WASHINGTON, DC – The Federal Trade Commission (FTC) announced last Thursday that it has reached four “consent agreements” that serve to settle cases brought against four alleged spamming operations, exacting fines totaling over $480,000 in the process.The defendants in the case involving the highest fine were Cleverlink Trading Limited, Real World Media, LLC, Crazy Protocol Communications, Inc., Brian D. Muir, Jesse Goldberg and Caleb Wolf Wickman.
Crazy Protocol operates “Adult Cash,” an the affiliate program that will now be required to monitor its affiliates for compliance with the CAN-SPAM Act, under the terms of the settlement agreement with the FTC.
In a press release issued last Thursday, the FTC stated that “Cleverlink Trading Limited and its partners will give up $400,000 in ill-gotten gains to settle FTC charges that their spam, or that of their affiliates, violated federal law.”
In the course of an email ad campaign that the FTC referred to as “their ‘date lonely wives’ spam,” Cleverlink “violated nearly every provision of the CAN-SPAM Act,” according to the FTC.
“It [the ‘date lonely wives’ spam] contained misleading headers and deceptive subject lines,” the FTC stated in its release. “It did not contain a link to allow consumers to opt out of receiving future spam, did not contain a valid physical postal address, and did not contain the disclosure that it was sexually explicit. It also included sexual materials in the initially viewable area of the e-mail, in violation of the FTC’s Adult Labeling Rule.”
According to the FTC, after the Commission filed its initial complaint against Cleverlink, a U.S. District Court judge “halted the illegal spamming at the FTC’s request and froze the defendants’ assets.”
The settlement announced last week ends the litigation between the FTC and Cleverlink, “bars future violations of the CAN-SPAM Act and the Adult Labeling Rule and requires extensive monitoring of their affiliates for future violations,” according to the FTC.
According to the stipulated order for permanent injunction and final judgment posted to the FTC website, the judgment entered against Cleverlink was $2,635,000, but the judgment has been suspended except for “$303,000 to be paid to the FTC,” and “$95,000 to be deposited by Defendant Muir into an escrow account to facilitate tax payments.”
The agreement states that the defendants must pay the fine to the FTC and Muir must make the payment into the agreed-upon escrow account within 10 days of the order being entered.
Also within 10 days, Muir is required to “deposit the net proceeds from the sale of his 2001 Dodge Viper into the escrow account discussed,” according to the settlement.
The other three settlements all involved the use of “zombie” computers – computers used as origin and/or relay points for spam without the owner’s consent or knowledge – to conceal the source and actual sender of the spam.
In on of the other settlement agreements announced by the FTC last Thursday, the FTC stated that Zachary Kinion “sent spam hawking adult sites, mortgage rates, and privacy software and paid other spammers commissions to send spam messages for him.”
The FTC also alleged that Kinion “hid his true originating address by routing his spam through the computers of innocent third parties.”
The order against Kinion includes a judgment of $151,000, which the FTC said is the total amount that Kinion made from his alleged spamming. According to the FTC press release, however, that judgment has been suspended because of Kinion’s “inability to pay.”
With regards to the settlement with defendants William Dugger, Angelina Johnson, and John Vitale, the FTC stated that their operation also made use of “zombie” computers to conceal the identity of the sender.
The FTC further charged that the messages sent out by Dugger, Johnson and Vitale “violated provisions of the Adult Labeling Rule that prohibit sexually explicit images in the initially viewable area of an e-mail and that the label ‘SEXUALLY EXPLICIT:’ appear in the subject line.”
The settlement with Dugger, Johnson and Vitale requires them to “give up $8,000 in ill-gotten gains,” bars the trio from future violations of CAN-SPAM and requires that “before they use third parties’ computers to send spam, they must obtain authorization from the computer’s owner and inform the owner how the computer will be used,” according to the FTC press release.
The fourth and final spamming-related settlement announced last week involved an individual the FTC described as a “professional button-pusher” in its release.
The FTC charged Brian McMullen, doing business as “BM Entertainment” and “B Pimp,” with using illegal spam to “drive traffic to Web sites run by third parties.”
McMullen also allegedly used “zombie” PCs to carry out his illicit email campaigns.
“(I)n an attempt to conceal the source of the spam, the spammer routed his promotions for pharmaceuticals and adult content through unwitting consumers’ computers,” the FTC stated in Thursday’s release.
In addition to a fine of $24,193 that has been suspended due to his inability to pay, McMullen has also pleaded guilty to criminal charges related to spamming, and to unauthorized possession of “access devices” (credit cards), according to the FTC. McMullen is currently awaiting sentencing on those charges.
All four agreements contain language specifying that the defendants have entered into the settlement without admitting guilt to the charges brought by the FTC.
“Defendants do not admit any of the allegations set forth in the Complaint, other than jurisdictional facts, and deny liability for any of the violations alleged in the Complaint,” states the agreement entered into by the Cleverlink defendants. “Entry of this Order shall not be considered a finding of any wrongdoing whatsoever.”
