FTC Letter Looks to be a Warning for Michigan and Utah

E-mail marketers received an unusually bluntly worded and somewhat inexplicable show of support from the Federal Trade Commission earlier this week in the form of a 16-page letter spelling out point-by-point what a bad idea the FTC thinks so-called child protection state e-mail registries are.

“By compiling such a list that cannot be effectively monitored for abuse, [a child protection e-mail registry] may provide pedophiles and other dangerous persons with a potential list of contact points of…children,” said the letter, which was dated Oct. 25 but published Tuesday. “E-mail addresses on the proposed registry are unlikely to receive less spam and may actually receive more spam, including adult content.”

However, rather than address two current state laws, the FTC’s letter addressed an Illinois bill that died earlier this year. The letter was ostensibly in response to a request by Illinois state Rep. Angelo “Skip” Saviano, (R-Elmwood Park), for the FTC to assess the viability of a child-protection e-mail registry that was proposed in that state early this year. But it is unclear when the request was made or why the FTC chose to respond to it now.

FTC representatives did not return calls at deadline.

Some industry experts believe that the FTC’s letter was intended as a warning to Michigan and Utah.

“The FTC has done a compelling job of analyzing the risks associated with child protection registries and the technologies that support child protection registries,” said Trevor Hughes, executive director of the E-mail Service Providers Coalition trade group “While the Illinois bill is currently not expected to advance further, it is quite clear that the FTC has intended a strong warning to be issued to both Michigan and Utah with regards to the implementation of essentially identical laws.”

Michigan and Utah passed laws in August allowing parents or legal guardians to place children’s e-mail addresses or other “contact points” on child protection registries, making it illegal for marketers to send to registered addresses messages that promote or link to products or content it is illegal for minors to buy.

Marketers of material aimed at adults — even non-pornographic products such as a beer-of-the-month club, for example — would be required to scrub their lists of names on the registries once a month in order to be sure they would avoid sending messages to registered addresses.

Utah’s registry costs marketers $5 per thousand addresses checked to use it. Michigan’s has been postponed because the law mistakenly put a ceiling on the price that was too low for its registry to be viable. However, Michigan’s legislators reportedly fixed the bill last week so marketers can be charged $7 per thousand addresses.

Matthew Prince, chief executive of Unspam LLC, Park City, UT, the start-up company that runs both registries, said officials have told him to be ready to start scrubbing Michigan addresses early next week.

Meanwhile marketers contend that the registries do nothing to protect children while removing one of e-mail’s greatest advantages — its low cost. It would cost a marketer with a list of 1 million e-mail addresses $60,000 a year to comply with Utah’s law alone. Once Michigan’s goes live, a marketer of products aimed at adults with 1 million e-mail addresses can expect to pay another $84,000 to comply with Michigan’s law.

Hughes has nothing good to say about either law.

“The E-mail Service Provider Coalition and I personally are completely in support of good public policy that prevents children from receiving offensive stuff,” he said. “But what’s happening here is that these states have been seduced by the idea of a simple solution to an incredibly complex problem. And the solution they are being sold is in fact more damaging, riskier and much more complicated than is understood in these states.”

Unspam’s Prince said he has no idea why the FTC published its letter now. He also contends that the letter contains nothing new.

“It’s just sort of a rehash…from the original FTC report [on the viability of a national do-not-e-mail list] that was issued back in June of 2004, and we know what the FTC’s position is,” he said. Prince added that he believes the do-not-e-mail debate mirrors the do-not-call debate of a decade ago.

“The FCC issued a report that it [a do-not-call telemarketing registry] was too hard to do technologically, that no one would follow it and that no one would obey it. In 1992, Florida was the first state to pass such a list. In 1994 Hawaii followed suit and by 2003, 43 states had do-not-call lists. Turns out they were enforceable and they worked surprisingly well,” said Prince.

“What we learned in third-grade civics is that each state is its own laboratory of democracy and good ideas percolate to the top and bad ones don’t. The proof will be in the pudding of these first two states that have gone online.”

Prince said so far more than 150 marketers have been using its Utah service.