| Text of
Printed Hearing The Committee on Energy and Commerce W.J. "Billy" Tauzin, Chairman Legislative Efforts to Combat Spam <DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:88428.wais]
LEGISLATIVE EFFORTS TO COMBAT SPAM
=======================================================================
JOINT HEARING
before the
SUBCOMMITTEE ON
COMMERCE, TRADE, AND CONSUMER PROTECTION
and the
SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 9, 2003
__________
Serial No. 108-35
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
88-428 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
----------------------------------------------------------------------------
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas Ranking Member
FRED UPTON, Michigan HENRY A. WAXMAN, California
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania RICK BOUCHER, Virginia
CHRISTOPHER COX, California EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina SHERROD BROWN, Ohio
Vice Chairman BART GORDON, Tennessee
ED WHITFIELD, Kentucky PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois BART STUPAK, Michigan
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING, GENE GREEN, Texas
Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania TOM ALLEN, Maine
MARY BONO, California JIM DAVIS, Florida
GREG WALDEN, Oregon JAN SCHAKOWSKY, Illinois
LEE TERRY, Nebraska HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho
Dan R. Brouillette, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Commerce, Trade, and Consumer Protection
CLIFF STEARNS, Florida, Chairman
FRED UPTON, Michigan JAN SCHAKOWSKY, Illinois
BARBARA CUBIN, Wyoming Ranking Member
JOHN SHIMKUS, Illinois HILDA L. SOLIS, California
JOHN B. SHADEGG, Arizona EDWARD J. MARKEY, Massachusetts
Vice Chairman EDOLPHUS TOWNS, New York
GEORGE RADANOVICH, California SHERROD BROWN, Ohio
CHARLES F. BASS, New Hampshire JIM DAVIS, Florida
JOSEPH R. PITTS, Pennsylvania PETER DEUTSCH, Florida
MARY BONO, California BART STUPAK, Michigan
LEE TERRY, Nebraska GENE GREEN, Texas
ERNIE FLETCHER, Kentucky KAREN McCARTHY, Missouri
MIKE FERGUSON, New Jersey TED STRICKLAND, Ohio
DARRELL E. ISSA, California DIANA DeGETTE, Colorado
C.L. ``BUTCH'' OTTER, Idaho JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana (Ex Officio)
(Ex Officio)
(ii)
Subcommittee on Telecommunications and the Internet
FRED UPTON, Michigan, Chairman
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas Ranking Member
CLIFF STEARNS, Florida BOBBY L. RUSH, Illinois
Vice Chairman KAREN McCARTHY, Missouri
PAUL E. GILLMOR, Ohio MICHAEL F. DOYLE, Pennsylvania
CHRISTOPHER COX, California JIM DAVIS, Florida
NATHAN DEAL, Georgia RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky EDOLPHUS TOWNS, New York
BARBARA CUBIN, Wyoming BART GORDON, Tennessee
JOHN SHIMKUS, Illinois PETER DEUTSCH, Florida
HEATHER WILSON, New Mexico ANNA G. ESHOO, California
CHARLES W. ``CHIP'' PICKERING, BART STUPAK, Michigan
Mississippi ELIOT L. ENGEL, New York
VITO FOSSELLA, New York ALBERT R. WYNN, Maryland
CHARLES F. BASS, New Hampshire GENE GREEN, Texas
MARY BONO, California JOHN D. DINGELL, Michigan,
GREG WALDEN, Oregon (Ex Officio)
LEE TERRY, Nebraska
W.J. ``BILLY'' TAUZIN, Louisiana
(Ex Officio)
(iii)
C O N T E N T S
__________
Page
Testimony of:
Beales J. Howard, III, Director, Bureau of Consumer
Protection, Federal Trade Commission....................... 24
Betty, Charles Garry, President and CEO, EarthLink........... 31
Curran, Charles, Assistant General Counsel, America Online... 35
Hirschman, Kenneth, Vice President and General Counsel,
Digital Impact............................................. 52
Misener, Paul, Vice President for Global Policy, Public
Policy, Amazon.com......................................... 48
Murray, Christopher, Legislative Counsel, Consumer Union..... 60
Rubinstein, Ira, Associate General Counsel, Microsoft
Corporation................................................ 41
Selis, Paula, Senior Counsel, Washington State Attorney
General.................................................... 57
(iv)
LEGISLATIVE EFFORTS TO COMBAT SPAM
----------
WEDNESDAY, JULY 9, 2003
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Commerce, Trade, and
Consumer Protection joint with the Subcommittee
on Telecommunications and the Internet
Washington, DC.
The subcommittees met, pursuant to notice, at 1:03 p.m., in
room 2123, Rayburn House Office Building, Hon. Cliff Stearns
(chairman, Subcommittee on Commerce, Trade, and Consumer
Protection) and Hon. Fred Upton (chairman, Subcommittee on
Telecommunications and the Internet), presiding.
Members present, Subcommittee on Commerce, Trade, and
Consumer Protection: Representatives Stearns, Upton, Cubin,
Shimkus, Shadegg, Bass, Ferguson, Issa, Tauzin (ex officio),
Schakowsky, Solis, Markey, Davis, Stupak, Green, McCarthy,
Strickland, and Dingell (ex officio).
Members present, Subcommittee on Telecommunications and the
Internet: Representatives Upton, Stearns, Cox, Cubin, Shimkus,
Wilson, Bass, Walden, Tauzin (ex officio), Markey, McCarthy,
Davis, Boucher, Eshoo, Stupak, Engel, Wynn, Green, and Dingell
(ex officio).
Also present: Representatives Burr and Holt.
Staff present: David Cavicke, majority counsel; Ramsen
Betfarhad, majority counsel; Shannon Vildostegui, majority
counsel; Will Nordwind, majority counsel; William Carty,
legislative clerk; Gregg Rothschild, minority counsel; Jonathan
J. Cordone, minority counsel; Peter Filon, minority counsel;
and Nicole Kenner, minority research assistant.
Mr. Upton. Good afternoon. Pleased to hold this joint
subcommittee hearing today with my good friend Cliff Stearns,
Ed Markey and Jan Schakowsky. Today's hearing is entitled,
``Legislative Proposals to Combat Spam.''
I would note that when I returned from our July 4 break, I
found dozens of spam e-mails on my system last night, 3 or 4
times the normal for not cleaning it up for a couple of weeks.
This is a watershed moment for the Congress, and if we work
together as a Congress, I am confident that after many years of
fits and starts we may finally be in a position to respond to
our constituents' plea for help in protecting their in-boxes
from a flood of annoying junk e-mail and, more disturbingly,
the offensive smut.
Efforts in the last couple of Congresses have fallen short,
particularly because of squabbles between committees of
jurisdiction. At the end of the day, we have had some terrific
debates about combating spam but the bills have just died.
Meanwhile, spam has proliferated, consumers patience has worn
thin, and the volume of spam threatens to clog the arteries of
the Internet.
I know every member of this committee and these
subcommittees wants to combat spam. Vice chairman of this full
committee, Mr. Burr, has introduced legislation, H.R. 2214,
which would, at its core, empower consumers to opt out of
receiving commercial e-mail. I would note that Mr. Burr's bill
not only has the support of Chairman Tauzin, Mr. Stearns,
myself and others but even more--well, maybe not more
significantly but certainly important, the Judiciary Chairman,
Jim Sensenbrenner. This is indeed a major development and bodes
well for our efforts to once and for all move beyond the dead
bills and committee squabbles of the past, get legislation to
combat spam signed into law.
I also want to commend Mr. Green and Mrs. Wilson for
introducing their legislation, H.R. 2515. I was pleased to see
that when this bill was unveiled it contained so much common
ground between it and the Burr-Sensenbrenner-Tauzin bill.
Indeed, both bills apply opt-out to all commercial e-mail. Both
bills rely upon the FTC, the DOJ, State AGs and ISP private
rights of action for enforcement. These bills are not that far
apart, and I am convinced that the gaps can be bridged. Both
bills got sequential referrals to the Judiciary Committee, so
it is imperative that we avoid the inner committee pitfalls of
the past if we are going to deliver for the American people.
Based on the fine spadework of Mr. Burr, Tauzin and
Sensenbrenner to reach significant accommodation between the
two committees prior to the introduction of the bill, I believe
to their credit we are much closer to the goal line than ever
before. Mr. Green and Mrs. Wilson's proposal are very similar
in many respects, which I view as a further good sign that Mr.
Burr, Chairman Tauzin and Sensenbrenner came pretty close to
hitting the sweet spot.
Of course, like every other bill, H.R. 2214 was introduced
with the expectation that it likely would be perfected along
the way through the legislative process. That is what hearings,
markups, and house floor consideration--not to mention the
conference with the Senate--are for. Mr. Green and Mrs.
Wilson's bill provides some suggestions on where we can improve
our product, and I suspect that we will hear about some of
those today. For instance, we can tighten definitions to ensure
that we close down any potential and unintended loopholes.
I also support expanding AG enforcement to cover not only
the fraud provisions of the bill but also instances where
marketers fail to put required inclusions in their e-mails and
where marketers fail to honor consumer opt-out requests. I also
think that we can beef up the monetary caps and aggregate caps
on State AG recoveries, and I pledge to continue working with
all members of this committee in a bipartisan manner to make
these and other productive improvements upon the final product
as we continue to work in a cooperative fashion with the
Judiciary Committee.
To paraphrase my old boss, Ronald Reagan, it is amazing
what we can done if you don't worry so much about who gets the
credit. When it comes to combating spam there is plenty of
credit to go around in this committee on both sides of the
aisle as well as in the Judiciary Committee too. Mr. Burr, Mr.
Green, Mrs. Wilson, so many others deserve such credit. So if
we can just learn from the past, work together, avoid the
pitfalls, I am confident we will succeed in delivering anti-
spam legislation to the American people before too long. At
this point I yield to my friend from Massachusetts--maybe I
don't yield to him--Mr. Markey, for 5 minutes for an opening
statement.
Mr. Markey. I thank the chairman very much. This is the
second round for me in a battle against spam, and the last
round was very bitter, it was a multi-year fight, but,
ultimately, I was successful. Because spam is to the Internet
what Spam has been to culinary critics for years. For years,
millions of little kids, and that was my brothers and I in our
house in the 1950's, my mother was constantly serving
unsolicited Spam to my brothers and I.
And telling us it was good for us and telling us just
because she had a monopoly and just because she controlled the
capacity to Spam my brothers and I sometimes 3, 4 times a week,
always unsolicited. And we as consumers had very little ability
to protect ourselves successfully when we were 8 or 9, but by
the time we were 11 or 12 and we were able to organize better,
we ultimately were able to just stop the scourge of Spam. Now,
once again, spam raises its ugly head and consumers out there
are looking for relief from unsolicited invasions, especially
in the privacy of their home where they should have more
control over what it is that has allowed entry into that sacred
domain.
I want to salute the principal sponsors of the spam
legislation that I have cosponsored which has been offered by
Mrs. Wilson and by Mr. Green. I think it is important for us to
work with the other members who are working on other approaches
on this legislation, the chairman and others. This committee
approved spam legislation authored by our two colleagues in the
previous Congress, and I believe the bill they have introduced
in this Congress is an improvement over previous versions. It
is sensible regulation of certain Internet-based conduct and
includes realistic but tough enforcement measures. It will help
to preserve the best of what the Internet offers consumers and
to businesses while helping consumers and industry stem the
tide against the daily deluge of unsolicited commercial e-
mails.
One issue I want to highlight that I believe the Committee
ought to tackle as well is wireless spam. As wireless
technology advances and becomes like the traditional phone
networks and network for sending data, text and images in
addition to voice services, it is predictable that spam will
migrate to wireless services. When a computer user logs on in
the morning and finds 150 spam e-mails and has to spend time
deleting all of these items, it is a clear nuisance. Think
about the prospect of driving home and having your wireless
phone ring and buzz as all of these spam e-mails arrive. It
will be spam that follows you wherever you bring your phone. It
will be even more of a nuisance and more burdensome to
consumers to the extent to which they may pay their wireless
phone company based upon the number of text messages received
or sent. This is a future that is right around the corner
unless we act. It also has become the plague of millions of
wireless users in Asia and other parts of the world. Our
colleague, Rush Holt, has also introduced legislation that aims
to address this issue. I believe that we can tailor a remedy
for wireless spam that recognizes that spam to a wireless phone
is even more intrusive than it is to a desktop computer.
