Straight Talk - An Open Letter To You

"The Federal Regulators Are Coming To Town"

by John Glube, © 2003, all rights reserved of
Head's Up - A Copywriter's Journal

What? By now, unless you have been marooned on a deserted isle, you have probably heard about the United States Congress coming to grips with spam.

Excuse me. Do you mean America’s elected officials have had a match up with lunch meat?

Nope. The spam I am talking about is the unwanted e-mail you receive in your e-mail inbox.

And just who are the Federal Regulators? The Federal Trade Commission and the other Federal agencies empowered by Congress under the CAN Spam Act of 2003 to regulate commercial e-mail.

Talk about a mouthful. Hey, but get used to it folks. Why? With President Bush signing the new law in mid-December, the world of Internet marketing has irrevocably changed as the United States of America undertakes the challenge of dealing with spam.

After four years of debate both inside and outside of Congress, as the consumer Web begins to take off, we are watching the coming of age of e-mail marketing.

E-mail marketing is not dead. It is about to go through a rapid transformation over the next twelve to twenty four months.

Some of these changes will occur as a regime is put in place to deal with spam. Fail to deal with these changes at your peril. Under the pending legislation, the Federal Regulators will have the power to shut down your business, impound your assets and seek huge penalties.

You thought the potential of a $1,000,000 penalty under California was serious? Under the proposed Federal law, the penalties for the most mundane offences can run you up to $2,000,000 US, with treble penalties of up to $6,000,000 US involving aggravating factors and unlimited penalties involving claims of fraud.

But the most significant changes will happen as marketers meet the demands of consumers while complying with the demands of Federal regulators.

However, before going off on a flight of fancy, let's review in detail the pending Federal law.

What Is The Act's Status?

Just a quick trip down memory lane. It seemed Congress might pass a law to regulate commercial e-mail this summer. However, partisan squabbling caused any consensus to fall apart.

Then on October 22, 2003, the Senate unanimously passed the Bill. (I won't take you through the various compromises, although it does make for fascinating reading.)

The Bill then went to the House. At the time, it was thought the House might take the matter up fairly quickly.

But it took another month of negotiations between various factions in the House and the Senate (and the various trade groups, consumer groups and industry players) before a compromise agreement was announced by members of Congress on November 21, 2003.

On November 22, 2003, the House passed an amendment to the Bill reflecting this agreement.

The Bill with the House amendment went back to the Senate. There were a few technical errors in the House amendment. More discussions ensued.

The upshot? The Senate prepared its own amendment, called the "Senate's Amendment To the House Amendment."

The changes were reviewed with the House and accepted. The Senate then voted on and approved its amendment on November 25, 2003.

The Bill with the Senate amendment went back to the House. But the House was in recess for the Thanksgiving Holiday, being scheduled to return on December 8, 2003.

Upon return, the House passed the Bill with the Senate amendment. Congress then sent the final version of the Bill to the President, who signed the Bill into law on December 16, 2003.

However, the Act is not yet in force.

Why Discuss The Act Now?

You may be saying, "since the Act is not yet in force, what's the rush?"

True, normally when Congress passes a regulatory law, there is a period of grace before the new law goes into force, allowing the business community to adjust.

In this case, the Act comes into force on January 1, 2004, so time is short.

Why January 1, 2004?

This is the date when California's new anti-spam law goes into force. This law caused a lot of people in the direct e-marketing community to become gravely concerned and certain trade groups brought significant pressure on Congress to enact legislation prior to this date to pre-empt California's law on January 1, 2004.

What Is The Act's Purpose?

In sub-section 2 (b) of the Act, you will find the following statement:

    "the Congress determines that--

      (1) there is a substantial government interest in regulation of commercial electronic mail on a nationwide basis;

      (2) senders of commercial electronic mail should not mislead recipients as to the source or content of such mail; and

      (3) recipients of commercial electronic mail have a right to decline to receive additional commercial electronic mail from the same source."

(All references are to the Act as signed into law on December 16, 2003, or simply the Act. To read a copy of the Act Use This.)

