 

choice for many fraudulent and deceptive marketers. Second, a serious Internet infrastructure problem flows from the sheer volume of spam that is now being sent. 

Spam, even if not deceptive, may lead to significant disruptions and inefficiencies 

in Internet services, and may constitute a significant problem for consumers and 

businesses using the Internet. In addition, spam can spread viruses that wreck 

havoc for computer users. These problems together pose a threat to consumers’ confidence in the Internet as a medium for electronic commerce. 

Virtually all of the panelists at the Commission’s recent Spam Forum, described 

in more detail below, opined that the volume of unsolicited e-mail is increasing exponentially and that we are at a ‘‘tipping point,’’ requiring some action to avert deep 

erosion of public confidence in e-mail that could hinder, or even destroy, it as a tool 

for communication and online commerce. In other words, as some have expressed 

it, spam is ‘‘killing the killer ap.’’ The consensus of all participants in the workshop 

was that a solution to the spam problem is critically important, but cannot be found 

overnight. There is no quick or simple ‘‘silver bullet.’’ Rather, solutions must be pursued from many directions—technological, legal, and consumer action. The Forum 

helped to suggest paths to follow toward solutions to the spam problems. These solutions will depend on cooperative efforts between government and the private sector. 

In fact, the Forum is only the most recent example of the FTC’s role as convener, 

facilitator, and catalyst to encourage that activity. But the Commission also plays 

another important role—that of law enforcer. 

The Commission has pursued a vigorous law enforcement program against deceptive spam, and to date has brought 53 cases in which spam was an integral element 

of the alleged overall deceptive or unfair practice.3 Most of those cases focused on 

the deceptive content of the spam message, alleging that the various defendants violated Section 5 of the FTC Act through misrepresentations in the body of the message.4 More recently, the Commission has expanded the scope of its allegations to 

encompass not just the content of the spam but also the manner in which the spam 

is sent. Thus, FTC v. G. M. Funding,5 and F.T.C. v. Brain Westby 6 allege (1) that 

e-mail ‘‘spoofing’’ is an unfair practice,7 and (2) that failure to honor a ‘‘remove me’’ 

representation is a deceptive practice. In these cases, the defendants’ e-mail removal 

mechanisms did not work and consumers’ e-mailed attempts to remove themselves 

from defendants’ distribution lists were returned as undeliverable. 

Westby is also the first FTC case to allege that a misleading subject line is deceptive because it tricks consumers into opening messages they otherwise would not 

open. In other cases, the Commission has alleged that the defendants falsely represented that subscribing to defendants’ service could stop spam from other 

sources 8 or that purchasers of a spamming business opportunity could make substantial profits.9 Thus, through our law enforcement actions the Commission has attacked and will continue to attack deception and unfairness in every aspect of spam. 

42 

10 Claiming to be well-placed Nigerians, con artists offer to transfer millions of dollars into 

the prospective victim’s bank account in exchange for a small fee. Those who respond to the 

initial offer may receive official-looking documents. Typically, the victim is then asked to provide 

blank letterhead and his or her bank account numbers, as well as some money to cover transaction and transfer costs and attorney’s fees. 11The ‘‘Remove-Me’’ surf was conducted as part of International Netforce, an enforcement 

sweep in which the FTC was joined by the Alaska Attorney General, the Alaska State Troopers, 

Government Services of the Province of Alberta, the British Columbia Securities Commission, 

the British Columbia Solicitor General, the Canadian Competition Bureau, the Idaho Attorney 

General, the Montana Department of Administration, the Oregon Department of Justice, the 

Washington Attorney General, the Washington State Department of Financial Institutions, and 

the Wyoming Attorney General. 

Experience in these cases shows that the primary law enforcement challenges are 

to identify and locate the targeted spammer. Of course, finding the wrongdoers is 

an important aspect of all law enforcement actions, but in spam cases it is a particularly daunting task. Spammers can easily hide their identity, forge the electronic 

path of their e-mail messages, or send their messages from anywhere in the world 

to anyone in the world. Tracking down a targeted spammer typically requires an 

unusually large commitment of staff time and resources, and rarely can it be known 

in advance whether the target’s operation is large enough or injurious enough to 

consumers to justify the resource commitment. 

To complement its law enforcement efforts, the Commission endeavors to educate 

consumers and businesses on ways they can reduce the amount of unwanted spam 

they receive, and about particular types of scams commonly disseminated through 

spam, such as illegal chain letters and ‘‘Nigerian’’ scams.10 These materials are 

available on the FTC’s spam website, www.ftc.gov/spam. 

Another aspect of the Commission’s approach to spam is to investigate and research the problems it poses to understand them better. Through this research, the 

Commission can refine and better focus its law enforcement and consumer and business education efforts. 

Studying the Spam Problem 

The Commission has engaged in several research projects to explore how spam 

affects consumers and online commerce. These projects include a ‘‘Remove Me’’ surf, 

a ‘‘spam Harvest,’’ and a study of False Claims in Spam. 

The ‘‘Remove Me’’ Surf 

Last year the Commission announced the results of the ‘‘Remove Me’’ surf, in 

which the FTC and law enforcement partners tested whether spammers where honoring the ‘‘remove me’’ or ‘‘unsubscribe’’ options in spam.11 From e-mail that participating agencies had forwarded to the FTC’s spam database, the Commission’s staff 

selected more than 200 messages that purported to allow recipients to remove their 

names from a spam list. The agencies set up dummy e-mail accounts to test the 

pledges. We found that 63 percent of the removal links and addresses in our sample 

did not function. If a return address does not work to receive return messages, it 

is unlikely that it could be used to collect valid e-mail addresses for use in future 

spamming. This finding tends to disprove the common belief that responding to 

spam guarantees that you will receive more of it. 

The ‘‘Spam Harvest’’ 

In its ‘‘Spam Harvest,’’ the Commission’s staff conducted an examination of what 

online activities place consumers at risk for receiving spam. The examination discovered that one hundred percent of the e-mail addresses posted in chat rooms received 

spam; one received spam only eight minutes after the address was posted. Eightysix percent of the e-mail addresses posted at newsgroups and Web pages received 

spam, as did 50 percent of addresses at free personal Web page services, 27 percent 

from message board postings, and 9 percent of e-mail service directories. The ‘‘Spam 

Harvest’’ also found that the type of spam received was not related to the sites 

where the e-mail addresses were posted. For example, e-mail addresses posted to 

children’s newsgroups received a large amount of adult-content and work-at-home 

spam. 

As part of this project, the staff developed consumer education material, including 

a publication, ‘‘E-mail Address Harvesting: How Spammers Reap What You Sow,’’ 

that provides tips, based on the lessons learned from the Spam Harvest, to consumers who want to minimize their risk of receiving spam. The tips advise, among 

other things, that consumers can minimize the chances of their addresses being harvested by using at least two e-mail addresses—one for use on websites, newsgroups 

and other public venues on the web, and another e-mail address solely for personal 

43 

12Masking involves putting a word or phrase in one’s e-mail address so that it will trick a 

harvesting computer program, but not a person. For example, if one’s e-mail address is 

‘‘johndoe@myisp.com,’’ one could mask it as ‘‘johndoe@spamaway.myisp.com.’’ Some newsgroup 

services or message boards won’t allow masking of e-mail addresses and some harvesting programs may be able to pick out common masks. 13The remaining spam messages were not necessarily truthful, but they did not contain any 

obvious indicia of falsity. 

communication. Another suggested strategy to reduce spam is ‘‘masking’’ (disguising) e-mail addresses posted in public.12

The ‘‘False Claims in Spam’’ Study 

An additional FTC staff study examined false claims in spam. The staff examined 

1,000 spam messages selected randomly from three sources: our spam database of 

consumer-forwarded messages, the spam received at the addresses used in the 

Spam Harvest, and spam that reached FTC employee computers. The staff analyzed 

the messages based upon the types of products or services offered, the indicia of deception in the content of the messages, and the indicia of deception in the ‘‘from’’ 

and ‘‘subject’’ lines of the messages. 

The Types of Products or Services Offered—The staff found that 20 percent of the 

spam contained offers for investment or business opportunities, which include such 

things as work-at-home offers, franchise opportunities, or offers for securities. Another 18 percent of the spam offered adult-oriented products or services. Of those 

adult messages, about one-fifth included images of nudity that appeared automatically in the body of the message. Further, 17 percent of the spam messages involved 

finance, including credit cards, mortgages, refinancing, and insurance. All together, 

the investment/business opportunity, adult, and finance offers comprised 55 percent 

of our sample. 

Indicia of Falsity in the Content of Spam Messages—The staff also determined 

how many spam messages appeared misleading. Using expertise gleaned from past 

law enforcement actions and recent research efforts, the staff identified specific representations likely to be false. The staff found that 40 percent of all the combined 

categories of spam messages contained indicia of falsity in the body of the message. 

An astonishing 90 percent of the investment/business opportunity category of spam 

contained indicia of false claims. 

Evidence of Falsity in the ‘‘From’’ and ‘‘Subject’’ Lines—The staff also looked at 

evidence of deception in the ‘‘from’’ and ‘‘subject’’ lines of the spam. One third of the 

messages contained indicia of falsity in the ‘‘from’’ line. Messages falling into this 

category included ‘‘from’’ lines connoting a business or personal relationship, such 

as using a first name only, or stating ‘‘Your Account@XYZ.COM.’’ Another common 

instance of misleading ‘‘from’’ lines occurs when spammers make the sender’s name 

the same as the recipient’s address, so it appears that one has sent the message 

to oneself. 

In addition, the staff found that 22 percent of the spam messages contained indicia of falsity in the subject line, such as using ‘‘Re:’’ to indicate familiarity or a subject line that was unrelated to the content of the message, such as ‘‘Hi’’ or ‘‘Order 

Confirmation.’’ Over one third of adult-content spam contained false information in 

the subject line. Further, only two percent of the analyzed spam contained the label 

‘‘ADV:’’ in the ‘‘subject’’ line, even though such a label is required by the laws of 

several states. 

Conclusions of the False Claims in Spam Study—Adding up the various forms of 

deception, the staff found that 66 percent of the spam appeared to contain at least 

one form of deception.13 This Spam Study confirms the Commission’s earlier belief 

that fraud operators, who are often among the first to exploit any technological innovation, have seized on the Internet’s capacity to reach 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 also can misuse technology to 

conceal their identity. The Commission believes the proliferation of fraudulent or deceptive spam on the Internet poses a threat to consumer confidence in online commerce and, therefore, views the problem of deception as a significant issue in the 

debate over spam. 

The FTC Spam Forum 

Building upon our research, education, and law enforcement efforts, the FTC held 

a three-day public forum from April 30 to May 2, 2003 on spam e-mail. This was 

a wide-ranging public examination of spam from all viewpoints. The Commission 

convened this event for two principal reasons. First, spam is frequently discussed, 

but facts about how it works, its origins, what incentives drive it, and so on, are 

not widely known. The Commission anticipated that the Forum would generate an 

44 

14Open relays allow spammers to route their e-mail through servers of other organizations, 

thereby disguising the origin of the e-mail. Spammers identify and use other organizations’ open 

relays to avoid detection by the filter systems that ISPs use to protect their customers from unwanted spam. Routing spam through open relays also makes it difficult for law enforcement 

agencies to track down senders of fraudulent or deceptive spam. 15 A proxy server runs software that allows it to be the one machine in a network that directly 

interacts with the Internet. This provides the network with greater security. But if a proxy is 

not configured properly (i.e., if it is an ‘‘open proxy’’), it also may allow unauthorized users to 

pass through the site and connect to other hosts on the Internet. For example, a spammer can 

use an open proxy to connect to a mail server. If the server has an open mail relay, the 

spammer can send a large amount of spam and then disconnect—all anonymously. 

exchange of useful information about spam to help inform the public policy debate. 

This could help the Commission determine what more it might do to more effectively fulfill our consumer protection mission in this area. Second, the Commission 

sought to act as a potential catalyst for solutions to the spam problem. Through the 

Forum, the Commission brought to the table representatives from as many sides of 

the issue as possible to explore and encourage progress toward possible solutions to 

the detrimental effects of spam. 

The Commission believes that the Forum advanced both goals. As described 

below, the panelists contributed valuable information from a variety of differing 

viewpoints to the public record. In addition, the Forum spurred a number of participants into cooperation and action. Most notably, on the eve of the Forum, industry 

leaders Microsoft, America Online, and Yahoo! announced a collaborative effort to 

stop spam. Moreover, several potential technological solutions to spam were announced either at or in anticipation of the Forum. The Commission intends to foster 

this dialogue, and, when possible, to encourage other similar positive steps on the 

part of industry. 

The strong interest in addressing spam is shared by: consumers, Internet Service 

Providers (‘‘ISPs’’), law enforcement authorities, marketing services, bulk e-mail 

marketers, anti-spammers, and retailers and manufacturers. These interest groups 

were represented at the Forum by 87 different panelists collectively possessing a 

tremendous range of expertise, and coming from all over the globe to participate in 

this discussion. Distinguished representatives from the European Commission, Canada, Australia, Korea, and Japan offered their views on how spam affects their 

countries and how they are trying to tackle the problem. On the domestic front, panelists included prominent representatives from all sectors affected by spam, such as 

the president of the consumer group, the SpamCon Foundation, the president of the 

Direct Marketing Association, vice presidents of America Online and Microsoft, and 

the Washington State Attorney General. Distinguished members of Congress—Senators Burns, Wyden, and Schumer, and Representative Lofgren—also addressed 

Forum attendees. 

The Spam Forum was organized into twelve panel discussions that were conducted over the course of three days. In addition to the 87 panelists, approximately 

400 people were present each day in the audience at the FTC Conference Center, 

with many more individuals participating via a video link or by teleconference. 

Questions for the panelists were accepted from the audience and via a special e-mail 

address from those attending through video link or teleconferencing. 

Day One of the Forum focused on the mechanics of spam. Panelists discussed in 

detail how spammers find e-mail addresses and how deception in the sending of 

spam affects consumers and online commerce. Discussions then focused upon security weaknesses that enable or facilitate spam, such as open relays 14 and open proxies.15 Day Two explored the economic costs of spam. Panelists participated in an indepth discussion of economic incentives inherent in spam and the costs of spam to 

marketers, ISPs, and consumers, and its effects on emerging technologies. Specifically, panelists discussed spam blacklists, e-mail marketers, and wireless spam (unsolicited text messages received via cell phone). Day Three focused on potential solutions to spam. Panelists discussed three potential avenues to a solution: legislation, 

litigation, and technology. Specific topics covered included: state, federal, and international legislation; civil and criminal law enforcement and private litigation 

against spammers; and various technological approaches. 

Panelists at the Forum bought forward an enormous amount of information about 

spam and how it affects consumers and businesses. Several primary themes 

emerged from the various discussions. First, the volume of spam is increasing 

sharply. Many panelists reported that the rate of increase is accelerating. For example, one ISP reported that in 2002 alone it experienced a 150 percent increase in 

spam traffic. Second, spam imposes real costs. The panelists offered concrete information about the costs of spam to businesses and to ISPs. Specifically, ISPs reported that costs to address spam have increased dramatically over the past two 

45 

years. ISPs bear the cost of servers and bandwidth necessary to channel the flood 

of spam, even that part of the flood that is being filtered out before reaching recipients’ mail boxes. America Online reported that it recently blocked an astonishing 

2.37 billion pieces of spam in a single day. Third, spam is an international problem. 

According to our international panelists, most of the spam received in their countries is in English and advertises American products or companies. Most panelists 

agreed that any solution to stopping spam will have to involve an international effort. 

Our law enforcement experience has taught that the path from a fraudulent 

spammer to a consumer’s in-box typically crosses at least one international border 

and frequently several. Thus, fraudulent spam exemplifies the growing problem of 

cross-border fraud. To enhance our effectiveness in the fight against fraudulent 

spam and other kinds of fraudulent schemes that cross international borders, the 

Commission will be asking this Committee, as part of our forthcoming reauthorization testimony, for additional legislative authority in a number of areas, including 

measures that would: allow the agency to share such information on targeted 

schemes with our overseas counterparts; provide investigative assistance to them in 

appropriate cases; improve our ability to obtain information from U.S. criminal 

agencies and Federal financial regulators, who are often investigating the same 

types of fraudulent conduct that we are; and improve the agency’s ability to obtain 

consumer redress in cross-border cases by clarifying the Commission’s authority to 

take action in such cases, and by expanding the agency’s ability to use foreign counsel to pursue assets offshore. Legislation expanding the Commission’s authority in 

these ways is essential to improve the agency’s ability to fight fraudulent spam in 

particular, as well as other manifestations of the more general problem of cross-border fraud. 

Approaches to Solving the Spam Problem 

The broad themes that emerged from the Forum panel discussions depict the 

spam problem as increasing volume, increasing costs, and increasing international 

effects. This confirms that finding solutions to the problems posed by spam will not 

be quick or easy; moreover, the consensus of panelists was that no single approach 

will likely cure the problem. Some panelists at the Forum stated that a large scale 

technological change in the e-mail protocol system is not likely to occur. Nevertheless, others indicated that there are incremental technical changes that can be grafted onto the existing e-mail protocol to ease the burden of unwanted e-mail on ISPs 

and consumers. In addition, consumer representatives stressed that any solution 

should include consumer empowerment—to allow e-mail recipients to decide what 

messages they want to receive in their inbox, and to give recipients the technical 

tools to effectuate those decisions. Some panelists, but by no means all, advocated 

additional Federal legislation and law enforcement efforts as a means to provide 

needed accountability and deterrence. 

All Spam Forum participants agreed that solving the problem of bulk unsolicited 

commercial e-mail will likely necessitate an integrated effort involving a variety of 

technological, legal, and consumer action, rather than one single solution. Through 

the Forum and the follow-up efforts it suggested, the Commission hopes to act as 

a catalyst for technologists, industry, law enforcement, and policy officials to work 

together to find a solution. 

Conclusion 

E-mail provides enormous benefits to consumers and businesses as a communication tool. The increasing volume of spam to ISPs, to businesses, and to consumers, 

coupled with the use of spam as a means to perpetrate fraud and deception put 

these benefits at serious risk. The Commission looks forward to continuing its research, education, and law enforcement efforts to protect consumers and businesses 

from the current onslaught of unwanted messages. 

The Commission appreciates this opportunity to describe its efforts to address the 

problem of spam, and the outcome of its recent Spam Forum. 

The CHAIRMAN. I thank you both. I have gotten letters, as I mentioned, I would include for the record from the Center for Democracy and Technology, Mr. Jerry Berman. He says, based on our research and further discussion, CDT believes that the spam problem 

merits targeted Federal legislation to help alleviate the burden 

spam causes to consumers, businesses, and ISPs, and I also had a 

letter from Mr. Gates which I think Mr. Leonsis is going to talk 

46 

about more, where he makes several recommendations. I would 

like for both of you, if you would, to comment on these recommendations, perhaps in writing to us, because there is a series 

of them, as to your views as to whether they should be included 

in the legislation or not. 

I would hope, and I know that Senator Burns and Senator 

Wyden would hope that we could get this issue to the floor sometime before the summer recess, because it is clearly an issue that 

needs to be addressed one way or the other, so I would hope that 

you would get us that. 

I guess my first question is, suppose that we enacted the best 

law that took care of every problem, every loophole—— 

We have 5 minutes left on the vote, Conrad. Do you want to go 

and vote and then come back? 

Senator BURNS. We are voting again? 

[Laughter.] 

The CHAIRMAN. I think so. Maybe you want to go and then come 

back so we can keep the hearing going. 

And what do you do about somebody located, and you have an 

international agreement with the major countries in the world, 

somebody located in the Grand Caymans, as is the case with Internet gambling sites today. What is the answer? 

Mr. SWINDLE. Senator, I will start off. Obviously, and it has been 

said by, I think, everyone who has testified to this point, that no 

single solution, no single thing is going to be the solution. Passing 

legislation is not going to solve this problem. 

Someone said earlier that having legislation penalties would help 

us hunt down the perpetrators, and that got right to the point here. 

The penalties are not going to help us hunt down the perpetrators. 

In fact, the biggest problem we have is finding those who are sending the spam out. It is a technical problem that from my observation, listening to the forum we had last week, most of the people 

in technology were saying we do not yet know how to do this. We 

have got a lot of work to do. 

Laws can certainly classify a certain group of people who do certain things as criminals if we want to go that far and say that if 

we catch them, we penalize them heavily, and that might be a good 

idea as Senator Nelson was proposing, but the problem still remains finding them, and until we solve that problem, we have got 

to seek other alternatives. 

I speak of the emotion of the broad base of users, hundreds of 

millions, certainly in this country, and I have been told the numbers may reach 600 million by the end of this year worldwide. It 

seems to me that it would be practical, and I am not much on technology, but if you would give me the ability to put a screen in front 

of my computer so that nothing comes in there except what is on 

that screen—in other words, my address book—you would go a long 

way to solving my emotional problem with spam, my frustration 

with it, my wanting to just turn this thing off and walk away from 

it. That will be the biggest disaster we can imagine right now. 

Some of this technical stuff is going to take years to evolve, the 

same way with the legislation, but give the consumer the power, 

empower the consumer to say no to what is coming into his mailbox, and as I mentioned in my comments, I am not sure that indusVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00050 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
47 

try is prepared, and not because they cannot do it, but I am not 

sure they are prepared to do it because they do not want to do it, 

because it cuts them off from a potential customer. Well, I think 

that is dead wrong. We have an issue before us that can do grave 

damage to this incredible tool that we have. I think we all need to 

quit speaking and lobbying in terms of special interest, our own interest, and think about a cause greater than ourselves. We have a 

bigger issue here. 

The CHAIRMAN. Commissioner Thompson. 

Mr. THOMPSON. I think you highlight a very important point that 

we have to do what we can to eliminate jurisdictions of convenience, in other words, places that might serve as safe harbors for 

those who would engage in spamming. It is something we have discussed internationally. 

Countries have different ways of approaching that, and we are 

trying to talk to them about what has been effective, what has not 

been effective, what are ways that we can look at in the future. I 

believe that some legislative vehicle is helpful, but it is not the only 

solution, but it also means a cooperative effort, and not just waiting for an international treaty, although that can be a long-term 

goal. 

There is a short-term goal of having ongoing discussions, including bilateral agreements and understandings about how you actually prosecute cases that have fraud and deception at their core, 

and that includes what legislation we need to streamline the process so that we can share information with entities that have the 

same goals as we do. 

