Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
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In the past, companies had to rely on IT staffs to write new code for an opt-in feature, then tie customer opt-in activity to a marketing campaign system. “Now this can all come pre-built into business-to-consumer e-commerce software,” Powell says, noting that a software package offering this integration can run about $500,000, compared to the $1-$2 million it used to cost.
Although raising the level of e-mail marketing is helping legitimate marketers stay legitimate, experts caution that the battle against spam may be long and difficult. The challenges can be seen in the mixed reviews given the CAN-Spam Act itself, which critics say may actually lead to an increase in unsolicited e-mail while having a limited effect on halting spam.
“I think the law will be ineffectual, at least in the short run,” says Scott Dailard, Washington, D.C.-based attorney who specializes in marketing and advertising law and represents major retail chains for law firm Dow, Lohnes & Albertson PLLC. CAN-Spam is actually encouraging more marketers to send unsolicited e-mail, Dailard says. “The law created a loophole for legitimate marketers to send e-mail that people don’t want,” he says. “Because the law created a national opt-out standard, it’s not illegal to send e-mail unless a marketer is specifically told by recipients that they don’t want its e-mail.” He adds that the federal law has also emboldened marketers to send unsolicited e-mail because it lacks a provision allowing consumer-initiated class-action lawsuits.
Before the CAN-Spam Act went into effect, Dailard adds, many legitimate marketers were less inclined to send bulk e-mail in nationwide campaigns, because it was too difficult to keep abreast of some 36 state anti-spam laws. CAN-Spam supersedes state laws.
Moreover, many of the worst spam offenders are unlikely to be fined, apprehended or even discovered under efforts of CAN-Spam, Dailard adds, because of their ability to hide their base of operations and the increasing tendency of many to operate overseas. “Spammers have been operating in disregard to 36 state statutes, so there’s no reason to believe they would fall into line with new federal standards,” he says.
Adding to doubts over the effectiveness of CAN-Spam, at least in the near term, is a lack of awareness about the law and its provisions among small companies. Interland Inc., provider of web hosting and other online services for small businesses, reported last month that while 85% of small companies it surveyed use e-mail to communicate with customers, 62% had never heard of CAN-Spam or were not aware that it affected their business.
Much of this ignorance about the law stems from the way it was introduced during the retail industry’s busiest season last fall, some observers say. “CAN-Spam came out at the height of the holiday shopping season, so many retailers didn’t even know about it,” says Jordan Ayan, CEO of Subscriber Mail LLC, an e-mail service provider.
The FTC is charged with CAN-Spam enforcement, though building cases can take time because of the way spammers try to hide their identities, Goodman says. The government is expected to appropriate $12 million in new funds for enforcing CAN-Spam along with other measures pertaining to Internet fraud, says a spokesmen for Sen. Ron Wyden (D, Ore.), who introduced CAN-Spam along with Sen. Conrad Burns (R., Mont.). In addition, the FTC’s Bureau of Consumer Protection is dedicating its largest enforcement team to CAN-Spam and cooperating with a newly formed Spam Task Force, which coordinates investigation efforts by federal, state and international law enforcement groups.
One of the ways the FTC looks for leads in spam cases is by tracking spam messages forwarded by consumers to what the FTC calls its “spam refrigerator” database, which can be reached at UCE@FTC.gov. The law applies regardless of the volume of e-mail a marketer sends. “A single message can violate the act and lay the foundation for a law enforcement action,” an FTC spokeswoman says.
Proponents of CAN-Spam say it’s designed to use legal recourse to its best advantage. It provides, for instance, for prosecution of the company that is marketing something via spam as well as for the companies that transmit the supposed spam. Many spammers attempt to shield themselves as the source of spam by hiring a third-party transmitter, but CAN-Spam clarifies that all parties that “initiate” spam are liable. “The definition of ‘initiate’ is broad enough to capture both the transmitter and the marketer,” the FTC spokeswoman says.
A wider net
While many spam transmitters hide their home network servers by routing messages through a series of servers, identifying and finding the actual marketer can be easier and a more effective means of enforcement. “The real advantage of the CAN-Spam Act is that it doesn’t limit enforcement to one group or another,” Goodman says. “The act can go after the spammer or the marketer; anyone involved in spam could be subject to a law violation.”
CAN-Spam isn’t the only solution to spam, however. Several technical approaches are under development, although, as with CAN-Spam, none is expected to act as a stand-alone solution. Address verification tools, including CallerID from Microsoft Corp. and Domain Key from Yahoo Inc., are being designed to work within e-mail management systems and filters to authenticate senders’ e-mail addresses. Each tool operates differently. Yahoo’s Domain Key system is being designed around the use of encryption keys, or mathematical algorithms used to record and protect the identities of e-mail senders. Before an ISP would pass incoming e-mail to a subscriber’s inbox, it would use a key provided by a marketer to match the server sending each message with the sender’s information registered with the Internet-based Domain Name System.
CallerID requires e-mail marketers to publish their e-mail-sending policies, including the types and identities of servers they use, in the DNS. Before an ISP will accept incoming e-mail, it would check the source of the e-mail against the information registered in DNS. “Caller ID will help get rid of illegitimate marketers because one of the appealing things about e-mail to spammers is that they can remain anonymous,” says Anderson of Forrester.