Tech Daily Dose

FTC Revamps CAN-SPAM Rules ... Yum!

The FTC on Monday approved four new rule provisions under the CAN-SPAM Act, a 2004 mandate that set requirements for those who send commercial e-mail and spelled out penalties for inbox outlaws. The changes are intended to clarify the statute's requirements in an age of sophisticated cyber-scams.

Four topics are addressed in the new rule provisions:

(1) An e-mail recipient cannot be required to pay a fee, provide information other than his or her e-mail address and opt-out preferences, or take any steps other than sending a reply e-mail message or visiting a single Internet Web page to opt out of receiving future e-mail from a sender.

(2) The definition of “sender” was modified to make it easier to determine which of multiple parties advertising in a single e-mail message is responsible for complying with the act’s opt-out requirements.

(3) A “sender” of commercial e-mail can include an accurately-registered post office box or private mailbox established under U.S. Postal Service regulations to satisfy the act’s requirement that a commercial e-mail display a “valid physical postal address.”

(4) A definition of the term “person” was added to clarify that CAN-SPAM’s obligations are not limited to natural persons.

In addition, the FTC's statement of basis and purpose accompanying the final rule addresses a number of topics that are not the subject of any new rule provisions. Click here to read the full press release with more details.

(Spam Photo Credit: Benny Yap via Flickr)

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FTC's 'Secret Shopper' Sting

The FTC released the results of a nationwide undercover sting on Thursday showing the extent to which movie theaters and movie, music, and video game retailers prevent unaccompanied minors from buying tickets to R-rated movies, R-rated DVDs, unrated DVDs of movies that were R-rated in theaters, M-rated video games, and CDs with a parental advisory warning.

The survey found that 20 percent of underage teenage secret shoppers were able to buy M-rated video games, a major improvement from all prior surveys, and down from 42 percent in 2006. While CD and DVD retailers demonstrated some improvement since the earlier survey, roughly half of the 13- to 16-year-olds involved were able to purchase R-rated and unrated movie DVDs and flagged CDs. This shows that retailers need to redouble their efforts, the FTC said.

Although movie theaters have improved since the FTC's 2000 effort, they still sold R-rated movie tickets to unaccompanied children 35 percent of the time, demonstrating no statistically significant improvement in ratings enforcement since 2003, the FTC said. Click here for details.

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FTC Chairman Loves Sports -- And It Shows

Recently anointed FTC Chairman William Kovacic is obviously a sports fan. His breakfast speech to members of the Computer and Communications Industry Association on Wednesday was packed with athletic imagery. On succeeding Deborah Platt Majoras he said: "I feel a bit like the back-up quarterback who has held the clipboard on the sideline, knows the plays… and all of a sudden the starting quarterback is gone and I'm noticing how much faster the game moves when you're out there." He also quoted Hall of Fame Major League Baseball manager Earl Weaver: "It's what you learn after you know it all that counts." Read more about his remarks in CongressDaily's PM edition.

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FTC Hosts Mobile Marketplace Forum This Week

The FTC will host a town hall meeting this week to explore the mobile marketplace and its implications for consumer protection policy. Industry experts, academics, consumer advocates, privacy professionals and government analysts will discuss the use of text messaging and related services as instruments of commerce and consumers' ability to control mobile applications at the two-day event, which begins Tuesday.

Other topics include the adaptation of advertising to mobile devices (including challenges presented by small screen disclosures); applications targeting children and teens; industry best practices in preventing fraud, disclosing costs, and resolving billing disputes; security threats and solutions; and next-generation products and services.

Officials from Google, Nokia, Sprint-Nextel, Verizon, Yahoo, wireless association CTIA, and others will take part in the forum. The full agenda can be found here.

(Photo Credit: KB35 via Flickr)

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FTC Complaint Ends Cross-Border Telemarketing Scam

At the request of the Federal Trade Commission, a federal court in Illinois has entered a final order and default judgment against a group of individual and corporate defendants based in Ontario, Canada, for their role in a cross-border telemarketing scheme involving credit card offers and free cellular telephone offers. The defendants, collectively known as Pacific Liberty, are liable for about $5 million -- the total net sales they made.

