Unsolicited Commercial E-Mail (Spam) Could Chill Consumer Confidence in Online Commerce: FTC

The Federal Trade Commission today said that the proliferation of deceptive unsolicited commercial e-mail - "spam" - is a threat to consumer confidence in online commerce. In testimony before the Subcommittee on Telecommunications, Trade and Consumer Protection of the House Commerce Committee, Eileen Harrington of the FTC's Bureau of Consumer Protection said the agency is very concerned about the widespread use of unsolicited commercial e-mail (UCE) to disseminate false and misleading claims about products and services sold on the Net. "Not all unsolicited commercial e-mail is fraudulent, but fraud operators - often among the first to exploit any technological innovation - have seized on the Internet's capacity to reach literally millions of consumers quickly and at a low cost through UCE. In fact, UCE has become the fraud artists' calling card on the Internet," she said.

The testimony says the Commission is using a three-pronged approach to UCE. It is monitoring the problem using workshops with participation from industry and advocacy groups. These groups have urged encouragement of technologies and public policies that would give more control to consumers over the UCE they receive. "On another front, the FTC set up a special electronic mailbox reserved for UCE in order to assess, first hand, emerging trends and developments in UCE. ... The UCE mailbox has received more than 2,010,000 forwarded messages to date, including 3,000 to 4,000 new pieces of UCE every day," the testimony says.

"The Commission has responded to fraudulent UCE with a vigorous law enforcement program," the testimony says. Of over 100 law enforcement actions the Commission has brought to halt online fraud and deception, 17 have used UCE as an integral part of the targeted scheme.

The FTC also has launched a comprehensive consumer and business education campaign according to the testimony. The agency has issued three consumer publications, "Trouble @ the In-Box," "How to be Web Ready," and "Spam's Dirty Dozen: 12 Scams Most Likely to Arrive Via Bulk E-Mail."

"As government, industry and consumer interests examine legislative, self-regulatory, and law enforcement options at this important turning point, it is useful to be mindful of lessons learned in the past," the testimony says. "Earlier in this decade, the advent of the first and still the most universal interactive technology, 900 number, telephone-based "pay-per-call" technology, held great promise. Unfortunately, unscrupulous marketers quickly became the technology's most notorious users." Industry did too little to halt the widespread deception and consumers lost confidence in pay-per-call commerce and would not use it. The Congress enacted the Telephone Disclosure and Dispute Resolution Act of 1992 whose implementing regulations required certain disclosures and "... virtually eliminated the problem of deceptive 900 number advertising. Only now, some six years after federal regulations took effect, has there been growth in pay-per-call services as a means of electronic commerce."

"The Commission has steadfastly called for self-regulation as the most desirable approach to Internet policy. The Commission generally believes that economic issues related to the development and growth of electronic commerce should be left to industry, consumers and the marketplace to resolve. For problems involving deception and fraud, however, the Commission is committed to law enforcement as a necessary response. Should the Congress enact legislation granting the Commission new authority to combat deceptive UCE, the Commission will act carefully but swiftly to use it," the testimony says.

The Commission vote to approve the testimony was 4-0.

Copies of the testimony as well as copies of  "Trouble @ the InBox," "How to be Web Ready," and "Spam's Dirty Dozen," are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. P99 4101)