Legislature(2003 - 2004)

04/30/2003 03:10 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 36 - ELECTRONIC MAIL                                                                                                       
                                                                                                                                
Number 0382                                                                                                                     
                                                                                                                                
CHAIR McGUIRE  announced that the  final order of  business would                                                               
be  HOUSE  BILL NO.  36,  "An  Act  relating to  electronic  mail                                                               
activities and  making certain electronic mail  activities unfair                                                               
methods of competition  or unfair or deceptive  acts or practices                                                               
under  the Act  enumerating unfair  trade practices  and consumer                                                               
protections."  [Before the committee was CSHB 36(L&C).]                                                                         
                                                                                                                                
Number 0327                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA,  speaking as the sponsor,  explained that HB                                                               
36  attempts   to  regulate  junk  electronic   mail  ("e-mail"),                                                               
commonly referred  to as  "spam."  Roughly  27 other  states have                                                               
attempted to ban junk e-mail  in somewhat consistent manners, for                                                               
example,  by  stating that  fraudulent  e-mail  is illegal.    In                                                               
addition,  many states  require people  who spam  others to  give                                                               
recipients a fair way  to get off of a sender's  e-mail list.  He                                                               
posited that  these efforts are  having some effect,  because now                                                               
most  people who  send junk  e-mail provide  a link  by which  to                                                               
unsubscribe from the sender's e-mail list.                                                                                      
                                                                                                                                
REPRESENTATIVE GARA said that HB 36  gives either the state or an                                                               
individual  the  right  to seek  modest  damages  under  Alaska's                                                               
unfair trade practices Act.   The damages that a private consumer                                                               
can get  are either $500  or triple damages; however,  a consumer                                                               
most  likely  won't  have  damages   unless  he/she  contracts  a                                                               
computer virus from  a spam.  House Bill 36  makes it illegal for                                                               
someone  to  send  spam  without   also  providing  a  method  to                                                               
unsubscribe.   He  mentioned  that  one of  the  concerns of  the                                                               
Federal Trade  Commission (FTC)  and some  consumer organizations                                                               
is that some  people who send junk e-mail,  although appearing to                                                               
provide a  way to  unsubscribe, are really  just taking  one's e-                                                               
mail address  and using it again  or selling it to  someone else.                                                               
To address  this concern, HB  36 makes  it a violation  either to                                                               
not take someone  off of a mailing  list when asked to  do so, or                                                               
to  use that  e-mail address  in any  way that  goes against  the                                                               
wishes  of the  recipient, for  example, selling  the recipient's                                                               
address to  another after removing  or being asked to  remove the                                                               
address from that particular mailing list.                                                                                      
                                                                                                                                
REPRESENTATIVE GARA predicted that  the attorney general's office                                                               
will  take  high-impact cases  to  try  to  send a  message,  but                                                               
acknowledged that  the attorney general's office  is understaffed                                                               
and so might not take very  many unlawful e-mail cases.  For this                                                               
reason,  private individuals  have been  left with  the right  to                                                               
file an  action.  He  mentioned that  there are ways,  if someone                                                               
sends junk e-mail  but does not provide a way  to unsubscribe, to                                                               
find  out who  that person/entity  is  and then  bring an  action                                                               
against that  person/entity.  He  suggested that by  joining with                                                               
the 27  other states in this  effort, Alaska can perhaps  make an                                                               
impact and start rolling back the growth of spam.                                                                               
                                                                                                                                
REPRESENTATIVE  GARA   offered  that  HB  36,   via  a  provision                                                               
patterned after  Washington statute, is also  designed to prevent                                                               
people  from  using  misleading  subject  headers,  for  example,                                                               
something implying it is a message  from a friend.  He noted that                                                               
California takes a different approach  by requiring commercial e-                                                               
mail  to   include  in  its   subject  header  either   "ADV"  or                                                               
"ADV:ADLT."                                                                                                                     
                                                                                                                                
TAPE 03-48, SIDE A                                                                                                            
Number 0001                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  surmised that  the problem with  taking that                                                               
approach, if  each state has  different, specific  words required                                                               
in  the subject  header, is  that "spammers"  will complain  that                                                               
they can't  comply with such  complexity.  Hence, HB  36 requires                                                               
only that the subject header  cannot be misleading.  He mentioned                                                               
also  that HB  36 only  applies  to commercial  bulk e-mail,  not                                                               
political or personal e-mail.                                                                                                   
                                                                                                                                