The case was brought with the help of the U.S. Postal Inspection Service and the Toronto Strategic Partnership, which consists of the FTC, Competition Bureau Canada and various law enforcement agencies. Canadian regulators filed criminal charges against two of the defendants in September 2007. One got a year in jail and another received a six-month conditional sentence. Both were barred from telemarketing for 10 years. Read more about the case here.

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Markey Weighs In On FTC Behavioral Ad Proposal

Rep. Edward Markey, D-Mass., who heads the House telecommunications subcommittee, commended the FTC on Friday for appropriately recognizing "the pressing need for updated online privacy protections for children that reflect the sophisticated data collection and behavioral targeting practices now used widely across the Internet." Public comments on guidelines proposed by the agency were due at the end of the week.

"Without stronger protections, including a prohibition on collecting data on children’s and teens’ online activities, young Internet users may become unwitting targets of the ‘hidden persuaders’ of the digital age," Markey said. "The evolution of online behavioral advertising since the enactment of the Children’s Online Privacy Protection Act requires a commensurate rejuvenation of privacy safeguards."

Read CongressDaily's preview story about the FTC's proposal here.

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FTC Unveils Annual Report

FTC Chairman Deborah Platt Majoras, who is leaving her post this spring to join consumer products giant Procter & Gamble, issued the agency's 2008 report that describes competition and consumer protection missions and accomplishments. She unveiled the report at an American Bar Association antitrust meeting in Washington.

In the past year, the FTC has "rooted out economic 'villains' by actively pursuing the latest generation of fraudsters working to deceive the public… and those that mock the competitive marketplace by engaging in anticompetitive conduct that raises the specter of increased prices or decreased consumer choice," the report states.

The document highlights the Commission's work in the technology area against spyware and adware programs that are installed on consumers' computers without their knowledge or consent. It also mentions the major crackdown on federal Do Not Call list violators, including six settlements against telemarketers. Read the full report here.

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ValueClick To Pay $2.9 Mil In FTC Case

Online advertiser ValueClick will fork over a record $2.9 million to settle FTC charges that its product claims and e-mails were deceptive and violated federal law. The agency also charged that ValueClick and its subsidiaries, Hi-Speed Media and E-Babylon failed to secure consumers’ sensitive financial information, despite their claims to do so, officials said Monday.

The settlement, filed by the Justice Department on behalf of the FTC, requires ValueClick to clearly and conspicuously disclose the costs and obligations consumers must incur to receive the products it touts as “free” and bars future violations of the CAN-SPAM Act. The settlement also bars deceptive claims about the security of the consumer information collected at its e-commerce Web sites.

This is the FTC’s third case targeting the use of deceptive promises of free merchandise by Internet-based “lead generation” operations, and the commission’s 18th case challenging data security practices by a company handling sensitive consumer information. Read more here.

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FTC Reaches $2.9 Million ValueClick Settlement

Online marketing firm ValueClick has agreed to a $2.9 million settlement with the FTC but did not concede that it broke any laws, according to the company's fourth quarter earnings report. The FTC alleged that ValueClick employed deceptive marketing practices and as part of its deal, the company and commission agreed on a new set of standards to govern its business going forward.

The FTC had been examining ValueClick's lead-generation practices, including its use of advertisements that reportedly falsely promise free gifts to consumers for participating in an activity. "We ended 2007 on a strong note and we are pleased to announce a settlement with the FTC," ValueClick CEO Tom Vadnais said in a press release.

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Leibowitz Explores Facebook, Makes Friends

After covering high-tech policy issues for some time now, one thing I have realized is that when FTC Commissioner Jonathan Leibowitz gives a speech, you can always plan getting some useful information -- and a laugh or two.

During a luncheon keynote on Wednesday at the Congressional Internet Caucus' annual "State of the Net" summit, the former Senate staffer and Motion Picture Association of America executive, made some colorful observations about social networking sites.

"I'm embarrassed to admit that I'm new to social networking," he started off. "When I signed up for Facbeook, I wanted to understand the phenomenon better, but I'm having a lot of fun with it."

