BILL ANALYSIS
AB 1629
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Date of Hearing: April 14, 1998
ASSEMBLY COMMITTEE ON JUDICIARY
Martha Escutia, Chair
AB 1629 (Miller) - As Amended: April 14, 1998
SUBJECT : UNSOLICITED COMPUTER ADS ("SPAMMING"): NEW CIVIL
PENALTIES
KEY ISSUES :
1) SHOULD INTERNET SERVICE PROVIDERS (ISPs) BE PROVIDED NEW CIVIL
REMEDIES FOR THE UNAUTHORIZED USE OF THEIR ELECTRONIC MAIL
NETWORKS?
2) SHOULD THE UNAUTHORIZED USE OF INTERNET DOMAIN NAMES BE
PROHIBITED AS A CRIME?
3) SHOULD THE BILL'S $15,000 CAP ON DAMAGES BE ELIMINATED TO
EFFECTIVELY DETER SPAMMING VIOLATIONS?
SUMMARY : Prohibits the unauthorized use of electronic mail
networks and provides for specified penalties. Specifically, this
bill :
1) Seeks to limit the practice of sending unsolicited advertising
by electronic mail (e-mail), which is commonly known as
"spamming," by clarifying that electronic mail service
providers control the use of their services and equipment.
2) Prohibits any individual, corporation or other entity, or a
registered user of an electronic mail service provider, from
using the provider's service or equipment in violation of the
provider's published policy prohibiting or restricting the use
of its service or equipment for sending "spam."
3) Provides that an electronic mail service provider is not
required to create a policy prohibiting or restricting the use
of its service or equipment for sending spam.
4) Allows for the recovery of civil damages by an electronic mail
service provider against spammers who violate the provider's
published policy regarding spam, either for actual monetary
damages or $50 per spam, up to $15,000 per day, whichever is
greater, and the recovery of reasonable attorney's fees.
5) Prohibits the unauthorized use of computer domain names by
adding domain name forgery to the list of computer crimes
punishable by a fine of up to $10,000 and/or imprisonment for
up to three years.
EXISTING LAW :
1) Prohibits as a crime the unauthorized access and use,
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modification, or damage of computer data, a computer, a computer
system, or a computer network. It also provides that upon
conviction of these provisions, the victim may seek civil
remedies, as specified. (Penal Code Section 502.)
2) Allows individuals to "opt-out" of receiving unsolicited
advertising via fax and imposes a $500 fine for each violation
of this provision. (Business & Professions Code Section
17538.4.)
3) Is silent on domain name protection.
FISCAL EFFECT : Unknown
COMMENTS : This measure is intended to help internet service
providers (ISPs) stop or limit spamming and prevent domain name
fraud. A "domain name" (such as "assembly.ca.gov") is the
computer term for the address used to send e-mail messages via the
Internet. The bill seeks to stop or limit spamming by (1)
allowing electronic mail service providers to adopt policies
restricting its use and to sue spammers for damage they cause to
electronic mail networks; and (2) criminalizing unauthorized
domain name use.
The author states that advertisers are currently able to transmit
hundreds of thousands or even millions of unsolicited e-mail ads
at virtually no cost. Such mass mailings, however, impose
enormous costs on the providers whose equipment and services are
used. According to the author, this bill recognizes the existing
rights of ISPs to prevent the abuse of their equipment caused by
spam. The author claims that courts around the country have
recognized that ISPs have a cognizable property interest in their
equipment and service. They have also held that third party
advertisers who use their property without authorization to
deliver unsolicited ads are liable for trespass. (See, e.g.,
Compuserve v. Cyberpromotions (E.D. Ohio 1997) 962 F.Supp. 1015.)
The author also stresses that the bill does not require an ISP to
restrict use of its equipment for the transmission of unsolicited
ads. The bill, according to the author, does not take any
position on the propriety or impropriety of unsolicited e-mail
advertising. Instead, the bill leaves that determination to the
individual providers.
