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Unchecked FTC Powers and Surge of New Tax Proposals Top 2010 List of Worst Internet Legislation

Updated iAWFUL List Ranks Top Threats to Online Commerce

WASHINGTON, Feb. 18 /PRNewswire-USNewswire/ -- A request by the Federal Trade Commission to scrap congressional checks on its power to impose burdensome regulations on the Internet has moved to the top of NetChoice's latest "iAWFUL" list of harmful legislative proposals.

The Internet Advocates' Watchlist for Ugly Laws (iAWFUL) tracks the 10 pieces of state and federal legislation that pose the greatest threat to the Internet and e-commerce. In its first update for 2010, iAWFUL identifies several new measures that threaten to undermine the freedom and openness that lie at the core of the Internet's global appeal.

"Our 2010 iAWFUL list includes legislation that has the potential to mortally wound already struggling online retailers," said Steve DelBianco, executive director of NetChoice. "In many cases, proposals intended to fix short-term problems risk gutting the long-term success of our economy's engine of growth."  

The proposed FTC change would remove safeguards that have existed for over thirty years. When Congress passed the Magnuson-Moss Act in 1975, it recognized that a more transparent rulemaking process must temper the FTC's exceptionally broad regulatory powers over all forms of trade and commerce.

A repeal of Magnuson-Moss rules would let the FTC create new restrictions on longstanding retailer relationships that deliver free services to consumers.  

Colorado, Illinois, Maryland, Vermont, and Virginia also come under fire in the iAWFUL list. These states would like to force out-of-state advertisers to become tax collectors just because they use in-state Web sites to publicize their products.  

Online services and content providers are still experimenting with new models for advertising and distribution. State laws that use online advertising as a proxy for an in-state sales representative will stunt the growth of new business models and distort the evolution of Internet marketing.

For every new piece of legislation that made the iAWFUL Top Ten, something had to fall off the list. That's where the value of the watchlist truly shines. The top legislation on the August 2009 iAWFUL release was a Maine law restricting marketing to teens online. But in response to the publicity created by iAWFUL – and thanks to a lot of hard work by Internet advocates -- Maine's Joint Judiciary committee unanimously recommended repeal of the law in the next legislative session.

Another high-profile item on the last iAWFUL – a trio of federal bills regarding organized retail crime – made a remarkable improvement and fell from the Top 10. Again, thanks to the efforts of NetChoice and other Internet advocates, lawmakers began to get the message that law enforcement needed resources – not new laws – to fight organized retail crime.

The iAWFUL list, created in 2009, identifies America's 10 worst legislative and regulatory proposals targeted at the Internet. The iAWFUL Web site urges Internet users to join the fight to fix bills that threaten the future of online commerce and communication. The list is regularly updated to reflect the most immediate dangers, based on regulatory severity and likelihood of passage.

"States are increasingly trying to expand internet sales taxes, by forcing online retailers to become tax collectors and by imposing new taxes on online services" said DelBianco. "Tax collectors' creativity knows no bounds when it comes to designing new schemes for extracting cash from large and small businesses."  

The full iAWFUL list, complete with bill descriptions, is available at www.iAWFUL.com. Twitter users can follow iAWFUL developments on the NetChoice feed (@NetChoice) and via the hashtag #iAWFUL. Expanded information is also available on the NetChoice blog at http://blog.netchoice.org.

The entire 2010 iAWFUL includes:

  1. Expanding Rulemaking Powers of the Federal Trade Commission - New to iAWFUL
  2. Forcing Advertisers to become Tax Collectors (California, Colorado, Illinois, Maryland, Vermont, and Virginia)
  3. Hotel Taxes on Online Travel Companies
  4. Expanding Internet Sales taxation, based on inflated expectations and inadequate simplifications – New to iAWFUL
  5. Restricting Free Trial Offers (Maine and Oregon) - New to iAWFUL
  6. New Taxes on Digital Downloads (Colorado, Indiana, Wyoming, and Vermont)
  7. New Jersey Social Networking Bill
  8. Security Breach Notice Bills (Illinois and Mississippi) - New to iAWFUL
  9. Maine Predatory Marketing Law
  10. Right of Publicity Bills (Hawaii, Indiana, Massachusetts and New York) - New to iAWFUL

NetChoice is a public policy advocacy organization that promotes Internet innovation and communication and fights threats to online commerce at state, federal and international levels.  The Washington, DC-based group protects Internet commerce-driven competition and battles rules that hinder consumer choice and hurt small businesses.  For more information, see www.netchoice.org.

SOURCE NetChoice



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