I look forward to working with all of my committee
colleagues on addressing this issue as we attempt to reach a
consensus committee position on the underlying issue. Again, I
want to commend you, Mr. Chairman, Chairman Stearns, and I look
forward to working with Chairman Tauzin and Mr. Dingell and the
other members on this very important legislation.
Mr. Upton. Okay. I now yield to the chairman of the
Subcommittee on Commerce, Trade, and Consumer Protection of
which we have having a joint hearing, Mr. Cliff Stearns from
Florida.
Mr. Stearns. I thank my colleague from Michigan and I
welcome the witnesses and I am pleased to co-chair this with my
colleague, Mr. Upton.
I think no one disputes the great value of e-mail. It has
brought efficiency and productivity to all of us and helped us
in a short period of time, and it has become critical,
ubiquitous, inexpensive and a very effective medium of
communication. It is a communication medium that at least
according to one survey 75 percent of us are not willing to
forgo for even telephone service. The evidence that e-mail is
indeed the killer application of the information and knowledge
age can be found simply in our routines, our daily routines at
work or play, where routinely, like Mr. Upton indicated, is
going through our e-mails and deleting what we have to do.
But, of course, a lot of this is filled, our e-mails are
filled with unwanted e-mails asking us to buy certain products
ranging from the real products to the absurd. I guess I
personally don't have a problem with the marketing per say.
After all, a consumer-based economy is highly dependent on
marketing to differentiate the array of goods that we have and
services to the consumers. But I think the problem is twofold
after you look at it from there.
First, the marginal cost of sending the additional e-mail
is just about zero. Senders of commercial e-mail have no
incentive to target their marketing. Thus, the networks and
systems that support e-mail are flooded with these e-mails.
Recent estimates suggest that as much as half of all e-mails
are composed of such commercial solicitations. Now, someone
bears the cost of this voluminous unwanted solicitations, and
of course that someone, ultimately, is the consumer, the user
of e-mail. We will pay, as the e-mail service providers buy
more equipment. They will pass it on to us. We will also pay,
all of us, in lost time and productivity--the time we have to
go through and delete those all these e-mails.
The second problem that I see is that e-mail communications
make accountability a lot more difficult. Unscrupulous people
use it to advance fraudulent and deceptive acts, and even good
commercial actors are tempted to take advantage of this lack of
accountability.
So I think targeted legislation that can bring about a
greater level of accountability to e-mail communications is
good. I think H.R. 2214 is that bill. It enjoys the support of
a lot of members, including the chairman of this committee as
well as the chairman of the Judiciary Committee, which is very
important. This type of cross-committee cooperation is very
important. It is necessary in order for us to enact finally
this legislation on spam. I am also pleased that some of the
leading voices for anti-spam legislation, indeed pioneers in
this effort, colleagues on my committee, are also interested in
trying to work through and pass legislation finally. I am
particularly talking about the gentlelady from New Mexico, Ms.
Wilson, and my colleague, Mr. Green and Mr. Boucher. So we have
an opportunity for a bipartisan bill.
I believe that effective Federal legislation should bring
about greater accountability as a bottom line. That greater
accountability can be achieved by strengthening existing laws--
making sure that fraud and deception is prosecuted and
subjected to severe penalties. In addition, I think that
legislation should encourage accountability through adoption of
certain best practices by e-mail marketers. I know a number of
witnesses today have their own thoughts on this issue. I have a
proposal that I think would advance best practices in the
market and in turn inject greater accountability. So I hope to
discuss this proposal later.
In conclusion, with an observation I think that our witness
will probably confirm, legislation is only one part of the
solution. I think many of you on the witnesses out there could
propose a technical solution. Technology, consumer education,
industry cooperation, in my view, are the key tools in
combating spam and injecting real and effective accountability.
We must also consider the transnational dimensions of spam. It
is an international problem that will require increased
international cooperation to combat. So I hope to introduce
bipartisan legislation before August recess that would
strengthen the Federal Trade Commission's ability to address
the growing problem of transnational fraud, including spam that
is not home grown. Thank you.
Mr. Upton. At this point, I would recognize the vice chair
of the Subcommittee on Commerce, Trade and Consumer Protection,
the gentlelady from Illinois, Ms. Schakowsky.
Ms. Schakowsky. Ranking, actually, but that is good.
Mr. Upton. I am sorry.
Ms. Schakowsky. No, that is all right.
Mr. Upton. I am sorry, the ranking member.
Ms. Schakowsky. No. I thank----
Mr. Upton. We thank you all on this side of the aisle. We
will get that voter registration changed in Illinois.
Ms. Schakowsky. I thank Chairman Upton and Chairman Stearns
for holding this hearing today on spam. I wanted to ask
unanimous consent to place in the record a statement by
Congressman Rush Holt, which focuses on wireless spam.
Mr. Upton. Without objection.
[The prepared statement of Hon. Rush Holt follows:]
Prepared Statement of Statement of Hon. Rush Holt, a Representative in
Congress from the State of New Jersey
I am pleased that the Subcommittees have convened this joint
hearing to explore ways to address the mounting problem of unsolicited
e-mail advertising, or spam, which has become perhaps the biggest
nuisance of the Information Age.
I urge the committee to include in their legislation provisions to
combat a related problem that has gotten out of hand in some countries
and is growing ever worse in the U.S.--spam sent to wireless phones
through text messaging.
The Japanese are already fighting off a tsunami of cell phone spam.
On one recent day, the 38 million customers of the largest Japanese
wireless company, NTT DoCoMo, received 150 million pieces of spam. Even
today, after passage of anti-spam laws in Japan, DoCoMo's subscribers
still receive up to 30 million wireless spam messages each day. This
has caused millions of Japanese wireless phone users to simply stop
using their cell phone service.
So far, U.S. cell phone users have been largely spared this torrent
of annoying, unwanted messages. I presume this is because a lot of
telemarketers don't believe there are enough text-capable cell phones
in the country. Most new phones are text capable, however, and the
number of text messages sent in this country has been rising rapidly,
quadrupling from 250 million messages sent in December 2001 to 1
billion messages sent in December 2002. 17% of cellular customers,
about 23 million people, currently use text messaging--including 45% of
cell phone users in the lucrative 18-to-25-year-old category. Direct
marketers are already beginning to salivate.
I have introduced the Wireless Telephone Spam Protection Act as
H.R. 122. This bill is intended to launch what could be called a
preemptive attack against wireless spam before it spins out of control
in the United States. Congress too often acts once the fire is already
lit. This time, we should put the fire out before it gets out of
control.
I want to emphasize that not only should anti-spam legislation
incorporate wireless spam, it should also set stronger penalties and
consumer protections. Under most wireless plans, consumers pay for each
message they receive--they're paying to be spammed. That is why
consumers should not have to opt out of text message spam after they've
already received it, but instead should only receive those messages
they choose to get.
Mr. Markey has recognized the importance of addressing the wireless
spam problem, and he has informed me that he intends to address it
during markup. I want to express my appreciation to Mr. Markey for his
efforts and for all of his leadership on telecommunications issues.
I hope we can stop the wireless spam tsunami before it floods us
all.
Ms. Schakowsky. My constituents have contacted me about how
much they hate spam, and it is important to note that spam is
more, however, than just a time-consuming nuisance to people. A
great deal of spam is fraudulent and obscene. According to the
Wall Street Journal and Reuters, 50 percent with children with
e-mail accounts receive e-mail with pornography. Under the
current law, parents are virtually powerless to stop their
children from receiving inappropriate and disturbing
solicitations. We need to give parents the tools to protect
their children. First Amendment rights need to be protected,
but predators that target our children and grandchildren must
be prevented from contacting them in the first place.
Spam has also provided enormous opportunities for scam
artists. Shamefully, many spammers take advantage of senior
citizens and children. This past April the FTC released a
report analyzing false claims made in spam. The FTC analyzed
1,000 pieces of spam and found that 66 percent contained
deceptive information. The FTC and State law enforcement
agencies need broader enforcement authority to go after all bad
actors regardless of where they make their pitch--from the
Internet, on television or in the newspaper. Cyber criminals
need to be held accountable.
It is important to note that spam is a problem that extends
far beyond fraudulent and obscene. We are all overwhelmed with
solicitations for loans and various products and Viagra.
Consumers do not want to receive e-mails from these businesses.
Maybe some do but those who don't should be able to opt out of
receiving future solicitations if they wish. Unwanted spam also
hurts our economy. It clogs networks and it causes entire
networks to crash. Experts estimate spam will cost U.S.
businesses over $10 billion this year. The problem will only
get worse over time. According to industry experts, the volume
of spam rose from 8 percent of all e-mail in January 2001 to 45
percent in 2003. Spam is likely to exceed 50 percent of all e-
mail by 2004. It is clear it is a major problem. The question
is what can we do to help our constituents and stop spammers
from sending unwanted solicitations while at the same time
ensuring that e-commerce remain vibrant.
Spam is a very difficult problem to solve partly because it
is hard to track down many of the culprits. A great deal of
spam is sent from abroad, and many spammers do not have fixed
addresses, are difficult to track down. But I am glad that we
are taking action. I am a co-sponsor of 2515, the Anti-Spam Act
of 2003, and I support the bipartisan bill because it gives the
FTC and State attorneys generals strong enforcement powers, has
a comprehensive opt-out provision and has a clear definition of
what types of commercial e-mail should be regulated. I want to
just list a couple of concerns, though, that I have about 2214
in its current form and hope that they can be worked out.
One, it limits the amount of damages that an attorney
general can pursue from the spammer that violates the law.
Second, it prevents from States from enforcing the opt-out
list. Third, it forces the FTC to establish a knowledge
standard before issuing an injunction. Fourth, it applies only
to e-mails that have a solicitation as a primary purpose, and I
am afraid companies will be able to bury solicitations in their
e-mail, that people will find the loopholes.
So I look forward to working with all my colleagues on both
sides of the aisle on this problem. We were able to do the do
not call list and that helped the FTC and passed legislation
that helped the FTC to implement it. We have gotten an
overwhelming positive response and now it is time to tackle
spam. It is clear that we need to take action before the
problem gets worse. Thank you, both chairman.
Mr. Upton. I recognize the chairman of the full committee,
Mr. Tauzin from Louisiana.
Chairman Tauzin. Thank you, Chairman Upton, and thank you,
Chairman Stearns, for holding this important joint hearing
today. I wish that Mr. Markey was still here because once again
today I have to defend--oh, you are here, you are back--I have
to defend someone against another unfair, unwarranted,
unreasonable political attack, this time the mystery meat known
as spam. I heard you, Mr. Markey, talk about how growing up you
and your brothers were subjected to unwarranted and unwelcomed
and unsolicited adventures with the mystery meat known as Spam.
That never troubled me as a young man. Before there was trail
mix, before there was power bars, as a young hunter and
fisherman there was Spam, and we loved it and enjoyed it and
still do. What upset us the most was powdered meat. Now, that
really--I never could understand--I mean if you want meat, you
should get meat, you should not get powder. I never understood
that when I was a child.
Mr. Markey. Yes. Well, we didn't have those cajun spices
that kills the taste, you see. I mean in an Irish home you eat
it straight. There is no extra----
Chairman Tauzin. Yes, meat and potatoes, I know. And then
the other thing that really got us was Vienna sausage, I mean
unsolicited Vienna sausage. Why Vienna? I mean we had Aunt
Doolie sausage, we had great venison sausage, we had every kind
of sausage you can imagine.
Mr. Upton. Did you have a cat or something?
Chairman Tauzin. Huh?
Mr. Upton. Didn't you have a cat or something that could
eat some of that?
