The Federal Trade Commission (FTC) has submitted a recent report to Congress with recommendations on how to reward people who come forward and supply information on violations of the CAN-SPAM Act that was passed last year. In addition to other proposals, the FTC recommends that reward amounts should be in the range of $100,000, and as high as $250,000 in some cases.

The FTC begins its report by noting that it has faced three significant hurdles in its anti-spam enforcement efforts: (1) ascertaining the source of spam; 2) developing the evidence needed to prove an individual's participation in, or knowledge and control of, corporate spamming activity, sufficient to prove such person liable; and 3) obtaining monetary awards.

The FTC then notes that if a reward system could facilitate its task of obtaining evidence needed to support cases, it would be likely that such a system could improve the effectiveness of CAN-SPAM enforcement. Such evidence would focus on violations of certain provisions of the Act that are directed at a spammer's attempt to conceal his or her identity, and would facilitate the FTC's task of identifying and locating individuals responsible for specific spam campaigns.

According to the FTC, the persons most likely to possess such "high-value" information are insiders or potential "whistle-blowers" who are personal or business associates of spammers. The FTC does not believe that the majority of consumers who are forwarding 300,000 pieces of spam daily to the FTC spam database are likely to be a solid source for such information. Likewise, it does not believe that self-proclaimed "cybersleuths" are a good source for information, as they tend to draw conclusions based on guesses.

There are obvious deterrents to whistle-blowers, such as fear of losing a stream of income, concern about personal liability, and worry about retaliation of various kinds. The FTC thus concludes that a "powerful" incentive must be given so that whistle-blowers will come forward. While the FTC is not certain what level on financial inducement is sufficient, it believes that rewards generally in the range of $100,000, and in certain cases up to $250,000, are "reasonable estimates." The FTC understands that these "rewards" are but just one element of the costs associated with anti-spam enforcement.

In addition to the significant reward recommendation, the FTC proposes that to make recovery of a reward more certain, eligibility should be tied to imposition of a final court order, not the ultimate and potentially speculative collection of civil penalties from spammers. As such, the rewards would be funded through appropriations.

The FTC further proposes that rewards should be targeted only at persons with high value information. Such persons would have proof of a spammer's violation of the Act's provisions that involve an inherent level of deception, like falsifying header information. To minimize eligibility disputes, the FTC proposes that reward determinations should be wholly within its discretion, and not subject to administrative or judicial review.

With potential high-dollar rewards, there is concern about bogus spam tips. Therefore, to discourage "disinformation," the FTC proposes that it should be specified that it is unlawful to provide false information in connection with the reward system. To protect individuals from loss of income or retribution, the FTC proposes that identities of informants should be protected as anonymous. However, the FTC does not propose grants of immunity.

The mere enactment of the CAN-SPAM Act certainly has not solved the spam problem. Perhaps the recent recommendations of the FTC to Congress will lead to steps in the right direction.

Eric Sinrod is a partner in the San Francisco office of Duane Morris (www.duanemorris.com), where he focuses on litigation matters of various types, including information technology disputes. His column appears Wednesdays at USATODAY.com. His Web site is www.sinrodlaw.com, and he can be reached at . To receive a weekly e-mail link to Mr. Sinrod's columns, please send an e-mail with the word Subscribe in the Subject line to .

Reprinted here with permission from USAToday.com.