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NY AG Targets Spyware and Adware Georgia Enacts Criminal Spam Law and Gift Card Law

NY AG Targets Spyware and Adware Georgia Enacts Criminal Spam Law and Gift Card Law

New York Attorney General Eliot Spitzer filed suit against Intermix Media, a leading internet marketing company, alleging that the company deceptively installed spyware and adware programs on consumers’ computers without providing meaningful notice. The Attorney General alleged that this violates state false advertising and deceptive business practices laws.

Intermix owns and operates a wide range of web sites that advertise free software available for download, including screensavers, screen cursors and games. The Attorney General claims that these free programs are bundled with various ad-delivery programs and installed on consumers’ computers, without providing adequate notice to consumers. (The ad-delivery programs include those that display pop-up ads, install toolbars, and redirect web sites.) The AG also claimed that Intermix went to great lengths to protect the spyware and adware: the programs were hidden in unlikely locations on the computer, could not be removed through a computer’s “Add/Remove” function, and if deleted the programs reinstalled themselves.

The AG seeks to enjoin Intermix from installing adware and spyware onto consumers’ computers as well as disgorgement of profits and penalties. New York is considering a spyware bill; spyware bills have been introduced in several states and Congress, and there are existing laws in California and Utah.

Georgia enacted the Slam Spam E-mail Act which provides jail time and fines for initiating a false or misleading commercial email that originates, travels through, or is received by a computer located in Georgia. The bill took effect on April 19, the date it was signed by the governor.

The new law makes it a felony, punishable by $50,000 or 5 years in jail or both, to send false or misleading commercial emails if more than 10,000 messages are sent in any 24-hour time period, more than 100,000 messages are sent in a 30 day period, or more than 1,000,000 messages are sent in any one-year period.

It is also a felony if over $1,000 in revenue is generated from a single false or misleading commercial email or more than $50,000 in revenue results from all false or misleading commercial email messages transmitted to any single Internet service provider or its subscribers. And, it is a felony to employ or use a minor to send false or misleading commercial email.

A false or misleading commercial email includes email with 

95 a subject line that is intended to mislead a recipient about a material fact regarding the content or subject matter of the email;

95 header information that fails to accurately identify the computer used to send the email;

95 header information that is altered so that the recipient or email service provider cannot determine who initiated the email;

95 header information that uses or references, without authorization and with intent to mislead, a name, trademark, domain name, phone number or other third party information that would cause a recipient to believe the third party sent, endorsed or authorized such email;

95 header information that contains false or fraudulent information regarding how to contact the initiator; and

95 false statements that the email was sent because the recipient consented to receive it or because of a preexisting or current business relationship.

The criminal provisions of the law will be enforced by the Attorney General and district attorneys, while ISPs and domain name owners can file civil suits under the law.

Georgia also enacted SB 13, the Gift Card Integrity Act. The bill was signed into law on May 9 and takes effect October, 1, 2005. The Act amends Georgia’s consumer protection statute by requiring certain disclosures on the card and/or the packaging of the card.

Specifically, the Act requires that issuers of gift certificates, store gift cards, and general use gift cards

(1) include the terms of the card in the packaging that accompanies the card at the time of purchase, as well as making such terms available upon request, and

(2) conspicuously print the expiration date, if applicable, on the card and conspicuously print the amount of any dormancy or nonuse fees on the card or on a sticker affixed to the card.

General use gift card means a plastic card or other electronic payment device which is usable at multiple, unaffiliated merchants or service providers; is issued in an amount which amount may or may not be, at the option of the issuer, increased in value or reloaded if requested by the holder; is purchased or loaded on a prepaid basis by a consumer; and is honored upon presentation by merchants for goods or services.

Store gift card means a plastic card or other electronic payment device which is usable at a single merchant or an affiliated group of merchants that share the same name, mark, or logo; is issued in a specified amount and may or may not be increased in value or reloaded; is purchased on a prepaid basis by a consumer in exchange for payment; and is honored upon presentation for goods or services by such single merchant or affiliated group of merchants that share the same name, mark, or logo.

Other developments to watch. . .
Commercial faxes – The Senate committee on Commerce, Science and Transportation approved Senate Bill 714 which would reverse the FCC ruling that would require marketers to have prior written consent before sending a commercial fax even if the marketer has an established business relationship with the recipient. The FCC’s new rule is scheduled to take effect July 1, 2005, unless Senate Bill 714 is enacted and takes effect before then. The status of the bill is online at

Federal and state telemarketing rules – 33 trade groups have petitioned the FCC to rule that states cannot regulate interstate telemarketing calls. The trade groups want state telemarketing laws that regulate interstate calls to be pre-empted by federal telemarketing laws to make compliance easier.

This client alert is a publication of Loeb & Loeb and is intended to provide information on recent legal developments. This client alert does not create or continue an attorney client relationship nor should it be construed as legal advice or an opinion on specific situations.

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