FTC Expands Crackdown
On
Deceptive Bulk E-Mail
By STACY
FORSTER
THE WALL STREET
JOURNAL ONLINE
Federal and state law-enforcement officials are stepping
up efforts to rein in bulk e-mailers, expanding the types of practices
regulators consider fraudulent.
The Federal Trade Commission, the U.S. Postal Inspection
Service and several state attorneys general announced Wednesday a new
set of law-enforcement actions related to bulk e-mail, or "spam." They
also sent more than 100 warning letters to e-mail marketers whose
practices appeared to be deceptive.
The enforcement actions open a new front in the FTC's
efforts to protect consumers. Past cases involving spam have focused on
fraudulent products or schemes, such as sham work-from-home
opportunities or pyramid schemes. But in Wednesday's crackdown, one
target included a bulk e-mailer who used the logos of large financial
institutions to help elicit financial information from recipients, and
who falsely claimed that consumers could opt out of future messages.
"The FTC wants to stop all deceptive and unfair
practices, not just the content, but the fraudulent and deceptive things
about spam itself," said Brian Huseman, staff attorney with the FTC's
division of marketing practices.
Still, anti-spam advocates said regulators need more
clout to go after spammers and are pushing for legislation banning the
practice. Currently, there is no federal law against unsolicited bulk
e-mail, though many states have anti-spam statutes.
Consumers are being inundated with spam. Unsolicited
messages made up 36% of all e-mail on the Internet in August, up from 8%
a year ago, estimates Brightmail, an antispam-software maker.
Ray Everett-Church, chief privacy officer for ePrivacy
Group, a Philadelphia-based privacy consulting company, applauded the
move but said the FTC could do more to stem the problem by going after
more well-known or egregious spammers, or by sending more warning
letters.
"While any law enforcement action is an excellent step,
there are some bigger fish out there who continue to get away with their
deceptive activities," Mr. Everett-Church said.
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E-MAIL HARVESTING
FTC and state law-enforcement officials
in the Northeast tested how using e-mail addresses in
different places on the Internet expose consumers to greater
spam.
The investigators posted 250 new e-mail
addresses in 175 different online locations, including chat
rooms, news groups and message boards, and monitored them
for six weeks.
Here is what they learned:
* All of the e-mail
addresses posted in chat rooms received spam, including one
that received spam only eight minutes after the address was
posted. * Eighty-six percent of the
e-mail addresses posted at newsgroups and Web pages received
spam; as did 50 percent of addresses at free personal Web
page services. * Twenty-seven percent received
spam e-mail after posting to message boards. * Nine percent received spam
after being listed in e-mail service directories. * The type of spam received was
not related to the sites where the e-mail addresses were
posted. For example, e-mail addresses posted to children's
newsgroups received a large amount of adult content and
work-at-home spam.
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The FTC said one of the spammers it targeted improperly
used the logos of Fannie Mae and Prudential in e-mails offering mortgage
financing and refinancing services. The FTC also alleged that these
defendants deceived customers by claiming they could opt out of future
offers, when in fact e-mail requests to be removed from lists were
bounced back. In addition, the headers in the spams were "spoofed,"
meaning the spammers misrepresented where the e-mails had
originated.
The FTC charged the defendants with unfair and deceptive
practices and with "pretexting" -- posing as an entity it was not in
order to get sensitive financial information. The defendants' names
weren't disclosed.
The FTC also charged NetSource One and James R. Haddaway,
operating as WorldRemove, for allegedly using spam to sell a service
they claimed would reduce or eliminate spam from consumers' e-mail.
The FTC said that by using an undercover account to test
the claims, it received more spam after signing up for the service.
Representatives from WorldRemove didn't respond to an e-mail sent to its
Web site, which was registered in Jeffersonville, Ind. Directory
assistance didn't have a number for Mr. Haddaway.
The FTC's Mr. Huseman said the agency is just starting to
show results in what will be a long and aggressive agenda targeting
deceptive spam. For example, in February, the FTC sent warning letters
to people involved in illegal e-mail pyramid schemes. Since issuing
those cautions, the number of those pyramid scheme e-mails received by
the FTC in its spam database has been reduced by half, he said.
"But with actions like this, we send a message to
spammers that certain conduct will not be tolerated," Mr. Huseman
said.
Jason Catlett, president of Junkbusters Corp., president
of Junkbusters Corp., a consumer and privacy-advocacy firm in Green
Brook, N.J., called for an anti-spam law similar to one outlawing junk
faxes to empower consumers to go after spammers.
"If you think about the hundreds of thousands of spammers
and the billions of pieces of spam delivered every day, [the FTC's
sweeps] are simply not going to make a substantial reduction in the
amount of spam that we get," Mr. Catlett said.
Write to Stacy Forster at stacy.forster@wsj.com4
Updated November 13, 2002 6:53 p.m. EST