This is important. Although the title to the Act speaks of regulating "unsolicited commercial e-mail," under the Act, Congress through the Federal Regulators is going to regulate commercial e-mail.

How Will The Legislation Work?

For our purposes, let's start by looking at what the Act prevents e-marketers from doing.

(As an aside, in going through this exercise, I presume you are not marketing pornography, which has its own rules under the Act, and you are not concerned with the sections in the Act specifically designed to stop the more egregious forms of spamming activity.)

Under the Act e-marketers are prohibited from:

* Sending a commercial e-mail or transactional message that contains false or misleading header information; and,

* Sending a commercial e-mail message that:

    (i) Has a deceptive subject heading; and

    (Want some idea of the FTC's views on what is a deceptive subject heading, along with a glimpse into other potential problem areas? Then take a peak through the PDF report False Claims In Spam by the FTC's Marketing Division. Just 16 pages, with lots of graphs and pie charts. The report will also give you a fair start on a checklist of what not to do when writing your own e-mail copy.)

    (ii)Does not contain a return e-mail address or other Internet-based mechanism (an opt-out mechanism) allowing the recipient to request not to receive further commercial e-mail messages from the sender at the particular e-mail address.

* Sending further commercial e-mail messages to a person after he or she has opted-out.

* Sending a commercial e-mail message unless you:

    (i) clearly identify the message as an advertisement or solicitation;

    (ii) include clear notice of the opportunity to decline to receive further commercial electronic mail messages from the sender; and

    (iii) include a valid physical postal address of the sender.

You do not have to identify the message as an advertisement or solicitation if you have affirmative consent from the recipient.

(See generally section 5 of The Act.)

What Does All This Mean?

Having read through this you may be saying, "hey I do not have to be worried about all of this."

People who want to get my e-publication have to subscribe.

The headers on my e-mail messages are not forged. I use a valid from e-mail address.

The subject lines on my messages are not deceptive, people can easily opt-out and all my messages include my postal address.

At first blush you may be right, but as we both know the devil is in the details.

From the perspective of an e-publisher running a permission based publication, there are four points to focus on, affirmative consent, commercial message, transactional or relationship message and sender.

What Is Affirmative Consent?

The Act defines "affirmative consent" as follows:

"The term `affirmative consent', when used with respect to a commercial electronic mail message, means that--

    (A) the recipient expressly consented to receive the message, either in response to a clear and conspicuous request for such consent or at the recipient's own initiative; and

    (B) if the message is from a party other than the party to which the recipient communicated such consent, the recipient was given clear and conspicuous notice at the time the consent was communicated that the recipient's electronic mail address could be transferred to such other party for the purpose of initiating commercial electronic mail messages."

(See subsection 3 (1) of the Act.)

We will focus on paragraph 3 (1) (A) of the definition.

(Paragraph 3 (1) (B) of the definition is relevant when looking at marketing to existing "e-mail lists" and issues surrounding "co-generation of leads.")

To help understand what is meant by the definition, let's review some examples.

In going through the examples, keep in mind the person has to "expressly consent" to receiving the message.

There are two ways a person can grant "express" consent:

* By the person responding to a clear and conspicuous request for consent; or

* At the initiative of the person.

What Happens When A Person Subscribes To Your E-Publication?

To subscribe the person normally has to fill in a form, usually providing their name and e-mail address.

Once the person subscribes, does this mean you have "affirmative consent" to start sending this person commercial e-mail?

The short answer is it depends on the purpose of your e-publication and what you say on your website at the time the person subscribes.

In essence the typical e-publication has a theme, a person subscribes for free and the publisher finances the operation through the sale of advertising to third parties.

Usually, you will see a sign-up form on the main landing page, often above the first fold.

In the simplest example there is language above the form briefly describing the e-publication, like "Subscribe now to the Internet News" and beneath the form, you will often find the words "We respect your privacy. We will not rent, sell or trade your name and e-mail address."

Is this sufficient? Or do you have to say more?

To put it in the vernacular, the issue is whether the recipient has granted "express" consent to receive your message. It is not sufficient to imply consent.

