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Eric Menhart Helps Win TCPA Appeal

 

A recent decision by the District of Columbia Court of Appeals addressed whether a private right of action under the Telephone Consumer Protection Act (TCPA) required a separate act of enabling legislation. The Court found that private causes of action may be brought in the Washington D.C. Superior Court under the Act without the need for enabling legislation. CyberLaw PC attorney Eric Menhart was on the brief for the prevailing appellant. Read the full text of the opinion: Portuguese American Leadership Council of the United States, Inc. v. Investors’ Alert, Inc. No. 04-CV-1187 (D.C. 2008).

In its decision, the Court finds that the TCPA provides that a “person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State . . . an action based on a violation” of the Act. The trial court interpreted the “if otherwise permitted” language in the TCPA to mean that before a private right of action can be exercised, a state must “opt in” through enabling legislation that allows the lawsuits to proceed.

The opinion notes that the language “if otherwise permitted by the laws or rules of court of a state” in the TCPA appears to refer to the neutral general jurisdictional and procedural laws and rules governing each state’s court system. Second, the Court notes that rulings by the Federal Communications Commission support the view that no enabling legislation is necessary. Third, the D.C. Court of Appeals finds that a majority of state courts hold that enabling legislation is unnecessary to make the TCPA’s private action provision enforceable in state courts. Finally, the court refers to the legislative history of the TCPA to further support its ruling.

The ruling brings D.C. to the same result that all other reviewing states have reached: allowing a private right of action under the Telephone Consumer Protection Act.

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Spam Turns 30

 

Saturday, May 3, 2008 was the 30th anniversary of
bulk e-mailing, popularly known as spamming. On May 3, 1978 an employee of Digital
Equipment Company mass-mailed some of his colleagues an advertisement for a
computer for sale over ARPANET (Advanced Research Projects Agency Network),
which was a technological precursor to the Internet. Unsurprisingly, many of
the recipients found the unsolicited communication method for commercial
purposes unsavory. Little has changed in thirty years as to that point.

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Menhart Testifies on DC Anti-Spam

 

CyberLaw Attorney Eric Menhart recently testified as an expert guest before the Council of the District of Columbia on the Council’s proposed Spam Deterrence Act of 2007. A copy of his testimony is available here.

Menhart recommended that the proposed bill calculate damages on a per message basis, eliminating exceptions for “an established business relationship,” and including liability for “rogue” ISPs that enable spammers to operate on their networks. Finally, Menhart recommended statutory authority allowing limited jurisdictional discovery for any plaintiff that offered a well-pled complaint.

While the measure has not yet passed, at least one Councilmember expressed optimism that it would become law in 2008.

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Text Messaging New War on Spam

 

The new front in the war on spam: text messaging to mobile
phones.

 

While the “classic” spamming techniques via e-mail are as
strong as ever, the wireless phone and the ever-increasing fascination with
text messaging is accelerating the use of text spam. According to this article,
consumers in the United States are expected to receive about 1.5 billion spam
text messages this year, up from 1.1 billion last year and 800 million in 2006,
according to Ferris Research, a San Francisco market research firm. Many
estimates are much higher.

 

What to do about the increase? Legally, state and federal
spam deterrence laws would likely allow consumers and service providers to sue
for damages. The Telephone Consumer Protection Act might also be useful in
combating spam via phone. On the technical side, we can expect to see similar
tactics to those currently employed as to e-mail spam, including filters,
blacklists, and more.

 

Another trend to expect: as wireless phone Internet access
becomes more full-featured, you will see an increase in the type of messages
sent. Many spammers rely on a small percentage of people purchasing products,
many fraudulent, after receiving various spam messages. As more people access
the Internet via their phone, particularly to make purchases, we’ll see more
and more attempts to take advantage of that commerce by spammers.

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House Passes Permanent Do Not Call Ban

 

Updating a previous post in CyberLawg, the U.S. House of
Representatives has easily passed a bill that would make phone numbers on the FTC’s
Do Not Call list permanent. The list is available at donotcall.gov.

 

The ease with which this passed was somewhat surprising, but
new facts appear to have contributed to its passage. First, the FTC has hired a
contractor to review the registry regularly and purge unused numbers,
preventing unused numbers from remaining on the list in perpetuity. Second, the
telemarketing industry has admitted that the list has not been a terrible
burden, and has not put up a serious fight over the measure’s introduction and
passage.

 

The Do Not Call list has been very consumer-friendly and
continues to be popular among Americans. A recent poll showed that 94% percent
of Americans had heard of the national list, and 76% had added their phone numbers.
The bill enjoyed bipartisan support in the House and prospects are strong for
passage in the Senate.

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Bill Proposes Permanent Do Not Call List

 

A new bill has been introduced in the United States House of
Representatives that would amend the "Do-Not-Call" Implementation Act
to eliminate the automatic removal of telephone numbers registered on the
registry. The bill remains in the early stages of the legislation process.

 

Approximately 132 million home and mobile telephone numbers
have been added to the database since its inception in June 2003.

