Spam Dunk
Industry lawyers are upset over California’s anti-spam bill, but not because it bans unsolicited e-mail. What bothers them more can be expressed in four words: Private right of action.
Signed into law last month, Sen. Kevin Murray’s SB-186 gives consumers the right to sue when they receive unsolicited e-mail, and to recover damages of $1,000 per unwanted message, with a cap of $1 million per incident. This is going to result in “people suing legitimate companies for sending mail,” says Quinn Jalli, an attorney and strategy relations manger with Mindshare Design, a San Francisco e-mail marketing technology company.
“You’re going to pay a trial lawyer 500 times to prove your innocence over and over again,” adds Ken Hirschman, vice president and general counsel at Digital Impact, a San Mateo-based e-mail marketing firm.
They have a point, judging by Utah’s experience. Whereas most state laws deal mostly with fraudulent e-mail, specifying penalties for inaccurate header and sender information, Utah’s Unsolicited E-mail Act gives consumers the right of action against anyone who sends them an unsolicited message. It took effect roughly 18 months ago, promptly caused the filing of hundreds of lawsuits.
One of the first cases, filed by a Salt Lake City resident named Terry Gillman, accused Sprint of violating the law. But Judge Denise Lindberg ruled that Gillman clearly opted in when he signed up to the audio Galaxy Web site. Galaxy shares data with Sprint.
Judge Lindberg now has a backlog of 1,200 similar complaints, according to a recent article by the Salt Lake Tribune. And Denver Snuffer, one of two lawyers said to be spearheading the Utah filings, told the Tribune: “We have 22,000 more to go. We intend to continue to file them until we have some effect on the practice of spammers in Utah.”
Some of those suits are “border fraudulent,” says Jalli. “I’ve spoken to attorneys [in Utah], and in a lot of suits there is clear evidence of an opt-in.”
And that danger now exists in California. “Being a California attorney myself, I know there are lots of litigious types in this state,” Jalli adds.
Many legitimate firms will settle rather than fight.
“It’s cheaper to send a lawyer $5,000 than to answer a lawsuit in state court,” says Hirschman. “At some point, you’re going to throw up your hands and say, ‘Maybe I’ll just stop sending e-mail.”
Hirschman cites another threat: “Small-claims court actions by the hundreds of thousands. It’ll be a lot of fun to spend evenings harassing big companies for $1,000 a pop,” he says. Some complainants may settle by saying, “Send me a laptop.’
Even consumers who proceed in good faith may forget that they had opted in.
“They’d have to track their own activity of years and years of Web surfing,” says Direct Marketing Association spokesman Louis Mastria.
“Consumers are saying, ‘I did forget.’ Why should they have the private right of action?
How do you protect yourself? Jalli’s firm requires an opt-in supported by documentation. That includes IP address, time, date and URL of opt-in.
“If you can prove that the recipient requested it, you can show compliance with state laws,” he says.
Hirschman concurs.
“Our clients don’t send unsolicited e-mail,” he says. “If you want to maintain a good brand image, you can’t engage in spamming.”
Of course, there are other reasons to be against the bill. For one thing, there is no way for a mailer with a e-mail address but no street address to know where the person lives.
“Between 15% and 20% of the U.S. based e-mail addresses are in California,” Hirschman says.
Another problem is that it requires that consent to mail be obtained by the advertiser, not the sender.
That “essentially wipes out the list rental business and the newsletter sponsor business, or at least creates serious doubt,” says Hirschman. “Until we get a court case that determines whether it is appropriate to engage in some of these activities, a lot of vendors are going to be sort of scratching their heads and wondering if they can do it at all.”
Is there any chance that this law will become the national standard?
Industry leaders hope not because the Internet is not a local instrument. Jalli and Hirschman both think it is necessary to have a national bill, but not one that allows private right of action. But who knows what will happen?
Hirschman jokes, “The first thing they teach you in laws school is, ‘Here’s how this rule works — except in California.’”
Meanwhile, marketers are wondering why people hate e-mail so much. As it turns out, a new survey by Vente Inc. found that consumers don’t hate e-mail as much as telemarketing.
Vente, a compiler of online consumer data, surveyed consumers in focus groups and in an online spam survey. Respondents were twice as likely to find telemarketing the most irritating medium as e-mail. Not that people love e-mail: One-third of those surveyed said they deleted all spam without opening or reading it; another third said they glanced at the subject or sender line before deleting it.
And why do they dislike it so?
Over 80% said that the most irritating thing about it is its volume. Half reported that they receive over 30 e-mails a day, most of which were spam.
Vente also studied whether the product — and the level of the relationship — have anything to do with permission.
It asked consumers to imagine a hypothetical Chevrolet purchase. Most people felt that their dealer had implied permission to continue sending them postal mail; 24% felt that extended to e-mail. Only 12% felt they had signed on for phone calls.
As the relationship expanded beyond the dealer to include loan companies and other General Motors divisions, the implied permission level went down.
“Based on the response to this question, the implications for all those who sell through a distribution channel seem clear: Even though the consumer may be purchasing your brand, the relationship is with the retailer,” wrote Jeff Durski, vice president of marketing at Omaha-based Vente.
The picture was different when it came to cell phones. Consumers felt a stronger relationship with the service provider than the retail store.