Now I can hear you saying, "hold on, the persons fills in the form and presses the subscribe button, what more do you want? Clearly the person is exercising initiative."

True. But to receive what? "The Internet News." Some may understand since the e-publication is free, the e-publisher will finance the operation either by:

* Running ads for products or services the e-publishers markets; or

* Through the sale of advertising to third parties, both included with the publication and by way of solo advertisements promoting a particular product or service.

There is the rub. The Act requires "the recipient expressly consented to receive the message ... at the recipient's own initiative."

To repeat. By subscribing, the recipient is exercising initiative. But the consent to receive commercial messages must be more than implied, it must be express.

What Language Is Required?

Sub-section 7 (a) of the Act states:

"(a) Violation Is Unfair Or Deceptive Act Or Practice - Except as provided in subsection (b), this Act shall be enforced by the Commission as if the violation of this Act were an unfair or deceptive act or practice proscribed under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B))."

(See sub-section 7 (a) of the Act. Sub-section 7 (b) sets out the various Federal agencies empowered to regulate the specific sectors not covered by the Federal Trade Commission, being banks, savings associations, credit unions, investment companies, advisors, brokers and dealers, insurance companies, airlines, stockyards and sectors specifically regulated by the Federal Communications Commission.)

In determining whether a particular act or practice is unfair or deceptive, the Commission applies what I call "the reasonable consumer test." The language you use has to be sufficient to inform a reasonable consumer of the nature of the messages to be received upon subscribing to the "Internet News."

(For more information on this topic, you will want to get a copy of the PDF booklet Rules? What Rules? - How To Market On The Internet Without Getting Busted By the FTC.)

Want to meet this standard? You are going to have say something more than "Subscribe Now To The Internet News."

What wording to use? The exact wording you need will depend on the nature of your e-publication, what you say elsewhere on your web page and the form of advertising you run.

One point. Based on how the Act defines "affirmative consent," the recipient with the proper wording can grant you as the e-publisher express consent to send messages containing third party advertising.

Where Should You Put The Required Language?

Can you bury the language in clause 13 (a) of your 4 page terms of use agreement, with the link to the agreement being on the bottom of your page?

Since disclosure of what the recipient is "expressly consenting to receive" upon subscribing is material, you will have to make disclosure at or near the subscribe form.

Going back to our example, "Subscribe To the Internet News" there are a number of different options:

You could write something like:

"Subscribe now to the Internet News and receive informative articles about Internet marketing. Now, since your publisher likes to eat and to keep your subscription free, the Internet News includes advertising and you will receive the occasional solo advertisement."

Okay, your advisors may not like this type of informal language, especially as it limits your future options.

Another option would be to set up your subscribe form with the heading "Subscribe Now To The Internet News." Place the statement "Your Subscription Terms" immediately beneath and either to the right or left of the subscribe button and make this a hyperlink.

When the person clicks on the link, your subscriber is taken to a page containing your formal subscription terms and conditions. Then to ice the cake, as part of the subscription process, the person has to confirm agreement with your subscription terms by clicking a check box.

Why go through this trouble? Because it creates a record, confirming agreement.

The point of this analysis? You have to make sufficient disclosure so the recipient when subscribing is expressly consenting to receive your message and you want to have a record available in case of a dispute or problem down the road.

If you decide not to go with the check box, or having your subscriber e-mail you a form as part of the subscribe process, at least keep a record of your web page layout and use a subscribe script which captures the name, email address and Internet Provider address of your subscriber.

Why the IP address? This helps identify the recipient in case of a future issue. It also shows you simply did not harvest the name and email address of your subscribers.

Let's turn this issue around for a moment.

Many marketers argue by making disclosure you drive away subscribers. The argument goes, who wants to subscribe to someone's e-zine knowing you will receive advertising?

Understood. And, if after setting out your position, you find your subscribe rate dropping off, maybe you need to reassess what you are saying.

However, as a marketer your strongest stock in trade is trust. The question is how can you enhance your trust through the use of a disclaimer?

Why not change the concept. Instead of treating it as a disclaimer, look upon the words you use as part of the reason why a person should say yes, I want to subscribe to your e-publication.

