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Consumer Bankruptcy Law and Practice: 9.6.3.2.1 Introduction

The 2005 Act added complicated and confusing notice requirements by making amendments to section 342 with which both debtors’ counsel and the courts must comply. While some of the new language is terribly drafted and confusing, the amendments to section 342 have little practical effect.330

Consumer Bankruptcy Law and Practice: 9.6.3.2.2 Deletion of safe harbor in section 342(c)

Section 342(c)(1), as renumbered, was amended to delete language in the section that had stated the failure to provide a debtor’s name, address, and taxpayer identification (Social Security) number (now only the last four digits) does not invalidate the legal effect of a notice. It is unclear what deletion of this language means. Presumably effectiveness of notice will be determined by otherwise applicable law.

Consumer Bankruptcy Law and Practice: 9.6.3.2.3 Creditor notice request given prepetition

Section 342(c)(2) requires that notice from a debtor to a creditor be sent to the address specified by the creditor for receipt of correspondence, and include the account number, but only if the creditor has supplied both the address request and the account number in at least two communications sent to debtor in the ninety days before the petition was filed.

Consumer Bankruptcy Law and Practice: 9.6.3.2.4 Notice request in particular case

Section 342(e) allows a creditor to file with the court and serve on the debtor an address that it wants to be used for notices in a particular chapter 7 or chapter 13 case. Any notice provided by the court or the debtor more than seven days after such an address request is made must use the requested address. This provision appears to override the more general address provision of section 342(c)(2), though it does not expressly so state. This provision also neglects to include any coverage of notices from other parties, such as the trustee, United States trustee, or other creditors.

Consumer Bankruptcy Law and Practice: 9.6.3.3 Effective Notice Under Section 342

Section 362(g)(2) provides that a “monetary penalty” may not be imposed on a creditor under section 362(k) for violation of the stay if the creditor has not received “effective notice” of the order for relief as defined in section 342(g)(1). This provision, when it applies, precludes only the recovery of punitive damages under section 362(k)(1), so actual damages, which by the terms of section 362(k)(1) include costs and attorney fees, may still be obtained.

Federal Deception Law: 12.6.1 Background

Unsolicited bulk commercial email, commonly known as “spam,”107 is a problem for consumers for a number of reasons. Its low cost and anonymity attract fraudulent sellers. Pyramid schemes, miracle cures, pornography, and a host of bogus products are marketed by spam.108 Spam can contain viruses. Any response to spam, even to request that no further solicitations be sent, gives information to the entity that sent the spam and can undermine the consumer’s privacy.

Federal Deception Law: 12.6.2.2 CAN-SPAM Remedies

The CAN-SPAM Act gives enforcement authority to federal and state officials.135 State attorneys general can bring enforcement actions if they believe that a violation has caused harm to citizens of the state.136 In addition, the CAN-SPAM Act gives internet service providers (ISPs) a private cause of action to enforce it.137 There is no private consumer right of action.138 Any consumer private

Federal Deception Law: 12.6.3.2 FTC Rules

The FTC’s Mail, Internet, or Telephone Order Merchandise Rule157 provides a remedy for online fraud when the problem is failure to deliver or a delay in delivering merchandise.

Federal Deception Law: 12.6.3.3 Federal Criminal Statutes

Some ISPs and commercial websites have successfully sued spam senders under two provisions of the federal criminal code: 18 U.S.C. § 2701, which prohibits unlawful access to stored communications, and the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, which includes a prohibition on hacking into a computer.165 These cases involved spammers who harvested consumers’ email addresses from websites, contrary to the website’s posted policy, or sent spam with a forged return address so that replies and bounced-back messages went to the ISP.

Federal Deception Law: 12.6.4.2 Preemption

The application of state anti-spam laws has been sharply limited by enactment of the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“the CAN-SPAM Act”), which preempts much of the state law governing spam.170 The CAN-SPAM Act preempts state law “that expressly regulates the use of electronic mail to send commercial messages” but does not supersede state laws that prohibit “falsity or deception in any portion of a commercial electronic mail message.”171

Federal Deception Law: 12.6.4.4 Remedies Under State Anti-Spam Laws

Most state anti-spam laws give recipients of spam a private cause of action, often including statutory damages, such as $10 per message or a flat award of $500.183 Many of these state statutes also allow a prevailing plaintiff to recover costs and attorney fees. While the damage amounts are small, they could be very significant in a class action. Even in an individual action, many people will have received so many email messages that the cumulative statutory damages could be significant.

Federal Deception Law: 12.6.5.1 UDAP Claims

There should be no room for dispute that general UDAP prohibitions apply to online fraud. However, some states are amending their UDAP statutes to make it clear that advertising, offers, and publications that are transmitted electronically or over the internet fall within the statute.198 The CAN-SPAM Act does not preempt state laws of general application that could be used to attack spammers, such as UDAP claims.199

Federal Deception Law: 12.6.5.2 Common Law Tort Claims

ISPs have successfully asserted against spammers the ancient common law claim of trespass to chattels—the use of a chattel without or exceeding the consent of the owner and impairing the use, value, or condition of the chattel.200 These cases have held that a spammer who temporarily intrudes on a computer electronically to harvest email addresses, or temporarily takes up a part of the computer’s capacity with spam messages, sufficiently impairs the chattel to support the cause of action.

Federal Deception Law: 12.6.5.3 State Telemarketing and Door-to-Door Statutes

Whether state telephone sales laws apply to online sales will depend on their language. Georgia’s telemarketing law explicitly applies to theft offenses committed while “engaged in any activity involving or using a computer or computer network.”204 Virginia’s home solicitation sales law covers sales conducted by telephone “or other electronic means.”205

Federal Deception Law: 12.6.7 Consumer’s Consent As a Defense

Defendants may argue that they used an “opt-in list” of email addresses of persons who gave prior consent and that this is a defense to liability. Any specific evidence of such consent should be explored during discovery. An alleged “opt-in” list may have been assembled by a third party having no actual evidence of such claimed consent. Furthermore, any actual “opt-in” may have taken place on a webpage entirely unrelated to the emails at issue.

Federal Deception Law: 6.1 Scope of This Chapter

This chapter analyzes substantive regulation of unwanted telephone calls, text messages, and junk faxes. It focuses primarily on the Telephone Consumer Protection Act (TCPA), which the Federal Communications Commission (FCC) administers. However, it also discusses the provisions of the FTC’s Telemarketing Sales Rule (TSR)—adopted under the Telemarketing and Consumer Fraud and Abuse Prevention Act (TCFAPA)—that overlap with the TCPA.