FTC Chairman Calls Spam "One of the Most Daunting Consumer Protection Problems FTC Has Ever Faced"

Addressing business executives and government officials at the Aspen Summit in Aspen, Colorado, Federal Trade Commission Chairman Timothy J. Muris today explained how competition, consumer protection, and the FTC fit into the American economy. Specifically, Muris focused on the challenges posed by spam and the roles of the government, marketers, and Internet Service Providers (ISPs) in combating this "daunting" consumer protection problem.

Muris stressed that, like competition policy, consumer protection policy plays a vital role in supporting markets. According to Muris, the Commission's consumer protection program has had numerous successes, yet currently faces its most significant test in addressing spam. Muris explained that legislation alone would do little or nothing to halt the growing flood of spam. Because the Internet allows spammers anonymity, and because spammers can send thousands of e-mails per day at essentially no cost, he stated that few would have the incentive to stop sending unsolicited e-mails in spite of new laws.

"No one should expect any new law to make a substantial difference by itself," Muris said. He outlined three important elements that he believes must be incorporated in order to create effective legislation. First, the legislation must address how to locate and prosecute spammers. "Our experience, and that of the few states that have tried to punish spammers, is that it can take months of investigation, and sometimes a dozen or more subpoenas, simply to locate a spammer," Muris said, indicating that technology could most effectively address this issue.

Second, Muris stated that legislation must adequately address spammers' punishments. Muris explained that, as with any consumer protection action, the FTC can freeze spammers' assets and seek consumer redress. In most cases, however, spammers have limited assets. "Our authority thus already entitles us to more money than many of the spammers have," Muris said. "Authority to get civil penalties will not make a dramatic difference." He also noted that when defendants have no assets, or when civil penalties do not provide enough incentive to stop spammers from violating the law, consumers will be protected only if criminal action is taken. Muris stressed that criminal authority must be clarified.

According to Muris, some proposed legislation could actually make it more difficult to prosecute problematic spam. He cited one bill that would make suing a spammer more complicated than the current process under the FTC Act, and other proposed bills that would require federal prosecutors to prove that a spammer falsified his identity in 10,000 different e-mails to bring a felony charge. "As the Department of Justice has noted in testimony, such proof simply will often be impracticable," Muris said.

Muris addressed the idea of creating a "Do Not Spam" registry modeled after the FTC's recently launched National Do Not Call Registry. If such a list were established, Muris said, "My advice to consumers would be: don't waste the time and effort to sign up." He explained that "we are sure the National Do Not Call Registry will reduce calls significantly." By contrast, a "Do Not Spam" registry would be ineffective because spammers can constantly create new e-mail addresses and identities, and because it costs virtually nothing for a spammer to clog consumers' inboxes. "Instead, recipients and Internet Service Providers bear most of the costs." Muris said.

Muris said that "eventually, the spam problem will be reduced, if at all, through technological innovations," including improved ISP spam filters and the integration of anti-spam technology into the e-mail services ISPs provide for consumers. Until these capabilities become available, Muris said, "the ISPs need to empower consumers by providing the means to deal with spam more easily." On the whole, Muris concluded that "legislation cannot do much to solve the spam problem, because it can only make a limited contribution to the crucial problems of anonymity and cost shifting."

Muris stressed that the FTC would continue to investigate and prosecute deceptive spam, as well as the deceptive and unfair use of e-mail technology. The FTC's work to combat spam includes cooperation with federal, state, and local law enforcement agencies in the Spam Task Force, consumer and business education and outreach, and continued collaboration with government, ISPs, marketers, and technologists, following the widely-attended FTC Spam Forum.

Muris also discussed two other areas "where the Commission has applied its policy tools to create appropriate and innovative responses to practices that affect consumer welfare," the National Do Not Call Registry and the FTC's e-commerce initiative. Noting that the National Do Not Call Registry contains over 32 million phone numbers, Muris stated that the program greatly facilitates consumers' ability to exercise choice with respect to their privacy.

Muris called the e-commerce initiative "an example of the Commission using its institutional strengths to support competitive markets and the common law as they adapt to technological change." He explained that while the Internet has increased the availability of goods and services to consumers, some state laws inhibit competition by requiring online vendors to maintain a physical office in their state or by prohibiting completely online sales or shipments of certain products, including wine, contact lenses, and caskets. Muris stressed that the FTC is working vigilantly to keep costs low and prevent any suppression of Internet commerce.

Muris concluded by outlining his vision for the FTC's "future success in consumer protection." He stated that the agency must continue to focus on the interrelation between competition and consumer protection matters, and be flexible and responsive to changes in products, modes of commerce, and technology. "We must increase the Commission's base of knowledge to address new commercial phenomena, to analyze complex technical issues involving health and safety, and to respond to new technologies," Muris said. "This base of knowledge will enable the Commission to retain the intellectual leadership necessary to persuade others to join us in our mission to foster consistent, market-driven consumer protection policies."