I think what is important is for us at the very least to come an 

understanding with countries about why this issue is a problem 

and is a threat to the Internet, and a threat to consumer confidence. I think we are reaching those goals, and to talk about what 

are the potential avenues for solution. I think we are at that point, 

and it is a very important point. 

The CHAIRMAN. Commissioner Swindle, would a do-not-spam list 

be an effective way of cutting down on some of this problem? 

Mr. SWINDLE. In a word, I do not believe so. We are just now 

coming to grips with how we are going to implement a do-not-call 

list. In the business of telemarketing, there is a relatively finite or 

small number of telemarketers. There are 5,000 or 10,000. I am not 

sure how many there are, but when you talk about the Internet, 

we are talking millions. We are talking in telemarketing a very 

regulated industry that literally does have borders, state control of 

telecommunications and so forth. In the Internet, it is totally borderless. 

I tried to imagine what the database for a telemarketing sales 

rule or do-not-call rule will be, and it will be large, because it is 

probably one of the more popular things that have come down the 

pike since I have been there. How we manage that, how we make 

it reactive, that it does what it is supposed to do, is a very complex 

problem, and we are going to get there, but we are not there yet. 

We have no experience, not ruling it out. 

The CHAIRMAN. Do you agree? 

Mr. THOMPSON. I agree. I also think there are challenges in 

terms of resources, because the scale and the size of what is going 

48 

to be contained in any database and the security that is going to 

be necessary will be very resource-intensive. I think it can be part 

of a solution, but in and of itself it may not be a solution. 

The CHAIRMAN. Senator Nelson, I have got to go vote. 

Senator NELSON. Mr. Chairman, do you want me to keep the testimony going or wait until you return? 

The CHAIRMAN. Knowing you, I am sure that is not a problem. 

[Laughter.] 

Senator NELSON. That is an appropriate reconfirmation of the relationship that I have with the Chairman. He knows I am not 

going to do anything crazy. 

[Laughter.] 

Mr. THOMPSON. Once again, you are in charge. 

Mr. SWINDLE. If I might finish the point, and Senator—or Commissioner Thompson—congratulations. 

[Laughter.] 

Mr. SWINDLE. I gave you a promotion there. We are really going 

to take control here. 

I was speaking of the database for telemarketing for the do-notcall list on the telephone. That is going to be an enormously big, 

complex thing, but we can get a grip on it. we have been doing this 

a long time. The Internet is something else. First off, you know the 

debate we get in on telephones of portability of numbers. We cannot figure out exactly how to do that. 

How many times do people change their telephone numbers? Not 

very often. How many times do they change their e-mail addresses? 

It goes on. How many people are there out there with e-mail addresses, and they have multiple e-mail addresses. You are talking 

about an incredibly large database that will be difficult to secure, 

and if I am a spammer, I just look at that as a target-rich environment. I do not think it is a solution. 

Mr. THOMPSON. One of the challenges we have is trying to cater 

static responses to moving targets, and in this area the target is 

moving very quickly. As we heard earlier, people who are engaged 

in spamming have every economic incentive to be clever and invest 

their time and money in morphing themselves into different entities, cloaking themselves, using the technology in order to send out 

their spam because it is so cheap for them to do so. For just a minimal positive response, your return on investment is quick and 

rapid. It is hard for us in an open network to change that, but I 

think we are talking about what other things that we can do to get 

at the bad actors, and one challenge that we still have to face is 

what do we do about volume, because even if we get after the bad 

actors, you still have this chart with rapid increase. 

The slope may come down a little, but because of the economics, 

you are still going to have many people trying to use this in marketing, and it could have some disruptions in service and other 

things that make the consumer experience not very good. I do not 

know what the right answer is, but it is a challenge that we have 

to consider. 

Senator NELSON. You all have mentioned that the FTC is seeking 

the additional legislative authority to improve the agency’s ability 

to obtain information from U.S. law enforcement agencies. Now, 

can you discuss for the Committee how the FTC coordinates invesVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00052 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
49 

tigations with other agencies, criminal agencies, and can you expand on your request for the additional legislative authority in this 

area? 

Mr. THOMPSON. I can talk briefly about it, that I think we have 

a good relationship with agencies within the United States, and I 

want to clarify the question a little. I think what we are asking for 

are ways to make it easier for us to share information with sister 

agencies that may lie outside of the United States. 

One of the trends that we are seeing, especially in the E-commerce areas, is that we represent the richest and most robust marketplace in the E-commerce base in the world. That means others 

who would seek to defraud people want to come here and victimize 

our citizens. Right now, the way our legislation works, there are 

very complex rules dealing with confidentiality of investigations 

and the information we gather as part of a prosecution that makes 

it harder for us to share information with, for example, a law enforcer in France, or a law enforcer in Canada who may be interested in prosecuting those who are living there that victimize our 

citizens, so in some ways, what we would like to see is some legislative streamlining that would make it easier for us to prosecute 

in a way that recognizes the global nature of the problem. 

Senator NELSON. Would you perhaps—while I was voting, both 

of you had already commented on the legislative approach to this 

problem in trying to put a criminal penalty as a means of stopping 

it, recognizing that we have got to work with the international 

arena as well. Would you further comment how, what you would 

like to see in law that would give you the tools as the regulator 

to attack this problem? 

Mr. SWINDLE. Senator, I mentioned, made reference to your comments about rather punitive measures we could take against those 

who do cause damage, and I am moving more and more toward the 

belief that we are getting into criminal acts. When you consider 

how we are so totally integrated now with information systems and 

networks, how we are so dependent upon them, I mean, you know, 

today you can be at your home with a very inexpensive computer 

that is more powerful than the computers you had in the space 

shuttle you went up in. That computer can be captured if it is not 

adequately protected and then it can be used as a weapon to go out 

and do damage to financial systems, to air control systems, to the 

Defense Department, it is unlimited, because you are in these networks. 

Those who would do this intentionally to disrupt information systems, to disrupt power grids, to disrupt air control, to shut down 

through the devices and code that goes out, and they overwhelm 

ISPs, overwhelm financial networks, this is grave, grave damage. 

This is far beyond going out and stealing 150 bucks from a grocery 

store, which is a crime. I think we are approaching the point where 

we do need to establish these people who do this as criminals, but 

we get back to the same problem, how do we find them, and that 

is a technology problem that we have not yet solved as far as I am 

familiar with. 

But I do think, again to repeat the point that I think I made 

while you were out, as I said in my comment, we have got two 

problems here. One is this very complex technical, legal, public polVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00053 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
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icy legislative arena, the other is this emotion, of all the wonderful 

people in this country and around the world who want to use this. 

They are excited about it. 

I love to shop on Amazon and eBay and things of this nature, 

but the more we are harmed by spam, and spam is one of the biggest carries of viruses that damage our computers, we lose confidence in it and we are going to back away from that. That is 

going to be a severe hit for the economic potential and entertainment potential and fun potential of information technology. 

I contend that industry had better focus on that right now and 

get something done. They need to give consumers and users and 

students and home users and small businesses the capacity to put 

a wall in front of their computer and say, I do not want it in here 

if it is not on my wall, in other words, your address book, and you 

know, the argument is, well, you are going to miss a message from 

an old friend. My problem. I can deal with that much better than 

having this open relay. So, I think criminal designation is probably 

going to be necessary, and I do think we need—to sort of paraphrase what you said, I think we need a couple of good hangings 

here. 

Mr. THOMPSON. I think a challenge, though, I think it is important perhaps to have some criminal penalties for the most egregious behavior, but let us talk a little about the fact that that may 

only represent the one tale of the people who are involved in spam, 

because one of the challenges you have when you introduce the element of criminalization, the standard of proof may be different. The 

idea of intent is different. Right now, for example, based on the 

FTC act for fraud and deception, we do not have to prove intent. 

Once you introduce that element, that makes it harder to go after 

what may be the bulk, which you may be able to get to based on 

civil prosecution and penalties. 

Also, one other factor that I think is important to consider is 

that, how do you wind up prioritizing within the criminal enforcement community this kind of behavior, because it is not only just 

providing some sort of criminal remedy, but it is also talking to 

criminal prosecutors and making sure that they understand how 

important this is compared to any number of different criminal 

statutes they have to enforce, so I think the challenge is to view 

criminal penalties, maybe one aspect of a solution, but there have 

to be many more tools in addition to that. 

Senator NELSON. Thank you for your statements. 

After the April 30 spam workshop, the Commission has received 

a tremendous amount of testimony from consumers marketers, 

ISPs, filtering technology firms and many others. The work that 

the Commission has already done in combination with the workshop materials would aid this Committee in its work on crafting 

spam legislation that works. Can you report to this Committee in 

45 days an outline of a legislative approach that deals with the 

issues raised during the workshop, a consumer education plan, any 

jurisdictional needs that should be addressed in reauthorization, 

and the cost to implement such recommendations? 

Mr. SWINDLE. Senator, we would never refuse your request. We 

will make every effort. That is one of the reasons we held the workshop, because we believe that we needed to get everybody who is 

51 

involved in this in the same room at the same time and have it out, 

and actually a couple of them did try to have it out, but I think 

the whole purpose of that is to try to better inform all of us, the 

regulators, and the legislators as to what we can do with this, and 

in the process co-opt the industry in all of its respects, and even 

some of the people who like to engage in this stuff in here and talk 

about the harm that is being done. That is our goal, to try to prepare a well-informed body of knowledge, and I will certainly take 

back your request, and we will get to work on this and give you 

a response to that question. I would be a little remiss if I answered 

it before I found out what we have got. 

Senator NELSON. Thank you very much. Thanks to both of you. 

Senator WYDEN. Senator Burns. 

Senator BURNS. Thanks for coming down today, and thanks for 

the invite you offered us during your three day workshop down 

there, and I am sorry I did not get to stay for it, and I have already 

got it written down here that maybe the video that—I think you 

videoed every session. I will tell you what, I would not mind having 

a set of those videos, and I know you have got hours and hours of 

them, but, you know, we could thumb through those things, and 

that would probably be a good way to do it, is just to get the videos 

of those sessions, those testimonies and those discussions. I think 

that was a very good workshop, and I thank you for allowing us 

to come down and participate in that. 

And Commissioner Swindle, you are exactly right, the best solution to this whole thing is people who participate and use best business ethics, and we know those are the answers, but we also know 

that the industry is going to have to step forward. It is my belief 

that they will not until there is a national legislation that forces 

them to at least consider some things that can be flexible and be 

very light on their feet to deal with this thing as far as the legitimate marketers, because I am a market-oriented guy. 

I think this thing, you know, when you walk from here to downtown, you walk by a lot of businesses and you see a lot of advertising, and you see a lot of things that are wanting to do business 

with you, and this industry should not be any different. However, 

I think the industry is going to have to step forward and set up 

a standard of best practices, and have those legitimate marketers— 

we welcome them—who want to do business in this realm of doing 

that. 

Now, you have already responded to the no-spam list. We would 

be remiss if we did not consider that, but I am not real sure that 

that is not a detail maybe that the FTC could—on their own, because you have done a wonderful job down there. You have taken 

this issue and you have elevated it to a position of national awareness. You have done a terrific job down there, and we do not want 

to do anything through legislation that would curtail that particular activity with the FTC, but I just want—you mentioned, Mr. 

Swindle, in your testimony, the Commission mentioned the testimony that a solution to spam must include consumer empowerment, and of course, we use that term a lot. Do you think opting 

out constitutes consumer empowerment? 

Mr. SWINDLE. That is certainly a form of it, Senator. Unfortunately, a lot of the spam does not honor the opt-out selection, so 

52 

you have still got the spam coming in, and the point I made is, I 

was reading the article this morning about Microsoft’s initiative 

that was in the Post this morning, and my friend and sometimes 

adversary Marc Rotenberg, who I believe is going to be testifying 

on a later panel, made the statement, or is reported to have made 

the statement that Microsoft’s proposal does not address the core 

need of consumers, which is to be free of commercial e-mail unless 

they specifically request it. That is different from opt out. 

I have suggested that, to accommodate or try to resolve this emotional turning away from electronic commerce and e-mail that we 

are experiencing because of spam, that the ISPs and software manufacturers and the hardware manufacturers, whoever does this 

stuff can provide to the consumer the capacity to easily, recognizably simply say—this is oversimplification, but I do not want to receive any e-mail from anybody other than the ones I send to and 

the ones that are in my address book. 

Think of all the e-mail that would not come in any more, just do 

not even have it come in, and that is what I mean about quick fixes 

for emotional problems, but I think there is a basic need. Opt out 

certainly recognizes this, but it is not honored. There is a basic 

need for consumers to be allowed, at their own choice, to be free 

of—Senator McCain used ‘‘unwanted.’’ That may be the best way 

to put it, unwanted e-mail, and if you put them in control of that, 

we will have a lot happier users out there and we will have less 

a problem on this emotional bent, and we can really get to work 

on this legislative and technology bent. 

Senator BURNS. We could call them weeds. That is kind of an 

invasive and unwanted—— 

Mr. SWINDLE. Nutgrass down in South Georgia. 

Mr. THOMPSON. I think that is a nice way of characterizing it. 

Senator BURNS. We have to eliminate the weeds, and if we can 

find a herbicide to spray them and it kills the weed and lets the 

grass grow, that is what we are looking for in this situation. 

Senator NELSON. Some of them are snakes. 

Mr. SWINDLE. I would like to use an illustration, Senator, if I 

may, and it will take just another minute. I just bought my wife 

a brand new, nice computer. It is a great computer, Dell, a great 

company, has got Microsoft XP on it, a fine piece of software. All 

of a sudden, I started getting pop-up spam messages that says, 

Messenger, centered, dead center, large, right in my screen, and I 

do not know how to copy it. There is a way to copy it, but I am 

not technically savvy enough to figure it out. I said, where is this 

stuff coming from? It comes from a built-in Microsoft messenger, 

Instant Messaging, I guess, sort of like AOL, a wonderful device, 

if you want it. 

The problem is, Microsoft put that in that computer, defaulted to 

the on position, did not tell me it was there, did not tell me how 

to easily get it off of there, and they use it, or somebody’s using 

their system, maybe an affiliate, to send me spam that I do not 

want. The industry needs to solve this problem. They can solve it 

technically. They just need to want to solve it, and as to your initial proposal, maybe they need a fire lighted under them. I think 

they do. 

53 

I think the FTC has done a grand job of elevating the subject of 

privacy to the public. Everybody is aware that they ought to be 

concerned about their privacy. We have achieved a very—I would 

never say excellent, because we are still working on it. It is a journey, not a destination, but we have more companies doing better 

things on privacy than ever before, and we have not passed a law 

to get there, but public pressure, if you inform the public, they then 

demand. Industry will respond because that is how they stay in 

business. 

Senator BURNS. I believe that, and I thank you for your openness 

and your frankness about this, because I think we have been talking about this issue for 4 or 5 years. It is time to quit beating 

around the bushes and tell it like it is and then go ahead and respond to that, and I thank both Commissioners for coming this 

morning. 

Mr. Chairman, thank you. 

The CHAIRMAN. Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman. First, I always welcome the views of the Federal Trade Commission, but I will tell 

you, I am a little troubled about sitting around and waiting another 45 days, or whatever. It is time to get going, folks. It is time 

to protect consumers. This problem has grown so dramatically, just 

in the last few months, that I just fear if we embark on yet another 

prolonged kind of study session, we are not going to get after this, 

and it is time to start moving, and frankly, Senator Burns and I 

in the last 4 years have been looking at just about every idea under 

the sun. We are going to continue to look at others, but I want to 

get some things clear on the record. 

First, on the enforcement provisions, 2 years ago, Commissioner 

Swindle, Eileen Harrington came to the Committee and said that 

the enforcement mechanism in the Burns-Wyden bill would work. 

In fact, her comments are, the enforcement scheme laid out in the 

bill likely would work well. 

Now, it has got four tiers. The four tiers are the criminal penalties, the Federal Trade Commission civil penalties, the authority 

of the state Attorneys General, and the ability of an ISP, an Internet service provider to bring suit. I guess the first question I would 

like to know from both of you on the record, do you disagree this 

morning—so we can actually get a sense of what two Commissioners think this morning, do either of you disagree with what Eileen Harrington said when she said the enforcement mechanism in 

the Burns-Wyden bill would work well? 

Commissioner Swindle. 

Mr. SWINDLE. Senator, we essentially do that already. Under section 5 of the Federal Trade Commission Act we deal with deception 

and unfairness, a false header, that is an address, the from line of 

somebody that is not the real person, that is deception. Deception 

in the subject line is deception. Deception in the subject matter is 

deception. We have the ability, with the existing laws, to do those 

things. Certainly the criminal and civil aspects of it are positive 

things. We do that already. 

We work very well with the Department of Justice in trying to 

find solutions to these problems and certainly go after the bad 

guys. We certainly encourage the continued ability of states to enVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00057 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
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force the Federal Trade Commission Act, and working with the 

AGs, and we do a marvelous job with that. 

Senator WYDEN. But Commissioner, obviously, empowering the 

state Attorneys General is something the Congress has to do. The 

ISP provision is something the Congress has to do. I just want to 

know, so we do not go out and reinvent the wheel every 45 days 

or 60 days, whether you agree with what Eileen Harrington said, 

and I happen to think you have done useful work. It is not a referendum on whether you all have done useful work. Eileen Harrington said our enforcement mechanism would work. Do you agree 

with that? 

Mr. SWINDLE. I have not disagreed, but the point I want to make, 

Senator, is, we can have this structure, which you know is wonderful. The problem still remains finding those who are doing the evil. 

That is a technology challenge. It is a staffing challenge. We go 

after these cases, and one of the big dilemmas we have is trying 

to figure out how many resources can we devote to this when we 

very likely will not find who did it, and the effect of what was happening, does it warrant the spending of these resources. It is a very 

difficult thing. 

Enforcement is many things. It is having the structures you described, certainly, but also you have to have the capacity to go do 

something with those tools. You have to have the capacity to find 

the person who has done wrong and bring them in and stand them 

up in front of those four standards and get them. 

Senator WYDEN. Commissioner Thompson, Eileen Harrington, do 

you think she was right when she said, what we are trying to do 

on enforcement would work well? 

Mr. THOMPSON. I think she was right, what she said when she 

said it. What I think is based upon what I have heard and the information that we have gotten that the problem may have morphed 

a little. Now, I do not want to make any mistake about it. You will 

hear from me today instances where I would like to come back and 

tell you whether certain parts of the various bills we see will address part of the problem, but I do not want to make any mistake 

about it. I think that we need legislation, and we need it this year. 

The issue is whether the form of legislative vehicles we have 

seen so far address parts of the problem and not other parts of the 

problem, and we would like to be a resource to you to give you the 

best information of whether some of those parts might be more effective or might be necessary elements in addressing the problem. 

Let me give you an example. I was actually moved by the information that was given to us by a small ISP provider, when I say 

small, less than 20,000 subscribers who said that last year, they 

spent $200,000 to deal with spam, and they were able to spread 

that cost passing it through to their subscribers, but they saw a 

real choke point coming up ahead, because they were so small, that 

they would not be able to pass that cost on, and that is because 

of volume. I am not sure we have a way to address that, but I 

would like to give you the best information that I have, and I am 

willing to come back to you in 45 days or sooner, if necessary, to 

give you what that best judgment is. 

Senator WYDEN. Mr. Chairman, if I could just get one other question in very briefly, what we tried to do in the Federal Trade ComVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00058 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
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mission portion of it is to give you all the flexibility to make distinctions between the big-time offenders and the small-time violators. Again, because we had gotten favorable testimony from the 

Federal Trade Commission, we felt we were headed in the right direction. Do you all still feel that that is a sensible distinction to be 

making, either of you? 

Mr. SWINDLE. Senator, I think we need to continue this dialogue. 

I have been using this expression for a long time. There are no simple answers to this. I have not seen one piece of legislation that I 

think will be adequate. 

I do not know that we need additional authority. As I said, we 

have the capacity to go after deception and fraud right now. We 

have got to realize that this is going to be an evolving process. It 

is going to take technology advances, it is going to take industry 

stepping up to the plate and doing what they ought to do because 

it is the right thing to do, and it is going to take us working and 

advising and consulting with you, Senator Burns, Senator McCain, 

and other Members of the Congress, trying to find the best possible 

solution. We want to find the best possible solution, I mentioned. 

We are not going to find the perfect solution. We can forget that. 

We just are not going to find it, but the best possible solution will 

be the one that is effective and the one that does not do more harm 

than good and start to make impediments, and again, industry 

could solve much of this problem if they would get it done so that 

you would not be having to try to get it done through legislation, 

which invariably, because of the speed of this industry, the legislation will always be behind. 

Senator WYDEN. My time has expired. My only point is that 

when you have the real scofflaws, when you have the real bad actors, those are not people who are paying attention to what industry self-regulatory initiatives are all about, and that is why we 

have got to move, and we have got to move quickly, and I think 

we ought to have your input, but Mr. Chairman, I hope that this 

effort to have 45 more days and more discussion will not turn into 

something that is so prolonged that we cannot get action on it. We 

have had a lot of years of studying it, and I think we ought to get 

moving, and I thank you for the time. 

The CHAIRMAN. Senator Cantwell. 

STATEMENT OF HON. MARIA CANTWELL, 

U.S. SENATOR FROM WASHINGTON 

Senator CANTWELL. Thank you, Mr. Chairman. I know this Committee and my colleagues here today have spent a great deal of 

time working on this issue, as the FTC has, on trying to enforce 

and crack down on the individuals, and I am anxious to hear from 

our second panel as well, because I think we are going to hear 

some interesting comments from them, because I think the industry is being very much impacted by this as well. 

There are people who very much count on having a relationship 

with online consumers, and that relationship is being damaged by 

the perpetrators of spam, so I think everybody is interested in moving forward. Why not focus more narrowly on one particular aspect 

of this issue, which is harvesting. 

56 

I know my colleagues here have language in their legislation, but 

why not, as a first step, something that we can all have consensus 

on, and we know that there are perpetrators of spam, either 

autogenerated by computers, or people who are actually harvesting 

names that are available online from various websites. Why not 

crack down on that right away, and focus on the anti-harvesters as 

a key component? 

