Direct Marketers Join Fight
Against Surging Tide of Spam

The battle against spam, or unsolicited commercial e-mail, is getting a surprising new supporter: the direct-marketing industry.

The surging tide of spam has forced conventional junk-mailers to throw their weight behind the idea of federal legislation to stem the flow. The Direct Marketing Association, a trade group for marketers who sell directly to consumers, wants to push for federal legislation restricting spam this year or during the congressional session ending in 2004.

The move makes federal legislation more likely since the Direct Marketing Association, a powerful lobbying group, had previously opposed federal laws or regulation of any kind. The group now says federal law should track its voluntary guidelines, which currently urge marketers to ensure that recipients have a way to remove their names from e-mail lists. In addition, the DMA plans to suggest that marketers who violate the law pay stiff penalties of $11,000 per violation, or piece of spam sent.

Some consumer advocates, who argue that there ought to be an outright ban on unsolicited commercial e-mail, suspect that the group is trying to water down any legislation. Some other big names in the e-mail world have already thrown their support behind strong legislation. Last week, AOL Time Warner Inc.'s America Online said it would push for legislation to resolve the spam problem. And Microsoft Corp. earlier this month also advocated strong laws.

'Volume Is So Great'

The Direct Marketing Association, which previously advocated self-regulation, says there now is so much spam it is impossible for its members to be heard. "The volume is so great that we have to have some sort of government intervention," says Jerry Cerasale, the DMA's senior vice president of government affairs. The group wants legitimate marketers to be able to continue using e-mail.

LIMITING SPAM The Direct Marketing Association supports federal legislation that would track its guidelines, which say members may send commercial solicitations under the following circumstances: 1. The solicitations are sent to the marketers' own customers, or 2. Individuals have given their affirmative consent to the marketer to receive solicitations online, or 3. Individuals didn't opt out after the marketer has given notice of the opportunity to opt out from solicitations online, or 4. The marketer has received assurances from the third-party list provider that the individuals whose e-mail addresses appear on that list A. Have already provided affirmative consent to receive solicitations online, or B. Have already received notice of the opportunity to have their e-mail addresses removed and haven't opted out.

Spam now comprises 41% of all Internet e-mail, according to Brightmail, a software company that blocks spam and is cited by federal agencies and congressional representatives. The flood costs U.S. corporations $8.9 billion each year and accounts for $4 billion in lost productivity, according to a January 2003 report by market research firm Ferris Research.

In the absence of a federal law, a number of states are trying to tackle the problem on their own. A New York court ruled last month, for example, that a former marketing company called MonsterHut violated state consumer-fraud laws by claiming inaccurately it received consumers' permission to send them e-mail ads. America Online won a judgment of about $7 million last year under the Virginia Computer Crimes Act against a spammer for overburdening its systems with deceptive, unsolicited e-mail.

California State Sen. Debra Bowen, who authored one of her state's first laws regarding spam in 1998, has now proposed a measure that would ban spam unless the recipient has agreed to receive the e-mail ad or has an existing business relationship with the sender. Under the proposal, consumers would be able to sue violators for $500 per spam.

Ms. Bowen says current law "doesn't work" because it relies on district attorneys, who have other priorities, to prosecute spammers. Also, the previous law's "unsubscribe" provision, which lets marketers send e-mail as long as they allow the recipient to request their name be removed from the mailing list, hasn't cut the volume of spam, she says.

Another approach is a "do not e-mail" list, similar to telemarketing "do not call" lists that ban marketers from contacting people with whom they have no prior business relationship. Missouri and Colorado have proposed such lists to block spam. On a national level, Democratic U.S. Sen. Charles Schumer of New York, who is beginning to draft antispam legislation, is considering this concept, according to people familiar with the situation.

In seeking federal adoption of its proposals -- some of which are already in existing state laws -- the DMA acknowledges that it is partly trying to prevent a crazy-quilt of regulations attempting to limit a global medium.

In the meantime, the association is also considering other initiatives to crack down on junk e-mail. It has expressed willingness to help law-enforcement agencies, including international agencies, identify and prosecute spammers who make fraudulent offers. It is talking about giving its stamp of approval to marketers who follow certain guidelines and pay a fee of $500 or $1,000.

But some antispam advocates say only an outright ban will have much effect. Many laws are vague about enforcement, they say, leaving overworked state attorneys general to prosecute the offenders. Some argue that "do not e-mail" lists also won't work because they lack any incentive for spammers to check the lists.

Transferring Cost to Sender

The cost of sending e-mail is so minuscule that any legislation will be useless unless it transfers some cost to the sender, says Ray Everett-Church, a founder of the consumer group Coalition Against Unsolicited Commercial E-mail. Now, recipients of spam, such as Internet-access companies, corporations and individuals bear the cost because they pay for the Internet service.

David Sorkin, a law professor who tracks spam legislation at the John Marshall Law School in Chicago, and Mr. Everett-Church question the effectiveness of the DMA's efforts so far. For one thing, the group represents established marketers such as catalog retailers. Most hard-core spammers -- who send come-ons for herbal supplements, enlarged body parts and low mortgage rates -- don't belong to the organization.

"Companies that are doing unsolicited marketing are typically not DMA members and are usually not advertising products and services that are legitimate or legal," said Mr. Everett-Church. "So the proposal for a minimal threshold for the legitimacy of spam will not help the average consumer in terms of the kind of spam or volume they receive."

The DMA's Mr. Cerasale acknowledges that his organization doesn't have any hold over spammers who aren't members. He says the organization, however, may offer some assistance to law enforcement in tracking down people perpetrating fraud.

Write to Mylene Mangalindan at mylene.mangalindan@wsj.com¹

Updated February 25, 2003