DMA Cautions House on Spyware Bill; Seeks Balanced Protections for Consumers and Legitimate Businesses

March 16, 2006 — As lawmakers look for ways to protect Americans from spyware, the Direct Marketing Association (DMA) on Thursday cautioned members of Congress about the need to effectively protect consumers while maintaining the flow of information that has enabled the growth of the online marketplace.

Jerry Cerasale, DMA’s senior vice president for government affairs, testified yesterday on H.R. 964 (the “Spy Act”) before the Subcommittee on Commerce, Trade and Consumer Protection of the House Committee on Energy and Commerce.

The bill prohibits individuals or companies from deceptively installing programs on computers, requires “notice and consent” from users before software is downloaded, and requires downloaded programs to be easily removable. The legislation also increases the authority of the Federal Trade Commission (FTC) to set penalties for violations. Similar legislation passed the House in both the 108th and 109th Congresses.

DMA shares the goal of making the online marketplace secure for both consumers and businesses, and supports efforts to combat the spread of programs that install deceptive, fraudulent, or harmful software on people’s computers without their knowledge.

At yesterday’s hearing, Cerasale said the fight against pernicious programs is ongoing, despite progress made though industry self-regulation. "I don't think it will ever be over," he said. Moreover, he acknowledged that technology companies, marketers, and policymakers alike must be ever vigilant since there is not a "magic bullet" or an all-purpose answer to combating harmful downloads.

In his testimony, Cerasale expressed concerns with specific language in H.R. 964 that could inadvertently limit the interaction of legitimate businesses with customers and slow the growth of the online economy. He warned that the bill’s current language goes beyond regulating “surreptitious surveillance” practices and would apply the notice and consent provisions to all information collection software, including non-identifiable information that is used solely for advertising purposes.

“DMA and its members have long supported the principle of notice and choice surrounding the use of personally identifiable information,” Cerasale told the House panel. “However, requiring notice and consent for all information practices tied to software downloads would result in limiting the consumer’s Internet experience in a manner that consumers ultimately would oppose. The proposed requirements would prove an obstacle to consumer personalization and customization of Web sites as consumers would eventually cancel requests to transmit information, without first learning of the program’s purpose, missing the opportunity to obtain unique and valuable tools that could enrich their online experiences. This would all culminate in a restraint on innovation and the deployment of new, seamless technologies.”

DMA also expressed concerns with the “Good Samaritan” provisions of the bill, which offer protections for companies that provide downloads of anti-spyware software. While praising technological innovation as an important force in combating cybercrime, Cerasale pointed out that the bill’s Good Samaritan provision could be inadvertently anti-competitive, in that it could empower software providers to remove legitimate software from a customer’s computer. “The current framework, under which existing laws are used to hold anti-spyware companies liable for removal of legitimate software, has served as an important check on overreaching of such programs and should be preserved,” said Cerasale.

DMA strongly believes there is a balance that can be reached that protects consumers while ensuring the growth and vibrancy of a secure online marketplace. Cerasale’s message to Congress yesterday was that “while DMA supports the Committee’s interest in combating spyware, we do not believe that a broad regulatory approach to all software downloads and Internet marketing is the appropriate approach to this issue and is not in the best interest of either consumers or business."

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