Legislature(2003 - 2004)
04/30/2003 03:10 PM JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.