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Policy Positions

Barriers to Commerce

Barriers to Sharing of Bikes and Scooters

In its advocacy for internet-enabled business models NetChoice has the following principles to assist cities and businesses in implementing sharing of bikes and scooters:

Barriers to Competition in Online Travel Services

A volatile and fluidly-priced industry such as travel services has proved a natural fit for eCommerce. Consumers have become their own travel agents and regularly use websites that provide travel, hotel and car rental information.

Yet when travel website Orbitz—a founding member of NetChoice—was introduced in 2002, it faced legacy federal regulation that prevented it from competing against the Computerized Reservation System (CRS) interfaces used by travel agents. Outdated regulation kept booking fees high and harmed consumer choice and convenience, until the rules were changed in 2004.

Barriers to innovation via Antitrust

When it comes to mergers, acquisitions, and innovation, we are seeing a movement pushing back against growth by using antitrust law. Whether it is calls for breakups, or adjusting the burden of proof to the merging party, these efforts stifle innovation and free enterprise.

NetChoice advocates on antitrust issues with the following policies:

Barriers to Short Term Rentals

Online platforms empower home-owners to leverage their assets as part of the sharing economy.  But legacy incumbents are leading efforts to make short-term rentals unworkable for citizens. 

In its advocacy for short-term rentals of homes and rooms (STR), NetChoice advocates at the city, state, and federal levels to keep opportunity available to hosts and platforms.

Barriers to Online Auctions

Online auctions are a convenient marketplace for buyers and sellers. Sellers can reach a national audience of consumers and buyers can research, bid and buy from wherever they are.

As auctions and other online marketplaces prosper, they face new regulatory challenges. Online retail sites are being blamed for offline shoplifting, and some legislative proposals would make online marketplaces liable for making sure that items sold on their sites are not stolen. Yet given that almost half of all retail inventory losses are due to thefts by store employees, we know that e-Commerce is not to blame. Laws targeting online auction sites would therefore fail to correct core retail security problems while unfairly burdening e-Commerce.

Barriers to Online Real Estate Competition

A home is the single largest purchase for most people, and the Internet can provide buyers with easy ways to research property listings and values—but for traditional real estate brokers, that’s a problem. Feeling the pinch of new competition, traditional real estate brokers have successfully lobbied for rules to make it harder for online real estate firms to compete. Laws mandating what services brokers must provide and preventing companies from offering discounts and rebates hurt online businesses and ultimately harm consumers.

Barriers to Online Sale of Wine

e-Commerce is ideally suited for offering consumers with access to the offerings of small vineyards offerings, hard-to-find-vintages, or other niche wine products. Yet the sale of beer, wine, and spirits in the United States is thoroughly blanketed by a three-tier distribution system of producer, distributor, and consumer.  A relic born out of Prohibition-era concerns, this system reduces consumer access to the offerings of small vineyards offerings, hard-to-find-vintages, or other niche wine products.

Without demonstrating the need for discrimination, some states have enacted regulations that disadvantage out-of-state wine sales. These rules have been held as a violation of the U.S. Constitution’s Commerce Clause if states do not extend shipment privileges to in-state and out-of-state wineries in the same manner.

Barriers to Sharing of Bikes and Scooters

In its advocacy for internet-enabled business models NetChoice has the following principles to assist cities and businesses in implementing sharing of bikes and scooters:

Barriers to Online Ticket Resale

Internet-based marketplaces allow consumers to conveniently buy and resell tickets to places of entertainment, dramatically altering the ticket marketplace from the days when states first enacted restrictions on ticket scalping. The leading online ticket marketplaces aggressively enforce safe trading policies, and have proven to be ideal partners for state regulators charged with enforcement of consumer protection laws.

However, many states still regulate prices and the place of sale where ticket owners may resell their tickets despite the emergence of reputable Internet-based marketplaces. Furthermore, operators, promoters, and producers of entertainment events impose restrictions on ticket holders that limit their choice of where and how they may resell their tickets.

NetChoice works to repeal ticket resale restrictions, bringing greater choice, convenience and competition to the growing online marketplace for event ticket resale.

Privacy

Identity Theft

Data protection is an important issue for businesses, especially e-commerce retailers. But it’s important to remember that it takes a thief to commit identity theft, and that businesses are liable for the costs of every 9 out of $10 in ID thefts.

Many businesses acknowledge there are potential benefits to requiring notice of data security breaches. Data protection legislation typically requires consumer notification of a breach and the implementation of security measures to safeguard consumer information. Consumers who receive timely notice can monitor their credit accounts for unauthorized charges and add fraud alerts to their credit reports.

