Email Spammers Have Been Taking Advantage of Consumers and Providers for Decades. Has the CAN-SPAM Act of 2003 Improved the Problem, or Made it Worse?

Posted By: Jaren Martineau

Emails

By PCL-BO [CC-BY-SA-2.5], via Wikimedia Commons

Large volumes of spam email messages have been congesting internet servers and email boxes now spanning multiple decades. There have been multiple solutions proposed in order to address this challenge. In 2003, the federal government adopted the CAN-SPAM Act in an effort to address the problem. What has been the result? Has the Act had a positive effect on the problem?

The Problem of Spam

Spam has been a thorn in the side of email users and providers even prior to the time that internet and email use began to become popularized in the early 1990’s. Everyone who has used email services for more than a nominal amount of time is familiar with these questionable and often less than honest email marketing messages that are continually being spread about on the internet. The ratio of spam to ham (good and desirable email messages) has risen over the years, with spam making up the vast majority of all email messages in circulation. Reports as of 2014 show that spam makes up approximately 87%-90% of all email messages sent.

Spam has many negative or even harmful aspects aside from the mere annoyance factor of ongoing marketing messages. Because of the sheer volume of spam email messages, they result in a much more ineffective use of an end user’s email account. As people sort through their email messages they have to sort and distinguish between good messages and junk email messages. Sometimes, end users mistakenly don’t read the good email messages either because their spam filters may have mistakenly flagged them as spam, or because they get lost among all of the other unwanted email messages. Spam messages are also often associated with email scams and malware. They often contain attachments containing viruses, pornography, or phishing scams. Spam wastes computer resources such as hard drive space, bandwidth, and processing power of both personal computing devices as well as the resources of internet infrastructure and email providers. In fact, the cost to the United States economy is estimated to be at least $20 billion annually.

Legal and Technical Protections

In order to protect consumers and businesses from the negative aspects of spam emails, there have been both legal and technical measures that have been implemented. On the technical side, great time and effort has been spent by email providers to design and implement both spam filtering and spam blocking methods and technologies. Providers have created and maintained email Real-time Blackhole Lists (RBL), where email providers are able to report upticks in spam coming from specific IP addresses and ranges of IP addresses on the internet which then alert and permit other email providers to proactively block incoming email messages from those sources. Great effort has also been expended on technologies that filter incoming email messages based upon characteristics of the actual email messages themselves such as the subject lines, email headers, and contents of the message body itself. These strategies have been remarkably effective, but not foolproof. Spammers often come up with new ways to craft their email messages so that they bypass these filters, causing the maintainers of spam filtering software to continually have to adjust them in response to new spam techniques in an ongoing game of cat-and-mouse.

Legal solutions to spam have evolved over time. One of the earliest legal theories used to protect consumers and email providers from spam was the common-law doctrine of trespass to chattels. Trespass to chattels is defined as “intentionally dispossessing another of the chattel or using or intermeddling with a chattel in the possession of another.” Chattel refers simply to the personal property of another. As previously explained, when spammers send out their email messages, they “intermeddle” with the email servers, bandwidth, processing power, and disk space of others. The trespass to chattels doctrine imposes liability upon those who violate property rights in this way. This form of legal protection was used successfully in the case of CompuServe Incorporated v. Cyber Promotions, Inc. in 1997.

Following this case, and the continued increase in the volume of spam, states began to work on passing their own legislation in an attempt to protect consumers from spam. The legislation that was being considered by states varied, with some of the most restrictive laws on spam being proposed by the state of California. In an effort to harmonize the legislative efforts and to prevent some states from potentially being overaggressive in the matter, in 2003 the federal government passed the Controlling the Assault of Non-Solicited Pornography And Marketing Act (CAN-SPAM Act).