 

The bill, H.R.3541, is a simple modification of the previous
rules, which allowed for phone numbers registered on the list to expire after a
certain amount of time, presently five years. The bill would prevent the FTC
from promulgating rules that would limit anything less than a permanent removal
for any number submitted to the list.

 

Bottom Line:
While a very pro-consumer move, this bill will be heavily opposed by marketers
and business interests. Their opposition has merit. Allowing the list to live
on in perpetuity would lead to numbers remaining on the list through numerous
transfers of ownership, eventually leading to every number in the nation being
on the list. The burden on consumers updating their numbers every five years is
very low, taking less than five minutes. The potential infringement on the free
market is greater than the very small burden on consumers. Accordingly, this
bill is not the best policy for the “do-not-call” list.

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France Declares War on Spam

 

The nation of France is leading the way in providing new methods for combating spam e-mail. The French government is sponsoring the development of an open-source toolbar for Microsfot Outlook and Mozilla Firefox that makes it easier for users to report to ISPs that spam is coming from their networks. The project, called Signal Spam, also takes into account legitimate mailing practices. If a message comes from a legitimate marketer, the system can send an automated response to the person who reported it, telling them how to unsubscribe to the mailing list. Marketers are encouraged to register with Signal Spam.

The leadership of the French government on this matter is welcome. The United States has been wholly ineffective in regulating the spamming industry, passing ineffective laws that do little to prevent the problem, and limiting the liability of ISPs that profit from the industry, to the detriment of ISPs that operate lawfully. Consumers are equally affected. What consumer hasn't had an important e-mail lost due to inefficient spam filters or barely dodged a virus sent via spam e-mail?

Bottom Line: The leadership of the French government, only the 10th worst spam source, should be emulated by other nations, including the United States, easily the greatest source of spam in the world. If the program is successful, the US and other nations should seriously consider implementing similar programs.

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ISPs Start Charging For E-Mail

In a move that was imminent given the rise in unsolicited commercial e-mails, some internet service providers have begun to start charging for the privilege of sending e-mail.

Internet service providers Comcast, Cox Communications, Road Runner and AOL will now charge legitimate mass-mailers, such as banks, inestment firms and retailers, for the privilege of delivering their legitimate e-mail messages to the ISPs’ respective subscribers. Employing a system known as CertifiedEmail, a company can pay $.0025 per message to bypass ISP spam filters and guarantee that the message will be received by the recipient.

The system is designed for e-mailers such as banks, large retailers and others that may find the fee worth the result of greater deliverability of e-mail to customers. Non-profit groups can receive the service for about 10% of the cost of the commercial version. The ISPs receive a portion of the proceeds collected as a resut of the service.

No one will be prevented from e-mailing users of the participating ISPs, whether for commercial or personal reasons, but mailers that do not use the system “mail at their own risk” that the message will not be delivered to one of the participating ISPs subscribers.

Bottom Line: The meteoric rise of spam, phishing schemes and other cyberthieves ensured that the economics of free e-mail would one day lead to this unfortunate result. Legitimate companies employing e-mail communications have virtually no choice but to employ pay-systems to ensure that their customers can separate the wheat from the chaff in their inboxes.

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MySpace Settles on Spam

 

MySpace recently settled an anti-spam lawsuit brought against TheGlobe.com for $2.55 million. TheGlobe appears to have used the mass marketing as a last gasp attempt to survive bankruptcy, according to its recent corporate reports.

 

Bulk marketing practices are often seen as last ditch attempts by failing companies to right the ship. Another circumstance that tends to breed bulk marketing campaigns are IPOs when the newly public company hopes to inflate the IPO offering by showing a surge in sales. One recent example of this practice was Vonage, which launched a huge bulk fax campaign just before its IPO. Vonage has since been hit by numerous TCPA suits in addition to its patent litigation woes.

 

Bottom Line: TheGlobe appears to have hurt itself more than help itself by incurring a $2.55 million loss for illegal marketing practices. One can only hope that the company will be able to right itself without incurring additional liability for such practices.

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Top Spammer Arrested

 

Robert Alan Soloway, allegedly one of the world’s most prolific spammers, was arrested this week on a variety of charges including mail fraud, wire fraud, e-mail fraud, aggravated identity theft and money laundering. The potential jail time for all of the charges could be 20 years or more. The arrest of Soloway is good news for legitimate marketers, Internet Service Providers and other law-abiding e-mail users. However, no one should expect that the deluge of spam will be reduced by the arrest.

The arrest does have its benefits. First, this arrest provides positive news that authorities are taking the problems of unsolicited e-mail seriously. Second, arrests such as these often provide insight into the resources and connections that alleged spammers use to conduct their affairs. This can often lead to new arrests of conspirators. Finally, such news provides notice to other wrongdoers that authorities are capable of enforcing the laws on the books.


Bottom Line: Such arrests are unlikely to lead to reductions in the sheer volume of unsolicited e-mails for the average e-mail user. However, it is good news that law enforcement authorities are taking the problem of electronic torts seriously and using the legislative tools at their disposal to make arrests such as these.

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