by Emily Hackett

For many years, state legislators have grappled with the challenge of crafting laws that target cyber criminals without inhibiting innovation, hindering the free flow of information, unnecessarily regulating legitimate business, or running afoul of the First Amendment. That struggle will continue in 2006. Here is a quick overview of the leading Internet and e-commerce issues to be debated in state legislatures this year.

Data Security Breaches. Data security clearly was, and will continue to be, the number-one Internet and information industry issue debated in state legislatures in 2006. Spurred by a public outcry over a series of high-profile data security breaches that occurred in 2005, legislators introduced a flurry of bills requiring companies who have experienced breaches to notify affected customers when their personal data has been accessed or obtained inappropriately. By the end of 2005, a total of 156 breach bills had been introduced in 40 states -- and 26 were passed, creating what analysts are calling a “patchwork quilt” of laws. The existence of so many state laws with varying requirements may spur the passage of a federal law preempting state legislation. Meanwhile, more than 100 data security breach bills have been prefiled or are pending in 20 states.

Phishing. In 2006, states will continue to introduce bills aimed at cracking down on computer and online crimes. The Gartner Group estimates that in 2003 alone, the direct phishing-related losses to U.S. banks and credit card issuers was more than $1 billion. So far this year, six states have introduced anti-phishing legislation.

Spyware, Adware, and Pop-Ups. As consumers become more inundated with spyware, adware, and pop-ups, lawmakers will continue to look for ways to regulate the technologies that make it possible to market products and services online. Already, 2006 may see debate in 12 states on 34 spyware bills filed or carried over from 2005.

Violent Video Games. For the first time in history, youths aged 15 to 24 are spending more time online than watching television. The draw for many is online video games, where plaers can enter semi-fantastic virtual “worlds,” meeting people, acquiring property, and building structures. However, lawmakers, activists, and parents are increasingly concerned that some of the video games being sold on- and offline are too violent or too sexual for children. In 2005, 15 states passed laws restricting access or banning outright the sale or rental of these types of games to minors. Court challenges to existing laws have been successful, but lawmakers supporting these types of measures say they will not be deterred.

Online Dating. In 2005, eight states discussed regulating the online dating industry, but no bills were passed. Most recently, an online dating service again convinced a Florida lawmaker to introduce a bill requiring all dating services to post on their Web sites whether or not they conducted background checks on their members. Other state legislators will likely return to this issue with renewed vigor in 2006.

Voice Over Internet Protocol (VoIP). VoIP has attracted considerable attention in the media as well as among members of the business community and policymakers. There are significant questions over whether states have the authority to regulate VoIP carriers. However, in 2005, 40 VoIP-related bills were introduced in 26 states. Only 10 states passed laws, most of which extended the state’s E-911 surcharge to new Internet communication services, including VoIP.

Radio Frequency Identification (RFID). Lawmakers will also focus on privacy issues surrounding the use of RFID technologies. The hope among retailers is that the technology will be used as a “next generation” barcode, automating inventory while cutting costs for manufacturers and retailers. However, as the technology advances, the debate surrounding potential privacy infringements increases. Eighteen RFID-related bills were introduced in 14 states in 2005. Though none were enacted, the debate is expected to widen in 2006. So far this year, eight states have carried over RFID-related bills.

Outsourcing. Demand for outsourced, or “offshored,” services is rising quickly, as more and more companies look for ways to cut their costs and improve productivity. Not surprisingly, 216 outsourcing-related bills were introduced in 44 states. These bills included prohibitions on outsourcing jobs when receiving state funds, restrictions on offshoring personally identifiable information, and requirements that offshore call centers disclose their location or reroute calls to U.S. operators upon request. In 2005, 12 states enacted outsourcing laws, and more than 20 states have outsourcing bills currently pending for 2006.

Emily Hackett is executive director of the Internet Alliance. This article was excerpted, with permission, from Policy Flash, TRUSTe’s members-only e-newsletter focusing on policy and legislation.

 

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