U.S. Settles with Internet Access Spammers

The U.S. Federal Trade Commission (FTC) has settled a case it filed against spammers who collected consumers’ personal information, including credit card information, by sending unsolicited commercial e-mails that told people they had to supply the data or lose access to the Internet.

The settlement with Robert Stout, doing business as Global Internet Federal Registry, and Donald J. Lytle, an officer and director of Get Out From Under.com, permanently bars the defendants from misrepresenting themselves in any advertising, marketing, promotion, distribution or sale of any products or services via the Internet, and from using any personal information collected under false pretenses, the FTC said.

According to the FTC, the defendants in the case already agreed to destroy the personal information they collected as a result of the deceptive e-mails, shortly after the case was brought in October 1999.

FTC staff attorney Janet Evans told the E-Commerce Times Monday that there was no financial redress, or money damages, paid as part of the settlement.

“Financial redress depends on if there was financial injury to consumers,” Evans said. “In this particular case we got them very early so there wasn’t a need for that. In a lot of cases, we are getting substantial redress.”

Signing Up Surfers

The defendants in the case allegedly sent unsolicited commercial e-mails to Internet news groups, falsely notifying members that because of the Children’s Online Privacy Protection Act, consumers were required to certify their age in order to maintain access to the Internet.

Newsgroup readers were then instructed in the e-mail to go to Global’s Web site, where they were told they needed to fill out the site’s application form because, “all Internet users are required to register here for Internet licensing.”

Included on the form were sections collecting consumers’ names and addresses, as well as credit card numbers and expiration dates, the FTC said.

Sending A Message

Evans said that there are no “typical” types of spamming cases prosecuted by the FTC.

“There’s no similar pattern,” Evans said. “Fraud organizations are endlessly creative. We make a real effort to target different types of fraud in order to best get the word out of what types of practices are acceptable.”

In fact, Evans said, the FTC generally does not pursue the issue of unsolicited commercial e-mail unless the communication involves false or deceptive content, or touches on privacy concerns. The problems caused by those companies that send out thousands of unsolicited e-mails to consumers raise an issue for Congress to handle, Evans said.

Reverse Promotion

In January 2000, the FTC settled a case with Reverseauction.com in a similar manner. In its complaint, the FTC alleged that ReverseAuction obtained information about eBay users by registering itself as an eBay user and agreeing to be bound by the terms of eBay’s user agreement.

After it obtained the names, the complaint said,ReverseAuction sent e-mails to eBay users telling them their user IDs were about to expire, and promoting ReverseAuction’s competing site.

ReverseAuction was required to eliminate any personal data they obtained as a result of the e-mails, as well as send follow up e-mail messages to any eBay consumer that had received the original unsolicited e-mail. ReverseAuction was also required to include privacy notifications in any of its messages to consumers.

In July 2000, eBay entered into a US$1.2 million lawsuit settlement with ReverseAuction.com.