BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2950
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          Date of Hearing:   April 9, 2008

                   ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
                                   Mike Eng, Chair
                    AB 2950 (Huffman) - As Amended:  April 3, 2008
           
          SUBJECT  :    Computers: false or deceptive commercial e-mail  
          messages.

           SUMMARY  :   Modifies existing prohibitions against unsolicited  
          commercial electronic mail (e-mail).  Specifically,  this bill  :  

          1)States legislative intent that the provisions of this bill  
            shall operate within the exception to federal preemption to  
            the full extent permitted by the CAN-SPAM Act of 2003 and any  
            other provision of federal law.

          2)Prohibits any person or entity from sending, initiating, or  
            knowingly enabling or assisting another to send, initiate, or  
            advertise in a commercial e-mail message that contains falsity  
            or deception in any portion of the message or information  
            attached thereto.

          3)Specifies that falsity or deception in any portion of a  
            commercial e-mail message or e-mail attachment includes but is  
            not limited to the following:

             a)   The commercial e-mail message contains or is accompanied  
               by a third party's domain name without the permission of  
               the third party.  

             b)   The e-mail advertisement's header information contains  
               or is accompanied by materially false or misleading  
               information, as defined in federal law.

             c)   The e-mail advertisement has a subject line that a  
               person knows would be likely to mislead a recipient, acting  
               reasonably under the circumstances, about a material fact  
               regarding the contents or subject matter of the message.

          4)Authorizes the Attorney General (AG), district attorney or  
            city attorney, e-mail service provider, or a recipient of an  
            unsolicited e-mail to bring action against a person or entity  
            that violates any provision of this bill.









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          5)Specifies that a person or entity bringing an action may  
            recover or be awarded any or all of the following:

             a)   Actual damages.

             b)   Liquidated damages are of one thousand dollars ($1,000)  
               for each commercial e-mail message transmitted in violation  
               of the provisions of this bill, up to one million dollars  
               ($1,000,000) per incident.

             c)   Authorizes a court, when it finds that the defendant  
               willfully or knowingly violated the provisions of this  
               bill, to increase the amount of the award to an amount  
               equal to not more than three times the amounts of actual  
               and liquidated damages.

             d)    An order enjoining future violations.

          6)Allows the AG, district attorney, city attorney, e-mail  
            service provider, or recipient of the e-mail, to recover  
            reasonable attorney's fees and costs.

          7)Specifies that there will be no cause of action under this  
            section against an electronic mail service provider that is  
            only involved in the routine transmission of the commercial  
            e-mail message over its computer network.  For this purpose,  
            "routine transmission" does not include actions taken as an  
            advertising network.

          8)Specifies that if the court finds that the defendant  
            established and implement practices and procedures reasonably  
            designed to effectively prevent commercial e-mail messages  
            that are in violation of the provisions of this bill, the  
            court shall reduce the liquidated damages recoverable to a  
            maximum of one hundred dollars ($100) for each unsolicited  
            commercial e-mail advertisement, or a maximum of one hundred  
            thousand dollars ($100,000) per incident.

          9)Specifies that the provisions of this bill are severable.

           EXISTING LAW  

          1)Prohibits a person or entity from advertising in a commercial  
            e-mail advertisement that is sent either from California or to  
            a California e-mail address if the e-mail contains or is  








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            accompanied by a third party's domain name without permission,  
            contains or is accompanied by falsified, misrepresented, or  
            forged header information, or has a misleading subject line,  
            and makes a violation of the prohibition a misdemeanor.

          2)Authorizes the AG, an internet service provider (ISP), or the  
            recipient of an unsolicited commercial e-mail advertisement  
            transmitted in violation of state law to bring an action to  
            recover liquidated damages of $1,000 per unsolicited  
            commercial e-mail advertisement transmitted in violation of  
            provisions, up to $1,000,000 per incident, subject to  
            reduction by the court, as specified.

