House Hears IAB, DMA, TRUSTe and Others on Stalled Spyware Bill

Representatives of marketers, online ad firms and privacy watchdogs convened in the Rayburn House Office Building yesterday for a subcommittee hearing to revisit spyware legislation originally introduced in 2003. While witnesses representing Internet advertisers supported the legislation on the whole, they expressed concern about the potential for the bill to infringe too greatly on their business practices, hindering access to free, ad-supported Web content. Despite their apprehension, the hearing and related bill could amount to a proverbial tree falling in the legislative woods.

Members of the Subcommittee on Commerce, Trade, and Consumer Protection, a subdivision of the House Energy and Commerce Committee, came together to reiterate the need for passage of H.R. 964, The Spy Act, legislation aimed at protecting Web users’ personal privacy — and to a lesser degree — plain old aggravation caused by unwanted spyware downloads.

Present was a panel of five witnesses providing perspectives on the proposed law. Internet watchdogs were represented by TRUSTe and the Center for Democracy and Technology (CDT), while representatives from adware firm Zango, behavioral targeting firm Tacoda, the Interactive Advertising Bureau (IAB) and the Direct Marketing Association (DMA) stood in for the online ad industry.

Witnesses concurred most of the main provisions of the “Securely Protect Yourself Against Cyber Trespass Act” are worthy of putting into law. Agreeable stipulations prohibit unauthorized or uncontrollable computer takeover by software, delivery of ads that are difficult to close, collection of personally-identifiable information through keystroke logging and misrepresentation or removal of security software. The legislation would also require notice and consent before software installation.

Then came the caveats. Two sections of the bill in particular were bones of contention for witnesses. Section 3 is deemed potentially too far-reaching by both the DMA and the IAB.

Along with others on the panel, Jerry Cerasale, the DMA’s SVP government affairs, commended the subcommittee’s efforts on the bill as a catalyst for industry self-regulation, Federal Trade Commission anti-spyware action, and statewide spyware legislation. But he expressed concern that Section 3 of the proposed legislation “goes further than we would want.” The bill, he added, should “strike the balance for consumer choice plus advertiser- and marketing-supported Internet content.”

The section deals with the collection of information about Web pages visited by users to deliver ads. Dave Morgan, a panelist representing both the IAB as chairman of its Public Policy Council and Tacoda as founder and chairman, worried the section’s provisions would create a “one-size-fits-all definition” for technologies used to target and deliver advertising. “There’s not a lot of clarity of how Java or AJAX would be treated,” he told ClickZ News after the hearing session.

“The view is that what the bill should focus on is the bad behavior,” said Morgan, noting the original intent of the legislation was to penalize spyware purveyors, not craft broad regulations on constantly-evolving Internet technologies.

The “Good Samaritan Protection,” Section 5 of the legislation, protects providers of anti-spyware applications used to remove software violating Sections 2 or 3. No one on the witness panel was too keen on the stipulation.

“Zango urges the committee to delete subsection 5C,” said Christine Varney, esquire, an attorney representing adware firm Zango on the panel. Previously 180solutions, Zango settled with the FTC in November of last year, agreeing to pay $3 million in ill-gotten gains for using deceptive methods to install adware on users’ computers and block its removal.

Witnesses were concerned the Good Samaritan provision could unjustly protect companies with applications that categorize legitimate software as spyware, or dupe users into downloading spyware that masquerades as a spyware-remover.

The Spy Act has been passed twice by the House, but still awaits Senate approval. Indeed, subcommittee members expressed amazement that the Senate continues to stall passage. The bill’s limbo status “is a mystery to me,” said Joe Barton, Congressman from Texas.

Sources familiar with the stage of the legislation, however, doubt a third passage by the House will be the charm that moves it to the President’s desk. With the Senate fully focused on Iraq, sudden dismissals of U.S. Attorneys General, and other hefty matters, it’s unlikely The Spy Act or similar Senate legislation will hit the Senate floor anytime soon.

Even if it is passed into law, in its current state, the Act would sunset in 2014.

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