REPRESENTATIVE GARA  observed that HB  36 has the support  of the                                                               
AARP,  of the  Anchorage  Society for  Human Resource  Management                                                               
(ASHRM),  and  of  the  Alaska  Public  Interest  Research  Group                                                               
(AkPIRG), all of which testified  in the House Labor and Commerce                                                               
Standing Committee.   He relayed  that businesses have  said that                                                               
junk  e-mail  costs  their  companies  approximately  $9  billion                                                               
annually in  lost work  time.  It  is estimated  that individuals                                                               
get upwards  of 260 billion  spams annually and that  that figure                                                               
will triple  in the next few  years, to about 4,000  junk e-mails                                                               
per person  per year.  He  acknowledged that HB 36  will not stop                                                               
junk e-mail,  but said he  hoped that  it will have  some impact.                                                               
In conclusion, he pointed out  that not only individuals can file                                                               
an action.  Employers, who end  up paying for lost work time, can                                                               
also file an action on behalf their employees.                                                                                  
                                                                                                                                
CHAIR McGUIRE mentioned that  according to information obtainable                                                               
on CNN's  web site,  Virginia is  threatening spammers  with jail                                                               
time and with  loss of assets earned from "spamming."   She noted                                                               
that HB  36 contains some  of what the article  purports Virginia                                                               
is doing [legislatively].  She  asked Representative Gara whether                                                               
he  has  looked into  those  aspects  of  Virginia law  that  are                                                               
different from HB 36.                                                                                                           
                                                                                                                                
REPRESENTATIVE GARA said  he had, and although  he'd been tempted                                                               
to add a  criminal penalty, he'd also wanted to  be careful about                                                               
overreaching.   He surmised that Alaska's  unfair trade practices                                                               
Act will let  angered consumers fight back on this  issue of junk                                                               
e-mail and  perhaps have  some impact.   He  suggested that  if a                                                               
criminal  penalty were  added  to  HB 36,  it  would  have to  be                                                               
carefully thought out, which he has  not yet done.  He noted that                                                               
HB 36 does stipulate that  someone sending junk e-mail cannot try                                                               
to hide  where the e-mail  is coming from by  misrepresenting its                                                               
originating point.                                                                                                              
                                                                                                                                
CHAIR  McGUIRE asked  Representative  Gara to  consider adding  a                                                               
provision that would allow for  the seizure of assets earned from                                                               
spamming.                                                                                                                       
                                                                                                                                
REPRESENTATIVE  SAMUELS asked  whether requesting  to be  removed                                                               
from  an e-mail  list would  ensure permanent  removal from  that                                                               
list.                                                                                                                           
                                                                                                                                
Number 0663                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  said that if  someone requests  that his/her                                                               
e-mail address be taken off a  list but then that person's e-mail                                                               
address  is later  bought from  another source,  that should  not                                                               
entitle the  sender to again  start sending the same  junk e-mail                                                               
to that  person.  If such  happens, then "they've messed  up," he                                                               
remarked, "they should keep a  list of all the [e-mail addresses]                                                               
of people  who want  to be  taken off their  list."   He surmised                                                               
that  that  sender could  then  be  subject  to  a $500  fine  as                                                               
provided for in HB 36.                                                                                                          
                                                                                                                                
REPRESENTATIVE HOLM  argued that  because the  attorney general's                                                               
office  does  not  have  enough  staff, HB  36  will  be  totally                                                               
unenforceable.                                                                                                                  
                                                                                                                                
REPRESENTATIVE  GARA   reiterated  that   that  is   why  private                                                               
consumers,  including   employers  acting  on  behalf   of  their                                                               
employees,  have  been  given  the right  to  take  these  claims                                                               
themselves; this  is in recognition  of the fact that  people are                                                               
probably going to have to help  themselves a bit because staff in                                                               
attorney general's  office are  overworked.   He also  noted that                                                               
Alaska  has  a very  strong  unfair  trade practices  Act,  which                                                               
allows people to find private  attorneys to assist in such cases.                                                               
He again predicted  that the attorney general's  office will take                                                               
high-impact cases to  try to send a message, adding  that it will                                                               
be up to that agency to rank  these types of cases along with its                                                               
other priorities.                                                                                                               
                                                                                                                                
