Already a Bloomberg.com user?
Sign in with the same account.
By Jane Black In September, 2000, the Federal Trade Commission sent letters to junk e-mailers, warning them that a chain letter they were sending via the Internet was illegal. The letter promised that if the recipient sent $5 to the names at the top of a list, they would receive as much as $46,000 within 90 days. The scam was so brazen, it even urged potential recruits who doubted its legitimacy to contact the FTC's associate director for marketing practices. The agency warned the senders -- also known as "spammers" -- to stop promoting the chain letters, to return any money they had received, and to forward a copy of the warning letter to everyone they had contacted.
Yet, more than a year later, when FTC investigators searched online newsgroups and the agency's junk e-mail database, they still found more than 2,000 participants in the chain letter from almost 60 countries. "I am the FTC associate director for marketing practices," says Eileen Harrington, "and these chain letters are illegal."
On Feb. 12, 2002, the agency settled with seven defendants. The move, according to Howard Beales, director of the FTC's Bureau of Consumer Protection, marks the beginning of the agency's "systematic attack" on spam scams and deceptive opt-out notices, which promise consumers that their names will be removed from spammers' lists but usually lead to an additional flood of offers.
THREAT TO THE NET? The FTC effort should be applauded. Cracking down on Internet fraud is essential to bolstering e-commerce. But while it's easy to target blatant rip-off schemes, the commission's larger task -- a far more difficult one -- will be to stem the tidal wave of e-mail advertising everything from low mortgage rates to teenage sex. "It's a hard problem to control," admits Beales. "We're starting with the parts we can get at. It's only a drop in the bucket, but every little bit helps."
The spam bucket is huge indeed. The FTC has amassed a database of more than 8 million spam messages. Every day, 10,000 more arrive. According to Jupiter Media Metrix, Internet users received an average of 571 pieces of unsolicited commercial e-mail in 2001. That number is expected to rise to 1,500 annually by 2006.
The increase in spam is more than a simple annoyance: It could be a threat to the Internet economy. Messages from legitimate marketers are lost in the flurry of bogus offers and pornography promotions. Internet service providers (ISPs) face escalating bandwidth costs from having to beef up their networks to accommodate the flood of e-mail. These costs are either passed along to consumers or they hurt the outfits' bottom lines. Jason Catlett, executive director of antispam group Junkbusters, estimates that 3% to 4% of Internet bandwidth is taken up by spam.
"SPAMOUFLAGE." To date, the fight against spam has been mostly unsuccessful. Legislators shy away from new regulations that could crimp free speech. As technical solutions emerge, spammers become more cunning -- and malicious. Spam won't disappear. But there are concrete steps that the FTC and legislators can take to reduce the deluge of junk e-mail.
First, the FTC should crack down on junk mailers who use false return addresses -- also known as "spamouflage." I suspect that would cut back on most of the junk mail, much of which comes from addresses such as email@example.com or firstname.lastname@example.org. (I replied to both of these addresses and had my messages returned.) Spammers use false return addresses to prevent Netizens like me from tracking them down and asking them to stop.
False opt-out instructions are equally common. Antispam campaigners allege that many opt-out links are mere tricks. A user who clicks on a link to be removed from mailing lists will receive more, not fewer, offers because they have unwittingly confirmed that the spammer has reached an active e-mail account. Another spammer trick is to forward angry responses to antispam Web sites, which then receive tongue-lashings from the very people they are trying to help.
CALL FOR CONGRESS. These cases aren't as high profile as the fraudulent snail-mail chain letters that bilk innocent senior citizens out of their retirement money. But a crackdown on deceptive practices of the Information Age would send a strong message -- and deter some spammers from sending junk e-mail in the first place. The FTC's Beales says the agency is working on such cases and hopes to see results soon.
Now, Congress needs to get involved. Previous attempts to pass federal spam legislation have failed -- either because businesses objected or because the provisions were so watered down that privacy advocates refused to lend their support.
Spam legislation should be something everyone can get behind. Without it, marketers will be forced into the difficult position of trying to comply with the patchwork of state laws springing up across the country. Already 19 states have passed some sort of antispam legislation. California law requires that unsolicited e-mail includes a viable return address or a toll-free number that recipients can call to request that the advertiser cease and desist. The law also mandates that the subject line of unsolicited mail include "ADV" for advertisement or "ADV ADLT" for messages that market adult content.
"ENFORCEMENT IS KEY." A federal law would make it easier for legitimate marketers to get the word out, while limiting the reach of pernicious spammers. Congress should mandate an "opt-in" plan that requires Internet marketers to get permission before they send out e-mail promotions. The economics of spamming are simply too good for stringent opt-out laws alone to have much of an effect -- though they are a necessary first step. It costs about 20 cents to send 500,000 e-mail messages, according to Junkbusters' Catlett, who warns: "If opt-out were to prevail, e-mail, the killer application of the Internet, would become the application that killed the Internet."
Passing a new law won't be easy. The powerful Direct Marketers' Assn. opposes any opt-in schemes limiting marketers' ability to fire off new promotions. And the provision could be seen as infringing on free speech. Moreover, the FTC's Beales says there's no guarantee that opt-in schemes will work. "I get a fair amount of spam from marketers who say I've opted in. I have no clue what they're talking about," he laughs. "Requiring opt-in won't solve the problem. Enforcement is key."
Beales may be right. But with the tide of spam rising, along with Internet users' tempers, it's essential that lawmakers take the first steps. As Beale himself says, every little bit helps. Black covers privacy issues for BusinessWeek Online. Follow her twice-monthly Privacy Matters column, only on BusinessWeek Online