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States Take The Lead Toward Net Legislation
The race toward developing Internet policy has been tight between the federal and state governments, but it looks like states have taken the lead.
According to the National Conference of State Legislatures, as of Aug. 9, 23 states had passed some sort of legislation dealing with computer crimes, with some legislatures — such as Michigan's and Virginia's — passing more than one bill on related issues. Then there is the pile of bills still sitting in some state legislatures or that have been killed in committee. North Carolina had about 30 Internet or computer-related bills introduced in the past year, while Maryland had over 50, just to name two.
Some states have been relying on each other to help them initiate certain technology-related positions and programs. Colorado contacted Virginia, for example, to ask how to establish a secretary of technology position within the state government. Other states such as Wisconsin, Louisiana, Georgia, Florida, Texas and Maryland also have looked to Virginia as a role model in regards to issues such as R&D funding, Internet policy and spamming, Virginia officials have said.
California lawmakers have taken it upon themselves to develop roles for themselves as leaders of the foremost dot-com state — home of Silicon Valley. Bills of ongoing debate in the state legislature — which breaks at the end of this month — include those regarding Internet companies and service providers sharing information with third-parties as well as some focusing on Net sales taxes.
California already collects tax revenues from e-retailers that have a presence in the state, but not those who don't.
"What we're generally dealing with is non-discriminatory access issues," said Mike Jacob, chief consultant to the Assembly Information and Technology Committee. And "the general consensus (here) is that there needs to be some sort of privacy standard to both private and public issues."
The Internet tax issue has taken center stage with state lawmakers. Over 20 state representatives are now meeting in Texas trying to rewrite remote sales tax laws.
"This is a very ambitious effort by the states to radically simplify and streamline state use and sales taxes," said Frank Shafroth, director of state and federal affairs for the National Governors' Association. "I'm anticipating we'll have legislation ready to go to the states for the next (legislative) session."
States have been worried from the get-go that federal action on the Internet sales tax issue would impede their own abilities to regulate e-commerce within the state.
"It's very clear the federal government has, and is continuing to intrude further — that's a very serious concern," Shafroth said.
Shafroth said it is sales tax revenues that often fund education in many states, and that funding may be in jeopardy depending on what steps Congress takes next.
"Interference here will have an adverse affect on education," he said.
As to the issue of Internet privacy, Shafroth said the states have been focused on that issue long before the federal government made it a major concern.
"Congress is settling on this thing," he said. "They've forgotten states have been concerned about privacy for a long time and they have moved for some time to try to protect it. They are some real great concerns over what Congress is doing."
Uniform Money Services Act
The National Conference of Commissioners on Uniform State Laws (NCCUSL) approved the Uniform Money Services Act at its annual summer meeting that ended Aug. 4. One provision of the act requires non-bank companies that use "cybercash" to conduct business under one law in an effort to prevent money laundering.
Currently, some states have their own laws addressing non-bank money transmitters, but this act was passed to remedy the patchwork legislation between states that currently exists.
"We're trying to come up with one uniform law," said Drafting Committee Chair Tom Bolt of St. Thomas, Virgin Islands.
Bolt said Congress called on NCCUSL after the 1994 Money Laundering Suppression Act was passed to draft a law that would regulate check cashiers — back when the Internet was in its infancy and "there was little discussion of cyber-payments, digi-cash, that sort of thing," Bolt said.
He said financial businesses such as Thomas Cook and American Express had to obtain a separate license to conduct business online for each state or territory. As the Internet began to permeate more aspects of the economy, the commissioners began to address Internet-based payment transactions such as smart cards. Bolt said that since regular brick-and-mortar banks are so heavily regulated already, money laundering activities were increasing in the non-bank areas where there was less regulation.
"I think the intent of the federal government to assist them in this act was to fill in the hole to half the states that don't have any regulations," Bolt said.
Web-based payment sites are giving "old economy" banks a run for their money. For example, PayPal allows subscribers to access person-to-person payment services and allows users to send money instantly and securely to anyone with an e-mail address. PayPal can also be used to pay an IOU, collect money for an event, or buy and sell items at online auctions. InternetCash is a credit card alternative used for shopping online at participating Web sites. InternetCash is a pre-paid stored value card sold at retailers nationwide.
Commissioners said the act was a 'light-touch' regulation and not an effort to impede the growth of e-commerce, but to keep new online payments systems in sync with traditional banks.
"The drafting committee and the cyber payments working group looked at emerging cyberpayment … and found that they, in many ways, raised the same type of safety and soundness concerns as traditional methods," said Anita Ramasastry, drafting committee reporter and associate director of the University of Washington's Center for Law, Commerce and Technology.