NetChoice helps inform policymakers about the costs and unintended consequences of data breach legislation. Over-notification will occur if consumers receive notices for situations that don’t pose a risk of identity theft, and will de-sensitize them to situations of true risk. That’s why most businesses have advocated a risk-based trigger for notice obligations. In addition, some state notification bills created the risk of massive private lawsuits against companies who missed technical notice requirements. Moreover, a rush to pass security breach notification bills has already created an unworkable system of inconsistent and incompatible state laws.

Online Advertising

Advertising helps consumers because it funds free online content and services. However, some legislators and policy activists have expressed concern about targeted advertising. Others have specific concerns related to marketing to minors. NetChoice opposes laws that seek to regulate interest-based advertising, and works to preserve protected commercial speech on the ‘Net.

Online Safety

Online safety is an important issue for children, parents, educators and law enforcement—and NetChoice believes there is a role for everyone in making the Internet safer.

Studies show that the best way to help children use the Internet safely is to educate them about safe behavior. That’s why states should ensure that online safety is taught in the schools. But we also need better education and awareness programs for parents, too, so that they can make use of tools for blocking, filtering and monitoring their child’s Internet activity.

Law enforcement plays a key role in detecting and catching child predators. And policymakers should ensure that there is appropriate punishment for sexual predators, including monitoring the Internet activity of convicted sex offenders.

NetChoice has testified before legislatures that education, empowerment, and enforcement are the key ways to keep kids safe online. Some states have proposed bills mandating the consent of a parent before a child can enter a social networking website. Despite these bills underlying good intentions, currently there are no public or private databases that exist to verify that a person whom a child designates as a parent is in fact the parent. Moreover, it does not follow that a legal requirement on web companies to collect parental consent forms will stimulate meaningful parental involvement.

Phishing and Pharming

Criminals have long used con schemes and phone scams to take advantage of trusting consumers. Now they’re “phishing” by sending fraudulent emails pretending to be a credit card issuer or Internet Service Provider, luring users to a phony website to “update” their account information. Criminals are also “pharming”—misdirecting consumers to fraudulent sites even if they’ve entered a legitimate URL.

The states and Congress are gearing-up to stop phishing through new laws and increased enforcement – and for good reason. Criminals co-opt trusted brands like AOL, eBay, and Yahoo to dupe unsuspecting users into divulging their account access information. And it’s getting worse. The number of consumers receiving phishing attack e-mails has doubled over the past few years.

NetChoice helps provide information to policymakers about the threat of phishing and pharming and to educate them about legislative solutions.

Spyware

Spyware is software downloaded onto a computer that has deceptive intentions such as: sneaky delivery; secret collection; and resisting removal. Spyware can ruin user experiences and increase support costs for ISPs, software developers and computer sellers.

NetChoice supports legislation that focuses on bad behavior instead of banning technologies. Early spyware legislation prohibited the installation or transmission of software that collects personally identifiable information. However, it is important that legitimate exchanges of information be preserved, particularly for license and subscription validation, password checking, security monitoring, parental controls, and network management.

Internet Governance

Cybersquatting

Cybersquatting is an abusive practice in which a speculator registers a domain name identical or very similar to the trademarked name of a legitimate company or other organization. The speculator can then hold the name for ransom, forcing the trademark owner to pay far more than the actual cost of registration.

Cybersquatters unfairly and illegally take advantage of the established value of someone else’s trademark. Under the Anti-Cybersquatting Consumer Protection Act of 1999, trademark owners can sue a cybersquatter or ask ICANN to arbitrate their claim.  For small e-Commerce companies, the time and expense needed to understand and assert these legal remedies are often more than the owner can afford.  Consequently, these businesses either continue to lose prospects to cybersquatters, or are forced to meet the ransom demanded.

Another variant in speculative domain name registration is “typo-squatting” or “parking” – registering domain names that closely resemble the names of already popular Web sites. Typo-Squatting sites confuse and divert potential customers. When a consumer types the domain name of a known website directly into the browser’s address bar, but mis-types the name, they’re taken to a different and sometimes confusingly misleading website. Legitimate businesses shouldn’t lose customers to websites traps designed to generate ad revenue.

Integrity of the Internet’s Domain Name System

The Domain Name System (DNS) acts as the “phone book” for the Internet and translates hostnames to IP addresses, making it possible to find websites and send email with domain names. The Internet Corporation for Assigned Names and Numbers (ICANN) is a non-profit organization that manages the domain name system, and works to ensure the stability and interoperability of the DNS in coordination with the private sector.

ICANN currently manages a DNS that generally works well for businesses and end users.  However, the DNS requires continued investment to maintain availability in light of growing internet use and attacks. In addition, the integrity of domain name services is being undermined by unfair and deceptive practices, such as phishing, pharming, and spam.

