Do Antispam Laws Have a Dark Side?

WASHINGTON, D.C. -- Small-business owners disagree on what stance Congress should take on spam, with some saying unsolicited e-mail should be banned and others defending it as a valuable marketing tool.

A national do-not-e-mail list would hurt small companies trying to market their products to new customers, some small-business owners told a House subcommittee on Thursday. Others disagreed, saying spam is growing at an exponential rate and needs to be stopped.

The hearing was before the Small Business Committee's Subcommittee on Regulatory Reform and Oversight.

Swamped by Spam

Frustrations over the amount of spam received by an Internet T-shirt sales business finally drove the owner to sell the business. "You could say spam finally shut me down," said Bruce Goldberg, founder of Weathermen Records, based in Farmers Branch, Texas. "If the problem continues to grow at the rate it currently is growing, it will be impossible for businesses to rely on the Internet and e-mail as a form of communication."

At one point, his business got 15 spam messages for every 1 legitimate e-mail, Goldberg said. A spam filter cut the ratio only to 3 to 1.

"The hard part was distinguishing the legitimate e-mail from junk, as I have to treat each new e-mail as a potential customer," he added. "Even as careful as I was, I would still lose customers by accidentally deleting their messages."

Others urged Congress not to be too zealous about regulating unsolicited commercial e-mail. A national do-not-spam registry, part of a spam bill passed by the Senate last week, would prohibit small businesses from prospecting for new customers through e-mail, said John Rizzi, chief executive officer of E-Dialog, a Lexington, Massachusetts, e-mail marketing service provider. He sends e-mail to established customers of other companies, including JC Penney and the National Football League.

The House has not yet acted on a spam bill this year.

List Criticized

A national do-not-spam list, promoted by Senator Charles Schumer (D-New York), would be a "disaster" for small businesses, Rizzi said. Most true spammers won't abide by the list, but legitimate small businesses will, he said.

"You'll see customers frustrated because they're getting less and less e-mail from their favorite companies, but no less spam," Rizzi said. "Remember, spammers are lawbreakers. They're not going to take their list and match it and clean it against this list."

Schumer's office did not respond to a request for comment on the hearing. But a representative of the Federal Trade Commission, charged by the Senate bill with looking into a do-not-spam list, said the FTC opposes a registry.

Unlike the national Do Not Call telemarketing list that took effect in October, a do-not-e-mail list would be tougher to enforce because it's so easy for spammers to hide their identities, said J. Howard Beales III, director of the FTC's Bureau of Consumer Protection. "Our key concern about this do-not-spam [list] is enforceability," he said. "These are not people who pay a lot of attention to legal rules."

The FTC supports national spam legislation instead of state laws, because the Internet does not have borders. The long-term solution may be more technological than legislative, Beales said.

Representative Charles Gonzalez (D-Texas) questioned whether a national spam law can work at all if spammers can hide. "So until technology allows us to identify the senders ... it doesn't matter what legislative scheme we come up with, it's going to be very difficult," he said.

Gonzalez urged Congress not to go "overboard" in trying to outlaw spam when legislative approaches may not work.

Marketers Cooperate

Both E-Dialog's Rizzi and Jerry Ceresale, senior vice president of government affairs for the Direct Marketing Association, cheered congressional efforts to pass a national spam law. Such a law would save small businesses from negotiating more than 35 state antispam laws, they say. California recently passed one of the toughest, requiring customers to opt in to commercial mail lists.

Rizzi also promoted an idea from the Email Service Provider Coalition asking large-scale e-mailers to voluntarily become part of a registry that certifies their identities, blacklisting spammers who don't play by the rules.

Ceresale encouraged Congress to find a way to combat the "dark side" of e-mail--fraudulent, pornographic, and virus-laden spam--without banning all types of commercial solicitations. "What we have to do is ... kill the dark side without killing the promise," he added.

The do-not-spam list and an opt-in approach to commercial e-mail advanced by some consumer groups would kill some of that promise, Ceresale added. He suggests many consumers find unsolicited e-mail useful.

A May survey by his organization found that more than 11 percent of adults who received unsolicited commercial e-mail in the previous year purchased a product from an unsolicited e-mail message. "E-commerce is very important to all marketers, especially small businesses," Ceresale added. "It's a low barrier to entry."