Some critics say, however, that this law doesn't address the real money laundering problem and is more of a "safety and soundness" act.
"It's my understanding that this basically mirrors existing law that's already been passed in some states," said John Byrne, senior counsel and compliance manager for the American Bankers' Association.
Byrne said that trying to regulate non-bank cyber-cashiers under one law may be a good idea in theory, but "it's not as groundbreaking as it may seem."
Byrne said the U.S. Treasury Department already has money services business regulations in place at the federal level, relative to these types of money transmitters. However, it would be difficult for each state to try to audit and assess licensing coverage of all money transmitters.
"I can envision a situation where this would be a type of self-regulatory approach," where cyber-money transmitters would want to find their own ways of letting users know they are licensed and are valid businesses, he said.
A Different Kind Of Virus Hits The Web
The New York City Health Department is using the Web to help stamp out the dangerous West Nile virus. The mosquito-born virus, which can cause fatal inflammation of the brain and of the spinal cord lining, only recently has been found in the United States. Residents can monitor the city's mosquito-spraying program via the health department Web site. Because the virus originates in birds (mosquitoes just pass it on to humans) the Web sites includes a "Dead Bird Reporting Form" through which residents can alert city workers to carcasses that can be used in sample testing for the virus. The health department also offers a "Standing Water Report Form" in an effort to track down potential mosquito breeding grounds. Gov. George Pataki, R, sent a letter to President Clinton Friday asking for $20 million in emergency financial assistance to combat the virus.
NFL Team Goes Cyber
The National Football League's Minnesota Viking's are finding their way around the radio industry's inability to broadcast their games over the Web — they're going right to the source. The Vikings are allowing KFAN radio to produce a radio-style broadcast available only on the Web after Minneapolis' WCCO's parent company, Infinity, wouldn't allow its stations to go cyber. The first vikings.com broadcast was Aug. 5. The Vikings have offered split advertising sales with the stations, and marketing representatives think the Net broadcasts will be bigger sellers than those on the radio. Infinity also owns radio rights to the Baltimore Ravens, Chicago Bears, Dallas Cowboys, New York Giants, Detroit Lions, New England Patriots, Philadelphia Eagles, Tampa Bay Buccaneers and Washington Redskins.
Microsoft Software Pirates Nabbed
Microsoft and the U.S. Custom Service said Wednesday that almost $1 million in alleged counterfeit Microsoft products have been seized in Georgia following a six-month investigation. Customs agents raided the offices of Compunet Systems in Griffith and Tierra Computer in Doraville. The two vendors, which allegedly were distributing pirated copies of Office 2000 Professional Edition, the Windows 98 operating system and other software, could be prosecuted for trafficking in counterfeit good. Federal trademark law calls for up to $2 million to be paid in fines and 10 years in jail for each violation, while copyright law includes fines of up to $250,000 and five years in jail per violation. Georgia's rate of software piracy is nearly 26 percent, above the national average and up 3 percent from two years ago, reported Reuters. Software pirates are believed to cost the state about $206 million each year in tax and wage losses.
State E-Briefs:
Campaigns: For the first time in convention history, delegates at the Democratic National Convention in Los Angeles this week cast their votes on computers. The names of each state and territory were called out Wednesday night and the leader of each delegation responded with how many votes will be cast — and a click of an Apple computer mouse. There are 4,338 delegates; a candidate needs 2,170 to win the nomination.
Business: Maryland Gov. Parris Glendening, D, last week named five to the board of directors of the Maryland Technology Development Corp. (TEDCO). Gregory Billups, Wayne Hockmeyer, Richard Lewin, Andrew Lynch and Steve Walker will serve on the board of the group that was established by the Maryland General Assembly in 1998 as a vehicle to maintain and enhance the state's reputation as a leader in technology. "These individuals are leaders in the state's technology and business community," Glendening said in a statement. "They will bring a wealth of knowledge and expertise to TEDCO, allowing Maryland to capitalize on and maintain its presence at the forefront of the rapidly expanding technology marketplace."
Telecom: The TeleCommunity Bandwidth Conference was held in Austin, TX, Monday and Tuesday as representatives from local and federal governments, the telecommunications industry and communities met to discuss bandwidth resources and support programs available for Texas in the next year. Hosts and sponsors included TeleCommunity Resource Center, Texas ISP Association, Southwestern Bell, GTE/Verizon and other telecom companies.
E-commerce: Residents of Henderson, NV, can now access zoning and property information on the Web. OpenWeb enables users to find property information and locate areas on a map, as well as the area's elected officials, sales prices and subdivision names. OpenWeb is linked too the city's Visual Interactive Development Code (VIC), which describes permitted uses and other development guidelines.
- by Liza Porteus
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