Mr. SWINDLE. Senator, I personally think the clandestine capturing of e-mail addresses and then turning around and using 

them is an abominable act. It is commonplace, we all know that, 

and perhaps we need to look at it in terms of saying you cannot 

do this, but again, we get back to how do we enforce it, how do we 

find those who do it, because from a technology standpoint, it is 

fairly well concealable, but again, it is just one small element of 

this whole problem that we need to keep working and need to be 

getting industry to step up and tell us, number 1, how to solve the 

problem with technology, and number 2, we are not going to do this 

any more. 

I have a good friendship with a member of industry that was telling me when he took over the company, and it is a fairly big company, he said that he found out that one of the practices of the 

company was, when they got e-mail addresses they sold them, and 

he asked, why are you doing that, did you ask for permission. They 

said, no. He said, we are stopping that right now. That is the kind 

of leadership we need. 

Senator CANTWELL. We have had a lot of discussion, I am sure, 

in the last couple of years about what those relationships are and 

what businesses have the right, in various types of marketing, 

what relationships they can extend to some of their partners, but 

in this notion of anti-harvesting legislation, being specific, that you 

cannot autogenerate or cannot take names that you have gotten 

from other places online and e-mail them, and then going back to 

those, and I know it is not obvious who all of these entities are, 

but with a little investigation you can find them. If that organization cannot prove that they have a prior business relationship with 

that name, then they would be guilty of having harvested it. It is 

a more simple framework of saying that there are people—you 

know, we have had all this debate about opt in and opt out, and 

we can continue to have it, or what is the right framework, and 

how do you make the penalties, but I think 90 percent of the people 

would agree on the anti-harvesting aspect. 

Mr. THOMPSON. I think that would be helpful. 

Mr. SWINDLE. I think it is a legitimate approach. I would ask for 

consideration to how you define existing relationship, because some 

of the definitions of it I have seen, you could drive a Mack truck 

through them. You almost have an existing relationship just because you exist, and that needs to be carefully thought of, because, 

again, I made a statement in my opening remarks that the laws 

of legislation that will tend to favor larger firms over smaller firms 

is not a good idea in my mind, that I think some of the larger firms 

will have the capacity to drive trucks through large holes. 

Mr. THOMPSON. I think it would be helpful. I think it is an element, but I think it is only one element. I know that this Committee has been particularly concerned about how to deal with proVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00060 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
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tecting what consumers’ interests are. I think it is important, 

though, that we also manage their expectations. I think that this 

is one element, but I think there are other parts of the problem 

that need to be addressed, too, and I think that a well-crafted legislation should have various pieces, because there is not one single 

answer to this problem. 

Senator CANTWELL. Well, I think that that is—I agree with that, 

but I think focusing on the most egregious issues is important for 

us to do, too. If we are not going to move forward on the whole 

framework, let us make progress on the most egregious side of the 

equation. 

And Mr. Swindle, I just wanted to clarify when you were talking 

about that example, you were talking about—with Microsoft, you 

were talking about seeing a pop-up message, right? You were not 

talking about somehow someone e-mailed you an additional message? 

Mr. SWINDLE. I am going to use the term that is alien to Microsoft, I guess, Instant Message, which I guess belongs to AOL, but 

right in the middle of the screen a message. 

Senator CANTWELL. I know what you are referring to. So are you 

saying that you lump that in with—I am not saying it might not 

be a rude behavior, and one that the consumer—— 

Mr. SWINDLE. It is spam. 

Senator CANTWELL. How are you defining it as spam? 

Mr. SWINDLE. It was a commercial notice placed on my screen 

without me being able to control it, not knowing it was there. I 

found out how to control it and cut it off, and I have not gotten 

any more, but it would have been nice if Microsoft told me, hey, 

Orson, thank you for buying the new computer and getting our 

software. By the way, our instant messenger service is on, and you 

are going to be receiving messages from us, and if you do not want 

it on, just do this and turn it off. They did not give me the courtesy 

of doing that. The message basically said, if you do not want to receive things like this, go to a website and you can get instant message blocker, or something like that. It was advertisement, pure, 

unadulterated advertising. 

Senator CANTWELL. Well, and I certainly think that there are 

issues about what should be, once you have installed someone’s 

software, what capabilities they should have in continuing to communicate to you, and that should be clear to consumers and you 

should give them options. 

Mr. SWINDLE. Give me the power to turn it off, to say no—— 

Senator CANTWELL. Right. Exactly. 

Mr. SWINDLE.—that is all I ask, and they should have done that 

and they did not do it, and I find it interesting, they are now promoting how they are going to stop spam, and by their own practices, they are sending me spam. 

Senator CANTWELL. Well, I do not know that Microsoft is, 

but—— 

Mr. SWINDLE. An associate. 

Senator CANTWELL.—I think that it is a related issue, the software functionality, and giving consumers obviously the ability to 

turn off and turn on, and to be asked permission is a very key 

point, but I would try to keep that as a related, but separate issue 

58 

to this notion of that then comes into your e-mail queue from a variety of people that are generating. 

Mr. SWINDLE. I was looking at my e-mail and blanking over my 

inbox—— 

Senator CANTWELL. Your screen. 

Mr. SWINDLE.—was this spam message. It cannot be called anything other than that. 

The CHAIRMAN. Thank you, Senator. It is time—— 

Senator CANTWELL. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. The Senator from Washington’s time has expired. Thank you. 

Thank you very much, Commissioners. I appreciate your time 

and your input, and I will look forward to your comments on the 

Microsoft recommendations. The sooner you can get those to us, the 

better. Thank you. 

Our next panel is Mr. Ted Leonsis, the Vice Chairman of America Online; Mr. Enrique Salem, President and CEO, Brightmail; 

Mr. J. Trevor Hughes, Executive Director, Network Advertising Initiative; Mr. Marc Rotenberg, Executive Director, Electronic Privacy 

Information Center; and Mr. Ronald Scelson, who is of Scelson Online Marketing. I welcome you. I appreciate your patience, and I 

apologize for the delay, which has been caused by votes on the 

floor. Mr. Leonsis, welcome. It is a pleasure. Please proceed. 

STATEMENT OF TED LEONSIS, VICE CHAIRMAN, 

AMERICA ONLINE, INC. AND PRESIDENT, AOL CORE SERVICE 

Mr. LEONSIS. Thank you, Mr. Chairman. Chairman McCain, 

Members of the Committee. On behalf of America Online and our 

35 million worldwide members, I would like to thank you for the 

opportunity to testify before the Committee on the issue of unsolicited commercial e-mail. My name is Ted Leonsis, and I am Vice 

Chairman of America Online and President of the AOL Core Service, and as one of the early pioneers in this industry, I am here 

today because I believe this issue is the most important matter 

that is facing us today, and that is not a personal opinion. That 

comes directly from the hearts and minds of our members. 

I would also like to thank the fellow panelists for being here 

today, especially FTC Commissioners Orson Swindle and Mozelle 

Thompson for hosting a very timely workshop on spam earlier this 

month, and you will enjoy the tapes. It was at that forum where 

we made an announcement that to me was a shocking reflection of 

how bad things had truly gotten when it comes to the online medium that we helped to create, and the rising tide of spam. 

On April 30, we announced that our company was blocking up 

to 2.4 billion spam e-mails in one day from being delivered to our 

members. That amount is double the number of spam e-mails we 

had blocked in one day from just 8 weeks earlier, on March 5, and 

over four times the amount of spam we blocked since early December. 

On a yearly basis, and this is mind-boggling, that means we are 

now blocking almost 24,000 spam e-mails from going to each one 

of our members’ e-mail inboxes. 

And to give you some more context, if a standard business-size 

envelope represented each spam e-mail we were blocking, and 

59 

every day, every single day you laid those envelopes end to end, 

they would stretch around the earth four times and then on to the 

moon, but this is more than just sheer raw numbers. There is raw 

anger that spam generates from our members that has forced us 

and me personally to declare that the worst spammers are public 

enemy number 1, and we now know that canning the spam remains the priority, number 1 issue for online consumers today, and 

our members tell us, they go out of their way to tell us how much 

they hate spam every day on our service. 

We put a report spam button on our AOL software that came out 

in the fall and today more than 9 million receipts will come from 

our members. They are forwarding spam to help us block more and 

more of it right at our servers. Those are more than 9 million individual pleas from our members for action on spam, and as far as 

I am concerned, we are hearing them loud and clear, but even 

though our members are reporting more spam to us then ever before, and even though we are blocking more spam from getting to 

our members than ever before, it is clearly not enough to stop the 

rot of the e-mail tool that has become so central to our people’s 

daily online lives, and that is why we are all here today. We really 

need your help. 

We are not just at a crisis period, but we are at a point now 

where the very tool that is the core communication point in the online world is under attack. In short, we are witnessing a serious 

threat to consumer confidence in the e-mail function, and if that 

happens, it will lead to an erosion of faith in the online medium 

in general, and that would be a crime. That is why we applaud everyone here for stepping forward. You would have had and will 

continue to have a very critical and timely role to play in the effort 

to eradicate this scourge of spam. 

This is an issue that begs for attention but more importantly 

begs for action. We recognize better than anyone that there is no 

silver bullet that is going to kill spam on the Internet. It is everywhere, and no one owns the spam problem and no one will have 

the solution. We are in this together, Government, our competitors, 

our consumers, the entire industry. Every constituent that is online 

this matters to, and we are responding in AOL forcibly and comprehensively to the spam attack and believe we are rising to the 

occasion to defend our members in five key areas, and these are all 

pillars of our plan to battle against spam. 

First, we are and will continue to invest in providing the very 

best software tools to empower members to fight back against spam 

and spammers, such as the report spam button in customizable 

mail controls on our 8.0 software. 100 days after that announcement, we released a new version of our software called 8.0 Plus, 

and made it very easy for our members to move into a mode where 

they would only receive e-mail from people that they knew, so we 

have listened to the FTC and that capability is already built in. 

Second, we are constantly updating and strengthening the antispam filters that we own and operate at our server level, and we 

use our daily member feedback to do so. They are providing us 

with the lists, and we are listening and responding technically. 

60 

Third, we are working with State and Federal-level policymakers 

to ensure that the public laws stay abreast of and involved with 

the ever-changing, even more complex nature of spam. 

Fourth, we are playing offense legally. We have filed civil lawsuits against over 100 individuals and corporations who spam our 

members, and we are raring to go to do it with more. 

And fifth, we are working across the industry with key stakeholders such as Earthlink, Yahoo, and Microsoft, no small feat for 

AOL to do, in an effort to share resources, collaborate on technical 

solutions and set industry guidelines to beat these spammers, but 

even with all that, right now it is not enough, and so we are constantly seeking to advocate newer, tougher weapons against what 

I like to call the leadership targets in this war on spam, and that 

is where I believe you and Congress can step in with strong antispam legislation. 

We need bigger mallets in this online version of Whack-a-Mole 

that we are playing to go after the worst spam offenders, namely 

the outlaws and the kingpins of the spam world, and I am talking 

about those spammers who systematically and perseveredly send 

spam using fraudulent and invasive methods, those who mislead, 

lie, and falsify with disdain and disregard for any law or measure 

of decency. They need to get what they deserve, criminal penalties, 

felony counts, and jail time. 

I pointed to the recently unveiled Virginia anti-spam law, which 

is now the toughest in our nation, and the criminal penalties it 

contains, as well as the asset forfeiture provision as to a good starting point for Federal action. 

At the same time, we cannot allow these spam evildoers to represent in any way appropriate, legitimate, and practical marketing 

via e-mail. That is why, in addition to the remedy I just mentioned 

for outlaw spammers, we would all like to see a Federal bill established of rules of the road on the Internet for marketers who legitimately communicate online with consumers. 

If there is ever an idea whose time has come, it is stronger, 

meaningful anti-spam legislation with this two-pronged approach. 

Give law enforcement the tools to seek criminal and felony penalties against the very worst offenders on spam, and let the good 

practitioners of e-mail marketing be guided by a set of standards 

that we will all abide by. 

I know this is a tall order, but we will continue to play our part 

and invest and do our best to innovate and constantly give our 

members better anti-spam tools, seek more and more technological 

solutions, make our anti-spam filters even better so we can block 

more spam, and also work across the industry in a collaborative 

and cooperative way without regard to competitive boundaries. I 

am calling for us to work together in a multifaceted way in a more 

comprehensive approach, but we really need all of you by our side 

every step of the way. Do not let the spammers get away with it, 

and we have to act now. 

We are so pleased that Senators Burns and Wyden have taken 

such a strong and active interest in this issue, and we look forward 

to continuing to work with them and other Members in crafting 

legislation that will really help. I thank the Chairman and Members of the Committee. 

61 

[The prepared statement of Mr. Leonsis follows:] 

PREPARED STATEMENT OF TED LEONSIS, VICE CHAIRMAN, AMERICA ONLINE, INC. 

AND PRESIDENT, AOL CORE SERVICE

Chairman McCain, Senator Hollings, and members of the Committee, on behalf 

of America Online, Inc., I would like to thank you for the opportunity to testify before the Committee on the issue of junk e-mail—or ‘‘spam.’’ My name is Ted Leonsis, 

and I am Vice Chairman of America Online, Inc. and President of the AOL Core 

Service. 

I would like to tell you a little bit about the nature of the spam problem and its 

effect on ISPs and Internet users, as well as some of the things that AOL is doing— 

along with our other industry colleagues—to help address this issue. But first, I 

would like to commend you for holding this hearing and taking a forward-looking 

approach to the spam problem at such a critical time. We believe that there is a 

strong and important role for government to play on this issue, and we are anxious 

to work with you to find a solution to this crisis. 

Spam is one of the biggest problems facing Internet users and Internet service 

providers (ISPs) today. Junk e-mail clogs the arteries that carry communications 

across the Internet—misappropriating the network and resources of ISPs, and negatively affecting the online experience of Internet users. And because junk e-mailers 

do not bear most of the costs of sending their millions of messages, consumers and 

ISPs must shoulder the majority of the expense and burden of handling spam. Moreover, much of the mail contains objectionable or misleading advertisements. Consumers are being bombarded with offensive, deceptive, annoying e-mail; and legitimate commercial e-mail that consumers might want to read is being lost in a sea 

of junk. Clearly, spam is a significant business and consumer issue that needs to 

be addressed. 

While spam has caused problems for ISPs and consumers for years, it has grown 

exponentially in recent months. Spam now accounts for 60–80 percent of all mail 

coming in from the Internet to AOL members, and AOL estimates that the overall 

volume of spam is doubling at least every four to six months. Spam is costing U.S. 

businesses in excess of $10 billion annually, clogging the Internet and overwhelming 

e-mail service providers (see Ferris Research at www.ferris.com). For everyone in 

the online world, spam is a burden that has reached crisis proportions—and it’s only 

getting worse. 

Fighting spam has become a serious quality of life issue for everyday consumers. 

At AOL, we’re listening to our members and have declared spammers to be ‘‘Public 

Enemy #1.’’ AOL has taken a number of important steps over the past few months 

to fight back against spam, basing our actions on the complaints and concerns of 

our members. 

First, we have deployed strong technologies across our network to block and filter 

spam. Our anti-spam filters are now blocking up to 2.4 billion pieces of unwanted 

mail per day, which means we are stopping almost 70 spam e-mails per account per 

day from landing in the e-mail inboxes of our members. And we’ve fine-tuned technology that stops spam before it happens by preventing spammers from gathering— 

or ‘‘harvesting’’—e-mail addresses from AOL areas. 

Second, we’re enlisting our members in this fight by giving them new tools that 

make it easier than ever to block spam and report spammers. Our popular ‘‘Report 

Spam’’ button has resulted in a dramatic increase in the amount of spam being reported directly to AOL by its members—we now receive upwards of 9 million reports 

of unwanted e-mail per day. AOL’s Mail Controls are easy to use and allow our 

Members to block e-mail from specific mail address or entire domains, or to create 

a ‘‘permit list’’ of addresses from whom they will accept mail. We’re also providing 

our members with important consumer safety tips that can help them reduce spam 

and improve the security of their online experience—particularly in the broadband 

environment, where it is critical that consumers know how to protect themselves in 

the world of ‘‘always-on’’ high-speed connections. 

Later this year we will introduce new spam identification tools that will be personalized for each member, so members can decide for themselves what is unwanted 

mail. And we will strengthen our already powerful Mail Controls, offering more 

ways stop spam before it reaches the inbox. In addition, AOL will—in keeping with 

our longstanding commitment to providing strong Parental Controls—take special 

steps to help provide kids on AOL with a safe, spam-free experience. 

In addition to the technology tools we use and provide to our members, we’re also 

joining with other ISPs in waging war against spammers in court. Just recently, 

AOL filed lawsuits against over a dozen companies and individuals responsible for 

62 

sending 1 billion spam e-mails to our members. We’ve taken more than 100 individuals and companies to court over the past few years, resulting in millions of dollars 

in monetary penalties against spammers. We’re supportive of the actions that 

Earthlink and other ISPs have taken to fight spam on the legal front, and we look 

forward to finding new ways that industry can work together to bring spammers 

to justice. 

We’re also building alliances with others in our industry to think creatively and 

constructively about how to craft and implement real solutions to the spam problem. 

Just last month we joined with Microsoft and Yahoo! to announce a commitment 

to work together and with other industry stakeholders to combat spam. The group 

will initiate an open dialogue to drive the development of open technical standards 

and industry guidelines that will help fight spam, as well as discussing ways to cooperate with law enforcement efforts against large-scale spammers. 

And finally, we’re working with policymakers to support efforts to reduce unwanted e-mail. For example, we worked with Virginia legislators, the Attorney General, and the Governor to get a tough new law enacted in Virginia earlier this 

month that would provide criminal penalties for spammers who send junk e-mail 

by fraudulent means. We were also honored to participate in the spam workshop 

sponsored by the FTC several weeks ago, which served as a lively forum for debate 

and discussion about the complexities of the spam problem and how it can be addressed. 

Yet despite these efforts, spam remains a problem for service providers and their 

customers, particularly because many spammers use fraudulent transmission tactics—such as forging e-mail addresses and Internet domain names—to circumvent 

filters that are designed to allow ISPs to manage their mail load and empower consumers to exercise choice. In fact, we believe that these ‘‘outlaw spammers’’ (those 

who engage in fraud) are the primary cause of the overall spam problem. 

The ‘‘outlaw’’ spam problem includes: 1) e-mail that is sent using falsified means 

of technical transmission; 2) e-mail sent using hacked e-mail accounts; and 3)e-mail 

sent by spammers who intentionally abuse legitimate e-mail service providers by 

registering for multiple e-mail accounts or domain names using a false identity for 

the sole purpose of transmitting spam. ‘‘Outlaw’’ spam has increased alarmingly in 

the past year, and we believe that this dramatic growth underlies the astonishing 

increase in overall spam volume. These spammers are hijacking the computer resources and bandwidth of private consumers and businesses large and small, threatening to overwhelm the entire online medium. 

With the spam problem reaching crisis proportions, we believe that government 

can play a strong role in helping fight spam—both through increased enforcement 

efforts and through the enactment of new laws to target spam. AOL believes that 

Federal legislation can serve two purposes in helping to fight spam. First, it can 

help set baseline rules of the road for legitimate marketers who use the e-mail medium to reach consumers. Such rules, combined with industry standards and new 

spam-fighting technologies developed by relevant stakeholders, will help to ensure 

that marketers use e-mail responsibly and will also provide legitimate businesses 

with some clarity regarding the legal obligations governing their marketing operations. 

Second, we believe that government action is critical to deterring ‘‘outlaw’’ 

spammers. Strong and effective laws—including tough criminal penalties—must be 

put in place to pursue and prosecute spammers who use fraudulent transmission 

tactics. The newly amended Virginia Computer Crimes Act is an example of a law 

that gives ISPs and law enforcement powerful tools for fighting ‘‘outlaw’’ spam. The 

Act calls for enhanced criminal penalties if, for instance, spammers employ minors 

to send spam or derive significant revenue from sending large-scale spam. This statute provides another way for law enforcement and service providers to take direct 

aim at ‘‘outlaw’’ spammers, using the law to put them out of business. 

We hope that Congress will follow Virginia’s lead by enacting legislation that will 

target ‘‘outlaw spam’’ by imposing stiff penalties on spammers who engage in techniques of fraud and falsification. Such legislation is needed not only to stop existing 

abuses, but also to safeguard new e-mail technologies that outlaw spammers may 

try to circumvent. We are pleased that many Members of Congress—including Members of this Committee—have taken an interest in the spam problem and are working to advance legislative solutions. 

In the meantime, AOL is committed to maintaining a leadership role in the fight 

against spam. The goodwill and trust of our members depends on our continued 

focus on developing solutions to this problem. AOL will to continue to pursue strong 

enforcement actions and innovate our spam fighting tools—putting our members in 

even greater control. But ultimately, we believe the spam battle must be fought on 

many fronts simultaneously in order to be successful. From technology to education, 

63 

from legislation to enforcement, industry and government can work together to reduce spam significantly and give consumers control over their e-mail inboxes. 

We applaud the Committee for examining this issue at such a critical time, and 

we look forward to working with you and other lawmakers to stop spammers in 

their tracks. 

Thank you for the opportunity to testify; I am happy to answer any questions you 

may have on this topic. 

The CHAIRMAN. Thank you. Mr. Salem, welcome. 

STATEMENT OF ENRIQUE SALEM, PRESIDENT AND CEO, 

BRIGHTMAIL INC. 

Mr. SALEM. Thank you, Mr. Chairman and Members of this distinguished Committee, for allowing me to address you on this topic 

of unsolicited commercial e-mail, often referred to as spam. I am 

Enrique Salem, Chief Executive Officer of Brightmail Incorporated. 

Today, our software process is approximately 10 percent of the 

world’s Internet e-mail for our customers. E-mail has become a 

ubiquitous form of communication for businesses and personal use. 

Spam is flooding our inboxes and it is threatening the viability of 

e-mail as a communication tool. It undermines consumer confidence 

and threatens the future of e-mail and online commerce. 

The growth curve of spam has been steep over the last 5 years. 

Brightmail has seen an increase of more than 900 percent in the 

number of unique spam attacks per month, dating from April 2001 

to April 2003. Attacks can have anywhere from 10 to tens of millions of messages that span a few hours to many days. Over the 

same period, the amount of unsolicited commercial e-mail has increased from a few messages to approximately 46 percent of all 

Internet e-mail, and that is a conservative number. 

The numbers are actually growing very, very rapidly, and we believe that by the end of this year, it will be more than 50 percent. 