Chairman Tauzin. I thought you were saying something else.
Bottom line is we had other things to object to besides the
mystery meat, Spam, and I want to defend it; it is still a good
product. But when it comes to unsolicited e-mails spam is
obviously a scourge.
If our house is our castle, our castle is under siege right
now, it really is. I mean we have gone after some who have put
it under siege. We helped pass the telemarketing do not call
list and Americans are calling like crazy to get on that list
and to stop unwarranted, unsolicited telemarketing calls. We
have allowed every citizen in the country to call the post
office and stop the junk mail from hitting my mail box. We can
say no to unwanted visitors, to unwanted telemarketing calls.
We can say no to unwanted postal mailings into our mailbox. It
is time we give Americans a chance to say no to unwanted e-
mails. It is that simple. And the bills we are working on are
going to do that and give Americans a new right.
And we have finally got concurrence with the Judiciary
Committee, we are working on a common product. I really want to
thank Mr. Burr and Mr. Upton and Mr. Stearns and all the
members who worked to negotiate that product with the
Judiciary. I want to thank Mr. Dingell, and I particularly want
to thank Ms. Wilson for their assistance in these negotiations.
They are still going on, we are still getting concessions. I
think we are getting closer and closer to a final product that
is going to join the Wilson-Green effort with the effort our
two committees are making, and instead of having a product that
is blocked at another committee from getting to the floor, now
we will have a joint committee product. We will have a product
on the floor, and the Senate is likely to pass the product. We
are likely to get some real action on this issue this year, and
I want to thank you all for it. I particularly want to commend
Ms. Wilson for again being an outstanding leader on this issue
as she was last year, last Congress, and to commend all of you
for recognizing that this is not going to happen if we fight
committee battles over it. It is going to happen when we all
come together.
I particularly want to point out the three features of this
bill quickly. It creates consumer choice for the first time in
this area, it has got huge new anti-fraud provisions. And by
the way, we have been improving them in these negotiations,
including new rights for the AGs of our State, strong
enforcement provisions, and as Mr. Markey pointed out, it
begins to do something now about a problem that has already hit
Europe, already hit Asia, it is really big in the common market
already, and that is the problem of wireless spam, which we
expect is going to be a huge problem in this country if we
don't cut it off in its tracks. And we have begun that process
in this bill.
So when you think about the fact that this bill is now
coming together in such a great bipartisan way and more
importantly between our two great committees of Judiciary and
Commerce, we have got a real chance to give consumers a real
chance to defend their Internet castle from this siege that so
many are under.
I have been asked is this an attack on the First Amendment,
the free speech amendment? It is not. This is about the right
to listen or not listen. Husbands understand that. We call that
selective hearing, and wives get real angry with us when we do
it. But Americans have always enjoyed the right to turn it off,
not to hear, not to listen. That doesn't affect people's right
to speak. They can speak all they want. You don't have to
listen if you don't want. What we are talking about in this
case is--on the Internet--your right not to receive information
you don't want, particularly when it is egregious and offensive
information, in many cases, into your home, the same way you
can say no to those kind of products when people sought to
deliver them over the mail or in a telephone conversation.
So this is a great effort, and I want to thank our two
subcommittees for working as closely as they have and for so
many of you, Mr. Green, and for so many of you coming together
and trying to find a common product. We are going to have one
next week, and we will deliver a great victory to the floor,
and eventually we will have the signature of the White House
and Americans will be better off for it. God bless you. Thank
you.
Mr. Upton. Recognize the ranking member of the full
committee, the gentleman from the great State of Michigan, Mr.
Dingell, for an opening statement.
Mr. Dingell. Mr. Chairman, I thank you, and I commend you
and Chairman Stearns for holding this hearing today. Spamming,
cramming, slamming, they are all unacceptable practices, and I
want to say to my colleagues, the chairman of the committee, to
the gentleman--rather to the gentlewoman from New Mexico, Ms.
Wilson, to my two friends, the chairmen of the subcommittees,
Mr. Green, and to the others, including my dear friend Mr. Burr
who have worked on this matter. I commend them and I am
appreciative of what it is they have done.
I want to observe that this committee has made a
significant effort to combat spam. During the past two
Congresses we have reported legislation to protect consumers
from the increasing amounts of commercial e-mail that fill in
their in-boxes. Unfortunately, the legislation has yet to make
it to the President's desk. I hope this year will be different.
I would note that we are engaged in a discussion with members
of the Judiciary Committee because of a rather unfortunate
shared jurisdiction on this matter. I would note that the
position of the other committee is one which strongly favors a
much weaker and much less protective bill of the rights and the
concerns of American consumers.
As all of us are aware, the amount of spam clogging the
information networks of this Nation has risen several fold
since we last considered legislation on this matter. In fact,
the volume has increased to such levels that it is degrading
the usefulness of e-mail as a quick means of communication. For
this reason, the call for action has constantly grown. Indeed,
spam legislation now enjoys broad support across the political
spectrum, even from industry groups that once opposed it. I am
confident that the resolve of this House to pass strong
legislation has increased and will grow as the people make
their wishes and their concerns known.
Today we find ourselves examining two bills. The first,
H.R. 2515, is a strong bill put forward by two of the leaders
on this issue: Mr. Green and Ms. Wilson. I am pleased to join
with them and a bipartisan majority of the committee who are
co-sponsors of the bill on which they are so well leading. The
second, H.R. 2214, was introduced by my dear friend, Mr. Burr,
along with Chairman Tauzin and Chairman Sensenbrenner. This
bill has several unfortunate weaknesses. I remain hopeful that
the competing bills can be reconciled into one strong bill. And
I want to make clear my affection and respect for the sponsors
of all of the legislation I discussed.
Four criteria will tell us whether a compromise bill would
provide immediate protection for consumers and would prevent
network congestion. First, it must afford State attorneys
general and the Federal Trade Commission, FTC, full enforcement
authority over each provision in the bill. Lack of enforcement
is simply to assure that we pass out nothing but a sham and a
fraud. The Burr-Tauzin bill, and I say this with respect for
its authors, fails to do this. It is unnecessary and wholly
unprecedented to place arbitrary caps on the damages that State
attorney generals may seek from serial spammers.
And I have a couple of words to say about serial spammers
and folk like that. We have a number of different things in
this world for which we have no great affection. One is
cockroaches and another is spammers. The Bible doesn't say what
we can do about cockroaches, so we regard them as pernicious
pests and step on them at every occasion. And it does tell us
that we have to be kind to our fellow man. It doesn't say that
we have to tolerate them clogging our in-boxes in our different
electronic devices with the kind of nonsense and sometimes
pernicious stuff that they dispense to their fellow citizens.
And so we can step on them at least figuratively by bringing to
a halt some of the more outrageous of their practices. I
believe that the legislation that we are going to confront
today has to address this fact.
Second, the legislation should apply to all commercial e-
mail, and it should not contain limiting purposes or limiting
primary purpose language that is found in the Burr-Tauzin bill.
From a consumer's perspective, spam is spam, and in my
experience, consumers find no distinction between good spam and
bad spam. They call it all bad spam. The Burr-Tauzin bill would
create a new category of legalized spam that would be exempt
from the opt-out provision and from State regulation. I don't
know anybody except those who would benefit from this that want
this kind of arrangement. Smart marketers would seize this
loophole to create spam that fits within this definition and is
exempt from law.
Third, the bill should also contain strong language
protecting consumers, particularly children, from unwanted
sexually oriented e-mail. Only the Wilson-Green bill ensures
that consumers will not be required to view offensive material
before opting out. This language is then critical and is
crucial to a successful piece of legislation.
Fourth, the bill must contain a sufficiently broad
definition of affiliates so that consumers are not required to
opt out of each affiliates' operation within a giant
corporation. Let me take one for example: Citigroup has
hundreds of affiliates, and Burr-Tauzin bill would require a
consumer to individually opt out of each affiliate. These
affiliates are functioning oft-times out of common mailing
centers, are functioning together with coordinated operations,
but the consumer will be propelled to submit to serial
annoyances from each of them and to be like a fellow swatting
flies to try and get a little bit of peace.
In contrast, the Wilson-Green bill takes a much more
sensible and consumer-friendly approach, one that the American
people want. Simply stated, if affiliates can share a
consumer's e-mail address, then they can also share that
consumer's request to opt out of future spam. Very simple. If
they can share it, they have to share two things: One, the
address, and, two, the demand of a citizen which must be
respected that they stop this nonsense.
In crafting a compromise, we must remember that the twin
purposes of this bill are to protect consumers from unwanted e-
mail and to help unclog our communications network. A bill that
does not provide for strong enforcement or that creates a
category of government-sanctioned spam will not achieve either
of these important purposes which I strongly support. I would
note that it will not stop the flood of filth on the Internet
also. I, therefore, look forward to the witnesses' testimony on
the two bills, and I urge my colleagues to make ready for a
fight. Let us win this and let us stop this nonsense now. Thank
you, Mr. Chairman.
Mr. Upton. The gentleman's time has expired. I would note
that we have three votes on the floor, which we will go for 1
or 2 more speakers if we can. But I also remind members that if
they defer their opening statement, they will get an extra 3
minutes bonus for their first round of questioning. So let me
just start that procedure. Mr. Shimkus?
Mr. Shimkus. Thank you, Mr. Chairman. I am going to keep
this short and I will take my opening statement. Two things are
wrong. Spam delegitimizes the Internet as a viable marketing
took, one. And worst of all, it exposes children to content
that may be harmful for them to view or see, and that is one of
the provisions in my colleague and good friend, Congressman
Wilson and Congressman Green's bill that I would like to see
become part of the law is that the Centers of Sexually Explicit
Material include a warning label that lets the recipient know
he or she will be going to a sexually explicit web site. This
will help stop the brazen spammers who embed sexual material in
the actual content of their e-mails.
This gives me also an opportunity to talk about the dot-
kids-dot-us, which Congressman Markey and I and Congress Upton,
which will come online we believe in September, which is a tool
to help parents make sure that there is age-appropriate
material for their kids when they are going through the web
sites. So this is my opportunity to encourage all of you that
don't know about dot-kids-dot-us or you companies in industry
and interest groups, that is going to be a good opportunity to
make sure your material is--if you want access to kids, that it
is going to be suitable for children. So with that, Mr.
Chairman, thank you for the time. I yield back.
Mr. Upton. Okay. Mr. Boucher.
Mr. Boucher. Thank you very much, Mr. Chairman. Spam is no
longer just a nuisance to consumers. It has truly become an
epidemic that carries a large economic cost. Today more than 40
percent of all traffic on the Internet in terms of electronic
mail is spam, and it is anticipated that very soon that number
will exceed 50 percent. For example, AOL and Microsoft
intercept each day more than 2 billion spam messages just
between those companies.
A solution is needed that will protect consumers and
businesses and punish the abusers. Such a solution must include
at a minimum three important factors: Vigorous enforcement, a
workable definition of spam and strong consumer protections.
First, spammers will not be deterred unless there is strong
enforcement. I was recently pleased to join with 29 of our
committee colleagues, a bipartisan majority, including
Representatives Wilson, Green, Dingell, Markey and others, in
introducing the Anti-Spam Act of 2003. Our legislation ensures
that Internet service providers, State attorneys general and
the Federal Trade Commission are given full authority to
enforce vigorously all aspects of the Anti-Spam Act.
Legislation without such enforcement is a tiger without teeth
and will not stop spam abuse. Any legislation with strong
preemption, which this bill, in fact both of these bills
contain, must be matched by strong enforcement. Otherwise the
States would lose their current authority to act in the
consumer interest.
Second, any legislation to reduce spam must define spam
broadly enough to include what consumers normally considered to
be junk mail. Common sense dictates that spam is commercial e-
mail that consumers do not want in their in-boxes. Accordingly,
spam legislation must provide consumers with an ability to opt
out of any e-mail with commercial content that they do not
want. Alternative legislation takes a very narrow approach to
the meaning of spam by defining spam as e-mail whose primary
purpose is commercial, which, in effect, becomes a legal
charter for companies to continue to flood in-boxes and burden
ISPs.
