June 13, 2024

Michigan Email Registry as a Tax on Bulk Emailers

I wrote on Friday about the new registry of kids’ email addresses being set up by the state of Michigan. I wasn’t impressed. A commenter pointed out an important fact I missed: emailers have to pay a fee of $0.007 to screen each address against the list.

(One of the occupational hazards of blogging is the risk of posting without meticulous research. Fortunately such oversights can be corrected, as I’m doing here. My apologies to readers who were temporarily misled.)

I still worry that the list will leak information about kids’ email addresses to emailers. The fee will raise the cost of fishing expeditions designed to guess which addresses are on the list, to the point where it probably won’t be worthwhile for an emailer to launch blind guessing attacks. But emailers will still learn the status of addresses that are already on their lists.

The main effect of the fee is to turn the whole program into a tax on bulk emailing. The tax operates even if only a few kids’ addresses are registered, so parents worried about leaking their kids’ addresses can safely decline to register them. So let’s look at this as a tax scheme rather than a child protection program.

It’s an oddly structured tax, charging a bulk emailer $0.007 for each email address he mails to within a thirty-day period. (Emailers must re-check their lists every thirty days to avoid a violation.) And it only applies to bulk emailers who promote products that kids aren’t allowed to own. That includes some products whose promotion the state is particularly eager to control (e.g., drugs and gambling) as well as some products that are innocuous but inappropriate for kids (e.g., vehicles).

Why isn’t this structured simply as a tax on bulk email? We’d have to ask a free speech lawyer to be sure, but I wonder whether a tax on speech, and especially a tax that applies only to some kinds of speech, would be constitutionally suspect. Connecting it to the state interest in protecting kids from harmful commercial speech may provide some cover. (I could be off base here. If so, I’m sure commenters will set me straight.)

The tax seems unlikely to generate much revenue for the state. Including administrative costs, it may cost the state money. Presumably the goal is to change emailers’ incentives.

The incentive effect on outlaw spammers will be zero. They’ll just ignore this law, and add it to the list of laws they are already violating.

Gray hat spammers, who operate aboveboard and call themselves legitimate businesspeople, will see their costs increase. The tax will impose a fixed cost per address on their list, but independent of the number of messages sent to that address within a month. Adding to fixed costs will tend to cause consolidation in the gray hat spammer business – if two spammers share a list, they’ll only have to pay the tax once. It’s getting harder and harder to be a gray hat spammer already; this will only squeeze the gray hats further.

With the tax angle added, the Michigan program might turn out to be good policy. But I still wouldn’t register my own kid.


  1. This is becoming ridiculous. Well actually more ridiculous… its already been that way for awhile.

    What the he%% are they trying to do?

  2. Just to put the icing on the cake, the Republican controlled Congress is now talking about passing a law to impose a 25% flate rate tax on all for profit online adult pornographic web sites operating in the United States.

    What will the money be used to fund? The cost of enforcing the Internet Safety and Children Protection Act of 2005. Having the adult web sites pay to keep minors from looking at them.

    (As an aside, I thought the Republican Party stood for less government, lower taxes and balanced budgets.)

    Of course, since many profitable online adult pornographic operations are already incorporated outside the United States, how much money the tax will raise is an interesting question.

    For an interesting take on the whole idea:

    Can We Tax the Internet?

  3. There are a number of problems with a State policy that is in essence a tax on certain types of commercial email.

    * It discriminates against that commercial email which is subject to the tax and so may run afoul of the principles outlined in Granholm v. Heald [1].

    * It likely runs a foul of The Internet Tax Freedom Act (IFTA) [2] as amended by the Internet Tax Nondiscrimination Act [3].

    I write likely because there is a limited statutory exception for taxes in the IFTA on inter state and foreign commercial email sent to minors containing “harmful material” as that term is defined, providing one of the listed mechanisms to restrict access to the mailing list or web site containing the harmful material are not utilized.

    Even this limited statutory exception may well be subject to judicial review.

    * The policy penalizes those who send solicited bulk email.

    Spammers have sprayed graffitti all over the common green. Why from a policy perspective should permission based marketers, running confirmed opt-in mailing lists have to carry the freight in cleaning up the mess left by those who send unsolicited bulk email (“spam”)?

    * The policy does nothing to stop the underlying problem.

    Consumer frustration has arisen because people believe their must be a “magic bullet.” The reality? The best we can hope to achieve is to bring online abuse by way of spam, phishing attacks, trojans and viruses under control.

    It would help if the FTC changed its perspective (unlikely, given its focus on protecting the consumer interest).

    Presently, the FTC (supported by the Direct Marketing Association) perceives the fundamental problem facing consumers is deceptive spam and believes the core technical solution lies with e-mail authentication, which will:

    * make it easier to go after the “bad” guys; and,

    * set the stage for sender certification and reputation services, allowing networks to more easily filter “good” commercial e-mail from “bad” commercial e-mail.

    Deceptive spam is part of the problem and e-mail authentication is one brick in the solution. But, none of this deals with the problem of stopping spam at the source, through network security [4].

    The move by Utah and Michigan to set up a do-not-email-registry are symptoms of the refusal by American marketers to come to gripes with and support a legal framework (a la Australia and that recently recommended by the Canadian Task Force On Spam [5]) which supports network security, while legalizing only permission based commercial e-mail.

    Until this happens, I fear that the United States will continue to be the no 1 source for UBE in the world, State and private steps to establish do not email registries and the efforts undertaken by the FTC to fight deceptive spam, while making for good copy, will do little to solve the underlying problem of moving towards a more secure Internet.

    [1] – Granholm v Heald – http://tinyurl.com/7svdp

    [2] – The Internet Tax Freedom Act – http://tinyurl.com/dvmz8

    [3] – Internet Tax Nondiscrimination Act – http://tinyurl.com/d65y3

    [4] – “How to Stop Spam” by John Levine:- http://www.circleid.com/article/917_0_1_0_C/

    [5] – “Canada Finishes its Spam Task Force, Result is Pretty Good” by John Levine: – http://www.circleid.com/article/1085_0_1_0_C/

  4. Nato Welch says

    consolidation among grey hat spammers could be a good thing: fewer targets to sue.

    Unfortunately, it’s easy for multiple spammers to share target lists than to buy each other outright.

  5. Maybe look at it this way: have your kid earn its allowance/pocket money by registering a few email addresses and waiting for the spam 😉 (disclaimer: I dont have kids)