The two states that have enacted these e-mail laws, Michigan and Utah, can potentially collect millions of dollars per year from e-mail senders.
Cleverly, neither of the two acts uses the word "tax" — and almost no one has recognized the new laws as having this kind of effect.
What The Law Says Vs. What It Does
The Michigan and Utah laws are similar, but not identical, so I'll use the Michigan law here as an illustration. The Michigan act sets up a state "Do Not Contact" registry. Anyone may add e-mail addresses, instant messaging addresses, and telephone numbers to the registry.
Drafters of successful legislation know they need to give it an appealing name, regardless of a bill's actual effect. The Michigan law, therefore, was promoted in the legislature as the "Michigan Children's Protection Registry Act." Obviously, no politician wants to be portrayed as "against protecting children," which is a big reason why bills like these pass.
Under the act, people who send certain otherwise-legitimate e-mail messages (which I'll define later) are guilty of a felony if they send even a single message to an address that's in the registry. If convicted, senders are subject to civil penalties up to $5,000 per message, a criminal fine up to $30,000, and one to three years in prison. Anyone who sends e-mail is required to pay fees every 30 days to check their e-mail list against the state registry.
The Web site that accepts the list registrations for Michigan, known as Protect MI Child, repeats some of the law's great-sounding language about defending children against adult-oriented e-mail. But a closer look reveals that the law has no features that will actually protect children against spam or reduce spam in any way.
Why The Laws Won't Prevent Spam
Instead of protecting children, the laws allow politicians to boast, "We're doing something about spam," while doing nothing but raising state revenues. The legislation is clearly an attempt to evade the U.S. CAN-SPAM Act, which prohibits states from writing antispam laws, and the U.S. Supreme Court, which has struck down laws that restrict adults under the guise of protecting children. As implemented by Michigan, the law is certain to be ineffective in preventing unwanted messages. Consider the following:
• Not limited to state residents. Although the Michigan law talks about protecting the residents of that state, I was able to register any e-mail address I wished. The registry site asks for a street address within the state, but no one bothers to verify this. (I entered the address and phone number of a large Detroit newspaper.) The Michigan registry accepts any e-mail address in the world. You'd have to be a Michigan resident to sue under the law, but wherever in the world you live, your address can get on the list.
• Not limited to minors. The service doesn't even pretend to verify that an e-mail address belongs to a minor. Anyone can enter any address simply by claiming that a minor has access to it. An owner of a domain name can even register an entire dot-com. No one checks the date of birth you happen to claim for your "child."
• No right of class action. If the Michigan law was actually intended to stop unwanted messages, it would include the ability for private parties to file class-action lawsuits against those who advertise in spam. The law, however, provides no such right. You can certainly be charged with a felony and accused of "child abuse" by any kook seeking the act's civil penalty of $5,000 per message. But this sum would never attract an effective lawsuit against a hardcore spammer from a serious lawyer, whose expenses would exceed $5,000 in a single day.
• No exception for solicited e-mail. Remarkably, neither the Michigan nor the Utah law makes any exceptions for legitimate messages that the recipient wants and signed up for. The Michigan law, for example, states, "The consent of a minor or third party to receive the message is not a defense." Individuals can get on the registry, then sign up for your newsletter and sue you, seeking the civil penalty.
• It's a tax on legitimate senders, not a deterrent to spammers. If the Michigan law served a genuine public purpose, there would be no cost for legitimate senders to prune their e-mail lists of Do Not Contact addresses. The state's cost of maintaining the registry would be recouped from fines paid by convicted bad guys. The law's drafters, however, know that no big-time spammers are ever going to be caught using this law. They know the fees required to check the registry are nothing but a tax on legitimate e-mailers.
Spammers have perfected a variety of technical means to hide their identities, such as using e-mail servers in China. By contrast, legitimate publishers -- faced with felony charges that could mean crippling p.r. fallout -- are the only ones who will pay to check their e-mail lists against the Do Not Contact registries.
What Sites Are Your E-Mails Prohibited From Linking To?
The Michigan law makes it a felony to send e-mail to an address on the Do Not Contact list "if the primary purpose of the message is to, directly or indirectly, advertise or otherwise link to a message that advertises a product or service that a minor is prohibited by law from purchasing, viewing, possessing, participating in, or otherwise receiving."
I've seen a few arguments that the "primary purpose" wording would protect publishers of legitimate e-mail newsletters. But that language is vague and hasn't yet been tested. I wouldn't want to stand up before a judge and argue that the primary purpose of one of my e-mails wasn't to link, "directly or indirectly," to other sites that advertised forbidden products.
The list of forbidden products and services, while almost entirely undefined, is certainly very broad. Whether you're guilty of a felony could very well depend on which judge your case is assigned to. Can you be certain your company's e-mail messages will never link to sites advertising products that minors may not "purchase or possess"? How about R-rated DVDs, legal prescription drugs, wineries, fireworks (including sparklers), lotteries (even official state-run lotteries), car rentals, mortgage and financial products, and abortion services (in some states), just to name a few possibilities.
You might say, "That's ridiculous." Yes, it is, but that's how the laws are written, and a single individual can drag your company's name through the court system. As the nonprofit Institute for Spam and Internet Public Policy (ISIPP), headed by attorney Anne Mitchell, points out, "These new laws will affect nearly every commercial email marketer in the United States, and even those outside the United States who maintain some physical presence in the United States."
The fees are being set at high enough levels that interest groups are busily working to impose the charges elsewhere, too. Let's say that only 12 states in total adopt this revenue source. At the rate Michigan is currently charging, your company would be paying $1,000 per year for every 1,000 subscribers to your supposedly "free" e-mail newsletter. And Michigan's statute allows the rate to quadruple.
We'll look at the true costs -- and how such laws got passed in the first place -- next week.