Third, the consumer opt-out must be simple and it must be
effective. Out legislation does not require a consumer to opt
out of each affiliate of a company in order to stop receiving
unwanted e-mail. If a consumer does not want to receive a e-
mail from a company of all 100 of its affiliates, a single opt
out should be effective. The alternative legislation would
require the 100 opt outs.
These three factors, vigorous enforcement, a common sense
definition of spam and strong consumer protections, are
essential as elements of legislation that will be effective in
fighting spam. It is my hope that prior to committee markup we
will be able to achieve consensus on these matters so that a
broadly supported and truly effective measure can be presented
to the House, and I look forward to working with our colleagues
who are authoring both of these measures in order to achieve
that goal. Thank you, Mr. Chairman. I yield back.
Mr. Upton. Thank you. I would note that we have three votes
that are pending. We have 9 minutes left in the first vote.
Immediately when the three votes are done we will resume, which
I would guess will be about 2:10. So we will stand adjourned.
[Brief recess.]
Mr. Stearns. The joint hearing of the Subcommittee on
Telecommunications and the Internet and the Subcommittee on
Commerce, Trade, and Consumer Protection will reconvene, and we
will continue with the opening statements. The gentleman from
California, Mr. Cox.
Mr. Cox. Thank you, Mr. Chairman. I want to welcome back
our panel and thank you for your forbearance during our floor
votes. It is a very distinguished panel and we look forward to
hearing from you. I want to thank you, Mr. Chairman, thank
Chairman Upton as well for holding this important hearing on a
maddening problem for all of us.
Anyone who uses the Internet appreciates the time that our
esteemed panel has devoted to studying this issue. Thank you
also to Chairmen Tauzin and Sensenbrenner and of course Mr.
Burr, the author of H.R. 2214, for your hard work in seeking to
stem the rising tide of spam.
I think Mr. Burr and his cohorts in this effort were very
wise in choosing not to create a national do-not-spam list. I
say that because while I favor such lists in the context of
unwanted telephone calls and faxes, the nature of the Internet
and more importantly the nature of most egregious spammers
strongly suggest that offshore operators, criminal
organizations frequently running fraudulent enterprises, would
simply use the do-not-spam list as a useful list of new e-mail
addresses, a fresh set of victims for their unwanted and often
repulsive communications.
Speaking of repulsive communications, I would also like to
commend the sponsors of H.R. 2214 for creating tough civil and
criminal penalties for pornographers who falsify header
information. When someone presents a false identity or
disguises the content of their e-mail by failing to include a
warning label, we should throw the book at them. There are
people who like pornography and there are people who abhor it,
but no consumer should be misled or tricked by it. For that
reason, I intend to work with the sponsors of the bill to go a
bit further and apply to e-mail the same standard the law
currently applies to physical mail. Congress should outlaw the
sending of unsolicited pornography.
The authors of H.R. 2214 also deserve great credit for
ensuring that the cure to spam isn't worse than the disease.
Specifically, the authors deserve credit for limiting the
ability of class action lawyers to profit from spam. We have
already seen how unscrupulous trial lawyers have profited
handsomely from unwanted faxes thanks to a loophole in the 1991
law that was intended to prevent them. Despite the lawyers
getting rich, my constituents still write to me asking for
relief from unwanted faxes. The Burr-Tauzin-Sensenbrenner bill
wisely focuses its attention on helping consumers rather than
simply authorizing lawyers to collect a new litigation tax. The
great strength of H.R. 2214 is that it empowers consumers and
Internet service providers, the people bearing the costs of
spam in time and in hassle. It will create harsh penalties for
those who inflict these costs.
Finally, Mr. Chairman, I would note that spam doesn't have
to be commercial to be annoying, to be costly or to be
burdensome. Last week, I am sad to report the California
Supreme Court in my home State issued a most peculiar ruling
that needs legislative correction. The court held that the
owner of a private computer network cannot use the law of
trespass to prevent an intruder from sending 200,000 e-mails
into that network. In this case, the network made repeated
requests to the spammer to cease and desist, but the court said
it could not find economic harm. I will soon introduce
legislation to correct this injustice and ensure that
trespassing is trespassing, whether the property is a piece of
land or a computer server. I hope that the authors of H.R. 2214
will consider this provision for inclusion in the final mark. I
yield back, Mr. Chairman.
Mr. Stearns. Thank the gentleman. Mr. Stupak?
Mr. Stupak. Thank you, Mr. Chairman, and I would like to
thank both chairmen for holding this hearing today, and I want
to welcome our distinguished witnesses. Unfortunately, I will
be in and out so I want to make this opening statement now, as
I have a number of matters up in my office I have to attend to.
I am concerned that this is now the third Congress in a row
that this committee has addressed this issue, held hearings,
markups and expressed commitment to combating spam. Yet while
the flood of unsolicited e-mails is only growing, ISPs becoming
more and more overwhelmed and consumers more aggravated, this
committee seems to be moving in the wrong direction.
I commend the chairman of the full committee and Mr. Burr
for working on legislation to combat spam, but I am concerned
that this bill is weaker than the legislation that has come
through this committee in the past. I believe that the bill
falls short due to insufficient enforcement and inadequate
protection to consumers. Furthermore, we must do all that we
can to protect parents and children from harmful pornographic
e-mails, and this bill does not provide such protection. This
is not the direction in which we should be going. This problem
of spam is too big and too expensive to provide piece meal
enforcement and inadequate remedies.
Last, I remain concerned that unlike the bills in previous
Congresses, this bill, or the bills pending before the
committee today, do not contain a private right of action. I
co-sponsored the legislation introduced by Representatives
Wilson and Green. This bill has a number of--a good number of
Democrats and Republicans on this committee in support of this
legislation, and I am pleased that efforts were made to
strengthen enforcement and provide protection from harmful
pornographic e-mail in this legislation. However, unlike the
last speaker, I would like to note that I think we should go
even farther and provide for a private right of action and in
fact for class actions. We must equip all injured parties with
the tools they need to take action and ensure that we do not
leave consumers out in the cold without an individual remedy. I
look forward to hearing from the witnesses today about these
bills and other measures that may be necessary in order to
address this growing problem. Thank you, Mr. Chairman.
Mr. Stearns. I thank the gentleman. I believe the
gentlelady from New Mexico, Ms. Wilson. I remind all members
that the opening statement is about 3 minutes, and we urge all
of you, so we can move forward here because we got a late start
because of the full committee markup and we are trying to get
to our witnesses who have patiently waited through votes, and
so I urge all of you to put it in part of the record if you
can. Thank you.
Ms. Wilson. Thank you, Mr. Chairman. I will submit a more
complete statement for the record, but I do want to set a
little bit the context in which we are meeting here today. Five
years ago, Mr. Green from Texas and I started working on then
what was a pretty obscure but annoying problem: spam or junk e-
mail. In the 106th Congress, we were able to pass the Wilson-
Green bill by 427 votes to 1, but the Senate did not take it
up. And in the 107th Congress, our bill, H.R. 718, passed this
committee by a unanimous voice vote and was scheduled for the
floor the week of September 11. In this 108th Congress, we have
now introduced H.R. 2515. It now has 56 co-sponsors, including
30 of the 57 members of this committee--10 Republicans and 20
Democrat co-sponsors. A majority of this committee is a co-
sponsor of the bill.
What was an obscure issue in 1998-1999 by 2001 started to
become a serious problem when it was estimated that 7 percent
of all e-mail was junk e-mail or spam and is now overwhelming
consumers on the Internet with estimates being 40 to 50 percent
of e-mail being spam on the Internet at a cost of some $10
billion per year, all of that cost paid for by the recipients
and not by those doing the advertising. Fifty percent of
children between 7 and 18 years of age report getting
pornographic spam in their e-mail boxes, and we have seen in
the last couple of years that the promise of technological
solutions have failed. Even if you are blocking 80 percent of
the spam with your filtering technology, the 20 percent that is
getting through is still overwhelming people's in-boxes. We are
now at the tipping point, I believe, where we are actually
discouraging use of e-mail, impeding commerce, and e-mail is
now becoming not a reliable or useful communications tool.
So what must good policy do? I think it has to have a
strong civil and criminal penalties for fraudulent e-mail. We
have to make sure that we protect consumers and children
particularly from sexually oriented messages. We have to have
clear definitions without loopholes on what spam is. If the
technical loopholes are the joy of spammers today, we certainly
don't want to create legal loopholes for them to be exploited
by spammers tomorrow. Consumers have to have a right to say,
``No. Take me off your list.'' And that right has to be
respected and enforceable. We have to have strong enforcement
mechanisms, particularly if there is no private right of action
in the bill.
I think we are at a tipping point. If we don't get strong
anti-spam legislation this year, the problem may rapidly be
getting to such a point that only an outright ban or an opt-in
approach will be enough. You know, it might be reasonable to
ask people for one or two opt-outs a day to protect their
rights and protect the rights of free speech, but is it
reasonable to ask a consumer to have to do that 100 times a
day? Possibly not, and I think we are rapidly getting to that
point where we may have to take more extreme action analogous
to the junk fax law if we are unable to get meaningful
legislation passed in this Congress.
Spam has become a significant problem that threatens to
cripple the Internet and the worldwide e-mail system and it is
about time we address it.
Mr. Stearns. I thank the gentlelady.
Mr. Davis from Florida. The gentleman passes.
Mr. Green? Mr. Green is not here.
Mr. Wynn.
Mr. Wynn. Thank you, Mr. Chairman. I really appreciate you
calling this hearing today. Let me just make the observation
that combined with our efforts on the do not call list, this
effort against spam could make us a truly pro-consumer
committee. Spam e-mails are unsolicited advertisements that
flood the Internet in an attempt to advertise an issue or
product to people who may not otherwise choose to receive it,
and cost a tremendous amount of money. It accounts for about 50
percent of e-mail traffic, and this number is only expected to
rise. Just today, a staffer said she had received over 78 spam
e-mails before lunchtime.
Spam e-mails, as opposed to junk mail, costs the sender
very little to distribute, with most of the costs paid for by
the recipient through increased Internet access, cost and time.
According to the Fight Spam! web site, AOL was receiving 1.8
million spam e-mails from a single company each day until AOL
got a court injunction to stop it. Just this one example cost
AOL consumers 5,000 hours of connect time daily to discard this
spam.
Additionally, fighting spam has emerged as a leading
business issue. One reported estimate found that spam cost
businesses up to $10 million each year primarily due to the
implementation of anti-spam technology and lost productivity.
The issue of spam is not simply limited to annoying
advertisements. It may also be a catalyst for fraud. An article
in the Jefferson City, Missouri News Tribune recently outlined
a national spam scam. The sender sent an e-mail to many
consumers stating concern over a credit card purchase at Best
Buy. The e-mail instructed the individuals to visit a special
web site to resolve the situation by entering their credit card
and social security numbers. As a result, Best Buy fielded
thousands of calls from consumers regarding the fraudulent e-
mail and needed to tell them to disregard the message or, if
they had already entered their personal information, to notify
their banks, credit card companies and the FTC's identify theft
program. The scheme cost Best Buy and consumers time and money.
Luckily, authorities were able to shut down the web site within
2 hours, however much damage had already been done. The Tribune
equated the scam to an electronic hit and run.
I am very pleased to be a co-sponsor of the Wilson-Green
anti-spam measure to protect consumers against spammers. This
is a measure that would provide effective spam counter measures
and enforcement measures against those individuals who
fraudulently e-mail consumers. The bill would allow consumers a
real opt-out solution and afford the Federal Trade Commission
and, importantly, State attorneys general and the Internet
service providers full enforcement authority over the bill's
civil provisions, providing a much needed enforcement
mechanism.
I look forward to hearing from our panelists and learning
more about how we may fight spam and continue our tradition of
being true consumer advocates. I relinquish the balance of my
time.
Mr. Stearns. Thank the gentleman. The gentleman from
Arizona.