This is relatively easy when you run a journal and you don't sell advertising space to third parties, but simply recommend products and services.

You can make a virtue out of telling your subscribers by saying something like:

"Subscribe now to [insert name of publication] and receive regular issues about [insert here the description of your publication] along with notice of my personal recommendations for products and services you can use [insert here appropriate language for market serviced by your e-publication.]

Now, this is more difficult for those who are essentially running private mailing lists and selling advertising.

However, it is not impossible. How? Make a virtue out of running an "advertising" publication for your market sector.

"Subscribe now to [insert name of publication], receive informative articles about [insert market niche], read the marketing efforts of your peers in my sponsor ad section and receive notice of specials, offers and solo advertisements, so you can abreast of what is going on in our industry today."

A quick comment. This is sample language and you should treat it this way. Look around. Review the rules, read the relevant material and set up your wording and process. If necessary adjust it. Stay current as the situation evolves and talk with a competent advisor as required.

Depending on how competitive is your market, you may decide to work your disclosure into your "sales" page for your e-publication.

Do I Need The Name Of My Subscriber?

Many people simply ask for an e-mail address when inviting people to subscribe to their e-publication. Will this suffice?

Let's go look at the definition section of the Act. To have affirmative consent, you must establish "the recipient expressly consented to receive the message."

(See paragraph 3 (1) (A) of The Act.)

How does the Act define recipient?

Sub-section 3 (14) of the Act defines recipient as:

    "The term `recipient', when used with respect to a commercial electronic mail message, means an authorized user of the electronic mail address to which the message was sent or delivered. If a recipient of a commercial electronic mail message has one or more electronic mail addresses in addition to the address to which the message was sent or delivered, the recipient shall be treated as a separate recipient with respect to each such address. If an electronic mail address is reassigned to a new user, the new user shall not be treated as a recipient of any commercial electronic mail message sent or delivered to that address before it was reassigned."

(See sub-section 3 (14) of The Act.)

To put it simply, the person who can grant you "affirmative consent" is the "authorized user" of the e-mail address to which you are going to send your messages.

There is an old expression, "if it walks like a duck, sounds like a duck and looks like a duck, then by golly, it must be a duck."

Yes, Virginia, you do need to collect the name of the recipient, being the authorized user of the e-mail address to which you are going to be sending your messages, to have affirmative consent.

What About My Existing Subscribers?

When the Senate first passed the Act, there was an exemption for subscribers to grant "implied consent." This exemption allowed for legacy lists.

Based on the agreement reached in late November, Congress took out this exemption.

This means unless you can show your existing subscribers have given "affirmative consent" you are going to have to reconfirm your mailing list to send commercial e-mail.

What Is A Commercial Electronic Mail Message?

Are there any exceptions? If you go through the Act closely, you will notice all of the prohibitions are tied to the sending of "commercial electronic mail messages."

How does the Act define a commercial electronic mail message or commercial e-mail for short?

To determine whether an e-mail message is or is not ("to be or not to be") a commercial electronic mail message, you have to look at the primary purpose of the message.

And what is the primary purpose? Let's read the definition:

"(2) Commercial electronic mail message-

    (A) In General - The term `commercial electronic mail message' means any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service (including content on an Internet website operated for a commercial purpose).

    (B) Transactional Or Relationship Messages - The term `commercial electronic mail message' does not include a transactional or relationship message.

    (C) Regulations Regarding Primary Purpose - Not later than 12 months after the date of the enactment of this Act, the Commission shall issue regulations pursuant to section 13 defining the relevant criteria to facilitate the determination of the primary purpose of an electronic mail message.

    (D) Reference to Website - The inclusion of a reference to a commercial entity or a link to the website of a commercial entity in an electronic mail message does not, by itself, cause such message to be treated as a commercial electronic mail message for purposes of this Act if the contents or circumstances of the message indicate a primary purpose other than commercial advertisement or promotion of a commercial product or service."

(See sub-section 3 (2) of The Act.)