The current volume of spam being sent has a significant cost to 

ISPs and businesses. Spam is currently the number 1 complaint for 

many ISPs, and is negatively impacting customer satisfaction while 

driving support costs and infrastructure costs. 

On the business front, a recent report from Ferris Research esti- mates that spam costs U.S. businesses $10 billion a year in lost 

productivity, bandwidth, and storage costs. Businesses face an additional liability by allowing offensive and fraudulent content to 

reach employees. Adult content has increased more than 170 percent in the last 12 months. Unlike traditional direct mail or telemarketing, e-mail marketing has a very low marginal cost. As a result, despite extremely low response rates, spammers can make a 

profit. The more e-mails a spammer can send, the greater his profit, while costs remain nearly constant. 

The Internet does not know geographic boundaries. 90 percent of 

the spam hitting our probe network is untraceable, or uses some 

form of deception to hide its origin. In many cases, this is accomplished by sending the mail through unsecured open relays and 

open proxies that are spread out across the world. Of the 10 percent that is traceable, 60 percent claims to be from Europe, with 

16 percent claiming to be from Asia. 

Spammers will continue to use deceptive techniques to evade filters. We are starting to see an increasing amount of corporate identity theft, where spammers send mail using well-known brand 

64 

names in an attempt to evade filters and reach user inboxes. A consequence of this technique is that less dynamic spam filters can 

blacklist legitimate corporate domains in a misguided attempt to 

fight spam. 

The sheer volume of spam is also having a direct impact on legitimate direct marketers. The messages are being lost in a sea of 

spam. Overzealous filters now block an increasing amount of legitimate mail. In many cases, it is inappropriately deleted or placed 

in a bulk mail folder, which reduces the response rates to legitimate marketing campaigns. It is important to note that spam is invading other forms of electronic communication, including Instant 

Messaging and wireless devices. One only needs to look at what 

has happened in the international wireless markets to see that 

spam has become a very serious problem on cell phones, such as 

in Japan and on the NTT DoCoMo Network. We should not exclude 

these other valuable communication tools from consideration, because the same problems affecting e-mail today will soon affect 

these other forms of communication. 

I am here to tell you we will solve the spam problem. The solution will require strong legislation, cooperation between direct marketers, ISPs, and technology providers. It will require legislation, 

but there are limits to what laws alone can do. Strong laws can 

serve as a deterrent to spammers. We need Federal laws that prohibit deception in e-mail headers. There also needs to be a valid 

way to opt out, but we still need to define what it means to opt 

out. What are we opting out of? We need to prohibit the sale of 

tools to harvest e-mail addresses, as well as the sale of e-mail lists 

that have been inappropriately created. 

Beyond spam filtering, technology will be required to identify legitimate e-mail. There will need to be a set of best practices and 

guidelines defined and managed by industry coalitions that are followed by legitimate direct e-mail marketers, allowing us to more effectively block spam and allowing legitimate mail to be successfully 

delivered, preserving e-mail as a viable communications tool. 

Thank you for the opportunity to comment and participate in 

this important discussion. 

[The prepared statement of Mr. Salem follows:] 

PREPARED STATEMENT OF ENRIQUE SALEM, PRESIDENT AND CEO, BRIGHTMAIL INC. 

Spam Problem Overview 

E-mail has become a ubiquitous form of communication for both business and personal use. With e-mail has come spam. Today, spam is spreading in such staggering 

amounts—flooding both corporate and personal inboxes—that it now threatens the 

viability of e-mail as a primary communication tool. Unsolicited commercial e-mail 

(UCE), commonly known as spam, has reached epidemic proportions. Analyst firm 

IDC currently estimates that 7.3 billion pieces of spam are sent each day with 3.9 

billion of those sent in North America. 

The growth curve has been steep. Over the last 5 years, we have seen the amount 

of unsolicited commercial e-mail increase from a few messages to approximately 46 

percent of all Internet e-mail. Brightmail predicts that by December of 2003 spam 

will become more than 50 percent of all Internet e-mail. It has become a serious 

problem for Internet Service Providers (ISPs), businesses and individuals. 

Unlike direct mail or telemarketing, e-mail marketing has very low marginal cost. 

As a result, despite extremely low response rates, spammers can make a profit fairly easily. The more e-mails a spammer can send, the greater his profit, while the 

cost remains nearly constant. Bulk e-mailers are sending between 80 and 100 million messages a day. This both explains the alarming growth rate of spam and 

65 

makes it more frightening—there is no financial disincentive for flooding the Internet with more and more spam. 

Costs to ISPs and Businesses 

A recent Gartner Group study on spam estimates that spam costs an ISP with 

1,000,000 users $7 million per year. Spam is currently the number one complaint 

for many ISPs and is negatively impacting customer satisfaction while driving up 

support and infrastructure costs. Businesses are also not immune from the costs. 

A 2003 report by Ferris Research estimates that spam costs U.S. businesses $10 billion/year in lost productivity alone. Businesses must also add additional storage and 

bandwidth to handle the increase in e-mail traffic due solely to spam. Lastly, businesses face an additional liability—allowing offensive and fraudulent content that 

is often a part of spam to reach employees. Adult content has increased more than 

170 percent in the last 12 months and scams have nearly doubled in the same time 

period. These are concerns that go beyond the IT department and into the human 

resources arena. 

Costs to Direct Marketers 

Another significant consequence of the sheer volume of spam being sent is that 

over zealous filtering attempts are now blocking an increasing amount of legitimate 

mail. In many cases it is improperly deleted or placed in a bulk mail folder reducing 

the response rates to legitimate marketing campaigns. 

Spam is a large and growing problem 

As seen in Chart 1 below, Brightmail has seen an increase of more than 900 percent in the number of unique spam attacks/month from April 2001 to April 2003. 

A spam attack is a unique grouping of messages based on their content—for example, Herbal Viagra. Spammers will inject random content into each message to attempt to confuse filters by making each message that they send appear to be different. Attacks can have anywhere from ten to tens of millions of messages and can 

last from a few hours to many days. 

Chart 1 


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Spam is becoming increasingly offensive or fraudulent 

As noted in Charts 2 and 3 below, from April 2002 to April 2003, Brightmail has 

seen ‘‘adult’’ spam increase by more than 170 percent and spam categorized as 

‘‘scams’’ nearly double. These offensive e-mails are troublesome and costly for consumers as well as for businesses. 

Charts 2 & 3 


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Spam is threatening the viability of e-mail 

As seen in Chart 4 below, over the past two years, both spam and e-mail have 

grown. However, spam comprises a greater and greater percentage of the total 

amount of e-mail that is sent each year, which is threatening the viability of e-mail 

as a communications tool. 

Chart 4 

Spam is an International Problem 

Much of the spam reaching U.S. inboxes is routed through other countries. The 

majority of spam is untraceable (90 percent), but of that spam that does claim to 

come from a certain region of the world, the majority comes from Europe—with the 

Russian Federation comprising 10 percent—and Asia—with China leading Asia. A 

key point to make is that even if a spam message claims to originate in China, it 

very well could have originated in North America or somewhere else. This point has 

implications as we consider the impact of various state and Federal spam legislation. 

Chart 5 


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Tracking Spammers is difficult 

Spammers often obfuscate their true location by enlisting open relays or proxy 

servers throughout the world. Trying to track down the true origin of a known spam 

message is often quite difficult, as demonstrated in Exhibit 1 below. 

Exhibit 1 

Use of Open Proxies 

Spammers aggressively use technology to hide their tracks. A perfect example is 

the growing use of open proxies; open proxies are misconfigured servers that allow 

spammers to generate large volumes of e-mail that are not easily traceable to the 

actual sender. There are many thousands of open proxy servers available to 

spammers at any given time and a great deal of spam flows through these servers— 

both in the U.S. and overseas. 

Changing Techniques to Reach Inboxes 

Spammers have moved beyond simple text-based e-mail to entice end-users to 

click through. One such technique is using HTML-based e-mail. An example of a 

recent HTML-based spam message appears to the recipient as follows: 


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Exhibit 2 

When in reality, the HTML code behind this seemingly benign image is collecting 

valuable information for the spammer. 


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Spam Can Lead to Digital Identity Theft 

Spammers also employ well-known brand names in an attempt to get end-users 

to open e-mails. Not only does this perpetrate the spam problem, it also does considerable damage to the reputations of companies. 

We see spam from global corporations that was actually sent out by a spam shop 

halfway around the globe. These innocent corporations face more than the wave of 

bounced messages and angry responses from the spammed. This type of corporate 

identity theft can severely damage a company’s worldwide brand since spammers 

have global reach. 

Additionally, some misguided attempts to fight spam result in building blacklists 

that often include the domain names of these victims of domain identity theft. These 

blacklists further the damage done by the open relays and falsified headers of 

spammers when subscribers to these blacklists can no longer receive e-mail from the 

legitimate enterprises. Domain names are an intrinsic part of a corporate brand. 

The theft of these names for mass mailing of unsolicited e-mail has hurt some companies already and the trend may grow in the months and years ahead. 

Corporations have a responsibility to their employees and shareholders to take 

measured steps in securing their messaging systems. In fact, as liability cases do 

make their way into the courts, the extent to which corporations can demonstrate 

that they made ‘‘best efforts to protect against spam’’ will have a large bearing on 

the outcomes. 

In the header information in Exhibit 3 below, a spammer has used two wellknown company names to trick the recipient into thinking that the e-mail is from 

a trusted source, when in fact it is just an attempt to obfuscate the true identity 

of the sender. 

Exhibit 3 

Spam: Moving Beyond E-mail 

Wireless Spam 

There is a huge impending need for anti-spam protection in the mobile/wireless 

environment. Wireless e-mail produces a unique set of threats from spam, including 

volume issues when wireless users receive large amounts of spam. Viruses and 

worms can harm or temporarily paralyze PDA devices or the applications that run 

on them. Cell phones are particularly vulnerable to dictionary attacks done by 

spammers using phone numbers, with the advent of text messaging and SMS. 

There is currently more of a need for anti-spam protection for wireless devices in 

foreign markets than in the U.S. The highest risk to wireless spam and viruses exists in Asia and Europe, but the need in the U.S. for protection is growing. We can 

see the future for U.S. wireless in overseas experiences as they have adopted wireless technology more rapidly. One way that spam is affecting wireless communications overseas is by causing carriers to pay back their own customers for each spam 

message received. Since carriers like NTT DoCoMo in Japan charge for incoming 

messages, customers were at first paying their carrier for the pleasure of receiving 

and having to delete spam from their own devices. Now DoCoMo refunds customers 

for spam messages received, which is detrimental to DoCoMo’s bottom line. 

Additional costs of wireless spam are passed on to end-users. With wireless messaging pricing models, wireless users must pay for each message and, often, each 

line of content within that message. With unwanted messages flooding wireless devices, end-users will no longer find technologies like SMS a viable mode of commuVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00074 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\85548.TXT JACKIE

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nication. With the continued adoption of wireless communications in the U.S. will 

come a dramatically increased need for wireless anti-spam and anti-virus technology, to protect the end user and the provider’s bottom-line. As wireless adoption 

continues, spammers will increasingly target wireless users with spam, making for 

an expensive and very inconvenient dilemma. As spam invades PDAs, cell phones 

and the like, wireless carriers will have to block spam or face customer churn and 

costly refunds for unwanted wireless spam. 

Instant Messaging (IM) Spam 

Spam is also infiltrating the desktops of business and home users via another 

popular communication tool—Instant Messaging (IM). As more businesses use IM 

to communicate with business colleagues who are offsite or traveling, spam via this 

route has some of the same negative impacts that it does via e-mail—productivity 

issues and potential liability issues for offensive content that is delivered via IM. 

Exhibits 4 and 5 below are examples of recent IM spam that were received by 

business users. Exhibit 4 offers a common pitch to lose weight while Exhibit 5 contains more offensive content. Spam via IM is of particular concern to parents whose 

children use IM to communicate with friends. 

Exhibit 4 


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Exhibit 5 

Impact of Current Spam Legislation 

State Legislation 

As of April 2003, twenty-nine (29) states have spam control laws. In July 1997 

Nevada became the first state to enact spam control legislation (law amended in 

2001 and 2003). Nevada law states that it is illegal to send unsolicited commercial 

e-mail unless it is labeled ‘‘ADV’’ or ‘‘ADVERTISEMENT’’ at the beginning of the 

subject line, and includes the sender’s name, street address, and e-mail address, 

along with opt-out instructions. 

Similar spam control legislation was passed in California in September 1998. California law currently states that unsolicited commercial e-mail messages must include opt-out instructions and contact information, and opt-out requests must be 

honored and that certain messages must contain a label (‘‘ADV:’’ or ‘‘ADV:ADLT’’) 

at the beginning of the subject line. Only a small percentage of the messages 

Brightmail processes each month uses these labels, partly because less sophisticated 

spam filters were identifying messages with these marks and partly because 

spammers do not abide by these U.S. state laws since they are not sending spam 

from these states 

Indiana and New Mexico and Virginia are the states to most recently pass spam 

related legislation, doing so in April 2003. Virginia’s recently updated law has received a great deal of attention due to the stiff penalties for sending spam from 

within the state of Virginia, including giving the authorities power to seize assets 

earned from sending bulk unsolicited e-mail pitches while imposing up to 5 years 

in prison for violators. 

Have these state laws had an impact on the volume of spam? Not really—spam 

has continued to increase dramatically over the past few years, from being an annoyance to a serious threat to the viability of e-mail. Part of the problem has to do 

with enforcement of the laws—there have been limited number of cases that leverage current state law given that the burden of proof is often on the recipient and 

can be a heavy burden at best. An example of this heavy burden is the eTracks case 

that is currently being litigated by a San Francisco-based law firm, Morrison and 

Foerster LLP. States have limited budgets and those dollars are being allocated to 

enforcing laws that more directly impacts the safety and well being of its residents. 


521SALEM11.eps
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Foreign Spam Legislation 

We’ve seen spam legislation enacted in other countries, such as Japan where businesses delayed implementing technological solutions in hopes that Federal legislation would eliminate the spam problem. The law, enacted in October 2002, which 

required unsolicited text messages to be tagged, has had little impact on reducing 

the volume of spam sent via text messaging in Japan. 

The European Union (EU) has also passed legislation that its member states must 

comply with by October 2003, which requires that there must be a prior opt-in relationship between a sender and recipient in order for unsolicited e-mail or text messaging to be sent. Some member states are already in compliance, but the amount 

of spam that European e-mail users receive continues to climb. ISPs and European 

businesses are being forced to examine technological solutions to the spam problem, 

given that legislation is having little impact on the spam problem. 

Federal Spam Legislation 

There is hope that Federal laws will have the muscle required to combat the 

growing spam problem. The only current Federal restrictions on e-mail spam are the 

general criminal and civil fraud prohibitions. The FTC currently works with law enforcement to combat fraudulent e-mail scams, but at the moment 56 percent of spam 

does not fit the legal definition for fraud, according to a recent study by the FTC, 

and is therefore beyond current law. Given federal, state, and local law enforcement’s focus on preventing terrorism and their limited resources, they simply cannot 

keep up with spam. 

However, there are a number of proposals currently in front of Congress. 

These include the Can Spam Act (revised in April 2003) that would require unsolicited commercial e-mail messages to be labeled, require unsolicited commercial email messages to include opt-out instructions and the sender’s physical address, and 

prohibit the use of deceptive subject lines and false headers in such messages. Additionally, this bill would pre-empt any state laws that prohibit unsolicited commercial e-mail outright, but would not affect the majority of state spam laws. 

Another Federal initiative, the Computer Owners’ Bill of Rights (S. 563) would 

require the Federal Trade Commission to establish a ‘‘do-not-e-mail’’ registry of addresses of persons and entities who do not wish to receive unsolicited commercial 

e-mail messages. Additionally, the FTC would be empowered to impose civil penalties upon those who send unsolicited commercial e-mail to addresses listed on the 

registry. 

A third proposed law, the Reduce Spam Act, requires that unsolicited bulk commercial e-mail messages would be required to include a valid reply address and optout instructions, and a label (‘‘ADV:’’ or ‘‘ADV:ADLT’’, or other recognized standard 

identification). These requirements would apply to messages sent in the same or 

similar form to 1,000 or more e-mail addresses within a two-day period. In addition, 

false or misleading headers and deceptive subject lines would be prohibited in all 

unsolicited commercial e-mail messages, whether or not sent in bulk. 

Additionally, New York Senator Charles Schumer is planning to propose legislation that would incorporate many elements of other proposed legislation but also 

adds funding for enforcement of the ‘‘do not mail’’ registry component of his proposed legislation. 

From our point of view labeling has not helped to solve the problem, as it is a 

component of current state legislation. 

Benefits and Consequences of Legislation 

As with other public hazards, legislation can play an important role in the fight 

against spam. However, the extent of the problems often extends beyond state and 

country borders, preventing legislation alone from solving the problem. Consider the 

parallels in the offline world. While there are many ‘‘laws of the road’’ for drivers, 

still the public wants the auto industry to build as many safety features into cars 

as they possibly can. Similarly, while ‘‘Breaking and Entering’’ is a felony crime, 

homeowners use locks, bars and alarm systems to protect themselves from robbery. 

While legislation plays an important role in highlighting the seriousness of 

spamming, it is currently very difficult to enforce. Spamming is a global problem, 

with e-mail being routed around the globe and with wanton disregard for local regulations. Governments cannot impose regional laws on assailants outside their 

boundaries. Even when legal authorities can catch a spammer within their jurisdiction, the burden of proof can be daunting to prosecuting attorneys. 

Legislation may help to deter some spammers and provides a framework for prosecution and operations of both Direct Marketers and anti-spam companies. But, enforcement is key and will prove expensive and difficult. We need to alert this comVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00077 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\85548.TXT JACKIE
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mittee that is it critical to set the expectations of the public at the right level as 

far as the real impact of legislation on the volume of spam received. 

We believe the solution will involve a coordinated effort by Internet Service Providers, Direct Marketers, technology providers and law enforcement agencies. We 

will need to establish guidelines that outline e-mail best practices. These guidelines 

will need to be followed by direct marketers. It will become important to be able 

to identify legitimate direct marketers and there will need to be improvements in 

how direct marketers manage their lists. 

APPENDIX

Brightmail Corporate Overview 

Brightmail, the worldwide leader in anti-spam technology, provides anti-spam 

software that makes messaging secure and manageable. Founded in 1998, 

Brightmail protects the networks of enterprises, service providers, and mobile network operators by filtering spam, viruses and undesired messages at the Internet 

gateway. Brightmail currently serves many of the largest service providers, including AT&T WorldNet, EarthLink, MSN, and Verizon Online as well as leading enterprises that include eBay, Booz Allen Hamilton, Deutsche Bank, and Cypress Semiconductors. 

In April 2003, across its customer base, Brightmail software filtered over 60 billion messages and protected over 250 million mailboxes. 

Brightmail anti-spam architecture includes a patent protected ‘‘spam alert network’’ called the Brightmail Probe Network, a collection of more than a million 

decoy e-mail accounts. It is designed to attract unsolicited e-mail and has a statistical reach of more than 250 million e-mail accounts that provide Brightmail with 

a unique insight into the changing face of spam throughout the world. 

Brightmail is backed by world-class investors and partners and is headquartered 

in San Francisco, CA. 

Brightmail Architecture 

Probe NetworkTM

The Probe Network has a statistical reach of more than 250 million e-mail accounts. It consists of millions of decoy e-mail addresses that receive more than 300 

million spam messages per month. The data from the Probe Network is used for the 

real-time creation of anti-spam rules that are propagated to Brightmail customers 

every few minutes—24 hours per day. This patent protected technology is used to 

provide Brightmail customers with spam protection from the highly dynamic, ever 

changing, phenomena that spam has become. 


521SALEM12.eps
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U.S. Patent 6,052,709 (Apparatus and method for controlling delivery of unsolicited electronic e-mail) 

BLOC (Brightmail Logistics and Operations Center) 

• Operates 24 hours/day—365 days/year 

• Employs state-of-the-art tools to identify new spam attacks 

• Messages are automatically grouped into spam attacks and then rules automatically written against them 

• QA technicians verify the rules before they are made available 

• New anti-spam rule updates every few minutes 

• Rules are transmitted via a secure conduit (HTTPS) 

• Brightmail software is installed at the customer site 

• Brightmail’s extensive anti-spam rule set contains filters that automatically 

block identified spam attacks 

• Uses sophisticated grouping algorithms and pattern matching to identify and 

eliminate spam as it enters the e-mail gateway 

• Updated in real-time 

• Protection against spam is always current 


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The CHAIRMAN. Thank you, sir. Mr. Hughes. 

STATEMENT OF J. TREVOR HUGHES, EXECUTIVE DIRECTOR, 

NETWORK ADVERTISING INITIATIVE 

Mr. HUGHES. Mr. Chairman and Members of the Committee, I 

want to thank you for inviting me to testify. My name is Trevor 

Hughes, and I am the Executive Director of the Network Advertising Initiative. 

The NAI is a cooperative group of companies, and we are dedicated to resolving public policy concerns related to emerging technologies. In the past, the group has tackled issues such as self-regulatory solutions for online ad targeting and the use of web beacons 

online. We have now turned our focus to the growing problem of 

spam and to that end, a coalition has been formed within the NAI 

which is made up of 35 leading companies which are e-mail service 

providers. All of these companies are struggling with the onslaught 

of spam, as well as the emerging problem related to the deliverability of legitimate and wanted e-mail. 

Let me tell you a little bit about e-mail service providers. E-mail 

service providers enable their customers to deliver volume quantities of e-mail messages. These messages originate from the full 

spectrum of the U.S. economy. Large and small businesses, educational institutions, nonprofits, governmental agencies, publications and affinity groups all use the services of e-mail service providers to communicate with their customers, members, and constituents. 

While ESPs do serve the marketing needs of the marketplace, it 

is by no means the only customer group served. My members provide and deliver transactional messages such as account statements, airline confirmations, and purchase confirmations. They deliver e-mail publications and newsletters. They deliver affinity messages. The NAI and the e-mail Service Provider Coalition believes 

that much can be done to solve the problem of spam. At the most 

fundamental level, we believe that we need to create accountability 

within the e-mail delivery system. Spammers spend their days concocting new methods to obscure and falsify their identity in order 

to sneak past existing filters and avoid accountability. 