Mr. Shadegg. I thank the chairman and commend him for
holding this hearing. I also commend the chairman of the
Subcommittee on Telecommunications and the Internet. I think
this is a critically important topic, and I believe it is
important that we move legislation as quickly as possible. I
will insert my full statement in the record, however, before
doing so I want to thank our witnesses for appearing today. I
look forward to their testimony, and I want to associate my
remarks with those of the gentleman from California, Mr. Cox. I
believe in fact we can go a little further in this legislation,
and I share his concern about unsolicited pornographic
material. And with that I yield back the balance of my time.
Mr. Stearns. I thank the gentleman.
The gentleman from Texas.
Mr. Green. Thank you, Mr. Chairman, and I understand we
have reduced our opening statements to 3 minutes, and I will be
brief as I can and ask permission to have the full statement
put in the record.
Mr. Stearns. By unanimous consent, so ordered.
Mr. Green. My colleague, Congresswoman Wilson and I have
been working on this. This is our third term on this, and I
want to thank her for the cooperation we have done, and it
looks like we are going to be able to pass strong legislation,
and that is what I would hope to see. I know that our hearing
will talk about the two differences between the Wilson-Green
legislation and the H.R. 2214, the Burr bill, and at last count
we have at least 25 members of our committee, 10 Republicans
and 19 Democrats which I believe is the majority that has co-
sponsored our bill, and I hope that after publicly defining
clear differences, that the negotiations will continue. We have
had some very successful negotiations to reach a consensus
committee position.
The Wilson-Green bill is about closing loopholes and
putting real teeth in anti-spam policy. We all know the urgency
of the problem. It is all over our front pages; in fact, in the
latest Consumer Reports talked about how to stop spam. Three
sessions ago when we started on this, we thought the--I
actually thought maybe technology could deal with it, but we
now know that technology can't do it. Otherwise we wouldn't
have all the ISPs here interested in passing as strong a bill
as possible.
Many of my constituents are lower income and minority folks
who draw on these new technologies for communication and
information benefits. If people new to the Internet continue to
meet these online scams that we have, offensive material and
the burden of overwhelming spam, they will be turned off and
not take advantage of these new technologies. That is why it is
so important.
I would hope to have our principles, one, I think we need
to empower the States. The States are doing some really
innovative efforts, but at the same time provide Federal
solution to the problem of spam. And, ultimately, as the
chairman said, do something internationally with our neighbors
who also have the same problem. With that, I will yield back my
time and will place my statement in the record.
Mr. Stearns. I thank the gentleman.
The gentleman from California, Mr. Issa.
Mr. Issa. Thank you, Mr. Chairman. I will be brief. I am
pleased to have this opportunity today to discuss the growing
problem, the epidemic growing problem of electronic junk mail,
or spam. In the years that I spent in the electronics industry
and running a small business, I watched the Internet and e-mail
grow, but it was only toward the end of my time in the private
sector that spam began to become a real and ongoing problem.
Today, an entire industry is trying to deal with this problem
and doing it without government assistance. The absence of
action by this body, both here in this committee and the
Judiciary, has led to a problem that can only be resolved by
action.
There are products today which through great effort and
expense deal with spam somewhat, but they are not available to
the common user nor are they likely to be. Products with anti-
spam agents, such as surf control, do a very effective job of
getting rid of 97, 98, perhaps even 99 percent both of sites
that would be offensive and of unwanted e-mail. However, to do
this they have to add digital signatures on a daily basis to
each and every spam site. This, of course, means that the
spammers are working ever harder to try to get ahead of
organizations like this, and the cost of doing this continues
to rise.
There is no question that this body has the ability to
enact digital signatures. We certainly took a lead when we put
in the V-chip technology some years ago in order to categorize
information. Other suggestions to help deal with this problem
include, if you will, sort of a Good Housekeeping seal or a
positive enforcement of somebody who in fact agrees not to be a
spammer and is checked on that basis.
Many of the pieces of legislation that we will be
considering in the days to come attempt to deal with a portion
of this product. I am convinced that no one bill has all the
answers, that in fact both here at this hearing today and in
working with industry and in combining the best features of
multiple bills will be the only way that we will succeed in
providing the leadership that the government has in harmony
with commerce in the private sector. With that, I yield back
the balance of my time.
Mr. Stearns. Thank the gentleman. Mr. Davis? Oh, that is
right, you passed. She is not here, Ms. McCarthy. Ms. Eshoo,
yes.
Ms. Eshoo. Thank you, Mr. Chairman, and to Chairman Upton
and Chairman Tauzin for holding what I think is really one of
the more important hearings that we could be having on an issue
that is affecting far too many people in this country. And I
know that this is going to be a worthwhile hearing given the
distinguished panel that is here, including Mr. Hirschman of
Digital Impact. The company is in the city of San Mateo which
is just outside my congressional district, but I think many of
your employees are my constituents, so a special welcome to you
here today.
We have to get this right. If we don't, the American people
are going to come right back to us. This is not something that
is fuzzy or blurred. This is an interruption in their lives
every single day. They pay for a service and someone else plays
with it and jams their in-boxes. And so we have the
responsibility to be very clear in terms of legislation that
what we do will be effective and it will be effective because
it will be enforced. And most frankly, if we miss the mark on
this, I know that we will be asked to come back to square one,
because there are too many that are being affected by this.
And the numbers are really staggering. According to E-
Marketer, 76 billion spam e-mails will be delivered this year.
Fifty percent of kids have received e-mails containing
pornographic or sexually explicit information. That is a lot. I
mean 50 percent is a lot. And U.S. businesses will spend close
to $10 billion to fight spam this year. And marketers are
brazenly claiming, and they did this just last week, that the
success of the do not call list will drive them to send even
more spam, costing U.S. business and consumers even more. So,
clearly, it is an issue that we have to address. And why would
they do that? Because, obviously, they have been chased away
from using one medium, and it is far cheaper, by the way, to do
e-mails, to do spam. It is just pennies per thousand.
So I am pleased to be a co-sponsor of the Wilson-Green
bill. I think, No. 1, it is important to have many ideas
introduced in the Congress, but I think that this is the bill
that really comes the closest to resolving things in an
effective and very clear way for the people that we represent.
I think if the House had passed their bills in either of the
previous two Congresses, we wouldn't be facing the spam
epidemic that we have today.
So I look forward to questioning the witnesses on the
differences between the bills that are under consideration and
by my friends, Mr. Burr and Mr. Tauzin. What I am confident of
is that I think we can work to iron out the differences. We
need your considered opinions today, and that is why hearings
are so important here. And I also think that obviously that
strong enforcement language is ultimately going to have to
carry the day, because if something doesn't have teeth in it,
then most frankly it is pretty language but not really worth
much than the paper that it is written on.
So welcome to all the witnesses, and thank you to all of
the chairmen for having this hearing today. I think it is one
of the more important ones that we can have, because I think
that this year, not next year but this year, in this Congress
we should pass stringent spam legislation. Thank you, Mr.
Chairman.
Mr. Stearns. Mr. Ferguson is recognized.
Mr. Ferguson. Thank you, Mr. Chairman. I want to thank you,
Mr. Chairman for holding this hearing. It is about a matter
that faces all of us who use the Internet and all of us who
rely on e-mail as an important and a viable form of
communication.
Spam isn't only a nuisance, it is a serious threat to the
feasibility of the Internet and to children who potentially can
be bombarded by graphic images that their parents or anyone in
a responsible position would not them to see. The prolific
emergence of spam on the Internet is alarming. The estimates
range up to 60 percent of all e-mail traffic is unsolicited
commercial e-mail, or spam. Forms of this unsolicited e-mail
can vary from advertisements for products to fraudulent scams
to pornography. Now, my wife and I have three young kids. They
are not Internet users yet, but I hope that they will be
someday soon. But I will tell you, I have real serious concerns
about them using the Internet and using e-mail if they are
going to be subjected to the same sort of bombardment of
messages that I know I am and others like me are subjected to.
We have to protect e-mail users against the proliferation
of fraud over spam. We have to punish those who invade our e-
mail use and people who use misleading header and routing
information and those who want to falsify their identify. In
short, I believe that we have to do everything we can to curb
the overwhelming bombardment that spam has unleased on our in-
boxes.
Mr. Chairman, again, I want to thank you for having this
hearing, and I look forward to the testimony of our panelists
and to hear their suggestions how we can come up with a
solution to this growing problem. I yield back.
Mr. Stearns. The gentlelady, Ms. McCarthy?
Ms. McCarthy. Mr. Chairman, thank you very much for this
important hearing, and I thank the witnesses too for taking
time to come before us and share their wisdom on this important
issue. I served in the Missouri State legislature for 18 years
before coming to Congress and was very active in the National
Conference of State Legislatures, and so I want to assure the
panelists and the experts here today and you, Mr. Chairman,
that, yes, there is a Federal rule and it is very important
nationally and internationally for us to become wise to do what
we can to help consumers with this problem, but also have to be
in partnership with the State attorney generals who are out
there struggling State by State right now trying to put in
place something that will work at the State level. And so as we
go forward with our legislation, let us also hear from those
who have been working with the States so that we are in tandem
with what State attorney generals are attempting.
We almost passed a bill successfully in the Missouri
legislature this past session, but Microsoft came in and killed
it because we will find out why perhaps later today or in the
course of our journey, but in any event, Mr. Chairman, this is
a very, very important issue, and I am so very grateful to you
for having this hearing, and I am grateful to each and every
one of you for coming and enlightening us and making us wiser
so that we can act in the best interest of the people. Thank
you.
Mr. Stearns. Thank the gentlelady.
Ms. McCarthy. Yield back.
Mr. Stearns. And author of the bill, 2214, Mr. Burr.
Mr. Burr. Thank you, Mr. Chairman. I would like to thank
all of my colleagues on the committee for what I think has been
a very thoughtful opening statement process so far. Mr.
Chairman, we have a very difficult balance to reach. The
difficult balance is to make sure we produce a piece of
legislation that makes it through the House of Representatives
and to accomplish that we have to work with our colleagues in
the Judiciary Committee who have not been in the past as open
to move legislation, legislation that potentially went too far.
I am proud to say that we have worked with them very closely.
They have been tremendous partners, as have Mr. Dingell and
many on the minority side as we have tried to negotiate closer
on some issues. I am not sure if we can get to closure on all
of them, but we are 98 percent of the way there, and I think it
explains just how difficult some of the things that we are
trying to accomplish are. We don't want this to face a
constitutional test down the road on this issue or that issue.
I think there is one thing that we can all agree on. One,
we would all like to get the discount airfare offers, we would
like to get the discount hotel offers. We never know when they
are going to be advantageous to us. We would all like to get
rid of the pornography that comes in. And the fact is that
those that want to get around what we designed will do it. They
are going to find a way to do it. So don't one of us walk away
from here and believe that we can create a trap that eliminates
all of it, because the only way to do that is to flip the power
switch on the back of the computer.
The industry has spent a tremendous amount of money, and
they deserve a lot of credit for what they have done to try to
filter, but when you have got individuals that intend on
getting from point A to point B regardless of how they get
there, trust me, at some point they are going to get there. So
I think that there is a certain amount that we have to accept
that we can't stop. And there is a certain amount that we want
to protect that can get there. That is the difficult balance.
I don't perfect to be an expert on this. That is why you
folks are here today, and I commend for your willingness. By
the same standpoint, I agree with Ms. Eshoo. She has been a
good friend, and we have a big responsibility, and we have to
get it as close to right as we possibly can. I have worked on a
lot of legislation in 9 years. I can't say that I have ever
done anything here that is perfect. This will not be perfect.
But I also want to make sure that when we complete this process
that the House passes a bill this time. And I would urge all of
my colleagues to understand that we have other partners, many
in the Judiciary Committee, ultimately on the House floor that
we have to pass the test with if in fact we want this bill to
have a chance to become law. What the American people want is
legislation that is signed into law and not something that is
just moved through committee and then dies a quick death.
Mr. Chairman, I thank you, Chairman Upton, Chairman Tauzin,
Mr. Dingell, and I encourage all of the members of the
committee to listen extremely carefully to the answers by these
witnesses today. I thank you, Mr. Chairman.
