STATEMENT OF COMMISSIONERS ORSON SWINDLE AND  THOMAS B. LEARY
CONCURRING IN PART AND DISSENTING IN PART

in ReverseAuction.com, Inc., File No. 0023046


ReverseAuction.com, Inc., a company that offers auction services on the Internet, became a member of eBay, a popular Internet auction site, and was thereby granted access to the e-mail addresses, eBay user IDs, and feedback ratings of other eBay members. When registering as a member, ReverseAuction agreed to abide by eBay's privacy agreement, which prohibits members from using the personal identifying information of any eBay member obtained through eBay's web site for the purpose of sending unsolicited commercial e-mail. In Count One of the complaint, the Commission alleges that ReverseAuction violated Section 5 of the FTC Act by using other eBay members' user IDs, feedback ratings, and e-mail addresses for the purpose of sending those members unsolicited commercial e-mail, in contravention of its agreement with eBay. The complaint pleads alternative theories in support of the Section 5 violation in Count One: that ReverseAuction engaged in deception by falsely representing to eBay that it would abide by the privacy agreement, Complaint  16; or that ReverseAuction's use of the eBay member information for the purposes of sending unsolicited commercial e-mail was an unfair practice. Complaint  17.

We join our colleagues in support of the deception theory in Count I. ReverseAuction represented to eBay that it would not use the information it obtained about other members to send unsolicited commercial e-mail. ReverseAuction, however, sent unsolicited e-mails promoting its auction site to eBay members using e-mail addresses harvested from eBay's site. ReverseAuction thereby deceived eBay directly and, in doing so, also misled other members of the eBay community who believed that all participants in the eBay marketplace would abide by the same privacy rules.

We recognize that the Commission's decision to proceed against the deception alleged in Count One could be construed as placing the Commission in the position of enforcing eBay's privacy policy. Nevertheless, we want to emphasize that our decision to challenge ReverseAuction's deception is an effort to buttress, not supplant or detract from, initiatives of private parties (like eBay) who develop and implement their own privacy arrangements. We further believe that it is in the public interest for the Commission to pursue the deception allegation in Count One because such deceptive conduct undermines consumer confidence in the nascent electronic marketplace at a critical point in time and may thereby inhibit its development.

We do not, however, support the unfairness theory in Count One. The Commission has no authority to declare an act or practice unfair unless it "causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition." 15 U.S.C.  45(n) (emphasis added). The statutory requirement of substantial injury is actually derived from the Commission's own Statement of Policy, issued in 1980. The Commission explained at that time that, "[t]he Commission is not concerned with trivial or merely speculative harms. In most cases a substantial injury involves monetary harm . . . Unwarranted health and safety risks may also support a finding of unfairness. Emotional impact and other more subjective types of harm, on the other hand, will not ordinarily make a practice unfair." Letter from the Commission to the Consumer Subcommittee of the Senate Committee on Commerce, Science, and Transportation, Commission Statement of Policy on the Scope of Consumer Unfairness Jurisdiction, 4 Trade Reg. Rep.(CCH) 13,203 (Dec. 17, 1980), reprinted in International Harvester, Inc., 104 F.T.C. 949, 1070-76 (1984).

We do not say that privacy concerns can never support an unfairness claim. In this case, however, ReverseAuction's use of eBay members' information to send them e-mail did not cause substantial enough injury to meet the statutory standard.

Consumers do not have a substantial privacy interest in the e-mail addresses and other information that ReverseAuction harvested since consumers had already agreed to make this information available to millions of other eBay members (albeit with restrictions on using it for commercial solicitations). Moreover, a substantial portion of this information is available without restriction to non-members who visit eBay's web site. Merely obtaining consumers' e-mail addresses without their explicit consent and sending them e-mail solicitations does not cause substantial injury.

The injury in this case was caused by deception: that is, by ReverseAuction's failure to honor its express commitments. It is not necessary or appropriate to plead a less precise theory.

Industry self-regulation and consumer preferences, as expressed in the marketplace, are the best and most efficient ways to formulate privacy arrangements on the Internet and in commerce generally. Because proliferation of the kind of deceptive conduct in which ReverseAuction allegedly engaged could undermine consumer confidence in such privacy arrangements, we believe that it is appropriate to pursue this matter under a deception theory. The unfairness theory, however, posits substantial injury stemming from ReverseAuction's use of information readily available to millions of eBay members to send commercial e-mail. This standard for substantial injury overstates the appropriate level of government-enforced privacy protection on the Internet, and provides no rationale for when unsolicited commercial e-mail is unfair and when it is not. We are troubled by the possibility of an expansive and unwarranted use of the unfairness doctrine.

For the reasons discussed above, we dissent from the unfairness allegation contained in Paragraph 17 of the Complaint.