"Ahah, you thought, I knew there had to be a way out of this problem." Don't get too excited.

The Act defines a transactional or relationship message as:

"(17) Transactional or relationship message-

    (A) In General - The term `transactional or relationship message' means an electronic mail message the primary purpose of which is--

      (i) to facilitate, complete, or confirm a commercial transaction that the recipient has previously agreed to enter into with the sender;

      (ii) to provide warranty information, product recall information, or safety or security information with respect to a commercial product or service used or purchased by the recipient;

      (iii) to provide--

        (I) notification concerning a change in the terms or features of;

        (II) notification of a change in the recipient's standing or status with respect to; or

        (III) at regular periodic intervals, account balance information or other type of account statement with respect to,

      a subscription, membership, account, loan, or comparable ongoing commercial relationship involving the ongoing purchase or use by the recipient of products or services offered by the sender;

      (iv) to provide information directly related to an employment relationship or related benefit plan in which the recipient is currently involved, participating, or enrolled; or

      (v) to deliver goods or services, including product updates or upgrades, that the recipient is entitled to receive under the terms of a transaction that the recipient has previously agreed to enter into with the sender.

    (B) Modification of Definition- The Commission by regulation pursuant to section 13 may modify the definition in subparagraph (A) to expand or contract the categories of messages that are treated as transactional or relationship messages for purposes of this Act to the extent that such modification is necessary to accommodate changes in electronic mail technology or practices and accomplish the purposes of this Act."

(See sub-section 3 (17) of The Act. Although some of the items listed are not relevant to our discussion, I have included the complete definition, so you can gain a better understanding of the various types of messages being spoken about in the definition.)

You may recall in the article The Death Of E-mail Marketing? I suggested as work arounds in dealing with the California law to consider:

* Converting your publication to a journal;

* Moving to a paid subscription model; or

* Converting to a blog and supplementing your work by running a contact mailing list to bring traffic to your site.

We also examined alternative channels of distribution other than e-mail.

(See generally the article The Death of E-mail Marketing?)

Before going further, let's take a step backwards. Ask yourself, what is the primary purpose of your publication? To market products or services, or to provide information?

In answering this question, it might be helpful to look at some examples.

For the sake of discussion, let's presume you run an e-publication focused on Internet Marketing.

The classic model? You provide your subscribers with informative articles and you sell advertising to cover the publication costs and make money. Is the primary purpose to provide information or to allow people to buy advertising space in your publication, so your advertisers can market their goods and services to your mailing list?

Obviously, when you send out a solo advertisement to your list, this is a commercial electronic message.

There are different approaches. You run a personal journal, allowing you to build a relationship with your subscribers, while recommending products or services to your subscribers.

As part of the process, in marketing a particular product, you may provide quality information to your subscribers about a product or service, through web site postings or the use of audio interviews, in essence allowing the subscriber to make the buy decision. Again, you may run straight marketing messages to your list as part of the promotional effort.

Let's change the mix. You provide your subscribers with news concerning your sector, along with articles providing up to date insight into new techniques, strategies and related issues. People can subscribe for free.

You pay for the publication by selling advertising space in your publication to third parties.

Through a variety of methods, you are able to generate high traffic levels to your site. Advertisers are willing to purchase space due to the high traffic received by your publication. You don't run solo advertisements.

When you send out your publication to your subscribers are you sending a commercial message or an e-publication?

Now, let's take it one step further. You charge a subscription fee. All of the other factors in the equation remain the same.

In both these cases are you sending a commercial e-mail, or an online publication which is not covered by the definition of commercial e-mail?

And how about we go one more step. When a person subscribes to your publication, the subscriber also gains access to a private site which contains a private members forum, information products for download and a variety of tutorials on matters of topical interest.

Each time you publish an issue, you send your subscribers a notice outlining the issue contents and you post the issue online in your private site.

Depending on how you structure your business, you can call your subscribers members. Treat your publication as your organization's newsletter, which forms part of the membership benefits. Now, messages sent to members are treated merely as transactional messages, being part of the delivery of the services provided to a person upon becoming a member of your private site, avoiding the potential issues raised by the Act.