           FISCAL EFFECT  :   Unknown

           COMMENTS  :   

           Purpose of this bill  .  According to the author's office, "Over  
          90 percent of all e-mail traffic in the United States is  
          comprised of unsolicited commercial e-mail advertisements  
          (spam), including false and deceptive spam?In 2005, spam cost  
          United States organizations more than seventeen billion dollars  
          ($17,000,000,000), including lost productivity and the  
          additional equipment, software, and manpower needed to combat  
          the problem.  California represents 12 percent of the United  
          States population with an emphasis on technology business and it  
          is estimated that spam, including false and deceptive spam, cost  
          California organizations well over two billion dollars  
          ($2,000,000,000).

          "Despite CAN-SPAM, today 90 percent of all e-mail is spam.   
          Filters have not proven effective, and spam is threatening the  
          viability of e-mail as a means of communication, for individuals  
          and businesses alike.  A significant amount of spam has false or  
          deceptive content, either technically or in terms of the  
          advertised content.  Advertisers benefit from, but deny  
          liability for, their advertising agents' unlawful activities.   
          Spammers are adept at hiding their tracks.  Recipients bear the  
          costs of spam, not he spammers/advertisers."

           Background .  This bill follows SB 186 (Murray) Chapter 487,  
          Statutes of 2003, which completely banned e-mail spam in  
          California.  To enforce this ban, SB 186 created a private right  
          of action whereby a consumer or an ISP could sue spammers and  
          recover damages.  








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          Within months of its passage, SB 186 was preempted by the  
          federal CAN-SPAM Act of 2003 which allows for spam as long as  
          various conditions are met.  These conditions include offering  
          the ability to opt-out, a valid e-mail address contact, and the  
          disclosure of the name and location of the spam sender.

          According to the author, "Although this federal measure  
          preempted California's complete prohibition of spam, it did not  
          preempt the private right of action consumers and ISPs have  
          against those who send spam with misleading or falsified headers  
          and information, as well as the advertisers of those products.   
          California's current law?is better than most states' laws, by  
          specifying that individual recipients of spam can bring legal  
          action, setting liquidated damages at $1000 per spam, and  
          authorizing attorney's fees for a prevailing plaintiff, but  
          there are still too many loopholes and ambiguities.  Existing  
          laws have not stopped unlawful spam; in fact, the volume of spam  
          has increased since CAN-SPAM."

           CAN-SPAM  .  In 2003, Congress enacted CAN-SPAM to curb spam.  As  
          required by CAN-SPAM, the Federal Communications Commission  
          (FCC) adopted rules that prohibit sending unwanted commercial  
          e-mail messages to wireless devices without prior permission.   
          This ban took effect in March 2005.  In addition, the Federal  
          Trade Commission adopted detailed rules that restrict sending  
          unwanted commercial e-mail messages to computers.

          The FCC's ban on sending unwanted e-mail messages to wireless  
          devices applies to all "commercial messages."  The CAN-SPAM Act  
          defines commercial messages as those for which the primary  
          purpose is to advertise or promote a commercial product or  
          service.  The FCC's ban does not cover "transactional or  
          relationship" messages, or notices to facilitate a transaction  
          already agreed to by the consumer.  These messages would include  
          statements about an existing account or warranty information  
          about a product purchased by the consumer.  The FCC's ban also  
          does not cover non-commercial messages, such as messages about  
          candidates for public office.

           Previous legislation  .  SB 186 (Murray) Chapter 487, Statutes of  
          2003, prohibits the sending of unsolicited e-mail ads from  
          California or to a California e-mail address and modifies the  
          provisions governing the recipient of unsolicited electronic  
          mail (e-mail) advertisements (ads) to contact the sender to  








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          remove his or her e-mail address from the sender's mailing list,  
          and

           Double-referred  .  This bill is double-referred to the Assembly  
          Judiciary Committee.  Further analysis of the legal implications  
          of this bill will be reviewed in that committee's analysis.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          None on file.

          Opposition 
           
          None on file.
           
          Analysis Prepared by  :    Rebecca May / B. & P. / (916) 319-3301