Mr. Stearns. Thank the gentleman. The gentlelady from
California, Ms. Solis.
Ms. Solis. Thank you, Chairman Upton. I would like to also
thank the witnesses for being here, and I would like to request
unanimous consent to submit my statement for the record.
Mr. Stearns. And by unanimous consent, so ordered.
Ms. Solis. And just like to briefly raise a point. In our
State of California, we have been very aggressive on this issue
of spam, and our Attorney General Lockeer there set up some
different provisions and actually went out and filed a first
lawsuit in L.A. County. He has also been criticized because we
haven't gone far enough. So, certainly, the State solutions
that are being offered I think in 30 States probably isn't
enough, and we do need to find a Federal solution, so I hope
today in listening to the comments that we hear from all of you
that we will come up with some genuine ability to start looking
at how we can address this issue. So thank you, Mr. Chairman.
Mr. Stearns. I thank the gentlelady.
Ms. Cubin?
Ms. Cubin. Thank you, Mr. Chairman. I don't have much to
say about the subject that hasn't been said by other members,
but I would like to share an excerpt of an e-mail that I
received from a constituent that I think typifies the problem
that people are facing all across the country. Jeannie Wright
from Douglas, Wyoming wrote to me, ``Dear Representative Cubin,
I am writing in support of the idea to stop the ocean of
pornographic e-mail. At my work address, I receive
approximately 30 such messages per week. Having never been a
viewer of pornography, you can imagine my disgust at receiving
messages in which explicit photos automatically appear. You
don't have to click on anything, they just appear on the
screen. For instance, last week, my daughter and a client were
in my office when a photo of a sexual act appeared on my screen
as I was searching for a work-related message I had been
expecting. How very embarrassing for me and the client and what
a lot to try to explain to my 8-year-old daughter, not to
mention my boss. These messages make me feel like a victim.
Nasty people I do not know and to which I cannot respond
are sending me sexually explicit garbage at the place of my
work. Many of the messages offer you a link to unsubscribe.
Only about 5 percent of those links are legitimate. The rest do
not exist. When I try responding to the e-mail messages, those
addresses cannot be found, and the e-mail comes back to me.
There is no identifying information on these messages, so I
can't even call a phone number and demand that it be stopped. I
am afraid to log onto the web sites suggested by the e-mails
for fear I will appear on another spam list and receive even
more. For now, my only answer is to continue receiving these
messages.''
This is clearly a troubling situation, and the Congress has
been called upon to act. Making hardworking, taxpaying, law
abiding moms and dads explain the smut that appears on their
computers to their children and their colleagues should not and
cannot be tolerated. Mrs. Wright, like many who have contacted
their representatives, ought not feel like they are victims.
Instead we need to empower Americans to stop the madness.
Giving folks the tools to stop the onslaught on the in-boxes is
the right thing to do. We already have enacted a national do
not call registry, and the same principles of consumer
empowerment are incorporated into these anti-spam bills.
Additionally, I intent to extend these principles to
unsolicited faxes by introducing legislation to update the law
to require more information and clear opt-out instructions for
recipients of junk faxes. I look forward to hearing our
witnesses, and I thank you for your patience and your time
waiting for us today. I yield back.
Mr. Stearns. Thank the gentlelady. Mr. Engel, the gentleman
from New York.
Mr. Engel. Well, thank you, Mr. Chairman. I want to start
by expressing a bit of frustration that we find ourselves here
again. Obviously, this is not a new issue; in fact, as Ms.
Wilson pointed out, in the 106th Congress the House passed a
version of the Wilson-Green bill of which I am proud to be a
co-sponsor, and this committee passed the Wilson-Green bill in
the 107th. The only difference today is the sheer volume of
unsolicited commercial e-mail, or spam, that exists. It is a
staggering 9.3 billion messages per day.
I just wanted to point out three parts of the Wilson-Green
bill that make it a better bill than the others. First are the
enforcement provisions for State attorneys general. Simply put,
the Wilson-Green bill allows them to do their jobs. Provisions
of the Rid Spam Act basically mean the attorney general of New
York, my home State, would never pursue such a case. Why?
Because of the $1 million cap. The fact is New York is a much
more expensive place to live and work. Such a restriction
especially in these difficult financial times with the States
would make pursuing such litigation a poor use of taxpayer
dollars.
The Wilson-Green bill also gives the ISPs greater power to
pursue the culprits who are degrading their networks. We all
know this is not like the U.S. postal system where direct
marketers pay for the use of the system. This is in fact the
opposite. A spammer can send thousands of messages for pennies.
The true cost is borne by the companies that maintain the
network infrastructure, from the telephone and cable lines the
data travels on, to the computers that the e-mails land in. The
ISPs are being hurt, and we have an obligation to update our
Nation's laws to provide them with tools to protect their
investment.
A second issue is one of fairness to the consumer. When a
consumer opens a bank account at Citibank, Citibank can share
that person's information with its affiliates, such as its
credit card system, to market to that person. It is not too
much that if that person, one of our constituents and a client
at that bank, indicates to Citibank a desire not to receive
unsolicited commercial e-mails, that Citibank puts that into
the information it shares with its affiliates. And thus the do
no spam request follows through.
Finally, the last thing I will mention, and it is not a
small issue, as my colleagues have also mentioned, is the
sexually explicit e-mails. They are obviously disgusting and my
constituents are fed up with them. Wilson-Green adopts the
tried and tested and proven approach of the postal system, a
blank e-mail with just a link similar to how it goes through
the postal system. The Rid Spam Act only requires an indication
that sexually explicit material is part of the e-mail, but the
e-mail could include sexually graphic pictures. That is simply
not good enough.
I regret that we still find ourselves debating this issue.
I deeply regret that instead of easily passing such an
important bill we are now devolving into two camps. This is a
very troubling development. It is my fervent hope that we will
work--the chairman will work with Mrs. Wilson, Mr. Green and
Mr. Dingell to find common ground and move a bill
expeditiously. And I yield back and I thank you.
Mr. Stearns. I thank the gentleman, and I believe the
gentleman from New Hampshire is going to forego his opening
statement, so with great expectation we bring up the panel. Mr.
Howard Beales, Director, Bureau of Consumer Protection, the
Federal Trade Commission; Mr. Charles Betty, president and CEO
of Earthlink; Mr. Charles Curran, assistant general counsel,
America Online; Mr. Ira Rubinstein, associate general counsel,
Microsoft Corporation; Mr. Paul Misener, vice president for
Global Policy, Public Policy, Amazon.com; Mr. Kenneth
Hirschman, vice president and general counsel, Digital Impact;
Ms. Paula Selis, senior counsel, Washington State Attorney
General; and Mr. Christopher Murray, legislative counsel,
Consumer Union. Welcome, all of you, and we will just start
with Mr. Beales, from my left to my right.
STATEMENTS OF J. HOWARD BEALES III, DIRECTOR, BUREAU OF
CONSUMER PROTECTION, FEDERAL TRADE COMMISSION; CHARLES GARRY
BETTY, PRESIDENT AND CEO, EARTHLINK; CHARLES CURRAN, ASSISTANT
GENERAL COUNSEL, AMERICA ONLINE; IRA RUBINSTEIN, ASSOCIATE
GENERAL COUNSEL, MICROSOFT CORPORATION; PAUL MISENER, VICE
PRESIDENT FOR GLOBAL POLICY, PUBLIC POLICY, AMAZON.COM; KENNETH
HIRSCHMAN, VICE PRESIDENT AND GENERAL COUNSEL, DIGITAL IMPACT;
PAULA SELIS, SENIOR COUNSEL, WASHINGTON STATE ATTORNEY GENERAL;
AND CHRISTOPHER MURRAY, LEGISLATIVE COUNSEL, CONSUMER UNION
Mr. Beales. Thank you, Mr. Chairman and members of the
subcommittee. I am pleased to be here today to discuss the
challenges presented by bulk, unsolicited commercial e-mail,
better known as spam. Protecting consumers' privacy has become
a principal focus of the FTC. Consumers are concerned about
their privacy, including unwanted intrusions into their daily
lives. Spam is one of the biggest such intrusions. Everyone
enjoys reading the e-mail they want, whether messages are from
friends or news about a sale at your favorite store. Today,
though, our in-boxes are clogged with unwanted, objectionable
and fraudulent messages. Spam is threatening to destroy the
benefits of e-mail.
Two factors make spam different from other forms of
marketing. One is that unlike telemarketing or direct mail with
e-mail it is very easy to hide one's identity or to cross
international borders. E-mail can be sent from anywhere to
anyone in the world without the recipient knowing who sent it.
The cost structure of e-mail is another difference between spam
and other forms of marketing. Sending additional spam costs the
spammer little or nothing. Instead, recipients and Internet
service providers bear most of the costs.
The problems caused by spam go well beyond the annoyance it
causes to the public. These problems include the fraudulent and
deceptive content of most spam messages, the sheer volume of
spam being sent across the Internet and the security issues
raised because spam can be used to disrupt service or as a
vehicle for spreading viruses. In February of 2002, we
announced the FTC's first systematic crackdown on deceptive
spam. Since then we have tackled spam on three fronts: Law
enforcement, education and research. To date, we have announced
54 law enforcement actions targeting deceptive spam, and the
staff continues to investigate and prepare new cases. Among
other unfair and deceptive practices, we have challenged
spoofing, the practice of forging the from line in an e-mail to
make it appear that the e-mail was sent from an innocent third
party. We challenged that as an unfair practice. We have also
challenged deceptive subject line information, false remove-me
representations, false representations that a service could
stop spam from other sources, false claims that buying a
spamming business opportunity could make you rich.
The Commission has also been active in business and
consumer education efforts and with its research efforts. As
you know, we recently conducted a 3-day spam forum to explore
and encourage progress toward potential solutions to the
detrimental effects of spam. 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 different directions: Technological, legal
and consumer action.
Right before the forum we announced the FTC spam study.
Only 16.5 percent of the spam we analyzed advertised a
legitimate product in a legitimate manner; that is, without
clear indicia of falsity. We also conducted the remove-me surf
to examine removal representations in spam. Contrary to the
belief that responding to spam guaranteed that you would
receive more of it, 63 percent of the removal links and
addresses in our sample simply did not function. Additionally,
in our spam harvest, we examined how computer harvesting
programs pick up consumers' publicly posted e-mail addresses
leading to, you guessed it, more spam.
We have used our research findings to develop informative,
high impact materials to educate consumers and businesses on
spam. Our spam web site has a wealth of information about how
to avoid spam in the first instance and what to do if you
receive it. There is no single cure for spam. Instead, a
balanced blend of technological fixes, business and consumer
education, legislation and enforcement will be required.
Today's focus, obviously, is on legislation. There are
three issues that any spam legislation must confront to
effectively deal with the spam problem. First, legislation must
address how to find the person sending the spam messages.
Although technological changes will most effectively deal with
this issue, we have proposed several procedural legislative
changes that can provide some assistance in our law enforcement
investigations. Second, legislation must deal with how to
punish the person sending the spam messages. Civil penalties
and possibly criminal sanctions would help address this issue.
Finally, legislation must determine what standards will govern
non-deceptive, unsolicited commercial e-mail. These standards
should include clear identification of the sender of a message
and empower consumers to end the flow of messages that they do
not wish to receive.
Our written testimony and our earlier reauthorization
testimony set forth specific legislative changes that we would
welcome along with several important principles that potential
spam legislation should consider. E-mail provides enormous
benefits to consumers and businesses as a communication tool.
The increasing volume of spam coupled with its widespread use
as a means to perpetrate fraud and deception put these benefits
at serious risk. We look forward to continuing our research,
education and law enforcement efforts to protect consumers and
businesses from the onslaught of unwanted messages. We
appreciate the opportunity to describe our efforts, and I look
forward to your questions.
