FTC pursues 'spam' scam case

Web posted May 19, 1999

By Associated Press

WASHINGTON -- The perpetrators of a new junk e-mail scam targeted at thousands of consumers have used the Internet and a complex telemarketing scheme to keep their identities unknown.

But that's not stopping the Federal Trade Commission from suing them.

On Tuesday, the FTC announced actions against an unidentified defendant accused of sending unsolicited e-mail, better known as ``spam,'' that deceived consumers into making international calls to an adult entertainment phone line.

The agency says this action -- the first taken against an unnamed perpetrator -- is a warning to con artists who try to hide behind the vast, faceless Internet.

``Anonymity doesn't necessarily stand in the way of some kind of law enforcement,'' says Eileen Harrington, the FTC's associate director of marketing practices.

The scheme -- a combination of spamming and telemarketing fraud -- has already prompted 20,000 consumers to complain to America Online.

Many were caught off guard, like Clifton Taylor's 12-year-old grandson, who was doing his homework on the Internet when the offending e-mail popped up. It told him that his order for a purchase had been processed and that $375 would be billed to his credit card in the next two days unless he called the number on the screen to cancel.

But instead of a consumer representative, on the other end was a pornographic recording by a company using a site in the Caribbean. The international toll call appeared on the family's phone bill shortly after.

``This approach was so different it caught us by surprise,'' said Taylor, a retired schoolteacher living outside of Charlotte, N.C.

The case highlights some of the challenges in tracking down and stopping the senders of spam. A common tactic among spam artists, including those cited in Tuesday's action, is to use a variety of forged e-mail addresses so they cannot be reached.

Ray Everett-Church, co-founder of the Coalition Against Unsolicited Commercial E-Mail, likens the problem to the arcade game ``whack-a-mole'': No sooner does the mole get hit by the mallet in one place than it pops up in another.

``Spammers rapidly move from sending site to sending site,'' says Everett-Church. That makes it futile for a server provider to block one specific e-mail address. But, he added, companies can block e-mails based on their content; for example, filtering out all messages that contain a particular word or telephone number.

``The problem comes in finding similarities you can block,'' he said.

The FTC says it is raising the ante against fraud with its own technology. More than a year ago, the commission began collecting spam forwarded to it by consumers, creating a database with hundreds of thousands of messages in it.

The commission first learned of the scheme after a consumer submitted an online complaint form -- one of about 10,000 the FTC receives each week. Using the information provided by the consumer, the FTC ran a database search and came up with dozens of matches containing the same telephone number.

``This technology has given us an enormous leg up against scams that use technology,'' said Harrington. The agency was able to pull together a case in a few weeks.

AOL has a similar mechanism for receiving forwarded junk e-mail. The company has passed on its complaints about the scam in question, plus copies of the actual spam to the FTC, said Rich D'Amato, an AOL spokesman.

Harrington predicts the commission will have enough information to name a defendant in a few days. In the meantime, the court order has blocked the flow of money from American telephone carriers to the foreign telephone company that pays the operators of the hot line.

The FTC has asked the court for the money already paid by customers to their telephone companies for the toll charges to be put aside for consumer restitution and for the company to be barred from violating the law through its deceptive messages.

A successful case against the perpetrators would come as vindication to Taylor. He contacted an array of people from his phone company to members of Congress to local police to report the matter. Most rebuffed him because he didn't have enough follow-up information for them to pursue a case.

While he was furious about the e-mail, Taylor said his ``anger got worse because I couldn't get anywhere with anybody. The whole thing just completely rubbed me the wrong way.''