REPRESENTATIVE HOLM  opined that the activities  proscribed by HB                                                               
36 do not rise to a level  warranting seizure of assets.  He also                                                               
surmised that many  junk e-mails do not originate  in Alaska, and                                                               
pondered  how  HB  36  will  be enforced  with  regard  to  those                                                               
entities.                                                                                                                       
                                                                                                                                
REPRESENTATIVE GARA  pointed out  that HB  36 does  not currently                                                               
include  seizure of  assets.   He  posited that  a  $500 fine  is                                                               
warranted if  one asks  to be  taken off a  junk e-mail  list but                                                               
still  continues to  receive that  junk e-mail.   As  to how  the                                                               
provisions of HB 36 will be  enforced with regard to entities out                                                               
of state,  he suggested that  enforcement will occur in  the same                                                               
fashion as  any other claim  currently being brought  against any                                                               
business outside  of Alaska:   the consumer  will have to  file a                                                               
claim, send the  entity a copy of that complaint,  and the entity                                                               
will  then have  to  hire an  attorney and  respond  in court  in                                                               
Alaska.   The courts  allow one  to bring in  others from  out of                                                               
state to sue them.   Consumers may have to get  awfully mad to be                                                               
willing to go through this  process, he acknowledged, but posited                                                               
that there  are a number of  consumers who are awfully  mad about                                                               
junk e-mail.                                                                                                                    
                                                                                                                                
Number 1179                                                                                                                     
                                                                                                                                
REPRESENTATIVE   GARA,   in   response  to   further   questions,                                                               
reiterated that HB  36 does not proscribe the sending  of junk e-                                                               
mail; it  merely stipulates that  recipients must be given  a way                                                               
to unsubscribe to a mailing list.   If such a way is not provided                                                               
- or  if it only  has the appearance of  taking someone off  of a                                                               
mailing list  without really doing  so, or if the  sender refuses                                                               
to take  someone off of a  mailing list after being  requested to                                                               
do so  - and  the recipient  continues to  get that  junk e-mail,                                                               
then that is when the provisions of HB 36 can be applied.                                                                       
                                                                                                                                
CHAIR McGUIRE  said she would  submit not only that  junk e-mails                                                               
are annoying, but also that they  do cause harm.  For example, at                                                               
her personal e-mail address, she has  a megabyte limit, and so if                                                               
her e-mail  mailbox fills  up with  spam, her  legitimate e-mails                                                               
cannot get through.                                                                                                             
                                                                                                                                
REPRESENTATIVE OGG, after acknowledging  that he, too, would like                                                               
to see junk e-mails curtailed, opined that HB 36 is merely feel-                                                                
good legislation and  will not actually accomplish  anything.  He                                                               
said he didn't  think that senders of junk e-mail  even know what                                                               
jurisdictions their  e-mail goes to,  much less what the  laws of                                                               
those jurisdictions  are.   He asked why  they should  spin their                                                               
wheels on something that won't be  utilized.  He also opined that                                                               
recovering  $500   is  hardly   worth  the   consumer's  efforts,                                                               
particularly  given what  it would  cost to  hire an  attorney to                                                               
help pursue the issue.                                                                                                          
                                                                                                                                
REPRESENTATIVE  GARA pointed  out, however,  that in  addition to                                                               
the $500  fine, under  Alaska's unfair  trade practices  Act, the                                                               
consumer who  pursued such  an action  would also  be compensated                                                               
for attorney fees.   Thus it will  prove to be a bit  of a burden                                                               
to  violate  this proposed  law.    How  do entities  know  which                                                               
jurisdiction they are  sending junk e-mails to?   He offered that                                                               
when  entities use  huge e-mail  lists to  send out  junk e-mail,                                                               
they  have assume  that people  in all  states will  be receiving                                                               
that  e-mail; therefore,  those entities  should make  themselves                                                               
familiar with every state's laws  regarding junk e-mail.  "That's                                                               
what we do in commerce cases generally," he added.                                                                              
                                                                                                                                
