Twice a year, the team releases an updated iAWFUL list. The list provides a concise collection of both active and proposed legislation that would present a significant non-market barrier to Internet commerce.
This year’s list is full of legislative efforts run amok. As legislators and regulators fall over themselves in a race to regulate Internet services, many are doing more harm than good. In many cases unfamiliarity with technology or misinformation is driving action.
Data breaches and privacy concerns have whipped elected officials into action, but as the 2014 iAWFUL list finds, elected officials are making things worse.
Legislative proposals that would eliminate free services and require businesses to cry wolf over data breaches top the latest iAWFUL.
Eliminating Free Services
Internet users are accustomed to free and easy access to a wide variety of resources for everything from networking with friends, to booking travel to checking the weather. Advertisers, who pay to show ads to interested audiences, support all of these services.
Legislation introduced in California, Virginia and Missouri intended to protect consumer privacy would instead make it much harder for advertisers to pay for free online services and content. If these proposals are enacted they will reduce the value of advertising for online marketers and ultimately reduce resources for free online services. With reduced funding, free services consumers take for granted today may shut down or require consumers to pay out of their own pocket.
Requiring Businesses to Cry Wolf
Recent, high profile data breaches from large retailers have grabbed the attention of lawmakers. It is understandable that action should be taken to protect consumers from harm, but once again, rushed legislation may be more harmful than the status quo.
State legislators in ten states are considering legislation that would force businesses to issue broad and rushed notices that will impede ongoing investigations. Even worse, the increased quantity of notices will desensitize consumers to situations that truly merit an immediate response.
Deluging consumers with notices of a potential risk before there is meaningful action will derail the important conversations that must take place after a serious data breach.
Furthermore, the discrepancies among each state’s proposal will create a patchwork of conflicting rules that invites lawsuits and missteps.
The remainder of the iAWFUL list identifies a wide variety of misguided efforts including attempts to tax the Internet, limit innovation in education, and impose new taxes on online businesses everywhere.
- Making it harder to get advertisers to pay for free online services and content. States are considering laws to restrict interest-based advertising that today supports free online services and content. This would drive websites into showing a higher volume of low quality ads to make up lost revenue. If this trend continues, expect to see more pay walls in front of previously free websites.
- Data breach notification – Following high profile hacking of data held by Target, states are rushing to pass new data breach notice laws. However, forcing businesses to issue broad and rushed notices could impede investigations. Increasing the quantity of notices will also desensitize consumers to situations where a notice truly does merit their immediate attention. Moreover, the divergence among state laws is creating an impossible patchwork for businesses that have customers in multiple states.
- Discouraging teens from thinking before they post – So-called ‘eraser button’ bills may actually encourage teens to be careless about posting inappropriate content because they mislead teens to think they can erase what others have posted too.
- Limiting innovation in education – Schools should focus on safety, security and educational innovation while protecting student privacy protection from actual threats. But state legislation would make it harder for service providers to: identify students having difficulty learning; inform parents and teachers about bullying in school; and flag students that might pose harm to themselves or others.
- Internet Sales Tax – The ongoing threat of federal legislation would give new tax and audit powers to state tax collectors, threatening online businesses everywhere.
- Requiring teens to get parental permission to use online services like maps and weather – Proposed bills would require parental consent before a seventeen-year old could use basic resources like Google Maps or Yahoo Weather.
- Empowering courts over consumers – Allowing a court-appointed executor to counter your express wishes about how your online accounts are handled when you die does not respect consumer choice.
- Scaring stores away from embracing pro-consumer mobile technologies – Some state lawmakers want to mandate warning signs in stores that use new technology do analyze shopping habits and deliver discounts. These warning signs will alarm consumers and suppress adoption of new technology that helps stores send deals to returning customers — even where the customer downloaded an app for that very purpose.
- New limits on First Amendment rights – New bills limiting digital photos of license plates would violate the first amendment and impair law enforcement investigations that save lives and solve crimes.
- Putting children’s privacy at risk with email registries – Bills creating a do-not-email registry jeopardizes the privacy of minors while imposing new fees on markets and restaurants using email marketing.