Magnitude of the Problem : As reported recently by America OnLine
(AOL), on average, about 30 percent of the estimated 30 million
e-mail messages transmitted on its network each day are
unsolicited commercial e-mail. Supporters of anti-spamming
legislation argue that the high volume of junk e-mail places a
tremendous burden on electronic mail service providers when they
have to store such high amounts of data. Spam opponents note that
simply deleting junk e-mail does not end the problem for consumers
or e-mail service providers because there is no real cost to
sending mass e-mails. Rather, junk e-mail shifts the majority of
advertising costs from the advertiser to e-mail recipients because
individuals and their electronic mail service providers bear the
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costs in lost time, damaged equipment, lost productivity, and lost
business opportunities.
Domain Name Forgery Considered to be Electronic Trespass :
Spammers often use the domain names of others to disguise the
origin and content of their junk e-mail. For example, Company X
may send out a large bulk e-mail advertisement for its services
with a forged and falsified return address such as "From:
assembly.ca.gov" or "Return-Path: assembly.ca.gov". Currently, a
semiformal domain name registry exists that offers some level of
protection to domain names. However, domain name fraud is on the
rise, and it can be considered akin to personal name forgery or
trademark infringement in that a protected identity has been
falsely used. Supporters of the bill argue that prohibiting
unauthorized domain name use will help stop the theft of service
and
electronic trespass that spammers commit.
Additional Anti-Spamming Legislation : AB 1676 (Bowen), which is
also an anti-spamming bill, takes a different approach to the junk
e-mail problem (modeled after the junk fax law noted above) by:
(1) allowing consumers to "opt-out" of spam distribution lists and
(2) making spamming an infraction punishable by a $500 fine for
each violation. (That bill, unlike this one, contains no cap on
civil damages.) AB 1676 passed out of the Assembly Committee on
Consumer Protection on March 17, 1998, on a 13-0 vote, and is
currently pending in the Assembly Appropriations Committee.
In addition, AB 2640 (Bowen) is another anti-spamming measure
which creates civil remedies for internet service providers (ISPs)
subject to spamming and other unauthorized uses of their computer
networks. Specifically, AB 2640 allows for recovery of actual
damages suffered or an alternate amount determined as follows: $10
per megabyte of data copied without authorization; $10 per
account, per day, established, used, or given away without
authorization; or $10 per megabyte of storage used without
authorization on the provider's server or equipment. AB 2640 also
provides an additional civil penalty of $10 per name or e-mail
account for persons found liable for the authorized seizure of
these names or accounts from an ISP. (That bill, unlike this one,
also contains no cap on civil damages.) AB 2640 is pending in
this Committee.
Alleged Unconstitutionality of the Bill : Detractors of this type
of legislation have argued that anti-spam measures may be an
unconstitutional infringement on commercial free speech and that
any government regulation of the Internet may have a dampening
effect on Internet commerce.
However, in Destination Ventures, Ltd. v. FCC (9th Cir. 1995) 46
F.3d 54, 56, the Ninth Circuit held that Congress may supplant
private choice and completely ban junk faxing when that mode of
advertising necessarily shifts advertising costs from the sender
to the recipient. In the Destination Ventures case, the cost to
recipients was the paper and toner used in their fax machines.
E-mail holds many of the same features that may generate a similar
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cost-shifting burden and judicial analysis. The cost to
commercial e-mail providers includes, among other things:
additional bandwith to deal with high-volume traffic; additional
storage for bulk messages; and more staff to deal with bulk e-mail
traffic. The cost to users includes: additional connect time to
download unsolicited commercial e-mails; additional toll charges;
and lost productivity due to the time it takes to filter and
delete messages.
Furthermore, in Moser v. FCC (9th Cir. 1995) 46 F.3d 970, 975, the
Ninth Circuit held that Congress may completely ban advertising
that is particularly intrusive on residential privacy when
recipients have no effective means of opting out of receipt of
such intrusive communications, as long as advertisers have
alternative avenues open to them.