In many ways, our existing tools are merely reacting to the spam 

that is received today and not preparing for or combatting the 

spam that will arrive tomorrow. For this reason, we believe that 

the solution to spam exists in three components, a legislative component, a technological component, and a social component. I will 

address the technological component briefly, and then focus on the 

part of the solution for which we look to you, Federal legislation. 

Part of the problem in treating the spam epidemic is that 

spammers enjoy the impunity of anonymity. Spammers hide behind 

open relays, they spoof identities, and they deceive recipients with 

misleading from and subject lines. Make no mistake, the business 

of spamming is one of fraud and deception. 

The NAI recently proposed a technological blueprint to respond 

to this problem. Essentially the blueprint, called Project LUMOS, 

is designed to force senders of volume e-mail to incorporate authenticated identity into every message sent. The use of authenticated 

identity, along with a rating of sending practices over time, preVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00080 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
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vents spammers from hiding behind the technology of e-mail, and 

forces all senders to be accountable for their sending practices. We 

have engaged with many of the major ISPs and other groups on 

this effort, and we are greatly encouraged by the traction our effort 

has gained since it was launched 1 month ago. 

The ESP coalition strongly believes that strong, preemptive Federal legislation will be a critical component, but again not the only 

component in the successful resolution of the spam problem. In the 

United States today we have 28, and it could be 29 by now, states 

that have enacted some form of spam legislation. Unfortunately, 

the standards and definitions applied by these statutes are not consistent. As a result, we have a crazy quilt of different standards 

that has created an unnecessarily complex compliance system. 

To make matters worse, enforcement within the global medium 

of e-mail is exceedingly difficult when limited by state boundaries. 

We need preemptive Federal legislation to harmonize these standards and provide powerful tools to enforcement officials. 

We believe that the current spam bill before the Senate, the 

CAN–SPAM Act, strikes the appropriate balance with regard to 

preemption. The CAN–SPAM Act would allow for a national standard to be set for the delivery of unsolicited commercial e-mail. 

Given the incentives provided within the bill, most legitimate businesses will move to a fully consent-based model for e-mail delivery. 

This is particularly true where the standards set by the bill will 

be uniform across the entire country. To combat spammers, the bill 

provides strong enforcement tools for the FTC, the state Attorneys 

General, and to ISPs. We strongly support enforcement by all of 

these groups. 

One issue that has been raised in discussions regarding spam 

legislation and may be raised again is a private cause of action. 

Such a solution, while tempting, would do nothing to stop spam. 

Spammers spend their days looking for ways to technologically obscure their identity. Pursuing spammers requires enormous technological, financial, and investigative resources. Individuals do not 

have such resources, but Governments and ISPs do. 

We have a very real example of what a private cause of action 

means when included in a spam statute. In the state of Utah, a 

spam statute was passed last year that allows for a private cause 

of action in class action lawsuits. A single plaintiffs firm in Utah 

has now filed hundreds and by some accounts thousands of class 

action lawsuits under the statute, but the firm is not pursuing 

spammers. 

Given the cost and complexity of finding actual spammers, this 

firm has targeted leading companies and brands using law firm 

employees as plaintiffs and seeking out ‘‘gotcha’’ moments as the 

basis of their complaints. Perhaps most telling is the fact that 

there are no data to suggest that the amount of spam in Utah has 

been reduced by even one message. 

Another issue that has been raised in relation to spam is that 

of opt in versus opt out. Over the past few years, our industry has 

lost critical time debating this issue while spam has been allowed 

to proliferate. Let me make this perfectly clear. This debate, regardless of what standard is eventually adopted, will not result in 

the reduction of spam. A spammer’s stock in trade is in deception. 

78 

They do not care about whether they have permission from the recipient. They pay no heed to all of the existing state laws regarding 

spam. The most restrictive opt-in statute will do nothing to dissuade spammers from sending their messages. 

Again, the NAI is very supportive of the CAN–SPAM Act. We 

will continue to work with staff over a few technical details of the 

bill, but look forward to seeing a Federal law enacted this year. On 

behalf of the NAI E-mail Service Provider Coalition, I want to 

pledge that we will continue to work to fight spam and preserve 

e-mail with you and the members of your staff. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Hughes follows:] 

PREPARED STATEMENT OF J. TREVOR HUGHES, EXECUTIVE DIRECTOR, 

NETWORK ADVERTISING INITIATIVE

Executive Summary 

The NAI is a cooperative group of companies dedicated to resolving public policy 

concerns related to privacy and emerging technologies. In the past, the NAI has successfully launched self-regulatory solutions to online ad targeting, and the use of 

web beacons. The NAI has now turned its focus to the growing problem of spam and 

the related concern of deliverability of wanted e-mails. As part of this effort, a coalition has been formed within the NAI to represent the interests of e-mail service providers (ESPs). The E-mail Service Provider Coalition (‘‘ESP Coalition’’) is made up 

of 35 leading companies—all of which are struggling with the onslaught of spam, 

as well as the emerging problems related to the deliverability of legitimate and 

wanted e-mail. 

E-mail service providers enable their customers to deliver volume quantities of email messages. These messages originate from the full spectrum of the U.S. economy—large and small businesses, educational institutions, non-profits, governmental agencies, publications, and affinity groups all use the services of ESPs to 

communicate with their customers, members, and constituents. While ESPs serve 

the marketing needs of the business community, it is by no means the only customer group served. E-mail service providers also deliver transactional messages 

(such as account statements, airline confirmations, and purchase confirmations); email publications; affinity messages; and relational messages. Within the ESP Coalition, we estimate that our members provide volume e-mail services to over 250,000 

customers. 

The ESP Coalition sees spam as a threat to the long-term viability of the ESP 

industry. Indeed, spam presents a dire threat to all uses of e-mail—marketing, 

transactional, affinity and relational—as the continued growth of spam will lead to 

the widespread abandonment of e-mail as a communications tool. Put simply, the 

spam problem will critically damage the ESP industry if it is not curtailed. Consumers and businesses will not use e-mail if the system becomes so choked with 

misleading and deceptive messages that those messages that are actually wanted 

are lost in the fray. 

The ESP Coalition strongly supports legislation to respond to the growing menace 

of spam. We believe that strong preemptive Federal legislation will be a critical 

component (but not the only component) in the successful resolution of the spam 

problem. 

In the United States today, we have 28 states that have enacted some form of 

spam legislation. Many more are considering spam legislation in their current legislative sessions. Unfortunately, the standards and definitions applied by these statutes (and proposed in pending bills) are not consistent. As a result, we have a crazy 

quilt of differing standards and definitions that has created an unnecessarily complex compliance system. To make matters worse, enforcement within the global medium of e-mail is exceedingly difficult when limited by state boundaries. We need 

preemptive Federal legislation to harmonize these standards and provide powerful 

tools to enforcement officials. 

Federal legislation must carefully balance the legitimate use of e-mail against the 

need to respond to spam. E-mail represents one of the most powerful drivers of efficiency and productivity in today’s economy. Our response to spam must take into 

account and protect the widespread utility of e-mail. Overly restrictive or poorly 

79 

crafted solutions may end up ‘‘throwing the baby out with the bathwater’’ and damaging the very tool we hope to protect. 

The NAI is very supportive of the current spam bill proposed in the Senate (the 

CAN–SPAM Act). While we continue to work on some minor technical details within 

the bill—such as the length of time available for processing unsubscribe requests 

and definitional issues—we are encouraged by the fundamental structure and approach taken by Senators Burns and Wyden. We feel that this bill endeavors to balance the continued use of e-mail as a legitimate communications tool with strong 

standards and enforcement tools to prevent spam. 

Testimony 

Mr. Chairman and Members of the Committee, I want to thank you for inviting 

me to testify. My name is Trevor Hughes, and I am the Executive Director of the 

Network Advertising Initiative (NAI). The NAI is a cooperative group of companies 

dedicated to resolving public policy concerns related to privacy and emerging technologies. In the past, the NAI has created self-regulatory programs for online ad targeting, and the use of web beacons. The group has now turned its focus to the growing problem of spam and the related concern of deliverability of wanted e-mails. As 

part of this effort, a coalition has been formed within the NAI to represent the interests of e-mail service providers (ESPs). The E-mail Service Provider Coalition (‘‘ESP 

Coalition’’) is made up of 35 leading companies—all of which are struggling with the 

onslaught of spam, as well as the emerging problem related to the deliverability of 

legitimate and wanted e-mail. 

Let me begin my testimony by explaining the unique role that e-mail service providers play in the search for solutions to the spam problem. 

E-mail service providers enable their customers to deliver volume quantities of email messages. These messages originate from the full spectrum of the U.S. economy—large and small businesses, educational institutions, non-profits, governmental agencies, publications, and affinity groups all use the services of ESPs to 

communicate with their customers, members, and constituents. While ESPs serve 

the marketing needs of the business community, it is by no means the only customer group served. E-mail service providers also deliver transactional messages 

(such as account statements, airline confirmations, and purchase confirmations); email publications; affinity messages; and relational messages. 

The ESP industry is robust and growing. Within the ESP Coalition, we estimate 

that our 35 members provide volume e-mail services to over 250,000 customers. 

These customers represent the full breadth of the U.S. marketplace—from the largest multi-national corporations to smallest local businesses; from local schools to national non-profit groups and political campaigns; from major publications with millions of subscribers to small affinity-based newsletters. Even my local soccer association uses an e-mail service provider to deliver schedules and standings to the players in the league. 

Jupiter Research estimates that the e-mail marketing industry (which, again, is 

only a portion of the total spectrum of ESP customers) will grow in size to 2.1 billion 

dollars in 2003 (up from 1.4 billion dollars in 2002). By 2007, Jupiter estimates that 

the size of the e-mail marketing industry will reach 8.2 billion dollars. All of these 

numbers are for the U.S. market alone. Expanding the scope of this research to include all customers served by ESPs and foreign markets would increase these numbers significantly. 

But the size and importance of e-mail in the marketplace should not be measured 

by dollars alone. E-mail is indeed the ‘‘killer app’’. Over the past ten years, e-mail 

has been a strong driver of productivity and efficiency in the marketplace. It has 

also been an important social tool. E-mail has shortened distances in the world— 

allowing communication to occur with unprecedented speed and detail. E-mail has 

created affinity within groups that previously were too widely separated geographically to effectively recognize their common interests and positions. 

As an example of the importance of e-mail, a recent study by the META Group 

showed that, given a choice between e-mail or telephones, 74 percent of business 

people would give up their phones before e-mail. In other words, 74 percent of people now find e-mail to be more critical than the telephone in their daily work. 

The Threat of Spam and the Solution(s) to Spam 

The ESP Coalition sees spam as a threat to the long-term viability of the e-mail 

service provider industry. Indeed, spam presents a dire threat to all uses of e-mail— 

marketing, transactional, affinity and relational—as the continued growth of spam 

will lead to the widespread abandonment of e-mail as a communications tool. Put 

simply, the spam problem will critically damage the ESP industry if it is not curtailed. Consumers and businesses will not use e-mail if the system becomes so 

80 

choked with misleading and deceptive messages that those messages that are actually wanted are lost in the fray. 

I will not belabor the statistics on the growth of spam or the costs associated with 

handling spam. Surely all of the panelist can agree that we are presented with an 

enormous problem. Without an expedient solution, spam may end up killing the 

‘‘killer app’’ of e-mail. 

The media and marketplace have been replete with spam solutions for many 

years. Important vendors, such as Brightmail, have done a tremendous job at stemming the tide of spam. But the problem still exists and continues to grow. Increasingly, we are presented with the question: can anything be done? 

The NAI believes that much can be done to solve the problem of spam. At the 

most fundamental level, we believe that we need to create accountability within the 

e-mail delivery system. Spammers spend their days concocting new methods to obscure and falsify their identity in order to sneak past existing filters and avoid accountability. In many ways, our existing tools are merely reacting to the spam received today—and not preparing for or combating the spam that will arrive tomorrow. Stated differently, our efforts to cure spam are responding to the symptoms 

(the actual spam received) and not the cause (the lack of accountability on the part 

of spammers). 

So how do we create accountability within the e-mail system? 

We believe that the solution to spam exists in three components: legislative, technological, and social. Let me address the technological and social components quickly and then focus on the part of the solution for which we look to you: Federal legislation. 

The Technological Component 

Part of the problem in treating the spam epidemic is that spammers enjoy the 

impunity of anonymity. Spammers hide behind open relays, they spoof identity, and 

they deceive recipients with misleading ‘‘from’’ and ‘‘subject’’ lines. Make no mistake; 

the business of spamming is one of fraud and deception. 

The recent efforts of the FTC in relation to open relays and deception in spam 

should be commended. It is critical that we have strong deterrents to dissuade 

spammers from their trade. But the fundamental architecture of the Internet and 

e-mail protocols still allows for the deception to occur. 

The NAI recently proposed an architectural ‘‘blueprint’’ to respond to this problem. I will submit a description of the effort along with this testimony. Essentially, 

the NAI’s blueprint, called ‘‘Project Lumos’’, is designed to force senders of volume 

e-mail to incorporate authenticated identification into every message sent. The use 

of authenticated identity, along with a rating of sending practices over time, prevents spammers from hiding behind the technology of e-mail and forces all senders 

to be accountable for their sending practices. We have engaged with many of the 

major ISPs and other groups on this effort and are greatly encouraged by the traction our effort has gained since our launch just one month ago. 

Other technological solutions also hold promise. The NAI is actively working with 

other constituencies in the marketplace to bring about such solutions. I hope that 

we will have much more to share with you before the end of this year. 

The Social Component 

One part of the spam problem that has not been actively discussed is the need 

for consumer education around the appropriate use of e-mail addresses. 

The Center for Democracy and Technology (www.cdt.org) recently released a study 

on the consumer actions that result in exposure of e-mail addresses and, subsequently, spam. The results were compelling: the CDT report found that appropriate 

management of an e-mail address by the holder of that address can drastically reduce the amount of spam received. Further, the study found that there are a few 

actions that can create enormous amounts of spam. Specifically, the CDT reported 

that posting an e-mail address on a public website and posting an e-mail address 

in a public newsgroup or chatroom both resulted in huge amounts of spam. This is 

due to the use of ‘‘spiders’’ or ‘‘bots’’—programs that scour the web for e-mail addresses and harvest them into a spammer’s database. 

Clearly, one component in the total solution to spam is the education of consumers on issues such as those raised by the CDT report. If consumers understand 

those practices that result in spam, they will be much better able to control the 

amount of spam in their in-boxes. 

The Legislative Component 

The ESP Coalition strongly supports Federal legislation to respond to the growing 

menace of spam. We believe that strong preemptive Federal legislation will be a 

81 

critical component (but not the only component) in the successful resolution of the 

spam problem. 

In the United States today, we have 28 states that have enacted some form of 

spam legislation. Many more are considering spam legislation in their current legislative sessions. Unfortunately, the standards and definitions applied by these statutes (and proposed in pending bills) are not consistent. As a result, we have a crazy 

quilt of differing standards that has created an unnecessarily complex compliance 

system. To make matters worse, enforcement within the global medium of e-mail 

is exceedingly difficult when limited by state boundaries. We need preemptive Federal legislation to harmonize these standards and provide powerful tools to enforcement officials. 

We believe that the current spam bill before the Senate, the CAN–SPAM Act, 

sponsored by Senators Burns and Wyden, strikes the appropriate balance with regard to preemption. The CAN–SPAM Act would allow for a national standard to be 

set for the delivery of unsolicited commercial e-mail. Given the incentives provided 

within the bill, most legitimate businesses will move to a fully consent-based model 

for e-mail delivery. This is particularly true where the standard set by the bill will 

be uniform across the entire country. To combat spammers, the bill provides strong 

enforcement tools to the FTC, state attorneys general, and ISPs. We strongly support enforcement by all of these groups. 

As a coalition made up of legitimate businesses in the e-mail industry, the NAI 

also strongly supports the inclusion of an affirmative defense for good faith compliance efforts within the CAN SPAM Act. Such tools help to ensure that litigation is 

properly targeted towards true spammers, and offers important protections for businesses working diligently to maintain approved best practices. 

One issue that has been raised in discussions regarding spam legislation, and may 

be raised again, is that of a private cause of action. Such a solution, while tempting, 

would do nothing to stop spam and would definitely create a morass of litigation 

against legitimate companies. Spammers spend their days looking for ways to technologically obscure their identities. Pursuing spammers requires enormous technological, financial and investigative resources. Individuals do not have such resources, but governments and ISPs do. In fact, if a private cause of action existed, 

ISPs would be drawn away from their enforcements efforts by a flood of discovery 

requests generated through consumer litigation. 

We have a very real example of what a private cause of action means when included in a spam statute. In the state of Utah, a spam statute was passed last year 

that allows for a private cause of action and class action suits. A single plaintiffs’ 

firm in Utah has now filed hundreds (and by some accounts, over a thousand) class 

action lawsuits under this statute. But the firm is not pursuing spammers. Given 

the cost and complexity of finding actual spammers, this firm has targeted leading 

companies and brands—using law firm employees as plaintiffs and seeking out 

‘‘gotcha’’ moments as the basis of their complaints. Perhaps most telling is the fact 

that there are no data to suggest that the amount of spam in Utah has been reduced by even one message. 

Another issue that has been raised in relation to spam legislation is that of ‘‘optin’’ versus ‘‘opt-out’’. Over the past few years, our industry has lost critical time debating this issue, while spam has been allowed to proliferate. 

Let me make one thing perfectly clear: the debate over ‘‘opt-in’’ or ‘‘opt-out’’, regardless of what standard is eventually adopted, will not result in the reduction of 

spam. A spammer’s stock and trade is in deception. They do not care about whether 

they have permission from the recipient of the message. They pay no heed to all 

of the existing state laws regarding spam. The most restrictive ‘‘opt-in’’ spam statute 

will do nothing to dissuade spammers from sending their messages. 

A recent FTC study conveys this point succinctly. By reviewing a large body of 

spam received within the agency, the FTC estimated that fully two thirds of spam 

is fraudulent, misleading or deceptive. This means that the majority of spam is already violating an existing law in the United States. 

As currently written, the CAN–SPAM Act will provide important incentives for 

legitimate businesses to raise their e-mail standards. The NAI firmly believes that 

e-mail must be sent with the consent of the recipient, or within a pre-existing business relationship. Furthermore, we believe that e-mail should be sent with informed 

consent—meaning that recipients have clear and conspicuous notice as to the results 

of providing their e-mail address. This is a meaningful and workable standard. 

Again, the NAI is very supportive of the CAN–SPAM Act. We will continue to 

work with staff on a few technical issues details of the bill (such as the need for 

longer processing periods for unsubscribe requests), but look forward to seeing a 

Federal law enacted this year. 

82 

The Threat of Filtering and Blacklists 

Before I conclude today, I want to raise one growing problem in the fight against 

spam. While spam clearly represents a serious threat to the continued viability of 

e-mail, the problems created by some of the current tools used to combat spam are 

equally threatening. Internet Service Providers (ISPs) are aggressively building filtering technologies to limit the amount of spam entering their systems. Conceptually, this is a positive development. However, the spam filters currently in place 

are creating a new problem: wanted e-mail is not being received. 

According to a report by Assurance Systems, in the 4th quarter of 2002, an average of 15 percent of permission based e-mail was not received by subscribers to the 

major ISPs. Some ISPs had non-delivery rates that were startling: 

NetZero 27% 

Yahoo 22% 

AOL 18% 

Compuserve 14% 

AT&T 12% 

The same report for the 3rd quarter of 2002 showed an average of 12 percent nondelivery rate for the major ISPs—meaning that the filtering of permission based email increased 25 percent from the third to fourth quarters of 2002. Some of the 

e-mail campaigns within the Assurance Systems report had non-delivery rates as 

high as 38 percent. 

Non-delivery of wanted messages due to filtering (called ‘‘false positives’’ within 

the industry) represents an enormous threat to the ongoing viability of e-mail as 

an effective communications tool. The market will stop using e-mail for important 

communications if e-mail delivery is unreliable. It is critical that false positives be 

eliminated if e-mail is to survive as an efficient and productive means for communication. 

One of the main drivers in the false positive problem is the emergence and use 

of blacklists. These are lists of alleged spammers that ISPs—and any network administrator—can use to filter incoming e-mail. The blacklist operators build registries of IP addresses that they believe are associated with spam and make the lists 

available publicly. Currently, there are an estimated 300 blacklists in operation. 

Again, the concept of a blacklist may seem to make sense at first glance. Unfortunately, the reality of blacklists in today’s marketplace is far different. 

Many blacklists operate without standards and operate behind a veil of anonymity. For example, one of the leading blacklists, SPEWS (www.spews.org), offers no 

contact information: no phone numbers, no names, no addresses, and no e-mail address for the organization. The website has purportedly been registered in Irkutsk, 

Russia. SPEWS has no defined standards for posting to its blacklist—evidence has 

shown that a single complaint can result in the blocking of an entire range, or 

‘‘neighborhood’’, of IP addresses. Further, for those innocent senders that become 

listed on SPEWS, the only way to resolve the problem is to post their request for 

removal to a public spam forum available through Google (http://groups.google 

.com/groups?hl=en&lr=&ie=UTF-8&oe=UTF-8&group=news.admin.net-abuse.email). 

All of these efforts are designed to combat spam. But in their zeal to eliminate 

the problem, they have created a potentially disastrous ‘‘ricochet’’ effect: false 

positives. Going forward, our solution to spam must carefully balance the need for 

strong action against spammers with a determination to preserve the deliverability 

of legitimate e-mail. 

Conclusion 

The NAI believes that the problem of spam will be best resolved through three 

powerful forces: legislation (and enforcement); technology; and consumer education. 

Our group is actively working with ISPs and solutions providers to craft architectural solutions to spam that will drive accountability into the dark recesses of the 

Internet. We strongly feel that technology must be used to force spammers to identify themselves and be held accountable for their practices. We also believe that consumers must understand the need for careful management of their e-mail addresses. 

We could drastically reduce the amount of spam received by average consumers 

through educational efforts on what not to do with an e-mail address. 

But the technological and educational solutions are not enough. We need a strong 

Federal statute to raise the standards for e-mail practices across the entire country. 

Legitimate businesses will respond to such a statute by raising their practices to 

meet or exceed the standard set by law. Enforcement officials at both the state and 

Federal level and ISPs will have powerful tools to seek out and bring to justice those 

individuals responsible for spam. And we can do it while maintaining the balance 

necessary to preserve the legitimate use of e-mail. 