CHAIR  McGUIRE  surmised  that  one  of the  things  HB  36  will                                                               
accomplish is that  it will raise the awareness  of those sending                                                               
junk e-mail.  She offered her hope  that if more than half of the                                                               
states  start instituting  laws governing  junk e-mail,  then the                                                               
federal government will  step in and do something  at the federal                                                               
level.                                                                                                                          
                                                                                                                                
Number 1532                                                                                                                     
                                                                                                                                
REPRESENTATIVE GARA  opined that having a  federal solution would                                                               
be  great.   In conclusion,  he  said that  HB 36  is not  asking                                                               
anything more than that businesses  who engage in sending junk e-                                                               
mail act in  a reasonable and honest manner:   when asked to take                                                               
someone off their  mailing list, they should do  so regardless of                                                               
the laws in the recipient's  state and regardless of whether they                                                               
know what  those laws entail.   Those who send junk  e-mail can't                                                               
expect  to  be  able  to   just  ignore  reasonable  requests  by                                                               
recipients to be removed from mailing lists, he remarked.                                                                       
                                                                                                                                
CHAIR  McGUIRE suggested  that  most  legitimate businesses  that                                                               
conduct  business out  of  state  do make  the  effort to  become                                                               
familiar with  the laws of  the states whose citizens  they might                                                               
be doing  business with.   Of senders  of junk e-mail,  she said:                                                               
"If these  companies want to  sell you something,  they're making                                                               
billions of  dollars off selling things  on the Internet.   I ...                                                               
support it; I think they ought  to research it, and I don't think                                                               
it's too much to ask."                                                                                                          
                                                                                                                                
REPRESENTATIVE GARA mentioned  that he'd tried to draft  HB 36 in                                                               
such a way so as not  to violate the "constitutional ... rules on                                                               
interstate  commerce"; therefore,  he  predicted, HB  36 will  be                                                               
upheld even if attacked on constitutional grounds.                                                                              
                                                                                                                                
Number 1661                                                                                                                     
                                                                                                                                
CLYDE  (ED)  SNIFFEN,  JR.,   Assistant  Attorney  General,  Fair                                                               
Business   Practices   Section,   Civil   Division   (Anchorage),                                                               
Department of Law (DOL), on the enforceability of HB 36, said:                                                                  
                                                                                                                                
     Let me  tell you how  we deal with  consumer protection                                                                    
     violations now.   I'm  charged with  enforcing Alaska's                                                                    
     antitrust  statutes and  our consumer  protection laws,                                                                    
     and  we get  complaints daily  from people  who've been                                                                    
     the victims of telemarketing  scams, from e-mail scams,                                                                    
     from Nigerian  scams, and they're  coming in  all types                                                                    
     of forms.   Alaska  is a "victim  state" in  that there                                                                    
     aren't  many people  ... inside  the borders  of Alaska                                                                    
     who are  really doing  this.   It's people  Outside who                                                                    
     are preying  on people in Alaska  because [for example]                                                                    
     we have  this PFD [permanent  fund dividend] up  here -                                                                    
     people have this perception there's  money up here - we                                                                    
     have oil, whatever it is.   And the Internet is a great                                                                    
     way  to get  at  people -  from Outside  -  to prey  on                                                                    
     people here.                                                                                                               
                                                                                                                                
     And  we  have  the   tools,  in  our  current  consumer                                                                    
     protection Act,  to go  after these  people if  we want                                                                    
     to,  and we  get more  than  just $500.   Our  consumer                                                                    
     protection Act  allows us to  penalize these  people up                                                                    
     to $5,000  for every violation.   So, for  every e-mail                                                                    
     spam that comes  in that that would be  in violation of                                                                    
     [HB  36], for  example, we  could tag  them with  up to                                                                    
     $5,000 for every e-mail.                                                                                                   
                                                                                                                                
     So you  get into some  significant money there,  and if                                                                    
     we  saw a  widespread  abuse by  some national  spammer                                                                    
     that  ...  was  targeting  Alaska  for  one  reason  or                                                                    
     another, we  could take enforcement  action and  make a                                                                    
     significant  impact,   to  the  tune  of   millions  of                                                                    
     dollars.   I know  Oregon has  been very  successful in                                                                    
     doing this, reaching outside the  borders of Oregon and                                                                    
     prosecuting  e-mail spammers  and telemarketers  - they                                                                    
     have  a  new  telemarketing   law  that  operates  very                                                                    
     similar to  this, that gives  them the authority  to do                                                                    
     that  -  and  they  do  recover  significant  judgments                                                                    
     against these people.                                                                                                      
                                                                                                                                
