Comments and Recommendations concerning the Proposal for a European Parliament and Council Directive on certain legal aspects of electronic commerce in the internal market

Unsolicited Commercial Email imposes costs on the recipient rather than the sender, is a major cause of consumer dissatisfaction, and undermines the consumer confidence which is vital to the development of Electronic Commerce. The private-sector ban should be reflected in public legislation. It is recommended that the current text of Article 7 of the proposed Directive be struck in its entirety and be replaced with language whereby email is included with those means of contact requiring prior consent of the recipient as set forth in Paragraphs 12.1 of Directive 97/66/EC (Data Protection and Telecommunications) and 10.1 of Directive 97/7/EC (Distance Contracts).

1. Introduction
2. Consumer resentment
3. Labeling and Filtering
4. Current Practice
5. Comparison with Other Forms of Advertising
6. Conclusions and Recommendations

1. Introduction

The growth of electronic commerce in the Internal Market, which is the stated goal of the proposal, may well be hindered by what appear to be certain defects in the final draft. These defects concern the question of commercial communication by email, in particular Unsolicited Commercial Email (UCE, colloquially known as "spam"). Unsolicited Commercial Email causes a great deal of resentment and dissatisfaction on the part of consumers, and does much to undermine confidence. This dissatisfaction and lack of confidence could have a negative effect on the development and growth of electronic commerce.

2. Consumer resentment

Internet Service Providers cite Unsolicited Commercial Email as the most frequent cause of customer dissatisfaction. According to preliminary findings of a survey carried out by the Internet Law and Policy Forum which were stated to the House of Representatives Subcommittee for Telecommunications, 94% of Internet Service Providers in the United States reported that UCE "irritates their subscribers". As more new end-users ("recipients of Information Society services") are connected, this trend will only continue. Informal surveys (such as one recently carried out by World Research of San Jose, CA, USA) suggest that up to 90% of Internet users are opposed to the practice of Unsolicited Commercial Email.

Resentment by consumers of what is considered to be an unfair practice will ensure that it is never accepted by them, even if it were permitted by the authorities. The root causes of this consumer resentment are 1) cost-shifting and 2) mailbox flooding.

2.1 Cost shifting

Nearly all the costs of replication, transmission, intermediate storage, and eventual download are borne by the recipient of the message rather than the sender. This is accepted for private correspondence among individuals, or for mailing list traffic to which the recipient has subscribed, but is resented as an imposition when the message is not solicited.

2.2 Mailbox flooding

The structure of the Internet is such that cost factors proportional to distance are largely removed. It is possible to send an email to every Internet subscriber in Europe in a few hours, something that would be impossible to do by any other medium. As more and more senders each attempt to broadcast to even more recipients, there is a very real prospect of recipients' mailboxes being chronically full, leading to further messages being refused. Storage space required for electronic mailboxes has to be allocated to the recipients by the provider, so that each recipient gets a finite amount of storage. Should there be no room for the incoming message, it will be refused and returned to the sender. Thus it is that, although the problem of channel occupancy as with telephone or telefax is not directly present, the cumulative effect of a flood of unwanted messages can have very similar results, where wanted communications are blocked by unwanted ones.

3. Labeling and Filtering

Member State legislation pursuant to Article 7 could be such that a label in the body of the message would be in conformance, even though this does not appear to be the intention stated in the explanatory notes. What the explanatory notes imply (and the actual Article neither expresses nor implies) is that some form of electronic filtering or sorting can take place.

The overwhelming majority of private individuals and small firms which receive Internet services ("recipients") rely on a non-permanent connection via a telecommunications provider. These connections are usually charged according to time and distance, whereas the Internet service may be flat-rate. Thus, the choice of where filtering takes place assumes some importance, in that it directly affects the costs and continued usefulness of the mailbox. There are two possibilities 1) recipient-side, and 2) provider-side.

3.1 Recipient-side Filtering

Here, the full costs associated with the message, including download, have already been incurred. The problem with the mailbox filling up at many times the expected rate is not addressed. The only possible saving is the recipient's time in not having to search for private communications in what could be hundreds of messages.

3.2 Provider-side Filtering

Here, the message must pass through the filter before being placed in the mailbox. The problem of mailbox flooding can be avoided, and costs of downloading will not arise. In order to function correctly and not prove too burdensome, the label must be in the "headers" of the message and not the "body".

