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FTC searches for spam solution

The Federal Trade Commission tries to digest both sides of the spam argument during Day Three of its online privacy workshops.

WASHINGTON--Spam is the email people love to hate, but it's also a big moneymaker on the Net, and federal regulators are searching for middle ground.

Today, the Federal Trade Commission tried to hear both sides of the spam argument during day three of its online privacy workshops.

The FTC made it clear that it already has the authority to crack down on junk emailers who engage in unfair or deceptive practices. The agency can obtain court orders to shut down fraudulent mass marketing. It can also impose fines of up to $11,000 for each act of contempt if a company fails to abide by an agreement with the agency to clean up its act.

"We are currently looking into the practices of fraud emailers," said David Medine, associate director of the FTC's Division of Credit Practices.

Industry self-regulation combined with technology fixes has been a common solution offered to the FTC to counter concerns about privacy on the Internet, such as personal data being collected and sold online. The FTC may make a recommendation to Congress that some of the voluntary rules be made law.

Panelists criticized spam on several fronts today. Senders of bulk email often disguise the origin of emails and clog up Internet service providers' servers and Net users' in-boxes. Sometimes the messages make inaccurate or untrue promises about investment or business opportunities.

The Internet Marketing Council announced its formation today in order to address some of the problems cited. The group will give an "IMC Certified" logo to senders of unsolicited email who provide a discount or freebie to recipients, or credit towards free Net access. The logo will also go to spammers who agree to give ISPs a commission on certified email receipts the marketer gets back from customers, which prove the spam was read.

Members of the IMC will also have to offer customers a direct opt-out and comply with an ethics code that prohibits sending deceptive messages.

Another industry group, the Direct Marketing Association, has guidelines that call for the identity of the sender to be disclosed. It too calls for spammers to offer an opt-out choice. It also has an "email preference" option that allows consumers to remove their names from marketing email lists.

There are already two bills floating around Capitol Hill that attack spam practices. Rep. Chris Smith's (R-New Jersey) would ban commercial mass emails absolutely. Sen. Frank Murkowski's (R-Alaska ) legislation would require spammers to label messages "advertisements" and include the senders' accurate contact information including physical address and phone.

Smith and Murkowski's bills have also raised fears about online censorship because they would put federal regulations on cyberspace speech.

"[Labeling messages] is one of many options, but as a mandatory rule, it could raise First Amendment concerns," Medine said. "We have a strong preference for self-regulation; they know the technology better than we do."

Even America Online, which has has fought junk email companies like Cyber Promotions in court, opposes Smith's and Murkowski's efforts on free-speech grounds.

"We are uncomfortable with legislation that focuses on the content of the message," Jill Lesser, deputy director of law and public policy for AOL, told CNET's NEWS.COM.

AOL supports Sen. Bob Torricelli's (D-New Jersey) spam bill, introduced Wednesday. The bill aims to promote e-commerce by protecting consumers and ISPs from bulk unsolicited email, giving the FTC more authority to bust spammers who don't give an opt-out preference. It would make false return addresses illegal for commerical emailers, punishable by a fine of up to $5,000.

AOL fought a protracted legal battle against notorious spammer Cyber Promotions earlier this year. In February, the two companies settled, agreeing that members could block unwanted spam from Cyber Promotions.

Commissioner Christine Varney asked some of the players today, such as AOL, Cyber Promotions, and the Center for Democracy and Technology, if they could work on solutions together before the FTC steps in to make suggestions to Congress.

The panelists agreed to meet after the workshops. "The more people you bring to the table, the better it is," Lesser added.