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UPDATED: Sep 23, 2011
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As a general legal matter your e-mail should be private, with some important exceptions. As a practical matter it is fairly vulnerable to a dedicated intruder.
Legal Requirements For Privacy:
The Federal Electronic Communications Privacy Act makes it a crime to read or disclose the contents of an electronic communication, including e-mail messages. However, there are important exceptions:
(1) your commercial system operator (your internet e-mail supplier for example) can view e-mail if it suspects damage to its system or harm to another user;
(2) most commercial systems require members to agree to allow the system operators to view and disclose the contents of message if the system thinks it necessary;
(3) your corporate employer may have company-wide rules permitting the company to read your e-mail. If your company does not have any published rules or policies the law is uncertain and varies from state to state but most states have supported the employer’s right to look at its employee’s email; and
(4) Law enforcement officials can look at your e-mail, but they need a court-ordered search warrant – similar to the need for a search warrant to perform a telephone tap – before they may obtain access or disclose the contents of electronic communications.