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California OKs toughest anti-spam law in nation

California is trying a deceptively simple approach to the problem of junk e-mail: It is about to ban spam.

Gov. Gray Davis said on Tuesday that he would sign into law a bill that outlaws sending most commercial e-mail to anyone in the state not explicitly requested by the recipient. That would make it the most wide-reaching law of any of the 35 other state laws meant to regulate spam — or any of the proposed bills in Congress.

"We are saying that unsolicited e-mail cannot be sent and there are no loopholes," said Kevin Murray, the Democratic state senator from Los Angeles who sponsored the bill.

The law, which would also prohibit companies inside the state from sending unsolicited e-mail, would impose fines of $1,000 for each message, up to $1 million for each campaign.

Moreover, the proponents of the measure say, it promises to carry greater weight than most such laws because it would give individuals the right to file private lawsuits, encouraging action by plaintiff's lawyers even if state prosecutors have other priorities. A similar provision is credited with helping to insure compliance with the federal law against unsolicited faxes.

Marketers vehemently argue that California's approach is misguided because the law will do little, they say, to restrain the shadowy spammers responsible for most of the objectionable messages often relayed through foreign computers.

The new law is similar to one recently enacted in Britain that bans marketing e-mail to people who did not request it. Most other state laws, and the proposed federal law, allow unsolicited e-mail until the recipient asks to receive no more.

Indeed, the California law says users must explicitly agree to receive e-mail from each advertiser. That would appear to ban the preferred marketing strategy of many big advertisers: renting e-mail lists of people who have agreed to receive offers, often as part of a sweepstakes entry.

"We don't differentiate between Disney and Viagra," Murray said. "If you go out and rent a list of e-mail addresses, by definition you are not a legitimate business. You are the person we are trying to stop."

The law is scheduled to take effect on January 1. But it faces several hurdles. Many of the bills pending in Congress would preempt tougher state laws. And it is bound to be challenged on constitutional grounds.

David E. Sorkin, a professor at the John Marshal Law School in Chicago, said that the law probably will survive a claim that it violates the First Amendment, as courts have held that commercial speech deserves lesser protection than private speech. But it could be struck down as an unconstitutional interference with interstate commerce.

"I don't think that states have much business regulating the Internet," he said. "If you can't tell where the recipient of an e-mail is, and still have to comply with different state regulations, it is a burden on interstate commerce."

But if the law survives challenge, it could well have a significant effect on spam. Coming from the nation's most populous state and the home to many large Internet companies, the new law would put a burden on the sender to determine if the recipient resides in California, a technically difficult task.

"California represents up to 20 percent of the e-mail that is sent or received," said J. Trevor Hughes, the executive director, of the Network Advertising Initiative, a group of technology companies that send e-mail for marketers. "Instead of trying to segregate the California e-mail addresses, many of our members are going to make the California standard the lowest common denominator."

Until now, state laws against spam have largely tried to ban deceptive practices in commercial e-mail-like fake return addresses. Many require that spam be identified with the phrase "ADV" in the subject line. Only Delaware has also banned sending unsolicited e-mail. But that law can only be enforced by the state attorney general, who has not taken any action under the statute.

Action under the California law, by contrast, can be brought by the state, by e-mail providers that have to handle spam, and by the recipients themselves. At a news conference in Sacramento on Tuesday, Kathleen Hamilton, the director of California's department of consumer affairs, promised to enforce the new law, when it goes into effect on Jan. 1.

The law's proponents argue that the right of individuals to sue represents the most important form of enforcement.

"A few well placed pieces of litigation can do wonders," said Debra Bowen, a California state senator from Redondo Beach, who had proposed anti-spam legislation similar to the new law.

But e-mail companies are already preparing for an onslaught of lawsuits they say will be frivolous.

"Small claims court will be filled with people suing legitimate marketers saying they don't remember signing up for this list," said Kenneth Hirschman, general counsel for Digital Impact, a big e-mail marketing company in San Mateo, Calif.

"The companies will have to drudge down to the court and say here is the evidence that this person has opted in."

The law allows companies to send commercial e-mail to their customers, to those who have inquired about products or services, and those that have "expressly consented to receive e-mail advertisements from the advertiser."

In what appears to be a concession to Microsoft, the bill exempts some advertising e-mail sent by the provider of a free e-mail service to its users. Microsoft runs Hotmail, the largest free e-mail service, in part from computers located in California. Microsoft which opposed very similar legislation proposed in California earlier this year says it now supports the current law.

Murray argued that the new law would have more impact than earlier efforts because it applies to a company whose product is advertised, not just the company that actually sends the e-mail.

"When you go after the advertiser, you don't have the same offshore problems than when you go after the sender," he said. "People selling products have to have a local presence. They have to ship them from somewhere and they need a bank account to get paid."

If such suits prove to be effective, it could well have a significant chilling effect, said Keith Cohn, chief executive of the Vendare Group, a big e-mail marketing firm in Sherman Oaks, Calif.

"If someone could make a claim on me because of what an affiliate did, it may well eliminate all the legitimate stuff because people will be running for the hills."