The Whois system helps promote DNS integrity. Because it is a database of the owner of a domain name or an IP address, Whois benefits law enforcement’s ability to identify Internet malefactors quickly, and helps stop perpetrators of fraud, spam, and spyware from infecting consumer’s computers. Whois access benefits consumers, who use the data to help identify the entities behind websites to feel more comfortable when they participate in the electronic marketplace.

Internet Security and Availability

Denial-of-service attacks can cripple a website and disable an online business.  Moreover, small businesses are experiencing blackmail via denial-of-service attacks, where a business owner is forced to pay-up in order to stop the attack.

Attacks on the integrity of the DNS itself are also raising alarms. Attackers can redirect web browsers and DNS servers to fraudulent sites hosting convincing scams. One method of redirection involves corrupting DNS data that’s “cached” in memory so that users are pointed to fraudulent websites.  Increased security measures can help, but hackers and scam artists are quick to adapt their technology and tactics.

Promoting a Free and Open Internet

The “Internet” is not a specific place or thing, but a network of networks that transcend geographic and political borders. There is no single governor of the Internet, however, there has been calls for increased oversight by a political body—the United Nations.

As an example, ICANN is the technical manager of the Domain Name System (DNS). It coordinates DNS operation through contractual agreements with registrars and registries. Governments, on the other hand, govern through laws regarding consumer protection, spam, trademarks, privacy, and censorship. The political considerations that go into lawmaking don’t belong in ICANN. Likewise, each country’s differing views on censorship and free speech make political governance of the Internet unwise.

Internet Taxes

Internet Access Tax Moratorium

Internet access—and its concomitant ability to communicate, educate, and telework—should not be taxed. At a time when most people agree that the U.S. needs more broadband, Internet access taxes will slow broadband deployment, particularly in rural and low-density areas. Fewer consumers will buy a higher-priced taxed product. A smaller pool of potential customers means providers can’t justify investment in new broadband infrastructure build-out.

In addition, taxing Internet access widens the digital divide and limits the economic, educational and healthcare opportunities available to lower-income Americans. Only 11 percent of households with incomes below $30,000 have broadband service, compared to 61 percent of households with incomes above $100,000. Furthermore, taxing Internet access raises broadband costs for telework, distance learning, interactive medicine, and new online business models.

NetChoice endorses a permanent tax moratorium to encourage continued innovation on the ‘Net.

Internet Sales Taxes

State and local governments have for decades struggled to collect sales tax when their residents buy from out-of-state businesses like phone and mail-order catalogs — and now e-commerce websites and marketplaces. 

Until 2018, the Supreme Court’s Quill ruling prevented states from imposing sales tax burdens on businesses who lacked a physical presence in their state.  But Quill was overturned in the Jun-2018 Wayfair decision, allowing states to reach beyond their borders to impose sales tax burdens on businesses anywhere in the country.

In this post-Quill reality, NetChoice continues to defend free enterprise online based on the US constitution and the new standards established in Wayfair.

Wayfair details how South Dakota’s law would likely survive a Commerce Clause challenge as an undue or discriminatory burden on interstate commerce:

State-level administration for local tax districts

South Dakota’s exception for small sellers, so that new tax burdens fell only on “large, national companies that undoubtedly maintain an extensive virtual presence” 

No retroactive taxation on sales made before the Wayfair ruling.

State adoption of the Streamlined Sales Tax Agreement (SSTP), because it provides “sales tax administration software paid for by the State” and holds sellers using SSTP software “immune from audit liability”.

But in the wake of Wayfair, many states are enforcing their sales tax laws against businesses anywhere in the country, without first adopting all of Wayfair standards.  And while Wayfair said nothing about marketplace platforms used by online sellers, states are imposing tax obligations on marketplace facilitators — without following the Wayfair standards. 

NetChoice advocates for common-sense approaches for marketplace sales tax obligations:

States should not impose sales tax obligations on marketplace facilitators who merely list items for sale by others, and don’t process payments on marketplace purchases.  

Small businesses selling on marketplaces should have the option to collect sales tax on their own.  And marketplace sales should not count against the small business exception for sales made on their own websites or other sales channels.

Marketplaces should not be liable for tax errors because a seller designated the wrong taxable product category.

Marketplaces that perform sales tax services should be compensated by the states in the same way that Wayfair recognized SSTP for providing “sales tax administration software paid for by the State.” 

Sales tax obligations on marketplaces do not extend to recycling or disposal fees on items sold by marketplace sellers.

Wayfair made it clear that Congress retains the authority to legislate sales tax obligations on interstate commerce, so Congress should impose these marketplace taxation standards if states are unwilling to follow the court’s ruling.