The CAN-SPAM Act

The CAN-SPAM Act, primarily enforced by the Federal Trade Commission (FTC), puts requirements on email marketers in several ways. The Act requires that email marketers list the physical or mailing address of the business that is being marketed by the message in a visible location within the email message. The Act requires that the email message contain a working unsubscribe option and that the headers of the message are not forged in an attempt to hide the true origin of the message. The Act further requires that adult content be specifically marked as such and that advertisements must also be declared. Additionally, the Act prohibits abusive email practices such as sending emails through open relays, email harvesting, and fraudulent email messages. The Act provides civil liabilities as well as criminal liabilities for more egregious practices.

Following the passage of the CAN-SPAM Act, there were several high profile court cases with large awards being levied against spammers, although the volume of spam appears to have continued to rise following its passage. There are indications that the level of pornographic email messages that are in circulation has been greatly reduced.

There are many reasons to criticize the CAN-SPAM Act. Some argue that the Act does nothing more than to legalize spam, calling it the You-Can-Spam Act. Others criticize the Act because it preempts state law, preventing states from enacting stricter spam regulations than what is offered by the CAN-SPAM Act. And yet another criticism is that the weakness of the CAN-SPAM Act has resulted in unintended consequences as other countries have sought to enact strict spam regulations in absence of the United States taking the lead. Could it be that consumers and businesses would be better off in absence of the CAN-SPAM Act?

Market Failure/Government Failure

One of the underlying factors that contribute to the overall problem of spam is that spammers do not have to pay for the full costs of sending out their email messages. Spammers are able to shift a large part of the actual cost of their email marketing campaigns upon others. For example, in comparison with regular postal mail marketing campaigns, marketers have to pay for the postage in full prior to sending their marketing mail. Because snail mail marketers have to pay for the actual cost of postage, the cost limits the potential profitability of their campaigns and limits the number of pieces of marketing mail that can profitably be sent. Email, on the other hand, costs practically nothing to send. Email marketers pay for the cost of designing their email messages and campaigns as well as for their own internet connections, but the remainder of the costs are borne by other internet providers, email providers, and consumers. It is estimated that although the efforts of spammers result in only $200 million per year in gross revenues, the costs of spam to the US economy alone is estimated to be $20 billion annually. This is an example of a negative externality which results in market failure. Because email marketers do not bear the full costs for their activities, but they do receive the benefits from their activities, the market produces more spam than is optimal or than it would otherwise produce.

Often, one of the solutions that is put forth to solve the problems that arise from market failure is government regulation. But government regulation can sometimes result in a failure to appropriately allocate resources in the economy as well, sometimes causing an even worse misallocation than the market failure itself. When government action results in a misallocation of resources, it is called government failure.

The volume of spam in email systems is certainly the result of market failure that is caused by negative externalities. But is the CAN-SPAM Act a government failure? It appears that it may be. Because the Act does not protect against the volume of spam—the result of the market failure—and it also does not make any significant changes to cause spammers to have to bear more of the costs of their activities, the CAN-SPAM Act seems to support a continuation of the market failure, rather than to correct it. Furthermore, because of its preemptive effect, it also prevents states from effectively trying to solve this market inequity in other ways. To further compound the problem, the Act does not give an individual standing to sue spammers under the Act, reserving standing for certain government organizations such as the FTC or for “internet access service” providers. The combination of these factors seems to support the idea that the CAN-SPAM Act is not an effective use of government regulation to solve a market failure.

Conclusion

Email spam is a continuing problem. Although the federal government passed the CAN-SPAM Act in an attempt to regulate spam emails, the regulations have not made significant strides towards solving the market failures that contribute to spam emails. Because the Act does not improve the underlying factors contributing to spam emails, and in some instances prevents other forces from acting in a way that could potentially ameliorate the situation, the CAN-SPAM Act seems to do more harm than good. In order to better protect consumers and businesses, the CAN-SPAM Act should be reexamined in order to make it more effective, or it should be abandoned and replaced with an alternate spam regulatory regime.

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