[The prepared statement of J. Howard Beales III follows:]
Prepared Statement of J. Howard Beales III, Director, Bureau of
Consumer Protection, Federal Trade Commission
Mr. Chairman, the Federal Trade Commission appreciates this
opportunity to provide information to the Committee on the agency's
efforts to address the problems that result from bulk unsolicited
commercial email (``spam''). 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. It also discusses legislative ideas to enhance the Commission's
effectiveness in fighting spam.<SUP>1</SUP>
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\1\ The views expressed in this statement represent the views of
the Commission. My oral statements and responses to any questions you
may have represent my own views, and not necessarily the views of the
Commission or any other Commissioner.
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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 or deceptive acts or practices in or affecting
commerce.<SUP>2</SUP> Online commerce, including unsolicited commercial
email, falls within the scope of this statutory mandate.
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\2\ The 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. Sec. Sec. 44, 45, 46 (FTC
Act); 15 U.S.C. Sec. 21 (Clayton Act); 7 U.S.C. Sec. 227 (Packers and
Stockyards Act); 15 U.S.C. Sec. Sec. 1011 et seq. (McCarran-Ferguson
Act).
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The problems caused by unsolicited commercial email go well beyond
the annoyance spam causes to the public. Indeed, these problems include
the fraudulent and deceptive content of most spam messages, the
offensive content of many spam messages, the sheer volume of spam being
sent across the Internet, and the security issues raised because spam
can be used to disrupt service or as a vehicle for sending viruses.
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 email. 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
exchange of useful information about spam to help inform the public
policy debate. This could help the Commission determine what 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 potential solutions
to the detrimental effects of spam.
Virtually all of the panelists at the Commission's recent Spam
Forum opined that the volume of unsolicited email is increasing
exponentially and that we are at a ``tipping point,'' requiring some
action to avert deep erosion of public confidence that could hinder, or
even destroy, email as a tool for communication and online commerce. In
other words, as some have expressed it, spam is ``killing the killer
app.'' 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 explored and helped to suggest paths to
follow toward solving the spam problems. Such solutions will depend on
cooperative efforts between government and the private sector.
LAW ENFORCEMENT
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. For
example, the Commission has pursued a vigorous law enforcement program
against deceptive spam, and to date has brought 54 cases in which spam
was an integral element of the alleged overall deceptive or unfair
practice. 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.<SUP>3</SUP> 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 <SUP>4</SUP> and FTC v. Brian Westby <SUP>5</SUP> allege (1)
that email ``spoofing'' is an unfair practice,<SUP>6</SUP> and (2) that
failure to honor a ``remove me'' representation is a deceptive
practice. In each of these cases, the defendants' email removal
mechanisms did not work and consumers' emailed attempts to remove
themselves from defendants' distribution lists were returned as
undeliverable.
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\3\ E.g., FTC v. 30 Minute Mortgage, Inc., No. 03-60021 (S.D. Fla.
filed Jan. 9, 2003)
\4\ No. SACV 02-1026 DOC (C.D. Cal. filed Nov. 2002)
\5\ No. 032-3030 (N.D. Ill. filed Apr. 15, 2003).
\6\ ``Spoofing'' involves forging the ``from'' or ``reply to''
lines in an email to make it appear that the email was sent from an
innocent third-party. The third party then receives bounced-back
undeliverable messages and angry ``do not spam me'' complaints.
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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 <SUP>7</SUP> or
that purchasers of a spamming business opportunity could make
substantial profits.<SUP>8</SUP> Accordingly, these law enforcement
actions demonstrate that the Commission has attacked and will continue
to attack deception and unfairness in every aspect of spam.
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\7\ FTC v. NetSource One, No. 022-3077 (W.D. Ky. filed Nov. 2,
2002).
\8\ FTC 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)
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In May 2003, the FTC joined the Securities and Exchange Commission,
United States Postal Inspection Service, three United States Attorneys,
four state attorneys general, and two state regulatory agencies to file
45 criminal and civil law enforcement actions against Internet
scams.<SUP>9</SUP> As part of this sweep, the FTC brought five federal
court actions alleging the deceptive use of spam. In one case, the
defendants allegedly used spam with deceptive representations that the
email came from well-known entities, such as Hotmail or MSN, to market
a ``100% Legal and Legitimate'' work-at-home opportunity. Although the
spam promised consumers they could earn as much as $1,500 a week
stuffing envelopes supplied by the defendants, consumers ended up
paying $50 for a set of instructions on how to market a deceptive
credit-repair manual.<SUP>10</SUP> In another case, the defendant
allegedly used spam to make false and deceptive income claims for a
chain-letter scheme dubbed ``Instant Internet Empire.'' <SUP>11</SUP> A
third complaint alleged that defendants used deceptive spam to market
an advance-fee credit card scam.<SUP>12</SUP> In each of these cases,
the FTC was able to obtain preliminary injunctive relief and to shut
down the operations.<SUP>13</SUP>
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\9\ FTC Press Release, Law Enforcement Posse Tackles Internet
Scammers, Deceptive Spammers (May 15, 2003), available at <http://
www.ftc.gov/opa/2003/05/swnetforce.htm>.
\10\ FTC v. Patrick Cella et al., No. CV-03-3202 (C.D. Cal.)
(complaint filed May 7, 2003), available at <http://www.ftc.gov/os/
2003/05/patrickcellacmp.pdf>.
\11\ FTC v. K4 Global Publishing, Inc. et al., No. 5:03-CV0140-3
(M.D. Ga.) (complaint filed May 7, 2003), available at <http://
www.ftc.gov/os/2003/05/k4globalcmp.pdf>.
\12\ FTC v. Clickformail.com, Inc., No. 03-C-3033 (N.D. Ill.)
(complaint filed May 7, 2003), available at <http://www.ftc.gov/os/
2003/05/clickformailcmp.pdf>.
\13\ In the other two cases, the FTC filed stipulated final orders
prohibiting future participation in email chain letters. FTC v. Evans,
No. 4:03CV178 (E.D. Tex.) (complaint and stipulated final judgment
filed May 9, 2003); FTC v. Benson, No. 03CV0951 (N.D. Tex.) (complaint
and stipulated final judgment filed May 6, 2003). Both are available at
<http://www.ftc.gov/opa/2003/05/swnetforce.htm>.
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In addition to the law enforcement actions, in this sweep, the FTC
and 17 other federal and state consumer protection and law enforcement
agencies initiated an effort to reduce deceptive spam by urging
organizations to close ``open relays.'' <SUP>14</SUP> Fifty law
enforcers from 17 agencies identified 1,000 potential open relays, 90
percent of which were in 16 countries: U.S., China, Korea, Japan,
Italy, Poland, Brazil, Germany, Taiwan, Mexico, Great Britain, Chile,
France, Argentina, India, Spain, and Canada. The agencies drafted a
letter, translated into 11 languages and signed by 14 different U.S.
and international agencies, urging the organizations to close their
open relays to help reduce spam.
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\14\ An open relay is an email server that is configured to accept
and transfer email on behalf of any user anywhere, including unrelated
third parties, which allows spammers to route their email through
servers of other organizations, disguising the origin of the email. An
open proxy is a mis-configured proxy server through which an
unauthorized user can connect to the Internet. Spammers use open
proxies to send spam from the computer network's ISP or to find an open
relay. See FTC Facts for Business, Open Relays--Close the Door on Spam
(May 2003), available at <http://www.ftc.gov/bcp/con
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APPROACHES TO SOLVING THE SPAM PROBLEM
Solutions to the problems posed by spam will not be quick or easy;
nor is one single approach likely to provide a cure. Instead, a
balanced blend of technological fixes, business and consumer education,
legislation, and enforcement will be required. Technology that empowers
consumers in an easy-to-use manner is essential to getting immediate
results for a number of frustrated end-users. Any solution to the
problems caused by spam should contain the following elements:
1. Enhanced enforcement tools to combat fraud and deception;
2. Support for the development and deployment of technological tools to
fight spam;
3. Enhanced business and consumer education; and
4. The study of business methods to reduce the volume of spam.
The Commission's legislative recommendations, discussed below,
would enhance the agency's enforcement tools for fighting spam. In
addition, the FTC will continue vigorous law enforcement and reach out
to key law enforcement partners through the creation of a Federal/State
Spam Task Force to strengthen cooperation with criminal authorities.
The Task Force can help to overcome some of the obstacles that spam
prosecutions present to law enforcement authorities.
The Commission's experience 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
email 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. For example, in some instances, state agencies spent
considerable front-end investigative resources to find a spammer, only
to discover at the back end that the spammer was located outside the
state's jurisdiction. State and federal agencies recognize the need to
share the information obtained in investigations, so that the agency
best placed to pursue the spammer can do so more efficiently and
quickly. The Task Force should facilitate this process. Further, it can
serve as a forum to apprise participating agencies of the latest
spamming technology, spammer ploys, and investigational techniques.
Through the Task Force, the FTC will reach out not only to its
civil law enforcement counterparts on the state level, but also to
federal and state criminal authorities. Although few criminal
prosecutions involving spam have occurred to date,<SUP>15</SUP>
criminal prosecution may well be appropriate for the most egregious
conduct. The FTC and its partners in criminal law enforcement agencies
continue to work to assess existing barriers to successful criminal
prosecutions. The FTC will explore whether increased coordination and
cooperation with criminal authorities would be helpful in stopping the
worst actors.
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\15\ See, e.g., United States v. Barrero, Crim. No. 03-30102-01 DRH
(S.D. Ill. 2003) (guilty plea entered May 12, 2003). Like the related
case, FTC v. Stuffingforcash.com Corp., Civ. Action No. 02 C 5022 (N.D.
Ill. Jan. 30, 2003), the allegations in this criminal prosecution were
based on fraud in the seller's underlying business transaction.
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Improved technological tools will be an essential part of any
solution as well. A great deal of spam is virtually untraceable, and an
increasing amount crosses international boundaries. Panelists estimated
that from 50 percent to 90 percent of email is untraceable, either
because it contains falsified routing information or because it comes
through open relays or open proxies.<SUP>16</SUP> Because so much spam
is untraceable, technological development will be an important element
in solving spam problems. To this end, the FTC will continue to
encourage industry to meet this challenge.
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\16\ Brightmail recently estimated that 90% of the email that it
analyzed was untraceable. Two panelists at the Commission's Spam Forum
estimated that 40% to 50% of the email it analyzed came through open
relays or open proxies, making it virtually impossible to trace. Even
when spam cannot be traced technologically, however, enforcement is
possible. In some cases, the FTC has followed the money trail to pursue
sellers who use spam. The process is resource intensive, frequently
requiring a series of ten or more CIDs to identify and locate the
seller in the real world. Moreover, the seller and the spammer often
are different entities. In numerous instances, FTC staff cannot
initially identify or locate the spammer and can only identify and
locate the seller. In many of those cases, in the course of prosecuting
the seller, staff has, through discovery, sought information about the
spammer who actually sent the messages. This, too, involves resource-
intensive discovery efforts.
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Action by consumers and businesses who may receive spam will be a
crucial part of any solution to the problems caused by spam. A key
component of the FTC's efforts against spam is educating consumers and
businesses about the steps they can take to decrease the amount of spam
they receive. The FTC's educational materials provide guidance on how
to decrease the chances of having an email address harvested and used
for spam, and suggest several other steps to decrease the amount of
spam an address may receive. The FTC's educational materials on spam
are available on the FTC website.<SUP>17</SUP>
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\17\ See <http://www.ftc.gov/spam>
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Finally, several initiatives for reducing the overwhelming volume
of spam were discussed at the FTC's Spam Forum. At this point,
questions remain about the feasibility and likely effectiveness of
these initiatives. The FTC intends to continue its active role as
catalyst and monitor of technological innovation and business
approaches to addressing spam.
LEGISLATION TO ENHANCE THE FTC'S EFFECTIVENESS TO FIGHT FRAUDULENT SPAM
Effective spam legislation must address the following three issues:
First, legislation must address how to find the person sending the spam
messages. Although we believe that technological changes will most
effectively resolve this issue, we have proposed several procedural
legislative changes that can provide some assistance in our law
enforcement investigations. Second, legislation must deal with how to
deter the person sending the spam messages. As discussed below, the
Commission believes that civil penalties, and possibly criminal
sanctions, would help address this issue. Finally, legislation must
determine what standards will govern non-deceptive, unsolicited
commercial email. The Commission believes that the appropriate
standards would include clear identification of the sender of a message
and by empowering consumers to end the flow of messages that they do
not wish to receive.
