OFFICIAL TRANSCRIPT PROCEEDING FEDERAL TRADE COMMISSION MATTER NO. P024407 TITLE SPAM PROJECT PLACE FEDERAL TRADE COMMISSION 600 PENNSYLVANIA AVENUE, N.W. WASHINGTON, D.C. 20580 DATE MAY 1, 2003 PAGES 1 THROUGH 324 FTC SPAM FORUM -- DAY TWO SECOND VERSION FOR THE RECORD, INC. 603 POST OFFICE ROAD, SUITE 309 WALDORF, MARYLAND 20602 (301)870-8025 1 1 FEDERAL TRADE COMMISSION 2 I N D E X 3 4 Economics of Spam Page 5 5 Blacklists Page 111 6 Best Practices Page 183 7 Wireless Spam Page 257 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 For The Record, Inc. Waldorf, Maryland (301)870-8025 2 1 P R O C E E D I N G S 2 - - - - - 3 MR. HUSEMAN: We want to go ahead and get 4 started this morning. Thank you all for arriving back 5 for day two. 6 Before we begin, I just want to make a few 7 housekeeping announcements. Remember, if you have a cell 8 phone or other device that beeps, make sure to turn it 9 off, please. 10 Remember that the exits are directly behind you 11 and then out towards the front where you came in. 12 Again, we would like to thank the companies who 13 have provided us refreshments this morning. Those 14 include AOL, AT&T Wireless, EarthLink, ePrivacy Group, 15 Microsoft, SpamCon Foundation, Words to the Wise and 16 Yahoo!. 17 Before we begin day two, I would like to 18 introduce Commissioner Mozelle Thompson, who will start 19 off the day by giving us introductory remarks. 20 Commissioner Thompson became a Commissioner at the FTC in 21 1997. He's Chairman of the OECD's Committee on Consumer 22 Policy, where he leads the United States delegation, and 23 during his time at the Commission, he has been very 24 involved in technology, privacy and other information 25 practices, including the issue of Spam, and he's done a For The Record, Inc. Waldorf, Maryland (301)870-8025 3 1 great deal of important work in those areas. 2 And, just specially, we would also like to 3 thank him from the perspective of putting on this forum. 4 He has provided us with a great deal of valuable advice 5 and input in making this event possible. So, we would 6 like to thank him in that regard as well. 7 I now introduce Commissioner Mozelle Thompson. 8 (Applause.) 9 COMMISSIONER THOMPSON: Good morning. Welcome 10 all of you, and for those of you from out of town, 11 welcome to allergy season in Washington. 12 I wanted to tell you how happy I am to see you 13 all here at the second day of the FTC's Spam Workshop. 14 As you know, my name is Mozelle Thompson, and I'm one of 15 the Commissioners here, and I hope that you -- first of 16 all, I think you should give yourselves a round of 17 applause, because -- for just being here, attending and 18 participating, because I think that in the future we'll 19 look back on these three days as one of the most 20 significant events, international events that deals with 21 the subject of Spam. So, I want to thank you all for 22 being here. 23 (Applause.) 24 COMMISSIONER THOMPSON: You know, one of the 25 principal purposes of having this workshop, in case it For The Record, Inc. Waldorf, Maryland (301)870-8025 4 1 wasn't that clear, is to provide the Commission with the 2 best and latest information about Spam and the problems 3 of unsolicited e-mail and that I hope all of you will 4 learn as much as I expect to learn from the events of 5 these three days. 6 Now, yesterday we attempted to define what Spam 7 is, other than the fact that it's a very popular meat out 8 in Hawaii, and I think that that definition was a diverse 9 definition that we heard yesterday when we start to 10 consider what types of communications we should put under 11 the title "Spam" and what benefits and problems they pose 12 for consumers, businesses and governments. We also heard 13 from experts about the mechanics of how Spam works. 14 Now, today we'll continue our work by 15 discussing the economics of Spam. I hope after this 16 morning, we will all become more knowledgeable about the 17 real costs of unsolicited commercial e-mail. And these 18 costs go well beyond the simple cost of sending a 19 message. They also include the costs of individuals 20 reading and disposing of unwanted e-mail and the cost of 21 carrying Spam on a network as well as potential lost 22 opportunities that would -- of bandwidth that could be 23 provided for perhaps more useful and important purposes. 