What If You Don't Have "Affirmative Consent"

What happens if you don't have affirmative consent and you want to send commercial messages to your list? Two things.

First you will have to place "clear and conspicuous identification that the message is an advertisement or solicitation."

(See sub-paragraph 5 (a) (5) (A) (i) of The Act.)

Second and far more important, you will be sending out unsolicited commercial e-mail to your subscribers. Yep, you will be spamming your subscribers.

"Wait a minute," you are saying. "All the people who are subscribers 'opted-in' to receive my message." True, but did your subscribers give you "affirmative consent?"

If not, given how Congress wrote the Act, you can no longer treat your messages as "solicited commercial e-mail."

And this can potentially have serious repercussions for your business.

It means depending on how the terms of service are written for your e-mail service provider, your web host and your internet access, you may place your whole business in jeopardy by not reconfirming your mailing list.

"But, hold on, didn't I read somewhere the Act made it legal to send spam."

Legal in whose eyes? All the Act does is regulates how you can send this form of e-mail.

Nothing in the Act impairs the ability to enforce existing Federal laws concerning commercial e-mail.

True, given the power granted to Congress under the American constitution to pass laws concerning interstate trade, the Act does supersede any State law which expressly regulates the use of electronic mail to send commercial messages.

(There is an exception. The Act does not supersede State laws to the extent these laws prohibit "falsity or deception in commercial e-mail.")

You can't construe the Act so as to pre-empt State laws of general application, including State civil laws involving trespass, contract, or tort or State criminal laws involving fraud or computer crime.

You can't use the Act's existence to have any effect on the lawfulness or unlawfulness, under any other provision of law, of the adoption, implementation, or enforcement by a provider of Internet access service of a policy of declining to transmit, route, relay, handle, or store certain types of electronic mail messages.

(See generally section 8 of the Act titled Effect On Other Laws.)

"Translation Please?"

Sure. Despite what some might state, the Act does not mean it is "legal" to send spam.

The Act does not override:

* Policies an Internet Service Provider may establish concerning use of its service by senders of commercial e-mail as governed by other Federal laws;

* The terms of service you may have with your web host, e-mail service provider as governed by State law, which include a prohibition against sending unsolicited commercial e-mail; and,

* Policies forming part of the terms and conditions giving you the contractual right to market various products or services as a reseller, distributor or affiliate governed by State law, which include a policy prohibiting members from sending unsolicited commercial e-mail.

If anything, what the Act will do is clarify under agreements governed by State law what you must show to say you are sending solicited commercial e-mail. Meaning? You must show you have "affirmative consent."

Also, since the Federal Government is taking over the regulation of commercial e-mail sent via the Internet through a number of Federal agencies, this places in doubt the viability of the existing business model of private concerns holding themselves out as "spam police" or "spam cops."

(To see how these types of organizations might fit within the "grand scheme" you will want to read section 11 (1) of the Act under the heading Improving Enforcement By Providing Rewards For Information About Violations.)

The upshot of this whole discussion? Want to send commercial messages to your mailing list and don't wish to be found guilty of being a spammer? Then you will want to have "affirmative consent."

Who Is The Sender?

You may recall one of the prohibitions in sending a commercial message was you have to include the postal address of the sender. "Not a problem." you say. Well not so fast.

The relevant sub-paragraph of the Act reads:

      (A) It is unlawful for any person to initiate the transmission of any commercial electronic mail message to a protected computer unless the message provides--

        ...

        (iii) a valid physical postal address of the sender.

(See generally sub-paragraph 5 (A) (5) (A) (ii) of The Act.)

So, what's the big deal? I mean the sender is the sender, right? Wrong.

The Act defines sender as:

    (16) Sender -

      (A) In General - Except as provided in subparagraph (B), the term `sender', when used with respect to a commercial electronic mail message, means a person who initiates such a message and whose product, service, or Internet web site is advertised or promoted by the message.

      (B) Separate lines of business - If an entity operates through separate lines of business or divisions and holds itself out to the recipient throughout the message as that particular line of business or division rather than as the entity of which such line of business or division is a part, then the line of business or the division shall be treated as the sender of such message for purposes of this Act.