83 

Mr. Chairman, on behalf of the NAI E-mail Service Provider Coalition, I want to 

pledge that we will continue to work to fight spam and preserve e-mail with you 

and members of your staff. Spam is a complex problem and our efforts to craft solutions must be thoughtful, robust and effective. 

Thank you and I look forward to any questions you may have. 

The CHAIRMAN. Thank you. Mr. Rotenberg. 

STATEMENT OF MARC ROTENBERG, EXECUTIVE DIRECTOR, 

ELECTRONIC PRIVACY INFORMATION CENTER AND ADJUNCT 

PROFESSOR, GEORGETOWN UNIVERSITY LAW CENTER 

Mr. ROTENBERG. Thank you, Mr. Chairman and Members of the 

Committee. My name is Marc Rotenberg. I am Executive Director 

of the Electronic Privacy Information Center. We are a nonprofit, 

nonpartisan research organization here in Washington. We work in 

close association with the consumer and civil liberties organizations 

both in the United States and around the world. 

I think it is fair to say that there are few issues of greater concern to Internet users today than the growing problem of spam, but 

I think it is also fair to say that it is one of the most complex policy 

issues facing the Internet. Even though there is broad agreement 

about the tremendous cost and inconvenience that spam is placing 

on the use of the Internet, there is still important questions about 

the appropriate role of law and technology, the relationship between the Federal Governments and the states, and even the question of how best to ensure consumer protection with a problem that 

clearly has international dimensions, but all of these factors do not 

diminish the scope of the problem. 

As Chairman Muris stated at the public workshop last month, 

approximately 40 percent of e-mail messages today could be considered spam, and it is to be anticipated that in the next year the majority of e-mail traffic on the Internet will be spam. 

As Mr. Salem commented as well, it is also the case that spam 

will be migrating to new communication environments, including 

both Internet messaging and cell phone advertising, so the need to 

draw an effective line here with respect to the Internet has consequences as well for development of new industry and new consumer services. 

There are many factors that contribute to the problem of spam. 

As you all know, it is relatively easy and inexpensive to send a 

message to many, many people online. It is also obviously difficult 

to determine the origin of the messages, particularly for the most 

aggressive spammers. There are difficult jurisdictional problems, 

particularly with respect to international spam, and there are even 

some definitional problems associated with spam, as well as the 

fact that technical solutions which are being pursued aggressively 

by the ISPs are nonetheless imperfect. 

As one of the witnesses commented earlier, spam filters have the 

effect of both underblocking, which is to say, allowing messages to 

go through that the user does not desire, as well as overblocking, 

which means to exclude messages that the end user would like to 

receive. In almost any filter system, the end user has to download 

the e-mail and incur the cost and connection time to receive the 

messages before the filters are activated. 

84 

I wanted to focus briefly on what I think are the key policy 

issues in trying to find a solution to the spam problem, and I am 

going to draw both on the experience of list development on the 

Internet as well as previous efforts with legislation to protect privacy when similar problems have arisen, and I would like to point 

out first of all that I think if any case is clearly made for an optin provision, it is for online marketing. In fact, the traditions on 

the Internet indicate this, because as people who have been on the 

Internet for a while and understand the operations of lists, the best 

lists operate on an opt-in basis. 

People are provided the opportunity to sign up for the list. If 

their e-mail address changes, there are easy ways for them to 

change the e-mail address, and if they wish to be removed from the 

list, they can do so by quickly going to a web page or sending an 

unsubscribe message. These are the practices that are being followed by the best marketing firms online, as well as the companies 

that understand that permission-based marketing, marketing 

based on opt in, works particularly well in the online environment. 

Now, there is a good argument about whether or not it would work 

in the offline environment, but for the online environment, I think 

opt in is the right way to go. 

I would also like to suggest that on the question of enforcement 

means, the private right of action that is found in the Telephone 

Consumer Protection Act that gives individual consumers the opportunity to go to small claims court and seek a maximum, a maximum of $500, has proven to be an effective way of dealing with 

the problem of junk faxes and telemarketing, and I think a private 

right of action that provides limited damages is also a matter of 

fairness, because, of course, it is the end user who is being inconvenienced and burdened by the unsolicited marketing. 

Finally, on this critical issue of preemption, I am very sympathetic to the concerns of the industry groups about trying to comply 

with 50 different state statutes, but the reality is that it is the 

state Attorneys General who have been on the front lines of dealing 

with the spam problem, and it has been the state legislatures that 

have developed many of the most effective and innovative responses in response to the growing problem of spam, and I would 

like to caution you about the danger of basically telling the state 

legislatures and the state Attorneys General that the problem to 

spam will be found in Washington, and that the limited opportunities to go after spammers if a Federal preemption law was passed 

will essentially be eliminated. 

That having been said, I would like to thank you, Mr. Chairman 

and Members of the Committee, and particular Senator Burns and 

Senator Wyden, who I know have been doing a great deal of work 

on this issue for a number of years, for your efforts. Many people 

online will be very grateful to you if an effective, sensible solution 

can be found to the problem of spam. 

[The prepared statement of Mr. Rotenberg follows:] 

85 

PREPARED STATEMENT OF MARC ROTENBERG, EXECUTIVE DIRECTOR, ELECTRONIC

PRIVACY INFORMATION CENTER AND ADJUNCT PROFESSOR, GEORGETOWN

UNIVERSITY LAW CENTER

Summary of Recommendations 

• Continue to support strong enforcement action by the FTC 

• Promote international cooperation, particularly with consumer protection agencies 

• Recognize that many of the current spammers are likely subject to prosecution 

under current unfair and deceptive trade practices laws 

• Enact a Federal baseline that establishes an opt-in standard, gives consumers 

legal rights to go after spammers, and does not preempt state law 

• Anticipate that similar problems may arise with cellular phone advertising in 

the near future 

Statement 

Mr. Chairman, members of the Committee. Thank you for the opportunity to testify today about the problem of Unsolicited Commercial E-mail, or ‘‘spam.’’ My name 

is Marc Rotenberg. I am the Executive Director of the Electronic Privacy Information Center. EPIC is a non-profit, non-partisan research organization. We work in 

close association with a wide range of consumer and civil liberties organizations, 

both in the United States and around the world. 

There are few issues of greater concern today to users of the Internet than spam. 

Spam is also one of the most complex policy issues for the Internet. Even though 

there is broad agreement about the urgency of the problem, there are still questions 

about the appropriate role of law and technology, the relationship between the Federal Government and states, and even the question of how best to tackle a consumer 

problem that clearly has a significant international dimension. 

Scope of the Spam Problem 

As Chairman Muris noted at the recent FTC public workshop, the spam problem 

is increasing rapidly. In 2001 the FTC began to routinely collect spam. During that 

year, the FTC received an average of 10,000 messages per day. In 2002, that figure 

went up to 47,000 a day. The number has gone to 130,000 e-mails a day this year. 

As a measure of how fast a new e-mail address can attract spam, Chairman Muris 

reported that the FTC had seeded an e-mail address in a chat room. That e-mail 

address began receiving spam in eight minutes. 

It has been estimated that 40 percent of e-mail in the United States is spam, creating an annual cost of over $10 billion. These costs are incurred through lost productivity and the additional equipment, software and labor needed to deal with the 

problem. 

On spam, the interests of Internet users and the Internet industry are generally 

aligned. Only the Direct Marketing Association has expressed opposition to sensible 

opt-in legislation. However, as the recent FTC Workshop made clear, this position 

is simply not viable in the online world. Permission-based marketing, which relies 

on the affirmative consent of consumers, has always been a good business practice. 

Now it may be critical to stem the flood of undesired e-mail. 

Factors Contributing to Spam 

Several factors contribute to the spam problem. First, it is inexpensive and relatively simple to send spam to a very large number of Internet users. Unlike traditional junk mail, the marginal cost for each additional electronic message is essentially zero. Therefore, spammers are as likely to send to a million users as they are 

to a thousand. 

Second, the origin of spam is often difficult to determine. Spammers will frequently send messages from domains they do not own and in ways that conceal the 

source of the message. The spammers also show little regard for any effective list 

management. There is no meaningful effort to obtain consent or allow users to optout of undesired marketing. 

Third, spam raises difficult jurisdictional problems. Spammers may send messages from one state to another and even from one country to another. While there 

is general agreement across jurisdictions about the need to reduce spam, there are 

questions about how best to coordinate enforcement measures. 

Fourth, there are definitional problems associated with spam. Commercial marketers who engage in bulk e-mail advertising may be reluctant to concede that their 

messages are spam even though the vast majority of recipients find the messages 

burdensome and undesirable. Some Internet users may consider bulk political mail 

86 

as ‘‘spam,’’ though for both practical reasons and the First Amendment, it is appropriate to distinguish between commercial and non-commercial bulk mail. 

Fifth, technical solutions are imperfect. While ISPs have had some success identifying the source of spam, spammers rotate domains and even change the key terms 

in a message to avoid detection. Similarly, typical users find it difficult to adapt filters and other techniques to accurately remove spam. There is always the risk that 

a filter will delete messages that the user needs to receive. Other techniques, such 

as challenge and response, may be too cumbersome for most users. 

Sixth, the long-time reluctance of the private sector to acknowledge the need for 

a legislative solution to the spam problem coupled with the Direct Marketing Association’s active opposition to Internet privacy has certainly contributed to the problem. While the industry’s desire to avoid regulation is understandable, here the failure to establish strong measures to limit spam are contributing to a tragedy of the 

commons that threatens to undermine the commercial potential of the Internet. 

Difficultly Consumers Face with Spam 

While ISPs clearly face a significant cost that can be measured in bandwidth, staff 

hours, hardware, and even litigation fees, consumers face the ongoing annoyance 

that spam simply makes the Internet less friendly and e-mail less useful. For the 

consumer facing a mailbox full of spam, even good software programs do not solve 

the problem of the time and cost of downloading e-mail before it can be analyzed 

and assessed. These burdens fall particularly on consumers in rural regions, consumers who are traveling outside the country, and others who are likely to pay high 

fees while connected to the Internet. 

The most widely used spam filters, while they can be effective, invariably under 

block and over block incoming mail. As a result, users continue to receive undesired 

e-mail and are losing important e-mails that may include business proposals or simply notes from friends. Some spam filters group incoming messages as likely being 

spam, but the consumer must still sort through the messages. 

In addition, many of the techniques proposed by some are simply impractical or 

nonsensical. For example, a challenge response method to determine whether e-mail 

is coming from an actual person would probably discourage even desired communication. Similarly, routinely changing mail addresses is an impractical solution as 

is trying to prevent one’s mail address from being posted on a website where it can 

be harvested by one of the programs is not a workable approach as anyone who has 

a publicly accessible staff directory knows. 

A better approach for the consumer is one that empowers individuals to go after 

the spammers who misuse their personal e-mail address for unsolicited commercial 

e-mail and impose costs and burdens. 

Technical Measures 

It is clear that industry groups and technical groups are eager to find a solution 

to the spam problem. Many innovative approaches are currently being pursued even 

as some of the routine flaws that are exploited by spammers are fixed. 

Congress should continue to encourage technical solutions, but the possibility of 

technical solutions should not be a reason to avoid legislation. ISPs clearly favor 

better legal tools as well as better technologies to go after spammers when they can 

be identified. Moreover, without legal sanctions there is no practical basis to put an 

end to egregious spamming. 

There is one caution on the technology front that should be brought to the attention of the Committee. Several technological solutions, not surprisingly, focus on determining the actual identity of spammers, and would make identification through 

digital certificates and other means a requirement for sending e-mail to multiple recipients. While this approach may be appropriate for commercial speech, it would 

not be appropriate for political or religious speech. The Supreme Court has made 

clear in a series of cases that the right to speak anonymously is a central element 

of the First Amendment. Any attempt by the government to require identification 

for bulk e-mail that would include political speech would raise significant Constitutional concerns. 

Legislative Proposals 

S. 877, the CAN–SPAM Act, sponsored by Senator Burns and Senator Wyden, 

contains many important elements for a good anti-spam measure. All unsolicited 

marketing e-mail would be required to have a valid return e-mail address so recipients could ask to be removed from mass e-mail lists. Once notified, marketers would 

be prohibited from sending any further messages to a consumer who has asked 

them to stop. 

The bill would enable Internet Service Providers (ISPs) to bring action to keep unlawful spam from their networks. The legislation contains enforcement provisions 

87 

allowing the Federal Trade Commission to impose civil fines on those who violate 

the law. State Attorneys General would be given the ability to sue on behalf of citizens who have been targeted by unscrupulous marketers. 

This a good starting point, but we urge the Committee to go further, particularly 

to protect consumer interests. As the Burns-Wyden measure currently stands, it is 

simply not a sufficient solution. It gives the FTC a great deal of authority and the 

ISPs many opportunities to bring complaints. However, for the state attorneys who 

are already on the front lines and for the users who are also saddled with the costs 

and burden of spam there is not enough in the bill currently to reform egregious 

online practices or assure that spammers will be pursued. 

Three critical changes are necessary to strengthen the Burns-Wyden measure. 

First, the Committee should endorse a full opt-in regime for unsolicited commercial 

e-mail except in those cases where a prior business relationship exists. Opt-in is the 

logical basis for Internet mailings. In fact, most Internet lists today are based on 

opt-in. These lists typically also provide users with the opportunity to update their 

contact information and remove themselves from the list if they choose. There are 

many opportunities for companies to obtain consent and to build online marketing 

techniques, in parallel with the traditional Internet lists, which would be welcome 

by consumers. Where there is a genuine preexisting relationship, then it would be 

appropriate to communicate by e-mail. Simply visiting a website is not sufficient. 

There should be some actual exchange for consideration before a ‘‘preexisting business relationship is established.’’ 

Second, the bill should incorporate a private right of action that allows individuals 

to bring action in small claims court, similar to the approach established by the 

Telephone Consumer Protection Act (TCPA) for junk faxes and telemarketing. The 

opportunity to pursue a modest judgment in small claims court has provided a useful incentive in the effort to stem junk faxes and would be helpful for spam. In fact, 

many of the state measures take an approach similar to the TCPA in recognition 

that those who are the target of spam should have the legal right to seek redress 

against those who are responsible for the spam. Also, as the TCPA has shown, a 

national do not e-mail list may help with enforcement, though technical experts 

have expressed some concerns about the possible misuse of a national Do Not Spam 

list. 

Third, the bill should not preempt state law. While it is clear that some revisions 

have been made to the CAN SPAM Act to take account of the important efforts of 

states to combat spam, the bill still unduly restricts state legislatures that have 

been on the front lines of the problem. Even with the FTC’s important enforcement 

efforts, there is a real risk that a ‘‘one size fits all’’ approach will not be effective 

and will undermine the basic structure of federalism in the United States that allows the states to pursue different approaches to common problems. 

As Washington Attorney General Christine Gregoire stated on behalf of the Attorney Generals for 44 states, a weak Federal statute that preempts stronger state 

laws will reduce the level of consumer protection and facilitate the continued growth 

of spam. This would clearly not be a desirable outcome. 

House Proposals 

Several proposals are also under consideration in the House. Those bills that establish opt-in, provided for a private right of action, and leave the states free to pursue innovative approaches will respond to the spam problem most effectively. There 

is also an interesting provision in one of the House measures that would penalize 

automated harvesting techniques that are deployed for the purpose of sending unsolicited commercial e-mail. This provision may help with the spam problem. 

Additional Issues 

Mr. Chairman, you asked us also to address related issues that may be of interest 

to the Committee. I’d like to note that the problems of Unsolicited Commercial Email are likely to arise in a new setting that will impact million of consumers in 

the United States and that is cell phone based advertising. Although we are still 

in the early stages, it is apparent from the experience of other countries that consumers are beginning to express concern about advertising on their phones. If it is 

permission-based, there should be few problems. But if marketers begin to send 

bulk text messages or video messages to cell phone users, there will certainly be 

negative effects on the growth of cell phone based services. Already, providers in the 

United States are proposing to send e-mail to cell phones. 

There is also significant work on the spam problem underway in many countries 

outside of the United States, and in particular in the European Union. It is interesting to note that virtually all of these approaches rely on an opt-in and some private right of action. The approach taken in the European Union Communications 

88 

Directive emphasizes permission-based marketing and the need to ensure that even 

after opt-in is established, consumers retain the right to opt-out of online marketing 

lists. 

Similarly, an extensive report from the Australian government on the spam problem released just last month urges the adoption of legislation based on prior consent 

where there is no preexisting business relationship; requires commercial electronic 

messages to contain accurate details of the senders names and physical and electronic addresses; and further recommends appropriate codes of conduct for marketers and effective means of enforcement. 

Finally, a joint resolution issued in 2001 by the Trans Atlantic Consumer Dialogue, an alliance of more than sixty consumer organizations in the United States 

and Europe, recognized that the use of unsolicited commercial electronic communication is a growing burden for people who use e-mail. The TACD said, ‘‘governments need to work together to develop common approaches to address consumer 

concerns about unsolicited commercial e-mail.’’ The group acknowledged the important differences between commercial and non-commercial speech, and urged the 

adoption of a policy based on prior affirmative consent. 

Conclusion 

Mr. Chairman, spam is a complex problem. There is no simple legislative solution. 

A multi-tiered approach that includes aggressive enforcement, better technology for 

identifying and filtering spam, and cooperation at the state and international level 

will all be necessary. In addition, baseline Federal legislation that gives users the 

opportunity to go after spammers and ensures that marketing lists are built on explicit consent and not on deception is a critical part of the effort to stem the tide 

of undesired commercial e-mail. Given the rapid increase in the spam problem in 

just the last two years, I urge the Committee not to delay action on legislation. 

References 

Prepared Statement of the Federal Trade Commission before the Subcommittee 

on Commerce, State, the Judiciary and Related Agencies of the Committee on Appropriations, United States House of Representatives, April 9, 2003 (Chairman Timothy J. Muris). 

Coalition Against Unsolicited Commercial E-mail 

http://www.cauce.org/ 

Commission Nationale Informatique et Liberte ́s, website on spam. 

http://www.cnil.fr/frame.htm?http://www.cnil.fr/thematic/internet/spam/spam 

sommaire.htm 

CNIL’s Report on Spam 

http://www.cnil.fr/thematic/docs/internet/boite a spam.pdf 

EPIC Spam Page 

http://www.epic.org/privacy/junklmail/spam/ 

FTC Spam Page 

http://www.ftc.gov/spam/ 

Federal Trade Commission, ‘‘False Claims in Spam’’ (April 2003) 

http://www.ftc.gov/spam/ 

CAN–SPAM Act, S. 877 (Senators Burns-Wyden) 

http://www.spamlaws.com/federal/108s877.htm 

Internet Society, ‘‘All About the Internet: Spamming’’ 

http://www.isoc.org/internet/issues/spamming/ 

Junkbusters 

http://www.junkbusters.com/ 

National Office of the Information Economy, ‘‘Final Report of the NOIE Review 

of the Spam Problem and How It Can Be Countered’’ (April 2003) 

David E. Sorkin, Spam Laws 

htp://www.spamlaws.org/ 

Directive 2002/58/EC of the European Parliament and of the Council Concerning 

the Processing of Personal Data and the Protection of Privacy in the Electronic 

Communications Sector (‘‘Directive on Privacy and Electronic Communications’’) 

http://register.consilium.eu.int/pdf/en/02/st03/03636en2.pdf 

TransAtlantic Consumer Dialogue (TACD), ‘‘Resolution on Unsolicited Commercial 

E-mail’’ (2001) 

http://www.tacd.org/cgi-bin/db.cgi?page=view&config=admin/docs.cfg&id=98 

89 

The CHAIRMAN. Thank you, Mr. Rotenberg. Mr. Scelson, welcome. 

STATEMENT OF RONALD SCELSON, 

SCELSON ONLINE MARKETING 

Mr. SCELSON. First off I would like to thank Senator McCain for 

inviting me here for this. I know I am probably the most disliked 

person in this entire room. I send close to 100 million e-mails out 

every 12 hours. 

The CHAIRMAN. You have shown a great deal of courage by coming here today, and we appreciate it. 

Mr. SCELSON. There are a lot of things, listening to you 

speak—— 

The CHAIRMAN. Pull the microphone closer. 

Mr. SCELSON. Listening to you all speak, I originally had a 

speech just like these gentlemen, but being here today, I have to 

get a little bit more of a feel about the things people do not like 

and what the Government’s aspects of this are, and the e-mails I 

send out right now, the reason I have gone back to being a 

spammer—I originally started out, spam was not known as spam 

back then, but eventually started becoming one—— 

The CHAIRMAN. How long have you been in business? 

Mr. SCELSON. Fifteen years. The reason e-mail has grown is, people still buy. My average complaint ratio is 1,000 people complain, 

close to 2,000 removes in a mailing, and a 1 to 2 percent response 

rate. If it is hated so bad then why do more people buy than they 

complain about it? 

Most of what the Government is not aware of, and certain ISPs, 

including Hotmail’s newest filters that are here with us, leave out 

in detail to you all is, right now, the state laws, for instance, that 

say you have to provide a valid remove and ADV and a subject, 

their key filter, which was just updated on Thursday, I had broken 

as of Friday and released free to the other bulk mailers, has in 

there that remove word, unsubscribe, opt in. 

Well, now, you tell me follow the law, do not send spam, be a 

good guy. I would be a good guy and mail in the Hotmail and AOL, 

no offense, and their filters will filter this out. Now, if I do not use 

this, I am then accused of being a spammer. I agree with all of the 

people here, there is no reason to use proxies, there is no reason 

to use relays, and a remove is a good option to add in there for people to use. 

As far as the way we gather our addresses, most addresses for 

bulk snail mail are purchased from banks and a lot of companies. 

Your proposal to make extracting and gathering e-mail addresses 

and buying them is a good idea if this is also going to be added 

to the snail mail industry. What is fair for one is fair for the other. 

Personally, I do not get addresses this way, so it does not affect 

me. Most of the gentlemen that are here all offer a member’s directory and I am a paid member of all of these clients. This member’s 

directory is identical to a Yellow Pages providing e-mail name, 

phone number, and address. To automate software, which I have 

done for clients to extract phone numbers and phone books, is the 

exact same technology that extracts their members directory, which 

90 

I am a paid member of, and this is granted free from AOL to give 

me access to all these users. 

