NetChoice: Parental Consent Law Will Stifle E-Commerce

What's the worst Web-related law on the books in America? According to Internet lobbying group NetChoice, it's a Maine measure that next month will require Web sites to obtain parental consent from 14- to 17-year-olds before collecting from them even rudimentary personal information.

The Maine law, slated to go into effect Sept. 12, tops NetChoice's iAWFUL (Internet Advocates' Watchlist for Ugly Laws) and the organization asserts the law will threaten online communities and E-Commerce.

"The Maine law imposes severe limitations on all Web sites that serve teenagers," said NetChoice in explaining its decision to put the law at the top of the list. "At the very end of its session, the Maine legislature voted to require Web sites to obtain 'verifiable parental consent' before collecting personal information from teens. Lawmakers approved the measure despite the fact that Web sites have no means to confirm such consent, and would be effectively forced to stop providing valuable services like college information, test prep services, and class rings."

NetChoice started publishing iAWFUL in June and has regularly updated it as states continue to get involved with taxation and regulation of the Internet. "The Internet is increasingly under attack as lawmakers seek to mandate technological behaviors, impose new taxes and otherwise restrict the free flow of information and commerce online," said a statement issued by NetChoice Executive Director Steve DelBianco.

In an interview, DelBianco said that he's "in active discussions" with Maine's attorney general about the "constitutional problems" posed by the law. DelBianco also said he filed a lawsuit on Wednesday (Aug. 26) seeking to have the law waylaid until it can be further reviewed by the state legislature.

DelBianco said the law exposes retailer Web sites to lawsuits because it empowers lawyers "to sue companies that collect any personal information, like a name, on a teen without verifiable parental consent" while never explaining how those Web sites are supposed to get, or guarantee the accuracy of, that consent. "In the state of Maine, lawyers have no need to chase ambulances anymore," DelBianco said. "These attorneys can just follow the school buses home from the high school and ask each kid which sites they signed onto lately."

He said the law was passed "at the final hour of the Maine legislative session" and pushed through as a way of stopping drug companies from marketing acne medications to teens.

Four of the other nine measures on the latest iAWFUL might impact E-Commerce players, DelBianco said. The organization cited the creation, not by state legislatures but by tax officials, of taxes on digital downloads in Colorado and Washington State. The Colorado measure would impose sales tax on the downloading or printing of documents or Web pages while the Washington Department of Revenue wants to tax digital "goods" but not services, according to NetChoice. It includes a North Carolina plan to apply sales taxes to downloaded movies, music and software.

"The tax bureaucrats never take a vacation," DelBianco said. "If a legislature wants to tax, then a legislature has to do it. I have grave concerns over revenue departments enacting new taxes. It's not their job."

The iAWFUL includes federal and state bills intended to crimp "organized retail crime" asserting they "create unwarranted, extraordinary burdens on online marketplaces." NetChoice cites the Massachusetts' HB 1344 and the federal Combating Organized Retail Crime Act of 2009 (S 470), the Organized Retail Crime Act of 2009 (HR 1173) and the E-Fencing Enforcement Act of 2009 (HR 1166).

"These bills would mandate online and off-line marketplaces to investigate suspicious sales, place disclosure requirements on online marketplaces, impose obligations upon online marketplaces to police small retailers absent evidence of criminal activity," a NetChoice statement said. "The Massachusetts bill provides for the forfeiture of any property used or intended to be used to commit or facilitate a violation and is so broad that it could encompass a company's servers and domain names."

DelBianco said the laws are endorsed by retailers who believe their employees are engaged in the online selling of goods they steal from stores. However, he believes such retailers "are misguided in trying to blame this entire problem on the Internet. They claim the Internet and sites like online auctions are driving people to lives of crime and making them steal, but I oppose this misguided, misplaced blame for what is just employee theft." DelBianco, noting organized crime "has been around long before the Internet," said retailers would be "much better off focusing attention on better security measures and screening of employees."

The NetChoice list also names of North Carolina and Rhode Island for their efforts to impose so-called "Amazon taxes" in which affiliates of will be forced to pay sales taxes. Similar measures were introduced or considered, but withdrawn, in California, Hawaii, Maryland and Virginia. New York's remains in effect while Amazon pursues a legal challenge against it, DelBianco said.