The groups say they are investigating legal challenges because the laws passed so far by two states-Michigan and Utah-and now being debated by others could be so expensive to comply with and the violation penalties so grave they could deter companies from using e-mail marketing at all.
"People are concerned that it could make it uneconomic to do a lot of Internet marketing," said Dan Jaffe, exec VP of the Association of National Advertisers, who is critical of the laws attempts to draw distinctions between products "harmful" to kids.
The Direct Marketing Association is more fretful about the costs. "What they are trying to do is to protect children. On the policy side, the DMA has no quarrel. But the application creates a huge expense and penalizes national mailers," said Jerry Cerasale, DMA senior VP. "The fee schedules are outrageous."
Both the Utah and Michigan laws were to take effect July 1 and Utah's did. Michigan launched the registry, but enforcement is on hold while the state legislature makes a technical correction.
Like the federal do-not-call registry the Federal Trade Commission created, both state laws create a child e-mail registry and bar certain kinds of e-mails to addresses on the list. "A person may not send a communication ... if the communication contains or advertises material that is harmful to minors," says the Utah law. The state has interpreted the language to bar ads for alcoholic beverages, tobacco, pornographic material and "any product or service that is illegal in Utah" no matter who buys it.
Parents can put e-mails on the registry and marketers each month must scrub their e-mail lists against the state lists, with the marketers charged per e-mail examined. The states provide heavy fines-and even criminal penalties-for not complying and include a private right of action for violations.
Marketing groups and industry consultants say the first problem the list creates is readily apparent: Their e-mail lists don't include physical addresses. That means that each month they must run their entire national lists through each state at considerable cost. "It creates a tax on sending and it raises questions about does an individual state have a right to burden the flow of e-mail across the nation," said Quinn Jalli, director-privacy and ISP relations for Digital Impact. "We have companies that if they have to comply may be priced out of the e-mail market."
A second problem is family e-mail accounts. Utah, in a fact list, warns families about the implications of listing a family e-mail address rather than a kid's. "Registering an address will necessarily restrict the messages that may legally be sent to it," it warns. "Do not register your e-address if you would like to continue to receive any e-mail messages that contain or link to adult products."
Marketers and consultants worry that in a rush to register, that warning won't be heeded and the result will be anger when someone who signs up and pays to, for instance, get a wine newsletter, then suddenly doesn't get it. "A big headache for senders is adults who sign up for paid newsletters and then don't get them," said Anne P. Mitchell, president-CEO of the Institute for Spam and Internet Public Policy.
Finally, a third concern is about exactly what e-mails are barred. While it's clear one can't send ads for alcohol or tobacco to an address on the list, it's far less clear what happens to e-mails about something else that include an ad or mention of the product.
Francine Giani, executive director of the Utah Department of Commerce, said the state is interpreting its law to apply to direct advertising. An e-mail from a hotel chain offering reservations that somewhere mentions hotels with casinos or bars would be viewed as a reservations e-mail and not in violation.
The ad groups and consultants are worried that interpretation could change or differ from state to state. "What happens if you have it in 20 states, each with slightly different variations of what is allowed?" said Mr. Jaffe. He said ANA is considering a challenge.
State to state
The Association of National Advertisers says differences among state laws could be a hardship for marketers