AOL does have the highest filter system in the world, no matter 

what anybody thinks. I do this every day. I give them full credit 

for this. The biggest thing I find, most people also seem to forget 

when it comes to this, is the carriers right now are deciding and 

filtering whose mail gets what. Whether you are going to read and 

see our mail or not, this is censorship. I was brought up and fought 

for this, and still fight for this, because I believe in freedom. As an 

individual, what makes us free is the freedom of choice, and that 

is who should decide whether or not they are going to receive this 

mail or not. The Senator here does not like receiving e-mail. It 

should be his choice to decide whether he is going to receive it or 

not. 

I have heard the facts that it has risen the price of AOL and 

other companies’ business to their customers, to increase pricing, 

and the burden of mail basically getting into their system. Some 

of these price increases are brought on by their own filters. At one 

time, you could send 100 messages, 100 people one message at a 

time, using less resources and less bandwidth. Their new filters 

now make it mandatory that we send one person one message at 

a time, thus chewing up their bandwidth and increasing their cost. On our end, I have one location alone that is $2,200 a week in 

bandwidth, so I keep hearing, the more we send, the less cost we 

have. The same bandwidth which you chew up on your end we are 

chewing up on our end. I am more than willing to work with any 

legislation to solve this problem. I agree spam is not the way to go. 

When I set up my company to not send spam and send 100 percent 

legal mail, we went above and beyond that to include a toll-free 

phone number, a physical address, a website, full information on 

the bottom of our messages, so that we were 100 percent we are 

above and beyond all common laws. 

The areas such as Qwest, which I have lawsuits against some of 

these carriers, AT&T, BellSouth, AOL I have had dial up accounts 

through that they have also terminated. If you mail 100 percent 

legal and they get a single complaint, they will turn around and 

kill your circuit, so A, we go out of business, or B, we then resort 

to forging the headers. 

The biggest complaint here is, you cannot find us. Well, if you 

could, you are going to shut us down, so why should we let you find 

us? 

The laws definitely need to be made. I keep hearing there is no 

one simple solution. If you look at my written testimony, which it 

will take Government backing, and I am sure AOL’s people would 

like to look at this as well, it states in there a very simple way that 

costs no money on AOL’s end, no money on our end, makes the tax 

dollars go back to the Government, because if I stay here in the 

U.S. I owe you tax money for all the money I am making, the customers, et cetera. You pass the laws, we go outside the U.S., operations get moved outside the U.S., and from what attorneys have 

told me, if the corporation, the incoming money and everything is 

outside the U.S., there is no tax dollars owed in the U.S. 

And basically, if you look at this system, it is very simple, to the 

point it does not cost money, and if the system’s broken, that is 

91 

where legislation again would have to enforce it. It solves the 

whole problem. 

As of right now the last carrier I was on was Covista. I was on 

them for 2 weeks, sending approximately 180 million e-mails a day. 

That is one e-mail per user in my database a day. I never send 

more than that. They shut me down for a total of 1,200 complaints. 

Well, when you look at the volume of mail I am pumping out, to 

get 1,200 complaints mathematically is nothing. 

I do honor my removes. Even to this day, I send spam because 

I have to cloak my circuits to protect them from being shut down, 

but I still run, still have an honor, have a valid remove. It is not 

known as opt out, it is not known as a remove because the filters 

would interfere, but words such as take me off your list is very understandable to a person receiving it, and very much honored. 

One of the other big problems in e-mail is, the anti-spam organizations preach, do not use the removes, we are confirming your address is good, we will not remove you. I cannot say there are not 

dumb people in the world. They are in every form of business and 

any walk of life, every nationality, it does not matter, but most 

companies I know of have the advanced technology that when I 

send an e-mail to Hotmail server, I know right out of the gate 

whether that address is good or bad, and if it is bad, instead of, 

because we have to force affirm addresses due to your filters, if 

that address is bad, my mailer will not send it to it, just to keep 

from clogging up anybody else’s server, so since I know whether the 

address is good or bad or not, whether you ask to be removed, all 

that tells me is yes, you want the mail or no, you do not. I already 

know you are good. AOL, on the other hand’s, system accepts everything, but AOL is nice enough to provide the undeliverable to 

everybody, so I still know if you are good or not. 

Agreed, there needs to be a solution, but just do not take the 

freedom away from the individual. This should be their right and 

not the carrier’s to say, we are going to shut you down and we are 

going to block you. 

Most anti-spam groups that are fighting against spam are not 

Government-backed, Government-owned or anything. The reason 

Covista shut me down is that Spam House went to Qwest, which 

is Covista’s carrier, and threatened to blacklist their entire network 

because every anti-filtering trick they hit me with did not work, 

and I still stayed 100 percent legal, and because of their threat 

Qwest passed it on down the line. I had to sue Covista for this. 

Now, between everybody here, it is not their fault. I do not feel 

I should have to sue them, but that is the way the Government 

works. The anti-spam groups that have no legal right are interfering and forcing these people to shut us down. The Pink Contracts, which is what got me really well-known, everyone thinks 

they are contracts to send spam. I can show these contracts to you. 

There is not a single word in that contract to send spam. The details of that contract define every state, what its law is, and that 

if I send mail staying within every one of these laws, they will not 

shut me down, which I should not have a contract to have to do 

this. 

My price for the bandwidth is three times higher when used for 

this particular means of doing it, and they still will step in eventuVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00095 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
92 

ally, once they get threatened enough, and shut you down, and 

most people are not aware of all of this. Most bulk mailers are 

scared to admit it because of the recourses that will happen. I have 

been fighting for so long that if I do not say anything and no one 

else does, then either everyone is going to really turn to the underground and become a really bad thing, or we can find a solution 

and work together. 

AOL has AOL’s special offers. I am assuming you are familiar 

with this. It is their own personal spam company. They spam their 

own users with it, and I have received at my Hotmail account from 

AOL special offers advertisements to sign up for AOL, so the same 

people that are here complaining about mail send mail. Why? Because it is profitable to the client and to them. 

I am told there are a lot of cost factors in reading this e-mail, 

and the time it takes up on your end, Senator, when you read this 

e-mail, for you to go through it and push delete, which if we could 

use ADD you would know which ones are junk to make it a lot 

easier. 

When you read this mail and push delete, yes, it took some of 

your time, but if you are at home where you do not have the extra 

assistance of the people around you, you have to walk outside, go 

get the junk mail out of the box, read this junk mail—do you ever 

think of how many chemicals, pollution, trees and all are involved 

in this, and then you have to throw it away, so if you add the time 

it takes you to deal with snail mail versus e-mail, both of them cost 

you time and money. E-mail is less on that comparison. 

And that is basically all I have to say, and thank you again for 

having me here today. 

[The prepared statement of Mr. Scelson follows:] 

SCELSON’S ONLINE MARKETING

Slidell, LA 

To Whom It May Concern, 

My name is Ronald Scelson and I am the owner/operator of a commercial e-mail 

company that sends bulk e-mail as a form of advertising for companies over the 

Internet. I feel my company is doing no different than any other advertising company who uses the postal service to send out unsolicited bulk-mail to your home. 

The only difference is we send this information via the Internet instead of the 

United States Postal Service. 

It all began with sending e-mail into newsgroups. It went from there to the sending of e-mail, as we know it today. At that time mail was just sent, we didn’t care 

how. It was just pumped out and there were no removes. ‘‘Removes’’ is an industry 

term meaning—a hyperlink that will be sent back to the sender asking to have his/ 

her e-mail address removed from your mailing list. When e-mail advertising started 

getting known by people as ‘‘Spam,’’ my company was one of the first companies to 

get removes and valid ‘‘From’’ addresses. Now, in response to the commercializing 

of e-mails, some groups were formed as ‘‘Blacklisting’’ companies. For example, 

SpamCop started interfering and getting us blacklisted. Note: These companies are 

not government-backed nor funded, they are typical ‘‘everyday people’’ playing the 

role of a bully. Intimidating Internet carriers to cut off service to my company and 

other companies paying top dollar for Internet Service. My belief is that this business is doing a legitimate form of advertising and when done correctly, makes the 

client, government, and the commercial mailers money. 

In response to the bully tactics used by the Anti-Spam hate groups, my company 

decided to go Opt-In. In order to do this, Commercial Mailers had to sign a contract 

with the carriers now known as ‘‘Pink Contracts.’’ They are said to be Spam contracts to allow the sending of Spam under today’s terminology. What these contracts 

were really for was to force us to pay twice as much money as a normal business 

would for Internet Service. Allow commercial e-mail to be sent not ‘‘Spam’’ to people 

without shutting us down. Now what this really means is that all states have laws 

93 

pertaining to e-mail and if you break this law the e-mail that is sent will be considered to be ‘‘Spam.’’ This contract allowed us to send e-mail as long as we abide by 

every state law. Meeting all of the requirements indicated by individual state law 

will not be considered Spam. This would also not be in violation of any ISP’s (Internet Service Provider) policy. 

Now, when we sent the mail this way Anti-Spam (groups of people against Commercial e-mail that post your private info on their site. They also violate and interfere 

with current laws) groups would go to the carrier and tell the carrier ‘‘Hey! We’ve 

blacklisted them every way we can they are getting around it somehow so either 

you shut them down or we will shut you down!’’ Well, then the carrier shuts us 

down and breaks the contract. We have tried this with several companies. The last 

time we tried this doing it 100 percent legal the outcome was my circuit was shut 

down, we were put out of business and a major lawsuit—which to this day has still 

not been resolved. So, I was forced to go back to being a ‘‘Spammer,’’ where I could 

keep my Internet connection live and support my family. I believe that there should 

be guidelines and Spam should be illegal. But the only way this would work is when 

the carriers realize that we live in the United States and not a communist country! 

They provide services that aren’t different than any electric company. They get paid 

not to read, censor, and destroy people’s e-mail, but to provide a service! 

Now the individual has lost his/her right to get any e-mail he/she wants. The Carriers have determined that they would screen all incoming mail and only allow email that the carrier wants the end user to receive. But not limiting themselves to 

their own advertising, that still to this day does not get screened. If I were to go 

into your Post Office Box, without your written permission, open your, mail, decide 

what I think you should have or should not have, I would go to jail for this. This 

is exactly what the carriers are doing, The government says they want you to identify yourself and put ‘‘ADV’’ (advertising) in the subject and not forge your headers. 

If I mail 100 percent legal you come across two problems: 

1. The carrier, not the individual, filters ADV, then none of my mail will get in 

and I will go out of business, 

2. If I identify myself and not forge anything, the ’SP will terminate my circuit 

for mailing legal and put me out of business. 

This is called legal mail, but I won’t last a week and my line will be turned of 

For no legal reasons, except for the bullying power the anti-spam groups have. 1 

agree with having laws governing bulk e-mails. But carriers should be held accountable when they submit to these anti-spam groups. Terminating service to companies; such as my own, without any legal reason to do so is not the democracy that 

we all should be living. I think it should be done the right way as long as the carriers know they will be shut down for blocking a company or shutting down a company doing it legally. Filters are designed for 1SPs to eliminate ‘‘Spam’’. Most of 

these people that design these are ‘‘scam-artists.’’ Think about it, if the server accepts mail in any way. Then there is a way to send bulk mail. If laws are passed 

to eliminate bulk e-mail, then the ISPs will shut down the commercial mailers. 

Then all the mailers are going to do is start corporations offshore and send their 

mail from offshore, now your laws and filters do nothing. Then, there is no taxable 

money being exchanged and money will be sent out of the country. This is not a 

solution, this is a joke! 

I designed a system 5 years ago because I believe in the freedom of the United 

States and the company that I stand behind. We should have the right to do our 

business in a legal way with out any interference from someone whom has no say 

so in the matter. The system that can stop Spam gives the freedom back to the people, It is very simple and very cheap, especially when you look at AOT. who spent 

11 million dollars last year to stop Spam and it did not work. Most people are not 

aware when you hit the send e-mail button what all happens behind the scenes. 

Mail servers talk together just like people, if you send an e-mail to fjdhfjhdhsj 

@hotmail,com it will give an answer, error 550 user not available this means the 

address is no good. If you send it to ronniescelson@hotmail.com and my mailbox is 

full it will give an error 520 users mailbox full. Now my system is really simple and 

would be used by the individual not the carrier to stop Spam. They all have buttons 

in web-based e-mails example (Send mail) all you have to do is put an option ‘‘No 

Bulk E-mail’’ and put a check in the box. What this will cause to happen is when 

I send an e-mail to you, I will see an error (example: 420) at that point, I know 

this user does not want e-mail. 

This could only work if legislature enacts a law that would require Commercial 

mailers to look for this error when mailing. They would also be held criminally liable if they ignore and continue to send mail to these accounts. If you mail without 

forged headers, a valid from address, contact information and ‘‘Adv’’ in the subject 

94 

they cannot shut you down or block you. If they do, there should be a fine imposed 

on the ISP. There would be no need for removes. Users are complaining they didn’t 

ask to receive the mail so why should they remove themselves from 2000 plus different e-mail companies; they are right this system eliminates that problem. 

Reporters have interviewed me several times on this issue; and the articles have 

always focused on the money being made and never mention the cost that ‘‘we’’ as 

Commercial Mailers have to put out. The bandwidth at just one location cost 

$2,100.00/wkly, which is approximately $110,000.00 annually just for one carrier. 

AOL says they spend millions stopping Spam. This is a cost factor they brought on 

themselves and are passing on to the consumer. They are spending money doing 

something they should not be doing in the first place. I find this to be illegal, immoral, and unconstitutional. An example of this, is if I take a gun and shoot someone, the gun doesn’t go to jail for murder, I do. I, as a human, squeezed the trigger. 

Well, AOL puts a filter in place that reads, censors, and destroys legal mail THIS 

is illegal. They get away with this because they say a human does not read these 

messages, but a human did press the enter key to read and destroy mail. What is 

the difference? Some people state that snail mail is okay because you pay the post 

office to send it. We are more like private carries like UPS and FedEx. (UPS and 

FedEx are registered trademarks to the individual companies. They are not in any 

way affiliated with my company.) A customer pays a private carrier to send mail. 

This company then pays the costs for fuel, drivers, and the truck to deliver the mail. 

As a customer pays us to send mail, we in turn pay for the servers, networking, 

electricity, and technology to deliver the mail. The ISPs say that ‘‘Spam’’ is chewing 

up so much bandwidth they are right at the end of capacity; this is their own fault. 

Part of ISPs Anti-spam filters do not allow high ‘‘BCC’’ (blind carbon copy) I could 

set my BCC setting to 500 for every 500 people who get this e-mail I will use up 

a total of 33k in size (est. the ad is 33k). Since this filter is in place, I have to mail 

at 1 BCC, which means that if I send an ad to 500 people then it would be like 

500 times 33k. Now I have consumed 1.6 megabytes of bandwidth for those 500 people. So, now you see why their cost went up, 

They say ‘‘Spammers’’ break laws, well here are some examples: 

If we use ADV it, we are blocked. 

If we use Remove or unsubscribe, we are blocked. 

If we use the same ‘‘From’’ address that is valid, we are blocked.. 

If we send too many e-mails from one IP, we are blocked. 

So, we have two options: 

(1) Break the law and stay in business or do it legal and go out of business. 

(Meanwhile these carriers continue to violate the laws that are passed and for 

a touch of proof if you go to this website there is a list of common filters look 

for yourself. http://wwwlmirror.ac.uk/sites/spamassassin.taint.org/spam 

assassin.org/tests.html) 

(2) If the government wants to pass laws it needs to be fair to everyone involved. 

The Commercial Mailers and the Carriers. But not allow these Anti-Spam 

groups to get away with threatening peoples lives just to feel that they have 

the power to control a company’s destiny. Every state should have the same 

law to eliminate any possibility of violating these laws. This is necessary, due 

to the fact, that it is unknown where the recipient of an e-mail resides and 

whether or not you have violated any laws. 

I don’t believe you should e-mail private servers. AOL, Hobnail, Yahoo etc. provide consumers a service offering e-mail addresses. The consumer should have the 

right to choose to receive and sort his or her own mail, not the carrier. Laws and 

Censoring (filtering) e-mail are not going to work, it will only drive the price up for 

the smaller companies. As with the larger companies, like Norton’s System Works,. 

Which sold more copies than ever before with e-mail. Due to the reduction of the 

marketing and merchandising costs, the product was made available to the consumer at $39.95 in contrast to the $299.99 retail cost in stores. 

I consider myself living the American dream. I went to school in New Orleans 

where it was plagued by drugs and weapons. This is not what school was meant 

to be. I managed to survive the experience and ended up in a low-income neighborhood, still filled with drugs and violence. Even with a GED, I could not give my children the life I believe they deserve. So I started my own company and taught myself 

how to accomplish these things. In doing so, I found a way to create a business, 

provide for my family and put my children through a better school environment 

than I had. This to me IS the American Dream; freedom to grow and become something you dream of being. For doing this I was criticized, shut down, put out of busiVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00098 Fmt 6633 Sfmt 6621 S:\GPO\DOCS\85548.TXT JACKIE
95 

ness and threatened. I hope by me coming forward, this will show the untold side 

of the story that these anti-spam groups don’t want you to hear. 

Please allow yourself to be open-minded and compare this industry to bulk mail. 

The differences between the two are that when you receive mail at your home, You 

open it, read it if you want, then throw it in the trash. You then have to carry that 

trash to the curb, where it is then hauled away and used as landfill (like we don’t 

have enough trash already). Not to mention the trees that are cut down for the 

paper used! Then there is the Electronic Mail (E-Mail). If you don’t want it, just 

check off DELETE. No mess, no cleanup, no pollution. I think my way is better! 

If there are any questions or comments, or if I could be of any service, please don’t 

hesitate to contact me. 

Respectfully submitted, 

RONALD SCELSON. 

The CHAIRMAN. Did you say that it took you less than 24 hours 

to break one of Mr. Salem’s filters? 

Mr. SCELSON. Yes, sir. 

The CHAIRMAN. How do you feel about that, Mr. Salem? 

Mr. SCELSON. Excuse me, on his part, to defend him, something 

most people forget is, if a server accepts mail, obviously there is a 

way in. Unless the server does not accept mail there will always 

be a way in. 

Mr. SALEM. So I think that it is pretty clear that spammers have 

an economic incentive to try to avoid filters. One comment that I 

will make is that the way our solution works, we actually have set 

up a very elaborate system that basically only receives unsolicited 

bulk e-mail, so any mail messages that are being blocked are not 

based on words such as remove or unsubscribe, or anything else, 

so what that means is, if you hit our decoys, by definition, that 

decoy never requested the mail, so we are able to say, yes, it is definitively spam, and what our customers contract us to do is block 

that mail. 

I will tell you that we will continue the fight, because that is 

what our customers want us to do, and over the next couple of 

years I am confident we will solve this problem. 

The CHAIRMAN. Mr. Leonsis, are you a spammer? 

Mr. LEONSIS. Well, I would like to hire you. 

[Laughter.] 

Mr. LEONSIS. We would probably have a better relationship if 

you were on our side of the fence. I took a couple of notes during 

your comments, and very articulate, very heartfelt, and we have 

not raised prices to our members because of spam. We are absorbing that cost. We are taking an advocacy position for our members. 

With AOL, when you sign on, and since you are a paid member 

you would know that there is a terms of service, and our privacy 

policy, and we do not allow any member or any company or any 

partner that pays us to spam our members. We have preferences 

that allow you to opt out of AOL e-mails, AOL pop-ups, and we promote that. 

In fact, we have been actively promoting that off of our front 

screen, and so you have been violating TOSS, and I am sure you 

have been opening multiple accounts. 

In regards to how they are getting e-mail addresses from member directories, that is a shame. AOL has always considered itself 

a community, and we have been able to get people to locate other 

people. My mother, as an example, died of breast cancer, and when 

she was sick she would go to the member directory to try and loVerDate Nov 24 2008 11:15 Nov 15, 2013 Jkt 075679 PO 00000 Frm 00099 Fmt 6633 Sfmt 6601 S:\GPO\DOCS\85548.TXT JACKIE
96 

cate other women who were recently diagnosed with breast cancer. 

She certainly was not going to the member directory so that she 

could get e-mails that were unwanted or unsolicited or pornographic, and that is why that part of the business across the industry has shrunken, because people are gaining knowledge of what 

the tricks are and are now looking at their identity as being something that they need to protect. 

So while I believe that marketing is important, I also believe 

that e-mail is not a medium, that e-mail is more a utility. It is 

something basic and fundamental. There are places on ISPs and 

places on services that you can buy advertising and reach out to 

members, it does not trick people, and we need to kind of separate 

out kind of the myths from the facts of how commerce is done. 

The CHAIRMAN. Mr. Scelson talks about Pink Contracts. What do 

you know about that, and do you believe it is prevalent today, and 

I will ask Mr. Hughes and Mr. Rotenberg the same question. 

Mr. LEONSIS. We are taking a different approach right now. We 

do not look at black lists. 

The CHAIRMAN. My question is, do you know about Pink Contracts and do you believe it is prevalent today? 

Mr. LEONSIS. I am not aware of how prevalent or not it is. What 

we have really done is say that how we look at what spam is, it 

is not our opinion, it is our members’ opinion. We every day baseline where the complaints are coming, and the ones that rise to the 

top and get escalated, that is what spam is, and we have really no 

opinions on it. We have a very, very large, active community. We 

let them report in, and the numbers do not lie. When our members 

say, this is spam, that is when it gets blocked. 

The CHAIRMAN. Mr. Hughes, do you know of the Pink Contracts 

that Mr. Scelson refers to, and Mr. Salem knows about them. 

Maybe I should ask him next. Go ahead, about the Pink Contracts. 

Mr. SALEM. There are definitely relationships between marketers 

and ISPs, and oftentimes we are asked to make sure certain mail 

is not blocked. That is absolutely the case. as far as the details of 

those agreements, I am not aware of those details. 

The CHAIRMAN. Mr. Hughes. 

Mr. HUGHES. Clearly, we have heard of Pink Contracts, and as 

we understand it, Pink Contracts are paid for delivery contracts. I 

am not aware of any of my members engaging in those practices, 

but let me say that we truly are in a Spy v. Spy situation. We have 

heard on the other end of our panel here today that AOL on the 

one hand is building more robust filters day by day by day, and 

spammers on the other side are working at ways to avoid those filters. 