It would be useful to have additional legislative authority,
addressing both procedural and substantive issues, that would enhance
the agency's effectiveness in fighting fraud and deception. The
procedural legislative proposals would improve the FTC's ability to
investigate possible spam targets, and the substantive legislative
proposals would improve the agency's ability to sue these targets
successfully, including increased penalties for violations.
Procedural Proposals
The FTC's law enforcement experience shows that the path from a
fraudulent spammer to a consumer's in-box frequently crosses at least
one international border and often several. Thus, fraudulent spam
exemplifies the growing problem of cross-border fraud. Two of the
provisions in the Commission's proposed cross-border fraud legislation,
discussed at the recent reauthorization testimony, would be
particularly helpful to enable the FTC to investigate deceptive
spammers more effectively and work better with international law
enforcement partners.
First, the Commission has asked Congress to amend the FTC Act to
allow FTC attorneys to seek a court order requiring a recipient of a
Civil Investigative Demand (``CID'') to maintain the confidentiality of
the CID for a limited period of time. Several third parties have told
us that they will provide notice to the target before they will share
information with us, sometimes because they believe notice may be
required and sometimes even if such notice clearly is not required by
law.
Second, the Commission asked Congress to amend the FTC Act so that
FTC attorneys may seek a court order temporarily delaying notice to an
investigative target of a CID issued to a third party in specified
circumstances. Currently, the Right to Financial Privacy Act (``RFPA'')
and the Electronic Communications Privacy Act (``ECPA'') require such
notice.
The FTC's experience is that fraud targets often destroy documents
or hide assets when they receive notice of FTC investigations. Although
the RFPA and ECPA provide a mechanism for delaying notice, the FTC's
ability to investigate would be improved by tailoring the bases for a
court-ordered delay more specifically to the types of difficulties the
FTC encounters, such as transfers of assets offshore. In addition, it
is unclear whether FTC attorneys can file such applications, or whether
the Commission must seek the assistance of the Department of Justice.
Explicit authority for the FTC, by its own attorneys, to file such
applications would streamline the agency's investigations of purveyors
of fraud on the Internet, ensuring that the agency can rapidly pursue
investigative leads.
Other legislative proposals would enhance the FTC's ability to
track deceptive spammers. First, we request that the ECPA be clarified
to allow the FTC to obtain complaints received by an ISP regarding a
subscriber. Frequently, spam recipients complain first to their ISPs,
and access to the information in those complaints would help the agency
to determine the nature and scope of the spammer's potential law
violations, as well as lead the agency to potential witnesses.
Second, we request that the scope of the ECPA be clarified so that
a hacker or a spammer who has hijacked a bona fide customer's email
account is deemed a mere unauthorized user of the account, not a
``customer'' entitled to the protections afforded by the statute.
Because of the lack of a statutory definition for the term
``customer,'' the current statutory language may cover hackers or
spammers. Such a reading of the ECPA would permit the FTC to obtain
only limited information about a hacker or spammer targeted in an
investigation. Clarification to eliminate such a reading would be very
helpful.
Third, we request that the ECPA be amended to include the term
``discovery subpoena'' in the language of 18 U.S.C. Sec. 2703. This
change is particularly important because a district court has ruled
that the FTC staff cannot obtain information under the ECPA from ISPs
during the discovery phase of a case, which limits the agency's ability
to investigate spammers.<SUP>18</SUP>
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\18\ See FTC v. Netscape Comm. Corp., 196 F.R.D. 559 (N.D. Cal.
2000).
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Substantive Proposals
Substantive legislative changes also could aid in the FTC's law
enforcement efforts against spam. Although Section 5 of the FTC Act
provides a firm footing for spam prosecutions, additional law
enforcement tools could make more explicit the boundaries of legal and
illegal conduct, and they could enhance the sanctions that the agency
can impose on violators. As the Commission recently testified at its
Reauthorization hearing before this Committee, the Telemarketing and
Consumer Fraud and Abuse Prevention Act (``TCFAPA''), 15 U.S.C.
Sec. Sec. 6101-6108, provides a model for addressing unsolicited
commercial e-mail. Amendments to the TCFAPA would authorize the FTC to
adopt rules addressing deceptive and abusive <SUP>19</SUP> practices
with respect to the sending of unsolicited commercial e-mail.
Approaching spam through this statutory model would provide the market
with direction, but would do so within a framework that could change as
the problems evolve. Regardless of the statutory approach taken,
however, the Commission believes that the following elements are
important.
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\19\ The FTC has determined, in the Statement of Basis and Purpose
for the Amended TSR, that the undefined term ``abusive'' used in the
legislation authorizing that Rule will be interpreted to encompass
``unfairness.'' 68 Fed. Reg. 4580, 4614 (2003).
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First, any legislation should give the FTC some authority via
rulemaking to address deceptive practices relating to spam. Agency
rules could be adapted to new changes in technology without hindering
technological innovation, thus providing the market with direction, but
doing so within a framework that could change as the problems evolve.
Whether addressed through the legislation itself or through rulemaking,
unlawful practices that should be prohibited include: using false
header or routing information; using false representations in the
``subject'' line; using false claims that an unsolicited commercial
email message was solicited; using false representations that an opt-
out request will be honored; sending any recipient a commercial email
message after such recipient has requested not to receive such
commercial email messages; failing to provide a reasonable means to
``opt out'' of receiving future email messages; and sending commercial
email to an address obtained through harvesting or a dictionary attack.
Morever, any statute also should prohibit assisting and facilitating
any of the above, i.e., providing substantial assistance to another
party engaged in any violation knowing or consciously avoiding knowing
that such party is engaged in such violation.
Second, any legislation should embody the same standard of
liability that is embodied in Section 5 of the FTC Act, without a
general requirement to show intent or knowledge. Imposition of intent
or knowledge requirements as a precondition of liability would actually
make the FTC's ability to enforce the specific anti-spam statute more
restrictive than the agency's existing authority under Section 5 to
attack spam and would unnecessarily complicate enforcement.
Third, any statute or rule issued under the statute should be
enforceable by the FTC like other FTC rules. This entails actions in
federal district court, authority to seek preliminary and permanent
injunctions and other equitable relief, and liability for civil
penalties of up to $11,000 per violation. (The amount of civil
penalties is governed by statutory factors, such as ability to pay,
previous history of such conduct, egregiousness of the conduct, etc.).
Fourth, any legislation should authorize states to enforce the
statute or FTC rule in federal court. A state enforcement mechanism has
proven successful in other areas of consumer protection, such as
telemarketing, and would make the states more capable law enforcement
partners with the Commission.
Finally, any statute should seek to assure consistency between
state and federal laws. The scope of the Internet and of email
communication is global, transcending national boundaries. Congress
should seek to minimize artificial barriers that would break up this
market.
Additionally, the criminalization of false header and routing
information should be explored. The FTC staff has been discussing with
criminal authorities the likely effect of a specific statute that
criminalized this conduct. At this time, the FTC has no recommendations
on whether changes in the criminal code are necessary or
appropriate.<SUP>20</SUP>
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\20\ Any legislation that criminalizes certain types of spam
activities should not negatively impact the FTC's existing Section 5
authority or impose new standards of proof, scienter, or evidence for
civil enforcement cases.
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Admittedly, we recognize that these legal steps alone will not
solve the growing spam problem. Nor is it clear what impact these steps
will have on some of the other problems associated with spam (e.g.,
volume and security). These issues may need to be addressed separately.
Nevertheless, the FTC believes that legislation, such as that described
above, would provide more effective investigative and enforcement tools
and would enhance the FTC's continuing law enforcement efforts.
CONCLUSION
Email 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 widespread 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.
Mr. Stearns. Thank you. I would again note that, all
members, your testimony is made full and part of the record, so
we are going to try to insist the 5-minute rule knowing that we
are a little later than we originally thought we would be when
this hearing started. Mr. Betty, welcome.
STATEMENT OF CHARLES GARRY BETTY
Mr. Betty. Thank you, Mr. Chairman, ladies and gentlemen of
the committee, and thank you for inviting me to testify before
you today. My name is Garry Betty and I am the CEO of
EarthLink. EarthLink is the Nation's third largest ISP, serving
5 million customers nationwide with dial-up, broadband, web
hosting and wireless Internet services. As such, we are on the
front lines every day in the fight against this unsolicited
commercial mail that we have been hearing about for the last
hour or so, known as spam.
Spam is a problem and a growing problem. At EarthLink, have
seen over a 500 percent increase in receipt of spam in the last
18 months. And what originally began as an occasional
inconvenience has now grown as quite an annoyance. Spam creates
inefficiency, but, more importantly, for our customers spam is
the No. 1 thing that they least like about the Internet. Like
other statistics we have heard, 50 percent of all of our
incoming mail is spam. Our existing technology, filtering
technology does successfully eliminate 70 to 80 percent of
those messages from ever getting to our customers, but with
this rapid increase even 20 to 30 percent of a lot of spam is a
lot of unwanted mail getting to our users' in-boxes.
Many of the members of this panel have commented on cost.
Spam does cost Internet providers real money. Excess server
capacity, an abuse team working full time to ferret out and
close down sources of spam, internal and external legal fees
are costs that we incur trying to shut down the most egregious
of spammers. Spam is a pernicious problem. Get rich quick
schemes, effortless weight loss programs aren't anything new,
but the cost burden imposed by spam is. Unlike, as we have
heard, telemarketing or direct mail pieces, which require the
sender to pay for these messages, spam adds insult to injury by
shifting this cost burden to people like Earthlink and of
course the customers who have to delete that from their in-
boxes.
In order to combat spam, I think we must attack it on
several fronts. Legislation, litigation, enforcement, customer
education and technology solutions are all fronts in this
fight, and I will try to briefly address some of these efforts.
EarthLink supports legislation to help ISPs and consumers
fight spam. Congress is clearly engaged in this issue, as we
have heard today. We count no fewer than eight bills pending in
the House and Senate, and rather than speak to just any one
bill, we would like to note provisions in various bills which
we think will be helpful to ISPs like Earthlink and our
consumers.
Legislative provisions Earthlink supports include no
restrictions on an ISP's current ability to block spam on
behalf of its customers. ISPs are consumers' first line of
defense against spam. Recognition of ISPs rights of action
against spammers. As I will discuss, ISPs' lawsuits against
spammers are an effective tool to fight spam. Allowing recovery
of actual damages greater than the capital and statutory
damages, requirements for accurate sender, subject line and IP
address information, prohibitions on using harvested e-mail
addresses to send spam, and criminal penalties for non-
compliance.
Another important front in the fight against spam is
litigation. Earthlink was one of the first ISPs to sue
spammers. We filed over 100 lawsuits against spammers in the
last 5 years and most recently won a judgment in May of 2003
against Howard Carmack, known as the Buffalo Spammer, who was
estimated to send out over almost a billion spam messages
through Earthlink alone in an 18-month period. Earthlink's case
against Carmack is illustrative. Not only did we win a monetary
damage but more importantly we obtained permanent injunctive
relief against him. Furthermore, we make all ISPs third party
beneficiaries of such judgments. This bars the defendant,
Carmack, from sending spam to Earthlink customers or to
customers of any other ISPs, and we would urge other ISPs to do
likewise.
Obviously, this case was successful even without specific
anti-spam legislation. Rather we relied on a combination of
laws including Federal statutes, State statutes, new laws, such
as the Computer Fraud and Abuse Act, and time-tested notions of
common law, such as trespass and conversion. This is not to say
Federal anti-spam legislation is unneeded; rather, it should
supplement and strengthen the legal recourse available today to
ISPs and other parties.
Perhaps the most promising front in the fight against spam
is the implementation of technology solutions. Earthlink and
ISPs have generally relied on filtering software to limit the
amount of sp |