So far, Leibowitz said he has reconnected with an old high school friend and has received a "cyber heart" from his wife. He also discovered that his father is a member of the online community and when the younger Leibowitz tried to "friend" the elder, it took him two weeks to respond.

"Lots of it is interesting from a sociological perspective," said the Democrat, who has been a commissioner since 2004. "A Republican who never spoke to me in real life friended me on Facebook and has been trying to get me to be a supporter of [House Minority Leader] John Boehner," he chuckled.

Later in his riff, Leibowitz mentioned that he befriended venture capitalist and Barack Obama campaign adviser Julius Genachowski (who was featured on a panel earlier in the day). "That's not a candidate endorsement," he said, explaining that both are sports enthusiasts and Genachowski "tends to school me on the basketball court."

I just "friended" Leibowitz. Let's see how long it takes him to respond.

Update: Six hours after my post, he "friended" me back. Nice work!

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Former FTC Official: Google Merger Review Was 'Sound'

The FTC's former policy director, David Balto, told Technology Daily on Thursday that the agency's decision not to block Google's $3.1 billion merger with online advertising firm DoubleClick "is sound and shows a really careful evaluation of the potential competitive effects of the merger."

The commission's 4-1 vote, with Pamela Jones Harbour dissenting, was "very well reasoned," despite cries form critics who called for the recusal of Chairwoman Deborah Platt Majoras and voiced anti-competitive and privacy concerns, he said.

"People might advocate that the FTC become the super-regulator of the Internet but that would stifle the kind of innovation that is critical to the growth of these industries," Balto said. The agency took the privacy fears seriously and decided that "the marketplace is going to be the best discipline to make sure Google protects users' privacy."

The European Union's ongoing review of the pairing might be a different story because regulators there have "much broader concerns," Balto said. EU officials have scheduled a January hearing where privacy officials, consumer groups and Web firms will testify.

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Google Merger Critic Requests Congressional Action

The Electronic Privacy Information Center plans to take its complaints about the FTC's approval of Google's multi-billion dollar merger with DoubleClick to Capitol Hill. The agency gave the controversial pairing its blessing on Thursday [see Technology Daily's PM Edition for more].

EPIC's director Marc Rotenberg said he will "bring this matter to the appropriate congressional oversight committees that are responsible for the agency’s funding and statutory authority." His group has also submitted a series of expedited Freedom of Information Act requests to the FTC regarding the commission's review of the merger.

The FTC "had an opportunity to establish the necessary safeguards for personal data and competition that could have allowed a global framework to emerge," Rotenberg said in a statement. "Instead, the commission's failure to act leaves the question of how best to address the privacy and competition implications of this deal to others."

The agency, which he notes, is "funded by taxpayer dollars," has the sole purpose of protecting the public interest. "It failed to do so today in a case that will have far-reaching implications for the Internet economy and the privacy rights of American consumers," he said.

Meanwhile, Sen. Orrin Hatch, R-Utah, told us he still has concerns with the merger "especially as it relates to competition and privacy." "Given the relative youth of the Internet, a merger of this kind is unprecedented and no one can predict how it will affect the industry," he said.

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Tension Builds As Watchdogs Await Google Ruling

The FTC's antitrust review of Google's plan to buy online advertiser DoubleClick could conclude this week, the Center for Digital Democracy's Jeff Chester told us Tuesday afternoon. His group and the Electronic Privacy Information Center have repeatedly urged commissioners to take privacy concerns into consideration as they deliberate.

Chester, who also unsuccessfully asked Chairwoman Deborah Platt Majoras to recuse herself from the review of the $3.1 billion deal because of her ties to the law firm handling the case in Europe, said a decision "is imminent." [See related Technology Daily story here].

"They need to act responsibly here but I feel that the commission is trying to duck the issue," he said. CDD and EPIC have claimed that if Google and DoubleClick pool their Web resources, the company would be able to construct intimate portraits of its users' behavior.

Meanwhile, the European consumer group known as BEUC wrote to regulators there following up on concerns expressed in June. The Tuesday letter raised "additional risks to consumer welfare ... in particular with respect to the price, degree of innovation, quality, and selection of online products and services" available to consumers post-merger.

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