First CAN-SPAM Charges Filed
FTC cites two firms for violations of federal antispam laws.
Grant Gross, IDG News Service
Two alleged "saturation" spammers, one based in Michigan and the other operating out of Australia and New Zealand, are facing a variety of legal charges including the first under the new federal antispam law.
The two companies, Phoenix Avatar, based in the Detroit area, and Global Web Promotions have allegedly violated the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, which took effect in January. They also face charges of marketing fraudulent products under action by the Federal Trade Commission.
Spam allegedly sent by the two companies was responsible for more than 889,000 consumer complaints to the FTC between January 1 and April 24, the largest numbers of complaints about any alleged spammers, the FTC says.
Representatives of neither company were available for comment Thursday.
Jail Time Sought
"Inboxes are brimming with unwanted e-mail messages, even though consumers are using filters and following the advice of tech columnists and government agencies like ours," said Howard Beales, director of the FTC's Bureau of Consumer Protection, at the FTC's announcement Thursday. "Still, consumers say they're losing the battle for their inbox to unwanted and often offensive spam."
The CAN-SPAM Act, although credited for its initial effort to address the growing problem of spam, has also been criticized as insufficient and ineffective.
While these were the first criminal cases filed under CAN-SPAM, FTC and other federal law enforcement officials say the two companies have violated other laws as well. The operators of Phoenix Avatar, which was doing business as Avatar Nutrition, face up to 20 years in jail for mail fraud, and five years for CAN-SPAM violations, says Jeffrey Collins, U.S. Attorney for the Eastern District of Michigan.
CAN-SPAM may add penalties to spammers prosecuted, but most spammers will face other charges, including advertising fraudulent products, Beales says.
"My expectation is most of them will be multiple law breakers," he says. "I would think that's going to continue."
Two officials of Phoenix Avatar were arrested Wednesday near Detroit and were released on unsecured bonds, Collins says. The two remaining company officials are expected to surrender to law enforcement authorities this week, he adds.
Spoofing and Scamming
The FTC charged Phoenix Avatar's officials with sending illegal spam to sell bogus diet patches. Consumers were directed to one of several Web sites selling the diet patches for $59.95, but Beales says there's no scientific evidence that the patches actually work. Phoenix Avatar violated CAN-SPAM by not providing an opt-out mechanism or a valid postal address in their e-mail messages, according to the FTC.
The company also used spoofed e-mail addresses in the "from" fields of its e-mail, the FTC says. At the FTC's request, U.S. District Judge James Holderman of the Northern District of Illinois has frozen the defendants' assets and ordered them to stop sending spam and advertising deceptive products.
The Phoenix Avatar operators also face federal mail fraud charges.
In the Global Web Promotions case, the FTC accuses the firm of marketing bogus human growth hormone and diet patch products using unsolicited e-mail. The diet patch cost $80.90, and the human growth hormone product, $74.95. Operators of the company face charges of violating the FTC Act and CAN-SPAM, and the FTC is seeking a temporary restraining order barring further spam as well as sales and shipment of the company's products in the U.S. The cases were filed in Illinois because the FTC investigation initiated out of its Chicago office.
The FTC is also working with Australian and New Zealand authorities on other charges, Beales says.
The FTC, Department of Justice, and Postal Inspection Service tracked the spammers by ordering their products and tracing the money back to the source, Beales says.
"Rather than try to trace the e-mail, we tried to trace the money," he adds. "It's virtually impossible to trace the spam itself."