Number 1751                                                                                                                     
                                                                                                                                
MR. SNIFFEN continued:                                                                                                          
                                                                                                                                
     ...  People  who want  to  commit  fraud are  going  to                                                                    
     commit fraud, and  you're just not going  to stop them.                                                                    
     This law, and no other law,  is ever going to stop that                                                                    
     conduct.   That's been our experience,  anyway.  Having                                                                    
     it  on   the  books,  though,  will   deter  legitimate                                                                    
     spammers  or folks  who want  to use  the Internet  for                                                                    
     commercial  purposes.   They're going  to see  this law                                                                    
     and say, "Well, I want to be  a good guy - I'm going to                                                                    
     comply,"  and just  by having  this law  on the  books,                                                                    
     with absolutely  no enforcement, ... we're  hoping will                                                                    
     deter  people from  engaging in  this  conduct just  to                                                                    
     begin with.                                                                                                                
                                                                                                                                
     So,  ... I  think it  will have  some positive  benefit                                                                    
     just  in that  alone.   For  the people  out there  who                                                                    
     really want  to be the  good guys, "Well, shoot,  I got                                                                    
     to  really  be careful  who  I'm  sending my  mail  to,                                                                    
     because  if  I send  it  to  Alaska and  the  [attorney                                                                    
     general] gets  wind of  it, heck, I'm  looking at  a $5                                                                    
     million lawsuit  just like that."   For the  people who                                                                    
     are  just going  to thumb  their nose  at our  law, ...                                                                    
     what  do   you  do?    Well,   as  Representative  Gara                                                                    
     suggested, we have  to prioritize how bad  we think the                                                                    
     conduct is.   Do we  want to  go after these  people or                                                                    
     not?  ... Do  we want  to chase  down ...  "eBay" fraud                                                                    
     guys first before we go after some other guys?                                                                             
                                                                                                                                
     We have  an endless  variety of consumer  fraud [cases]                                                                    
     in  our  office that  we  are  juggling every  day  and                                                                    
     trying to decide who we want  to chase and who we don't                                                                    
     want to  chase.   But those decisions  we make,  and we                                                                    
     hope they have  some effect.  And this  bill just gives                                                                    
     us another tool  essentially.  It does ...  allow us to                                                                    
     go after  spammers that  now we can't  go after,  and I                                                                    
     think Representative  Gara explained very well  that it                                                                    
     would  only be  those  spammers who  are just  thumbing                                                                    
     [their] nose at you.  You  know, you tell them, "Hey, I                                                                    
     don't want this stuff any more, don't send it to me."                                                                      
                                                                                                                                
MR. SNIFFEN opined  that junk mail in a  mailbox, while annoying,                                                               
is not as  intrusive as junk e-mail because one  can receive junk                                                               
e-mail 24 hours a day, 7 days a  week.  He posited that there are                                                               
times  when senders  of junk  e-mail know  that they  are sending                                                               
spam to Alaska, particularly if  they are sending it to "gci.net"                                                               
accounts  or [acsalaska.com]  accounts.    Regardless of  whether                                                               
people know  where they are  sending spam,  if they are  going to                                                               
engage  in  that  kind  of   interstate  commerce,  it  is  their                                                               
responsibility, and the burden is on  them to know that.  The law                                                               
is very  clear that they have  an obligation to know  the laws of                                                               
the state they're doing business in.   "So we don't have sympathy                                                               
for them,"  he remarked, "if  they violate our law,  whether they                                                               
know it or not, we still have the right to pursue them."                                                                        
                                                                                                                                
MR. SNIFFEN  concluded by  saying, "We  see this  bill as  a good                                                               
enforcement tool  for the  attorney general's  office; as  far as                                                               
private consumers  actually taking  advantage of  this to  do any                                                               
real good,  ... that's a tougher  call."  As a  package, however,                                                               
HB 36 will make an impact, he predicted.                                                                                        
                                                                                                                                
Number 1906                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SAMUELS  moved  to  report CSHB  36(L&C)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal  note.   There being no  objection, CSHB  36(L&C) was                                                               
reported from House Judiciary Standing Committee.                                                                               

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