Complete Comments (with Images) available at Here
Comments on PL 2009, C. 230 (LD 1183),
An Act to Prevent Predatory Marketing Practices against Minors
Joint Standing Committee on Judiciary
Maine State Legislature
October 9, 2009
NetChoice welcomes this opportunity to comment on the Act to Prevent Predatory Marketing Practices against Minors (hereinafter the “Act”).
NetChoice is a national coalition of online businesses and trade associations who share the goal of promoting choice, commerce, and convenience on the Internet. Our members include the nation’s leading platforms for Internet communities and e-commerce, along with major trade associations and several thousand small online businesses. NetChoice works in Washington DC and in many state capitals to oppose regulatory barriers to online services. At the same time, NetChoice advocates for aggressive enforcement and new regulations against fraud and deception that undermine consumer trust and confidence in online information and commerce.
We focus our comments on how, if operative parts of this law are preserved by the Legislature, the Act will have negative impacts on Internet users in Maine, a predictable consequence because online services would restrict their content to avoid the risk of prosecution and private lawsuits.
For the time being, these negative consequences have not occurred, because the state is not enforcing the Act and the Federal District Court issued a strong warning against private lawsuits. This Joint Standing Committee should follow through on the Court order and repeal the Act. Then it can consider enforcement action and possibly new legislation to address concerns about marketing to minors.
The Act Broadly Impacts Internet Services & Harms Maine Residents
The Act creates statutory damages liability for websites that collect, transfer for any purpose, or use information from minors. Since no online service can know who’s sitting at a computer, or with any certainty what state they are from, much less their age, this threat will effectively force online services either to try to screen out Maine residents altogether or to try to determine the age of any user who’s potentially a Maine resident. For services that really want to reach minors, the Act requires verifiable parental consent before obtaining any personal information or a very wide range of “health-related information” information that may be used even in part for marketing or advertising.
But the fact is that in the online channel, age determination and parental consent are notoriously difficult to do and highly unreliable when they are done. There is simply no reasonably available mechanism to determine and verify the identity, age, and parental relationships of minors who seek to register for online services. Moreover, online services will be reluctant to deploy age and consent mechanisms when the inherent shortcomings of these mechanisms will still leave them vulnerable to class action lawsuits seeking statutory damages and attorney’s fees. As a result, online services will have to find ways to prevent Maine residents from viewing their content or using their services.
Below we describe several examples of how the provisions of this Act could impose significant prosecution and lawsuit risks for online services that presently offer valuable information and services to Maine residents of all ages.
The Act Harms Online Platforms and Services supported by Advertising
We are now witnessing explosive growth in Web 2.0 services, where users can post their own content and participate in online communities. Web 2.0 services like Twitter, Facebook, Wikipedia, online forums, and blogs have become extremely popular, especially among younger users. The services and platforms that make Web 2.0 possible invest heavily in software development, servers and storage, and high-speed bandwidth. In addition, these services must expand their customer support and legal teams to respond to complaints when user-generated content crosses the line of acceptable behavior.
Online services and platforms rely almost entirely on advertising revenue to pay for their investments. Ad-based sites are often viewed as being “free”—and while consumers can access content at no charge, there are costs that must be recouped from advertisers. In many instances, consumers help subsidize online services by providing information about themselves, including by registering with the website. This information allows content providers to deliver advertisements that are tailored to the interests of their users, which makes advertising much more effective.
The Act Burdens Legitimate Commerce and Content by Restricting User Registrations
User registration is a vitally important way for users to consensually provide information about themselves. This information helps to make advertising and marketing more effective, but it is also essential for building an online community. User registration allows users to foster community values through identification, and allows the operators of online forums to appropriately and responsibly moderate user communications.
But the Act seriously restricts the exchange of information between Web 2.0 services and their users. Section 9552 makes it unlawful to knowingly collect or receive health-related or personal information for marketing purposes from a minor, without first obtaining verifiable parental consent. “Marketing” is broadly defined to mean marketing or advertising products or services to individuals. In effect, the Act restricts advertising that is most relevant to user interests.
For complete testimony, please see /wp-content/uploads/netchoice-comments-on-predatory-marketing-act.pdf