As a result, the legitimate players in the middle delivering transactional messages, the consent-based marketing messages, have to 

build relationships with ISPs in order to make sure that wanted 

mail is actually delivered, and in some situations this is actually 

critical mail to have delivered. For example, it could be an airline 

ticket confirmation. It is a transactional message that is delivered 

in volume. 

So I can tell you quite definitively that a year ago, 18 months 

ago, none of my members really had resources that were dedicated 

to ISP relationships. In other words, delivery relationships. Today, 

97 

most of my members have at least one, and sometimes they have 

full staffs. 

The CHAIRMAN. I was referring to the relationship of spammers 

and ISPs. I am talking about the illegitimate contracts, not the one 

where you get an airline ticket. 

Mr. HUGHES. Sure. We have definitely heard of the practice. I 

have never heard of it within our organization. There definitely is 

a place, though—I want to make sure it is clear, there is a place 

for a dialogue between senders and ISPs. 

The CHAIRMAN. I understand there is room for dialogue between 

all the mail recipients and senders, but if there are contracts that 

go, that actually not only condone but contractualize the practice 

of spamming, then we have got an issue here. 

Mr. HUGHES. I would agree. 

The CHAIRMAN. Mr. Rotenberg. 

Mr. ROTENBERG. Mr. Chairman, I am not familiar with the practice, but I do want to say briefly that I would challenge Mr. 

Scelson’s assertion that he gets 1 to 2 percent response rate on his 

mailings. I find that very hard to believe. 

The CHAIRMAN. Well, we will let Mr. Scelson respond, then. Go 

ahead. 

Mr. SCELSON. I can pull lead stats from one of my servers off my 

laptop top show you what it did before filters were kicked in, after 

filters were penetrated. The 1 percent is the most average. There 

are a few exceptions, and one good exception to this was Norton 

System Works was a reseller, was a client of mine. AOL is very familiar with that one. I know they got hit hard with it. I think they 

also have a lawsuit involved in that one, too, if I am not mistaken. 

The CHAIRMAN. Mr. Scelson, one of the things that disturbs a lot 

of us about this, and maybe you could comment on this, does it disturb you that so much of this is pornography, and occasionally 

child pornography? 

Mr. SCELSON. Yes, sir, totally. I personally do not send any adult 

material, have not sent adult material, and do not intend to, no 

matter how this boils out. 

The CHAIRMAN. But it is up to—I understand about 20 percent 

of the spam. 

Mr. SCELSON. Yes, sir, it is, and most of the bad names that all 

e-mail companies get is not Norton System Works being sold that 

is really making people upset, it is the adult industry. Personally, 

you and I, even though I will not mail it, Playboy advertises that 

in the real world today nobody frowns on it. Why? Because it is 

kept very low key. There is no nudity, there is no vulgarity, unless 

you are a paid member. The porn you see in your e-mail today, all 

of us have seen, and it is just dreadful. My daughter is 9 years old, 

and she uses the computer quite well, and she sees this, so I understand where you all are coming from this, and totally agree with 

you. 

The CHAIRMAN. My time has expired. 

Mr. Leonsis, you want to make a comment? 

Mr. LEONSIS. I think as an ISP, as I stated earlier, we have a 

very strict covenant with our members on privacy and security. It 

is called Terms of Service, and we never enter into contracts to 

allow spam on our service. It is why the most egregious spammers 

98 

we are taking to court, and you have to read TOSS. It prohibits unsolicited bulk e-mail, and that applies whether you are one of our 

partners or not. We have people that pay us a lot of money, and 

sometimes it gets escalated to me on why cannot we spam, and we 

say, that is not what our rules allow, and so again, this is a utility 

function. You cannot just look at it as media, and an efficient way 

to deliver ad messages. 

The CHAIRMAN. Well, again, I was not challenging your organization, but if the so-called Pink Contracts are in existence, then it is 

something we have to deal with. 

Mr. LEONSIS. There are none in our organization. 

The CHAIRMAN. But there is ample testimony that they are in existence. 

Mr. SCELSON. Senator McCain, again the contracts are not to 

send spam. The contracts are to send e-mail that obeys all the 

laws. There is no such thing as a spam contract. If you are going 

to violate a law, I have not seen a carrier yet sign a contract for 

this. 

The CHAIRMAN. Now we get into definitions. Senator Wyden, do 

you want to go, or Senator Burns? Either way. 

Senator BURNS. I have a couple of questions, and I will tell you 

what I am going to do, I am going to set up a private little appointment with a couple of you, because we need to explore some of this 

a little bit further. 

We have heard you may get legislation that has unintended consequences, and that worries me a little bit, and Mr. Rotenberg, you 

are exactly right about some of these areas. 

As you know, I am a free marketer. I like that, and I do not want 

to get into a situation where we do have unintended consequences. 

In other words, when you come up here and serve in the Senate 

you sort of file back here the little saying that says, do no harm 

in everything that you do. I am wondering if this legislation—now, 

this is the first time I have run into Pink Contracts. Now, you 

would have thought I would have picked that up along the way, 

but us country boys, we do not pick up everything. 

This tells me that should you pass a law that you are actually 

falling into forcing people into the grips of maybe an enterprise 

that another middle man in business that somebody does not want 

to pay just to get your message to a legitimate message of what you 

have a return address that you really want to do business on the 

Internet, but you are putting another middle man in there, injecting one in there that is going to drive the costs for both the consumer and the person that is doing business. Is that a false way 

of looking at things? It was not explained very well, but you understand where I am coming from. 

Mr. SALEM. If I could make a quick comment, I think there has 

to be a way to identify legitimate marketers, and that is something 

that is going to become very, very important so that we can deliver 

messages from airlines or car companies, and so there is going to 

have to be relationships between the direct marketers and the carriers to make sure that that can happen, because what has happened to date is because some of those relationships do not exist. 

They are all being treated the same in many cases. 

99 

Mr. LEONSIS. Nine million reports a day on spam, and I cannot 

remember the last e-mail I received from an AOL member saying, 

please send me spam, so I understand the concern about erring, or 

the pendulum swinging too far, but it is way over here right now, 

and the laws that we are in discussion about today are very good 

steps, and as an industry we are going to work with our State AGs, 

and we need your help to get that pendulum back into a balance. 

Senator BURNS. If anybody wants to comment on this, because it 

is sort of an interesting idea. 

Mr. ROTENBERG. I think it is a very important point you make, 

Senator. Consumer groups are not against the use of the Internet 

for advertising. In fact, one of the wonderful things about the Internet for the consumer is the ability to get great prices on stuff you 

want, to be notified about books and authors that you are interested in, to get travel deals, and a lot of people are signing up for 

those lists to get that information because it frankly gives them a 

good deal. 

The problem, and I agree with Mr. Leonsis, the pendulum has 

swung so far in terms of the amount of marketing that the stuff 

you desire is just getting drowned out. You cannot even find it any 

more, because there is so much junk you are getting with the commercial marketing that you would like to receive, so I think legislation is appropriate. I want to be clear on that point. I think there 

is always a risk of unintended consequences. I think legislation will 

help. I do not think it will solve the problem, but I am sensitive 

to this issue of not closing some doors you might want to leave 

open, and the question of state enforcement, particularly if they are 

issues around illegal business contracts, suddenly becomes very important. 

Senator BURNS. Anyone else? I want to hear a comment from all 

of you, really, basically. 

Mr. HUGHES. Senator Burns, this is clearly complex problem, and 

unintended consequences exist today. I would like to give you two 

dystopian visions of the future we have about e-mail. One is, we 

allow spam to proliferate, and all of us stop using e-mail because 

our inboxes have become so choked with spam. The other is, we use 

blunt instruments to solve spam, and in the process of fixing the 

problem we kill the killer app. We kill e-mail. That emerges in 

something called false positives. False positives are wanted messages that are unreceived because of a filter or black list or some 

other tool to block them. 

What we have seen in the marketplace today, there is a study 

that came out from a company called Assurance Systems, is that 

in the fourth quarter of 2002 there was an average 15 percent false 

positive rate across the top 10 ISPs. That means 15 percent of 

wanted messages, of legitimate messages were not being delivered 

the inboxes of recipients. That is one of the unintended consequences of the blunt instruments that we are using. We need a 

much more balanced system to make sure that we kill spam but 

save e-mail. 

Senator BURNS. Yes, sir. 

Mr. SCELSON. Senator, I do totally agree there needs to be legislation on it. Again, the solution that is in my written testimony 

that I gave you all, you all have not got to see this yet. I am sure 

100 

you will see it before the end of the day. It is a no cost factor. It 

is very simple. There is no loss of unwanted mail, and one of the 

biggest complaints I have heard from people I send mail to is, there 

are over 2,000 bulk mail companies, not 200, that I am well aware 

in full existence out of 2,000 bulk companies you did not ask to receive mail in the first place. 

Why should you have to remove from each one? The Government 

gets involved with the remove. Why should the Government have 

to spend tax dollars on a global remove system? The system I propose costs no money and gives the power back to the people. 

The other thing I am looking for from the Government is, if I 

mail 100 percent within your laws, that companies like Brightmail 

will not filter the removes that are mandatory on us, and that carriers like BellSouth and AT&T and MSN will not come in and shut 

my circuits down for sending legal mail, and right now that is basically what they are doing, so I cannot reveal who I am, but they 

are right, we need to. 

Now, the same people that fight the spam have websites up that 

I used to reveal exactly who I was, and everything about the company website, the whole info. These people have my children’s 

school on their website, my children’s social security numbers, they 

have threats in there that if nothing else can stop me, maybe we 

should do something to their family. They are not bluntly saying 

go out and hurt them, but they are pushing strong accusations. I 

have never seen AOL or you all do anything like this, but a lot of 

these big anti-spam groups that were at the FCC hearing, it is on 

their website. You have the Internet, look for yourself. All I ask is, 

open your eyes to see it all. 

Senator BURNS. I am going to go to Senator Wyden now, but I 

appreciate those comments, and sure, we will take a very serious 

look at this, because I am still—we think we are on the right track 

with our piece of legislation, but that is not to say that we are written in stone of a better idea or something that could be incorporated with what we are doing, and we will probably explore that 

as we move along. 

Senator Wyden. 

Senator WYDEN. Thank you, Mr. Chairman. All of you were excellent. 

Mr. Scelson, a question for you to see if I can get it straight. You 

said that you were above-board and complying with all the laws 

and trying to act in a straightforward way, but I think I also heard 

you say, and I just want to clarify this, that you are, in fact, disguising the source of the e-mail because you believe otherwise you 

are going to get blocked by ISPs, is that right? 

Mr. SCELSON. Senator, that is a two-part question. I have not 

sent 100 percent legal mail in the last 6 months, since my last carrier breached a contract for sending legal mail. Since that time, 

again, if I send right off of one IP their systems detect how many 

e-mails come from one IP, will block this. If I send right off of my 

real IP, the carrier will come in and yank the circuit from me, so 

I have no choice but to hide this. I do not want this. If I am told 

today, you mail legal we will not shut you down, my spam days are 

over with. There is no need for spam. There are legitimate ways 

to do this. 

101 

Senator WYDEN. I understand that, and that is really what is at 

issue, and to your credit you are being very honest. What I think 

has concerned Senator Burns and I now for 4 years is that the bottom line is, is that the recipient of the e-mail cannot really tell 

where it is coming from, number 1, and number 2, if the recipient, 

again empowering the consumer, wants to tell the ISP to do certain 

things to protect them, the recipient is not in a position to do it. 

That is why we are trying to come up with a legislative solution 

here. 

And just a couple of other points. Is there any dispute among you 

five about the urgency of this effort, because I will tell you, it just 

seems to me that the volume of spam today really has the potential 

of poisoning the medium, and doing it in a real hurry. 

If you look at how fast it is going, I have been at this for three 

or 4 years now, and I am going to be looking at Senator Nelson, 

who has an attractive idea, and Senator Schumer has an attractive 

idea, but you know, those ideas of sending it to the Federal Trade 

Commission for 45 days, giving the exponential growth, I want us 

to move now, and I would just like to make sure that all of you 

are clear for the record how urgent this is, and if it is not done 

quickly, you are really talking about the potential to poison this 

medium. 

Mr. HUGHES. Senator, if I could, we needed legislation last year, 

we needed it yesterday, we need it as soon as possible, but more 

important than Federal preemptive legislation is, once we have 

that, we need strong enforcement. Legislation will be useless unless we create the deterrent effect that it is intended to create, so 

we are very supportive of legislation today. 

Senator WYDEN. I will tell you that beyond the fact that the Federal Trade Commission 2 years ago said that the enforcement 

model on the Burns-Wyden bill worked well, I am absolutely convinced, having worked on these issues since the days when I was 

Director of the Gray Panthers, that you bring a modest number of 

enforcement actions—you are not going to have to bring hundreds, 

but you bring a modest number of enforcement actions that are 

tough, that send a real message out there, that there are going to 

be consequences, that there are going to be significant consequences, and I think you change the world out there in the cyber 

arena. 

The only other point I wanted to make sure we were on the 

record, Mr. Rotenberg, you know I have enormous respect for you 

and what your organization does. We work with you on everything 

from the total information awareness program to CAPS, privacy 

issues and the like, but clearly what the states are doing is not 

working. We have got 30 states now that have enacted anti-spam 

statutes. If this was going to be solved at the state level, it would 

seem to me what the states would have put together collectively 

would have been more effective. Do any of you disagree with the 

proposition that Senator Burns and I have been advancing that 

this has got to be dealt with at the national level? 

Mr. SALEM. Just a couple of comments, Senator Wyden. First, 

there is definitely an urgency on this problem right now. A lot of 

the state legislation has talked about labeling. Labeling has not 

proven to help us solve the problem, so I think that is something 

102 

that does need to be looked at as your bill continues forward. I 

think the other thing that I would say is that we are going to need 

to invent some technology, because in my testimony I said 90 percent of e-mail today is untraceable, so there is some form of deception that is making it hard to identify who is sending it, and that 

is why I am surprised it took 24 hours. 

I think that is good, because we actually have data filters every 

five to 10 minutes to try to stay ahead of the spammers, because 

that is what is required to block and keep spam out of inboxes, so 

we absolutely support what you are doing. We would like to continue to help shape it so that it can be enforced, but there is going 

to have to be some technology invention so we can track who is the 

originator of that mail. 

Senator WYDEN. It is a fair point, and that is one of the reasons 

we tried to give a wide berth as it relates to the enforcement tools. 

We have got four enforcement tools, we have got flexibility for the 

Federal Trade Commission, because we know that the spammers 

are not technological simpletons. They are people who are constantly going to be on the cutting edge, and you can act on Tuesday 

and they will be devising something on Thursday. 

The last point that I wanted to ask about was the question in 

the New York Times report yesterday that indicated that in the 

last 2 years 200,000 computers worldwide had been hijacked without the owners’ knowledge, and are currently being used to forward 

spam. 

Now, in our legislation, we say that you cannot use an originating e-mail address the access to which was obtained by means 

of false or fraudulent pretenses or representations. We think that 

that might have been a useful tool had it been enacted to try top 

prevent the hijacking, but I am going to turn this over to Senator 

Nelson to wrap up. 

We would just like you to look at that language, because it may 

need some tweaking, but my sense is that had that part of the 

Burns-Wyden bill been on the books, that could have been used to 

derail that very serious hijacking situation, and we would like you 

to work with us, and I am not saying this is the last word. 

Mr. ROTENBERG. Mr. ROTENBERG. I wanted to say we very much supported the efforts to pass Federal legislation. We think it is necessary. We think 

your bill is a good model. We completely agree that there has to 

be a strong national approach. I think the FTC has done good work 

and the workshop was good, and I think the enforcement intentions 

are there. 

As I said, I think the real concern is simply, if you close the door 

on the states, which is not to say that they solved the problem, but 

if you largely prevent them from pursuing the problem, then I 

think that raises some problems, but beyond that, I think there is 

a lot of support in the consumer community, and it was the consumer groups actually a couple of years ago, to their credit, that 

said we have got to get a handle on the spam problem, because otherwise the Internet is going to be largely useless in terms of consumer use, and the groups that we have worked with have said, 

make this a priority, so I think if it can be done right, it will be 

a great accomplishment. 

103 

Senator WYDEN. You are absolutely right. We would not be anywhere near where we are without the consumer groups, and you 

are absolutely right on that point. The reason that Senator Burns 

and I give that activist role to the state Attorneys General to bring 

actions is that we think, again, that they bring a modest number 

of those actions, and that is a significant deterrent. 

And my final message to you five, because you have been excellent, keep the heat on us and do not let the Congress dawdle on 

this. At every possible stage for the last three or 4 years Senator 

Burns and I have been up against this argument. Well, now is not 

really the time. We need to study this. We need to send it to the 

Committee on Acoustics and Ventilation and let them look at it for 

another 6 months, and we cannot afford it. Ted Leonsis has made 

the point that this has grown so dramatically that we cannot afford 

to let that happen. 

There are a lot of good ideas in the Congress. We should look at 

them. You should tell us how to make them fit into an integrated 

system, but my message is, do not let the Congress dawdle now, 

do not let the Congress delay, so that we can get this passed. 

Mr. Chairman, are you going to chair? I know Senator Nelson 

had some questions. 

Senator BURNS. I do not have any more, and it is almost lunchtime, and I have never missed a meal and by God I do not plan 

to. 

Senator NELSON. Well, you can just turn the Committee over to 

me. 

[Laughter.] 

Senator BURNS. We already did that a while ago and it did not 

work, Senator. 

[Laughter.] 

Senator NELSON. We got a lot of business done while you were 

gone. 

Senator BURNS. You proceed on, please, Senator. We signed on 

for the term. 

Senator NELSON. Mr. Chairman, one of the characterizations 

that I would modify in some of your characterizations, your concern 

naturally about impeding the normal intercourse of commerce, and 

that is a legitimate concern also expressed by Mr. Scelson, but the 

difference, I think, that I would look at it, you gave the example 

of walking down the street and seeing advertisements, and that is 

in a public domain. 

I think when you get into personal mail coming into a personal 

box sitting in your personal home, then it is a little bit different, 

and that is what I think rises this to the level of concern where 

I think we are going to have to have some criminal laws applicable. 

I would love to have your response to that. 

Mr. SCELSON. Senator, based upon what you said is basically the 

reason I am fighting. That choice is the individual’s right. No offense to any of these individual companies. They should not decide 

if they are going to censor, read or destroy your legal mail. As an 

individual, that should be that person’s right to decide. If the carriers did not shut you down for doing it the right way, ADV is a 

way that as soon as you open your e-mail you know you can get 

rid of it. My IPs would never change. If the individual wanted to 

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block me, I have no problems with this. It is the companies that 

are going in and destroying your mail. 

If I go to your office and decide to go snoop through your mail 

and decide what you are going to get, I am not going to make it 

out the front door without going to jail, but at the same time, these 

filters are taking from your rights. They say a computer is doing 

this. There is nothing wrong with it. A human does not see this. 

Well, as an example, if you shoot someone with a gun, the gun shot 

him, not me. But I am a human, I squeeze that trigger, I am responsible. 

When they filter and censor people’s mail, a human is sitting in 

that entity. A human is responsible for destroying your private 

mail. It is the same scenario. What you are saying is absolutely 

correct. 

Senator NELSON. Well, the temporary Chairman characterized 

the problem at one point as weeds, weeds growing up, you use 

some Round-Up on them, get rid of the weeds, and I interjected 

with a big smile on my face. I said, it is not weeds, it is snakes 

in the weeds, and when the pornography starts coming at me, I 

think that is poisonous snakes, and that is where we have got to 

figure out some way to draw the line. 

Let me just ask one final question. Twenty-nine states have 

grappled with this, the most recent of which is Virginia, which has 

the strongest law, and so since Mr. Leonsis is from Virginia, what 

do you like about the new Virginia law, and are there parts of that 

that could serve for us to incorporate in this Federal legislation? 

Mr. LEONSIS. Well, the Virginia law really worked in tandem 

with what we can do commercially, and where we like the law, it 

really does give teeth especially to the Attorney General, and I 

think in all cases at the state level it is the Attorney General who 

has to go in and do the biting, and I think what is really important 

is that there be a rules of the road on a national level, and the 

states, looking at their individual laws we will have to deal with, 

it would be much better if we had a unified view from the top 

down, but we always need to be able to empower the AGs to go execute the law state by state. 

Senator BURNS. If the Senator would yield, what drove us in this 

direction, Senator Nelson, was the fact that some of us that has 

been here for a day or two know and understand and see the ramifications of trying to pass legislation that one size fits all for 50 

states, and it does not work. We tried to write policy in agriculture, 

I mean, a host of things that it just does not work, so that is the 

reason we did not want to take a giant step that erodes the state’s 

ability to deal with the situation. That is the reason we went down 

the road we went down. 

Senator NELSON. Well, I would just give in response, from the 

basis of my experience when I was in the state legislature in the 

1970s, I passed the first computer crimes law in the Nation, giving 

prosecutors the tools to go after the more sophisticated type of 

criminal that was using a computer instead of a crowbar. 

When I came to Congress, I passed the Federal computer crimes 

law. Now, it was a law that had Federal application, but it supplemented what the states were starting to do, and we have got to 

kind of find this balance. I can understand Mr. Scelson. He would 

105 

be going nuts if he had to deal with 50 different state standards, 

and so somehow you have got to have perhaps if there is a stronger 

standard in a state, that that takes precedence over the Federal 

law, but that there would be a uniformity with the Federal law to 

which they could then comply. 

Mr. SCELSON. Excuse me, Senator, what I am about to tell you 

has never been challenged before, and very few people are aware 

of this. There is a website called w3c.com. It is all the guidelines 

that were presented by the Federal Government when the Internet 

was released to the people. In those guidelines it states, ‘‘states do 

not have the right to pass laws pertaining to the Internet.’’ It has 

not stopped anyone. It has not been changed on that site, so if that 

is true, then Federal law is the only way to go with this, but as 

of so far, no one has ever fought or challenged this to my knowledge. 

Senator BURNS. Well, thank you, and Senator Nelson, we thank 

you for your participation. We are going to leave this record open 

for a couple of weeks if there is something else, and there are other 

Senators that will probably want to make inquiries, so if there are, 

you can respond both to the Senators and the Committee, and we 

thank you for your testimony today, and this Committee is adjourned. 

[Whereupon, at 12:30 p.m., the hearing was adjourned.] 

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