(See generally sub-section 2 (16) of The Act)

Did you notice in paragraph (A) of the definition, 'sender' means a "person who initiates such a message and whose product, service, or Internet web site is advertised or promoted by the message."

Yes sir, sender is the person who initiates the message and is the advertiser.

(For the definition of the word "initiate" you will want to read sub-section 2 (9) of The Act)

This means to properly comply with the requirement of providing a valid physical postal address of the sender, you will need the postal address of the advertiser.

Hmm, this could get mighty complicated, if your message has more than one paid advertisement.

Again this goes back to the type of publication you want to run. This is not a problem if you are running a journal, as typically you are the initiator of the advertisement, only referencing one product or service you market in each issue.

But it can be a problem if the perceived primary purpose of your publication is to market products and services and you are running adverts for more than one customer in each issue, as more than one person can be the initiator of the message.

Do You Run An Affiliate Program?

One of the concerns raised about the California law was the potential for liability on the part of the advertiser, especially through the use of affiliate programs to promote a particular product or service.

Given how the Act defines "sender," you will have to examine your obligations closely and ensure you have the appropriate compliance programs in place to protect your interests.

One e-marketer running essentially a small business and maximizing his sales by granting resale rights to his product ended up in serious hot water with the FTC because apparently one or more of his resellers took his product and began spamming people.

The FTC received a significant number of complaints, traced the product back to the original promoter (the advertiser) and shut down the whole business.

The e-marketer and FTC recently resolved the matter, through a stipulated settlement without any admission of liability by the e-marketer.

Under the terms of the settlement, the e-marketer essentially agreed to disgorge his net after tax profits from the venture. He also agreed to have his ongoing business affairs monitored for a period of 5 years, including maintaining a compliance program for all of his resellers and affiliates and provide regular reports for the FTC's benefit.

The matter was pursued and resolved under the existing laws. Giving the individual involved the benefit of the doubt, to which he is entitled as of right, since the matter was resolved without any admission of liability, with the additional remedies added to the FTC's arsenal under the Act, one can only imagine how severe the ultimate resolution for the e-marketer may have been under the new regime.

(See generally the press release issued by the FTC on November 20, 2003 titled Federal, State, and Local Law Enforcers Target Internet Scams and Deceptive Spam. You will want to review in particular part VI of the Stipulated Final Judgment in FTC v. K4 Global Publishing, Inc., et al. (D.C. M.D. Georgia))

A Glimpse Into The Future

This raises a telling point. To quote Shakespeare, is this really all much ado about nothing?

Will the new regime work? In support of the Act, the last finding made by Congress reads:

      "(12) The problems associated with the rapid growth and abuse of unsolicited commercial electronic mail cannot be solved by Federal legislation alone. The development and adoption of technological approaches and the pursuit of cooperative efforts with other countries will be necessary as well."

(See generally paragraph 2 (a) (12) of The Act.)

A fair statement, but it still begs the question as to whether Congress has struck the right balance to achieve the desired objective.

As part of the amendments to the Act, Congress added section 14. This deals with the application of the Act to wireless transmissions. Under this section, Congress has called upon the Federal Communications Commission, in consultation with the Federal Trade Commission to pass rules to protect consumers from unwanted "mobile service commercial messages."

Under the proposed regime for wireless text messages, Congress elected to require senders to have prior consent. In doing so, the provisions acknowledge:

* There may be need for an exemption for the service provider based on the concept of a pre-existing business relationship, as long as consumers have the clear right to opt-out upon signing up for the service and on each billing for the service; and

* The prior consent requirement is predicated on the sender's ability to reasonably determine the message is a "mobile service commercial message."

(See generally section 14 of The Act.)

Hold it. This regime sounds familiar. Why, yes of course, it is based on the original European Directive.

What could possibly justify a different approach for commercial e-mail and text messages? On the surface, maybe. With wireless, the consumer has to pay for the receipt of unsolicited text messages. But, in the case of commercial e-mail, there are the costs the recipient has to bear in dealing with unwanted commercial e-mail, being time in deleting the messages, the cost of maintaining filters and so forth.

