BILL ANALYSIS
AB 2950
Page 1
Date of Hearing: April 17, 2008
ASSEMBLY COMMITTEE ON JUDICIARY
Dave Jones, Chair
AB 2950 (Huffman) - As Amended: April 3, 2008
As Proposed to be Amended
SUBJECT : Computers: False or Deceptive Commercial E-Mail
Messages
KEY ISSUE : SHould THE COMMITTEE SUPPORT THIS MEASURE TO ENACT
LEGISLATIVE INTENT TO REGULATE FALSE AND DECEPTIVE SPAM TO THE
EXTENT PERMITTED BY FEDERAL AND STATE LAW?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
This bill seeks to improve and strengthen existing laws against
unwanted and unsolicited commercial e-mail messages known as
"spam." SB 186 (Chapter 487, Stats. of 2003) attempted to
impose a total ban on unsolicited e-mail messages, but that law
was soon preempted by the federal CAN-SPAM Act of 2003. The
CAN-SPAM Act expressly permitted the sending of unsolicited
commercial e-mail messages so long as the recipient has some
ability to opt-out of subsequent e-mails and the sender
discloses valid contact information, including an e-mail
address. However, CAN-SPAM did not entirely preempt the field;
it permits states to regulate commercial e-mails that are false
and deceptive, on the assumption that regulating false and
deceptive advertising is within the purview of the state. The
author is offering amendments to completely delete the contents
of the bill and solely state legislative intent to regulate
false and deceptive spam to the extent permitted by federal and
state law.
SUMMARY : States that it is the intent of the Legislature to
regulate false and deceptive spam within the exception to
federal preemption to the full extent permitted by the CAN-SPAM
Act of 2003 (17 U.S.C. Sec. 7707(b)) and any other provision of
state and federal law.
EXISTING LAW :
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1)Defines "unfair competition" as any unlawful, unfair, or
fraudulent business act or practice, including any deceptive,
untrue, or misleading advertising. Provides further that
California's Unfair Competition Law and False Advertising Law
is not limited to anti-competitive business practices targeted
at rivals, but is equally directed toward the protection of
the public from fraud and deceit. (Business & Professions
Code Sections 17200 et seq.; Arizona Cartridge Remanufacturers
Assn v. Lexmark Intern, Inc. (2005) 421 F3d 981 (CA 9th).)
2)Makes it a misdemeanor, under the False Advertising Act, to
engage in any advertising, including over the Internet, that
is false or misleading. (Business & Professions Code Section
17500 et seq.)
3)Makes it unlawful for any person or entity to advertise in a
commercial e-mail advertisement either sent from or to
California, under any of the following circumstances:
a) the e-mail advertisement contains or is accompanied by a
third party's domain name without the permission of the
third party;
b) the e-mail advertisement contains or is accompanied by
falsified, misrepresented, or forged header information;
c) the e-mail advertisement has a subject line that a
person knows would be likely to mislead a recipient about a
material fact regarding the contents or subject matter of
the message. (Business & Professions Code Section 17529.5
(a).)
4)Provides that, in addition to any other legal remedy, an
action may be brought against a person or entity that violates
#3 above by any of the following: the Attorney General; an
electronic mail service provider; a recipient of an
unsolicited commercial e-mail advertisement. Provides the
person or entity bringing such action may recover actual
damages or liquidated damages up to $1000 per each unsolicited
e-mail advertisement and up to $1,000,000 per incident.
Provides additionally that a violation of the above provisions
is a misdemeanor punishable by a fine of $1000 or not more
than six months in county jail. (Business & Professions Code
Section 17529.5(b).)
5)Imposes, under the federal CAN-SPAM Act of 2003, certain
restrictions on the use of unsolicited e-mail advertisements,
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or spam, including offering recipients the ability to opt-out,
providing a valid e-mail address contact, and disclosing the
name and address of the sender. (15 USC Section 7701 et seq.)
Provides that state regulations that target only false or
deceptive unsolicited commercial e-mails are not preempted by
CAN-SPAM. (See e.g. Facebook, Inc. v. ConnectU LLC (2007).)
COMMENTS : According to the author, this bill is intended to
address the problem of unsolicited commercial e-mail
advertisements, or "spam," that shows up regularly in our e-mail
inboxes, much of which the author claims, is false and
misleading. More than just annoying, spam costs business and
organizations in California up to $2 billion annually, the
author claims.
In 2003, SB 186 (Chapter 487, Stats. of 2003) attempted to
prohibit spam altogether and created a private right of action
whereby a consumer or service provider could sue violators for
actual and liquidated damages. However, shortly after the
enactment of SB 186, Congress enacted the CAN-SPAM Act of 2003.
This Act permitted the sending of unsolicited e-mails so long as
the sender appropriately identified itself and allowed the
recipient to opt-out from any subsequent e-mails. Although the
CAN-SPAM Act effectively preempted California's effort to impose
a total ban on spam, subsequent case law makes it clear that
states are free to regulate false or deceptive messages. Thus,
while most parts of SB 186 were preempted, it appears that those
provisions dealing with false or deceptive e-mails - in
particular Business & Professions Code Section 17529.5 - are
still valid law.
As to false or deceptive e-mails, existing law generally makes
it a misdemeanor to send commercial e-mail advertisements that
do any of the following: (1) send an e-mail that is accompanied
by a third-party's domain name without the permission of the
third party; (2) send an e-mail that is accompanied by a
falsified, misrepresented, or forged header information; or (3)
send an e-mail that has a subject line that the sender knows
would mislead a reasonable person as to the contents or subject
matter of the message.
Existing law provides penalties for persons or entities that
violate the above provisions. In addition to making the
violation a misdemeanor subject to fine, existing law also
permits the Attorney General, an electronic mail service
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provider, or a recipient of an unsolicited e-mail to bring an
action against the violator. The person or entity bringing the
action may recover actual damages or liquidated damages of $1000
for each unsolicited e-mail or up to $1,000,000 per incident.
These damages are reduced to $100 and $100,000, respectively, if
the defendant has established policies and procedures designed
to prevent the sending of unlawful and unsolicited messages.
ARGUMENTS IN OPPOSITION : The American Electronics Association
(AeA), which represents over 2,500, high-tech companies, opposed
the prior version of the bill and it is not known if it opposes
this measure as proposed to be amended. AeA argues that
California already has some of the strongest anti-spam laws in
the nation.
Author's amendments . Proposed amendments delete the contents of
the bill and instead makes the following statement:
Is the intent of the Legislature to regulate false and deceptive
spam within the exception to federal preemption to the full
extent permitted by the CAN-SPAM Act of 2003 (17 U.S.C. Sec.
7707(b)) and any other provision of state and federal law.
REGISTERED SUPPORT / OPPOSITION :
Support
California Alliance for Consumer Protection
Privacy Rights Clearinghouse
Opposition (to prior version of the bill)
American Electronics Association (AeA)
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334