24 We'll also talk about the market and 25 competitive forces that can affect the value we ascribe For The Record, Inc. Waldorf, Maryland (301)870-8025 5 1 to Spam. In thinking about all these costs, however, I 2 ask that you also consider the larger costs to the 3 marketplace to the extent that unsolicited e-mail can 4 undermine consumer confidence and feed public distrust of 5 the internet. 6 Finally, we will finish today's sessions by 7 looking forward at best practices and the next frontier, 8 or what many would say is already the current frontier, 9 the wireless marketplace. 10 So, to assist in our discussion, I'm reminded 11 that this might be an illustration of the old adage what 12 the problem is depends on where you sit, and I'm sure 13 that our panelists today will give us a lot of insight as 14 to how we should think about Spam. 15 So, thank you very much for being here, and 16 without further delay, we have our panel. 17 (Applause.) 18 MR. FRANCOIS: Thank you, Commissioner 19 Thompson, for not only your remarks but for your efforts 20 in the FTC's work on Spam. 21 My name is Renard Francois. I'm a staff 22 attorney with the Division of Marketing Practices at the 23 Federal Trade Commission and also pitching in a little 24 bit with the Spam Forum. So, we have a distinguished 25 panel here, and as Commissioner Thompson said, we are For The Record, Inc. Waldorf, Maryland (301)870-8025 6 1 going to talk about the costs and benefits of Spam, and 2 part of this panel, what we're going to do is talk about 3 dollars, but we're also going to expand the term of 4 "cost" to include the potential impact on e-mail 5 marketing and the potential impact on e-mail as a means 6 of communication, but we'll also include in the 7 definition of "cost" opportunity costs and loss to a 8 business' reputation that unsolicited e-mail may have. 9 One of the things that we recognized yesterday 10 was -- we focused on Spam and a lot of it on falsity and 11 people who intentionally manipulate systems to try and 12 maintain an illusion of anonymity, try and maintain 13 anonymity by falsifying where the e-mail is coming from, 14 but one of the things that we struggled with in our 15 conference call and the issues that we'd like to at least 16 be aware of throughout the panel is that it's not just 17 deceptive Spam that affects many of these panelists, and 18 it's not just deceptive Spam that affects e-mail as in 19 e-mail marketing and as a means of communication, but it 20 is the volume as well. 21 So, to some degree, I don't know if we are 22 going to get into a lot of distinctions between 23 legitimate bulk marketers and bulk marketers who engage 24 in deceptions and falsity. 25 One of the things that we want to start out For The Record, Inc. Waldorf, Maryland (301)870-8025 7 1 with that I've sent all the panelists is Mail Shell, a 2 company who was kind enough to forward us a study that 3 they had done, and copies of the study are outside in the 4 back on the table, and I think there's also a 5 representative here who may answer any questions that you 6 may have about it, but they did a Spam Catcher Attitude 7 Survey, where they surveyed 9,000 -- approximately 9,321 8 individuals about their attitudes towards Spam, and out 9 of the 1,118 responses that they received, I think one of 10 the things that we'll start the conversation with is, 11 that leapt out at me, is that 8 percent of people that 12 use disposable e-mail addresses, which we presume are 13 somewhat tech-savvy and maybe not the everyday, average 14 consumer, but approximately 8 percent of them have 15 indicated in the study that they have made purchases 16 based on the Spam that they receive. And I just want to 17 throw that out to some of the panelists to see what their 18 responses and reactions are and probably direct it 19 specifically toward Mr. DiGuido, CEO of Bigfoot 20 Interactive, and Ms. Laura Betterly as well, and then 21 probably Laura Atkins. 22 MR.
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