If the balance is between the interests of the e-marketing community on the one hand and protecting the consumer's interest on the other, can it be said this Act fairly balances both interests?

And why should the e-marketer's interests and the consumer's interests be at odds?

The consumer wants to take advantage of the convenience of e-marketing and be able to buy products and services from trusted sources, without concern of being ripped off, abused and plundered.

The ultimate objective of the e-marketer must be to gain the trust of the consumer, so the consumer will put down her guard and come to rely upon the e-marketer as her trusted advisor. This is the true potential of e-marketing.

At the same time, if you are going to regulate the industry, does it not make more sense to foster this environment, while thwarting those who rip-off, abuse and plunder through all manner of fraudulent schemes.

To make this regulatory regime work, all parties have to play their part.

Some argue the problem lies in large part with certain marketing trade groups of significant influence, representing many reputable companies that continue to want to send unsolicited commercial e-mail, because it remains profitable.

Others will say the culprits are the purveyors of pornography. More than a few pundits have expressed the concern, by proceeding in this direction, Congress is simply opening the floodgates to "spam, spam, spam."

Congress itself has acknowledged this Act is just but a first step.

It must also be understood the underlying structure for e-mail delivery, of which this Act forms only a part, is predicated on a number of understandings:

* Despite all the naysayers, there will be a "Do Not E-mail Registry" as contemplated under section 9 of the Act. A number of political careers have been staked to this mast.

* To facilitate the sorting of "good" e-mail from "bad" e-mail, or the creation of a "super white list" to use the words of at least one major ISP, e-marketers will within the next twelve to twenty four months have to pay for the privilege of sending commercial e-mail, by way of an annual license fee to send solicited commercial e-mail and huge user fees to send unsolicited commercial e-mail.

(To understand my basis for these comments, please read in part the revised footnotes 5, 6, 21 and 22 of the article The Death Of E-mail Marketing?")

Despite all this, realizing there is a great deal which is unknown, Congress has hedged its bets:

* Congress has given significant rule making authority to the FTC under section 14 of the Act to deal with changing circumstances;

* The FTC will report to Congress within:

    (i) 9 months on the feasibility of setting up a reward scheme (which only heightens the need for good record keeping and proof of "affirmative consent");

    (ii) 18 months on a plan requiring commercial e-mail to be easily identifiable. This is part of the overall technological plan to deal with spam, including the implementation of license fees for senders of solicited commercial e-mail and user fees for unsolicited commercial e-mail;

(See section 11 of The Act.)

    (iii) 24 months on how the whole scheme is working.

(See section 10 of The Act.)

Of course, those who are predicting doom and gloom could be completely full of it. A new age may be opening up and we will all reach the "Promised Land."

Ultimately, only time will tell whether Congress, through the Act has fairly balanced the interests of all concerned.

How To Respond As E-Marketers?

In the meantime, as marketers, how must we respond to the winds of change?

The most immediate concern? To bring your business practices into compliance as discussed in this article.

You will also want to look at least these three avenues of growth:

* There are significant opportunities available to greatly expand your mailing list through the use of a number of first class marketing programs and co-registration services;

* Implement strategies to allow consumers to access your e-publication through the use of existing and developing pull strategies as more consumers forgo e-mail and embrace the ability to read and review information and marketing material at the time and place of their choosing; and,

* Continue to practice and perfect basic relationship building strategies and techniques, so you can take full advantage of the opportunities available.

(On the last two points, see generally footnotes 12 through 17 and footnote 19 in The Death Of E-mail Marketing?)

My Disclaimer

Although I have a law degree, I am not a lawyer. The comments provided in this article on the Act are for information purposes only. If you have any questions, you should consult with competent counsel.

Well, there you have it.

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John Glube, Publisher and Editor of Head's Up, A Copywriter's Journal. Not yet subscribed to the Journal? To get all the details Click Here.

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First Published 01.12.03. Revised 17.12.03, 20.12.03, 02.01.04