As you may have noticed, PolicyBeta has been quiet over the past week. In addition to the late August slowdown that occurs annually in Washington when Congress leaves, we’re undergoing some renovations at our office, and much of our staff is on vacation. PolicyBeta will be back in full swing after Labor Day. In the meantime, be sure to check our home page for complete details on all CDT projects and developments.

The second half of August may be quiet in Washington, but the global spyware fight never sleeps, it seems.

Earlier this week, Washington State Attorney General Rob McKenna filed the second-ever case under his state’s Computer Spyware Act, which was enacted in 2005. The case concerns four California companies that allegedly install difficult-to-remove software on victims’ computers that generates barrages of payment demands for a movie download service. From the complaint, it sounds like a riff on some of the same slimy practices we’ve observed for years from spyware distributors. The FTC also filed a complaint against the companies sued by the Washington AG.

We were extremely pleased to hear about the lawsuits. We’ve been saying for years that enforcement is a vital prong in the war against spyware and nuisance adware. Cases like these undercut some of the financial incentive for spyware by sending a clear message to miscreants that they can and will be held accountable for fraudulent and deceptive practices.

Also this week we published out latest Policy Post, which details some of the latest developments in the fight against spyware and adware.

Earlier today we issued our full analysis of the troubling Deleting Online Predators Act (DOPA), which has come to be referred to as the “MySpace Bill.”

The legislation would require schools and libraries to filter access to chat and social networking tools or lose their federal e-rate funding. Because chat and social networking are so deeply ingrained in Internet communications, the legislation could force librarians to cordon off vast amounts of valuable Internet content.

In addition to limiting functions that are deeply ingrained in thousands of legitimate, socially valuable Web sites, The Deleting Online Predators Act (DOPA) would put the Federal Communications Commission (FCC) in the position of either ordering that all sites with chat capability be blocked, or engaging in a clearly unconstitutional process of choosing which sites to block.

As I said in our statement to press: “blogs, forums and social networking sites have emerged as essential tools for people of all ages to speak on the Internet. Blocking those functions would severely limit the value of the Internet itself for those who rely on schools and libraries for access. We urge Congress abandon this misguided, unconstitutional proposal.”

Today we released the second installment of our “Following the Money” series, which untangles the complex funding arrangements behind nuisance and harmful adware.

The discussions that surrounded our release of the first report in the series revealed a lack of awareness among advertisers, ad agencies, and intermediary networks about how ads end up in deceptive adware programs. To shed some light on this issue, we conducted a study of the ads generated by two deceptive adware programs, the results of which are explained in today’s report.

We were a little surprised to learn that fully 55 percent of the 380 ads in our sample were placed directly by advertisers, rather than through intermediaries. In our first report, we focused only on well-known national companies using adware. Those companies tended to use more intermediaries when advertising through nuisance adware products. But in the larger universe of adware ads, most appear to be placed by companies that have a clear knowledge of what they are doing.

The message, from our standpoint, is clear. It’s time for advertisers to take responsibility for where their advertising dollars go. Consumers are beyond fed up with these deceptive programs and we can’t imagine they’ll be happy if they learn that companies they do business with are helping to support this online scourge.

Consumer Reports annual “State of the Net” assessment was released this week.

The good news is that the magazine’s research is showing that spyware is on the decline due to improved anti-spyware programs and enforcement efforts. However, the numbers are still very high, 1 in 8 Internet users in the US dealt with a spyware infestation last year. The consumer magazine estimates that $2.6 billion was spent on spyware problem and that nearly a million users had to replace their computers because of it.

The report gives an overview of the state of the Canadian online security policy including some strong statements from the Canadian Internet Policy and Public Interest Clinic’s David Fewer on the failure of the government to act against spam.

There is also a quick, but informative review of anti-stalking tips domestic violence victims with quotes from Cindy Southworth of the National Network to End Domestic Violence.

As expected from any Consumer Reports review of this topic there are also unbiased reviews of major anti-virus and anti-spyware products that will be useful to all computer users.

On Thursday we sent a pair of letters to the Hill opposing legislation that would force Web site operators to tag a broad range of legal, socially valuable material with a government-approved warning label identifying the material as “sexually explicit.” The move is the latest congressional effort to place unconstitutional controls on Internet content.

CDT sent one letter to the Commerce Committee, which included the labeling provision in a major telecom bill, and another to the appropriations committee, urging lawmakers to remove the measure from the massive Science-Commerce-Justice-State appropriations package, to which it was recently appended.

What’s particularly troubling is that lawmakers have added the labeling mandate to two unrelated bills without any hearings or debate. Worse still, the committees that included the labeling language do not have any jurisdiction over the issue. The labeling mandate is in fact a criminal law that authorizes stiff prison sentences for violators. That jurisdiction rests with the Judiciary Committees, which have never considered the legislation. This is stealth legislating at its worst. Unless the labeling language is stripped from these bills, Congress may create a wholly new crime that targets individuals engaged in legal and constitutionally protected conduct, without any consideration of the consequences. I seem to remember that the Senate used to be considered America’s “greatest deliberative body.”

Here’s the first problem with mandatory labeling — it will do nothing to protect kids. Hundreds of thousands of objectionable Web sites are operated well outside of U.S. law and won’t be affected at all by such legislation. No child will be spared exposure to adult-themed content by dent of this law being passed.

Second, the legislation will have a profoundly negative impact on the constitutional rights of American Internet users. The bill’s vague definitions would sweep in a broad range of protected, worthwhile information including videos, books, television shows, movies, branding a massive amount of legitimate content with the equivalent of a digital scarlet letter. Victoria’s Secret would plainly be covered by the law as would safe sex sites supported by banner ads, sites operated by artists selling their wares, all R -rated movies as well as many PG-13 content, music lyrics, online magazines, and more. The only way to avoid being forced to carry the warning label is to engage in self-censorship, and that is a result that the First Amendment does not permit.

Finally, it is hard to understand how such a blunt instrument would help guide parents select content for their families, when voluntary ratings and tagging provides far more robust and granular information. All that it is likely to do is undermine existing ratings schemes, cause confusion and freeze innovation.

Any of those concerns are enough reason to kill this unwise and unconstitutional legislation outright, but taken together they should send a clear message to lawmakers that this provision should be left on the cutting-room floor.

We joined with more than 30 other groups today representing all sides of the political spectrum to urge Senator Arlen Specter to abandon the dangerous, premature “compromise” on warantless wiretapping that he reached with Vice President Cheney last month. In a letter to the Chairman, the groups warn that enacting the Cheney-Specter compromise would be “even worse than the status quo.”

Ostensibly intended to bring the White House’s warrantless surveillance programs under judicial review, the proposed legislative “compromise” does not bind the administration to make any changes to its programs if they are deemed by a court to be overreaching. It even allows the administration to preclude meaningful judcial review of the warrantless surveillance program in the more than 30 cases already pending. It gives the government the option to divert these cases from courts designed to provide a fair forum for all parties to the court that the government believes most favorable to it (the Foreign Intelligence Surveillance Court of Review) and to change the rules to make challenges more difficult. Even more troubling, the legislation guts the FISA by making compliance with the statute merely optional and authorizes the current administration and future administrations to conduct surveillance far more invasive than the existing programs that Administration officials have described.

We urged Specter to move forward instead with a bill he co-sponsored with Sen. Dianne Feinstein (D-Calif.), which addresses the process and resource concerns raised by the White House without authorizing any broad new powers. We also sent out a Policy Post today detailing our chief concerns with the Cheney-Specter proposal.