Internet Business Regulation

Two Internet bills were drastically amended in California: 

  • SB 550, formerly regulating data brokers, was gutted and now proposes to regulate the disclosure of Internet communications.
  • SB 1958, formerly addressing Internet Free Gift offers, was amended to establish a state Office of Faith-Based and Community Initiatives.  

California AB 2005, a bill that would expand the list of government employees that it would be illegal to post personal information on the Internet about with the intent to cause them imminent bodily harm, passed the Senate Public Safety Committee unanimously.

California AB 2304, a bill that would require computer technicians to report child pornography found on computer systems, failed to pass the Senate Public Safety Committee. The vote was 2-1, with three not voting. However, reconsideration has been granted.


The Florida Legislature presented the governor with SB 80, which would create criminal penalties for sending false or misleading electronic mail and a new civil cause of action, as a way to deter and punish identity theft. The bill does not allow a cause of action or provide for criminal charges against an interactive computer service, customer premises equipment provider, communications services provider, or cable provider whose equipment is used to transport, handle, or retransmit an unsolicited false or misleading commercial electronic mail message.

Data Security/ Identity Theft

Gov. John Lynch signed New Hampshire HB 1660, which requires notice when a breach of more than 1,000 customers occurs. Notice must be given as soon as possible. The entity also must notify, without unreasonable delay, all consumer reporting agencies that compile and maintain files on consumers on a nationwide basis. HB 1660 is effective January 1, 2007.

Gov. Linda Lingle signed Hawaii HB 2290, which defines "security breach" to include an incident where illegal use of personal information has occurred, or is reasonably likely to occur and creates a risk of harm to a person. Notice of a breach must be made "without unreasonable delay." The new law, effective January 1, 2007, will allow:

  • The Attorney General or the Executive Director of the Office of Consumer Protection to bring a cause of action against any business that violates any provision of this measure, and to seek a penalty of not more than $2,500 for each violation;
  • A private cause of action for a sum equal to the actual damages sustained by the injured party; and
  • The court to award reasonable attorneys' fees to the prevailing party, and clarify that both penalty actions cannot be brought against a government agency.

New York AB 8025, the "Anti-Phishing Act of 2006," was signed by Gov. George Pataki on June 7. The bill would allow the Attorney General or any person engaged in the business of providing Internet access to bring civil action against persons who engage in "phishing," the act of sending an email to a user falsely claiming to be an established legitimate enterprise in an attempt to scam the user into surrendering private information that would be used for identity theft. AB 8025 would allow the Attorney General or other violated party to recover the greater of the sum of actual damages or $1,000 for each separate violation. A court may increase the damages to up to three times the amount mentioned above when the defendant has been found to have engaged in a pattern of violations.

The New York House and Senate passed AB 5608, a bill that would create the "Modem Hijacking Deterrence Act," authorizing the Attorney General, a telecommunications carrier, USP, computer software provider, or VoIP provider to bring civil actions for damages, injunctions, civil penalties, and attorneys' fees for deceptively causing computer software to be copied onto a computer with the intent to hijack their Internet connection.

The Louisiana Legislature passed SB 641, a bill that would make it illegal to fraudulently use or possess another's personal identifying information. The bill would allow an injured person to seek actual damages and/or $100,000 for each violation. Telecommunications providers and ISPs are exempt for good faith transmission or routing of personal information. If signed by the governor, the bill would become effective September 1, 2006.


Louisiana HB 690 passed the House and Senate. The bill would prohibit a person not authorized to knowingly or willfully cause computer software to be copied, or procure the copying of spyware onto a computer.

Industry is concerned that New Jersey AB 3099 is written so broadly that it would ban the use of several legitimate software programs such as software updates and OS patches. As introduced it would prohibit, without written warning, the distribution of software that allows an unauthorized person (undefined) access to a user's computer or data.  

The bill also contains significant damages and a private right of action including: "recover compensatory and punitive damages and the cost of the suit including a reasonable attorney's fee(s)" and "a civil penalty of not more than $500 for a first violation and not more than $1,000 for each subsequent violation."

AB 3099, sponsored by Asm. Deputy Speaker Neil Cohen, is pending in the Assembly Telecommunications and Utilities Committee.

Emily Hackett is Executive Director of the Internet Alliance, the leading Internet trade association operating in the states. The IA represents a broad spectrum of Internet users, including marketers, content providers, ISPs and consumers. She can be reached at (202) 861-2476 or email.


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