Calif. spam legislation to hurt marketers

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Congress looks unlikely to pass national spam legislation this year, leaving marketers to wrangle with a California anti-spam law that some believe could have draconian effects nationwide, subjecting marketers to lawsuits and millions in fines.

The state law and the possibility that other states might follow-creating a jumble of differing regulations across the country-prompted marketing and business groups to ask Congress for pre-emptive national legislation. The Senate did just that, but efforts to reach agreement in the House before Congress adjourns for the year around Nov. 15 appears to be stymied.

An aide to House Energy and Commerce Committee Chairman Billy Tauzin, R-La., wouldn't completely rule out passage this year, but said it was unlikely "given the targeted adjournment date and that we are totally focused on Medicare and energy bills." The aide added, "Spam is important, but it has to take a back seat."

Business lawyers said prospects that the California law will actually take effect is just now sinking in. "There was a little delayed reaction thinking D.C. would take care of it," said Fred Main, senior VP-general counsel for the California Chamber of Commerce. "People are just realizing what they might have to do."

"We have a lot of lawyers in California," said Mr. Main. "A lot of people will get sued."

The California law goes further than any other state in three ways.

It affects all commercial e-mail, not just e-mail that uses fraudulent headers or makes fraudulent pitches. The law also applies to commercial e-mail either sent to a California address or accessed from a California address, which also covers e-mails to students at home for the summer. It also appears to cover e-mails sent from California to addresses outside the state.

`direct consent'

Instead of forcing businesses to let consumers opt out of getting unsolicited e-mail, the law requires they get consumers to opt in to commercial e-mail through "direct consent" unless a marketer has a "pre-existing or current business relationship." The term "direct consent" isn't well defined. Some lawyers suggest it means marketers need written consent to be completely safe. There is also some confusion on how long a "pre-existing business relationship" applies if a subscription runs out.

Finally it imposes penalties of $1,000 per e-mail or up to $1 million per incident and includes a private right of action that allows victims or their lawyers to sue marketers to enforce the law and collect attorney's fees.

Miriam Wugmeister, an attorney at Morrison & Foerster, said "People are pulling out their hair trying to figure out how to comply" with the California law, and warned that it "may force us to go back to using snail mail. It is going to make it substantially more cumbersome to do e-mail." She added that high fines and new requirements under the law could pose problems even for business-to-business e-mails

Joe Rubin, executive director- technology and e-commerce for the U.S. Chamber of Commerce, warned "hundreds of industries are probably going to be caught off guard by the enormity of California law," which, he said, "makes no sense in the real world." He predicted that while mainstream marketers will spend millions to comply, the worst spam offenders won't do anything.

The marketing industry is also worried that the ease of suing marketers who slip up, vs. the difficulty of finding and recovering from real spammers, will lead to the law's purpose being subverted. "California's law would have a tremendous impact on commerce and do nothing to aim at the real spam problem," said Ron Plesser, a Washington lawyer who lobbies for marketing groups including the Direct Marketing Association.

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