This bill adopts a much narrower approach to the problem of
unsolicited commercial e-mail. It does not effect an
across-the-board ban on its use. Instead, it allows individual
providers to decide for themselves whether they want to bar or
limit its use by adopting specific written policies regarding
"spam" on its network. The bill's provisions which impose civil
liability against advertisers who send spam in violation of an
ISP's policy would likely survive constitutional challenge since
this is a less restrictive means for addressing the problem than
the total bans which were approved in the Destination Ventures and
Moser cases, and the same type of cost-shifting
occurs in the case of unsolicited commercial e-mails.
ARGUMENTS IN SUPPORT : The ISP Consortium, the world's largest
industry association of Internet Service Providers, supports AB
1629, stating that it offers Internet users sufficient protection
from unwelcome and intrusive commercial spam. ISP Consortium
states that "it is our fervent hope that this bill will pass into
law, and resolve the problem of spam in California."
The Coalition Against Unsolicited Commercial E-mail (CAUCE), which
is the Internet's oldest and largest anti-junk-e-mail lobbying
organization with nearly 10,000 members nationwide, also supports
AB 1629. CAUCE states that polls show that the large majority of
Internet users are in favor of legal protection. According to
CAUCE, it is vital that there be some protection against
commercial interests who would drown personal, political, artistic
and religious speech in the relentless blare of advertising.
International Business Lists (IBL), a for-profit venture which
conducts e-mail advertising, also strongly supports AB 1629. IBL
utilizes only "opt-in" methods, meaning that they send messages
only to users that give prior permission. IBL states that spam
hinders legitimate Internet advertising companies, which create
new jobs, new products, and new technologies. IBL believes that
restricting spam fosters the growth of electronic commerce,
preserving e-mail for legitimate and valuable communication.
The Packet Clearing House (PCH), which is made up of 24 of the
largest California ISPs, representing nearly 2 million California
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Internet users, also supports AB 1619. PCH believes that the bill
is "the only effective anti-spam measure under consideration."
PCH states that the bill will "protect our networks from the theft
of service and electronic trespass which are the modus operandi of
spammers, and to protect our customers from unwelcome touting of
pyramid schemes, pornography, and illegal gambling."
Zocalo, an ISP with over 100,000 customers in California, also
supports the bill. Zocalo states that "the theft of resources,
network bandwith, and computer time which spammers perpetrate both
slows down and increases the monthly cost of Internet access not
only for our customers, but for everyone on the Internet."
ARGUMENTS IN OPPOSITION : Consumer Attorneys of California (CAOC)
opposes AB 1629 unless it is amended to eliminate the bill's
$15,000/day cap on damages. CAOC states: "We applaud your effort
to provide a meaningful remedy to stop junk e-mail, but we do not
believe that there is a justification for an artificial cap on
damages. We respectfully request the deletion of that language."
ISSUE: SHOULD THE BILL'S $15,000 CAP ON DAMAGES BE ELIMINATED TO
EFFECTIVELY DETER SPAMMING VIOLATIONS ? As noted above, the
magnitude of the spamming problem cannot be overestimated. Using
AOL's estimates that 30% of its 30 million e-mail messages each
day are spam, this means that 9 million unsolicited commercial
e-mails are being sent each day on their network alone. New bulk
e-mail companies are cropping up every day offering, for example,
the sale of over 50 million e-mail addresses for only $149, and
mass mailing software that will send over 250,000 e-mails per
hour!
However, under the bill, at $50 a message, it would only take 300
messages (even if millions are sent) to reach the $15,000 per day
cap. The above figures dramatically demonstrate that the problem
for ISPs isn't with 300 spam messages a day. Under the bill as
currently written, the person sending 300
messages would be liable for the exact same amount as the person
sending 3,000, 300,000, or even 3 million or more messages per
day. At such a low amount, many of the larger spammers would
simply consider the potential $15,000 a day penalty as a cost of
doing business. The Committee may wish to amend the bill to
completely eliminate the $15,000/day cap on damages to have a
"fighting chance" to deter bulk spamming violations.
REGISTERED SUPPORT / OPPOSITION :
Support Opposition
ISP Consortium Consumer Attorneys of California
Packet Clearing House
International Business Lists
Coalition Against Unsolicited Commercial E-mail
Consumer Federation of California
Analysis prepared by : Dan Pone / ajud / (916) 319-2334
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