• by Ray Schultz , Columnist, July 26, 2023

Email marketers are facing a legal threat in Utah — a state law that provides consumers with private right of action. 

The Utah Commercial Email Act took effect in May. It is “already being leveraged by Utah internet-service-providers (“ISPs”) to send demand letters threatening litigation to businesses all over the U.S.,” JD Supra reports. 

According to JD Supra’s analysis, the Act is designed to avoid CAN-SPAM preemption. This state law is framed as fraud prevention, and includes such email offenses as inaccurate header information and “engaging” subject lines. 

The key point is that email account owners or ISPs may bring claims under the Act to recover up to $1,000 per email for violations, plus recovery of attorney’s fees and costs, JD Supra writes. Maximum damages against any one defendant are capped $2 million,” it adds. 

Several states are passing such laws, and this is happening as firms ponder if consumers are really concerned about compliance. 

For instance, a recent episode of the podcast titled “There Has To Be a Better Way,” spoke with researchers at Indiana University on a survey they did of consumer attitudes. There were three key findings. 

The first is that “consumers are willing to pay a premium for products that come from a company that has a strong or effective compliance program as we’ve defined it,” says Todd Haugh, an associate professor of business law and ethics at Indiana University’s Kelley School of Business. 

Haugh adds: "I tend to think about this as the tagline, ‘Consumers will pay more for compliance.’ 

The second finding is that consumers “value products from companies that have compliance programs more than they would other attributes of those products,” Haugh says. 

How so? Consumers will “value certain compliance programs over standard features that companies spend lots of money talking about and promoting, because they believe that those are important features for consumers.” 

The third finding is that “consumers are willing to pay price premiums for compliance programs that are targeted at the products that they’re purchasing,” Haugh says. 

Haugh adds that this is “linking the compliance program tighter to the product or to the type of product itself had caused consumers to pay more as a price premium.” 

For instance, “linking data privacy compliance to a technological product like a cell phone made more sense than anti-corruption and a dining table, more of a manufactured product,” Haugh said.

It remains to be seen how firms can leverage compliance with a law like Utah’s. It would be better if there were one federal law, covering all issues. But that doesn't seem to be in the offing right now. This spells opportunity for legal teams and software providers that can steer companies through the differing state laws.