Discussions with people responsible for maintaining networks suggest that while labeling schemes can be developed, they are not all that trivial, and the various email programmes may have to be altered in order for labels to be applied and handled correctly. This will involve costs, which will ultimately have to be borne by the recipients.

Providers' hardware and software can be upgraded to handle the increase in traffic brought about by Unsolicited Commercial Email, but ultimately the costs will also have to be borne by the recipients.

4 Current Practice

Current practice in the private sector is 1) to ban the sending of UCE, and 2) widespread use of "opt-in" lists.

4.1 Private-sector bans and restrictions

The current practice of most Internet Service Providers in Europe is to include clauses in their Terms Of Service/Acceptable Use Policies which completely forbid the user from sending unsolicited "massmail" of any kind. This is because of extra administrative overheads involved with handling non-deliverable mail and dealing with complaints. Sanctions applied vary from warnings to termination of services to assessing "clean-up" fees in order to compensate for the administrative time expended in dealing with a "massmail incident".

Advertisers who try using UCE as a medium soon learn that this course is not recommended. They quickly get inundated with complaints from angry users who express their dissatisfaction in a variety of ways. This is only to be expected when someone tries to misuse a two-way medium for one-way communication. Legitimate companies will take this lesson seriously and refrain from further use of UCE, but less legitimate operators will use a variety of subterfuges to disguise the origin and attempt to circumvent their own Internet Service Provider's TOS/AUP and by sending the UCE via a more circuitous route: this has the effect of passing the burdens onto third parties who would otherwise not be involved.

The reaction of most Internet Service Providers is to suspend or terminate user accounts associated with unsolicited massmailing incidents. Those providers who do not "rein-in" their users become subject to peer pressure from their colleagues and associates. This is because the Internet relies on the cooperation of all parties to function. Parties seen to be uncooperative will, if need be, be excluded as other parties refuse to carry the non-cooperator's traffic. This kind of measure is undertaken by administrators of Internet Service Providers in order to guarantee the continued functioning of their own networks and to protect their own subscribers.

4.2 "Opt-in" lists

These are lists which are maintained for the purpose of distributing information in the form of email broadcast to all the subscribers on the list. Additional administrative burdens on the Internet Service Provider are, in general, minimal as the list operator ensures the continued validity of the address list (removing addresses which are undeliverable).

Advertising newsletters can also be sent by means of "opt-in" lists to which the recipients have explicitly subscribed. Such email is, by definition, solicited and therefore perfectly legitimate. Further labeling (such as would be required by Article 6 of the proposed Directive) is superfluous. The recipient knows, or should know, to what he or she has subscribed. Such lists are already in widespread use to the great satisfaction of all parties concerned: the marketers, the Internet Service Providers, and the recipients.

5 Comparison of UCE with other forms of advertising

Bulk/Broadcast email is unique as a potential advertising medium because most of the costs are borne by the recipient. For other broadcast media, be it print or electronic, the advertiser pays a significant portion of the production costs of the journal or programme. The recipient receives an indirect benefit from the transaction in that the programme or journal would otherwise either not have been available at all, or available at a very high cost.

There are no such indirect benefits with Unsolicited Commercial Email. There are only direct and indirect costs. There have already been cases of Internet Service Providers justifying rate increases by citing the additional costs imposed on them by the flood of Unsolicited Commercial Email.

6 Conclusions and Recommendations

The unfair distribution of the cost burden between advertiser and recipient will ensure that Unsolicited Commercial Email is never willingly accepted by recipients and consumers. Government would do well to follow the example of the private sector and ban Unsolicited Commercial Email, and permit the existence of Solicited Commercial Email without unnecessary regulations concerning labeling.

The growth and development of Electronic Commerce can best be fostered in an environment of consumer confidence, something that practices associated with Unsolicited Commercial Email have done much to undermine. A clear ban of unethical and promotion of ethical practices will do much to build consumer confidence, and can only be to the benefit of electronic commerce in general.

It is therefore recommended that the current text of Article 7 of the proposed Directive be struck in its entirety and be replaced with language whereby email is included with those means of contact requiring prior consent of the recipient as set forth in Paragraphs 12.1 of Directive 97/66/EC (Data Protection and Telecommunications) and 10.1 of Directive 97/7/EC (Distance Contracts).

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The European Coalition Against Unsolicited Commercial Email is an all-volunteer, ad-hoc grouping of Internet users and professionals dedicated to bringing about an end to an unethical practice by technical and legislative means.