May 3, 2004, 12:00 AM

Federal officials charge first e-mail marketers under the CAN-Spam Act

In the first legal action taken by the Federal Government, the Federal Trade Commission has filed its first legal actions under the CAN-Spam Act against two organizations charged with sending millions of spam e-mail messages, the FTC reported.

The Federal Trade Commission has filed its first legal actions last week under the CAN-Spam Act against two organizations charged with sending millions of spam e-mail messages that the FTC says made fraudulent product offers.

The FTC, following up on nearly 1 million complaints filed with the agency by consumers against the two, has filed court complaints against Detroit-based Phoenix Avatar and an organization that operates out of Australia and New Zealand, Global Web Promotions. Since the CAN-Spam Act went into effect on Jan. 1, consumers have filed 490,000 complaints with the FTC against Phoenix Avatar and 399,000 against Global Web Promotions, the FTC said.

The FTC says the two defendants violated the CAN-Spam Act by obscuring their identities in the "reply-to" and "from" fields of their e-mail messages, a process known as spoofing, and by failing to provide an opt-out feature within the messages. It said the defendants also violated the FTC Act by making deceptive claims regarding the performance of their products.

At the request of the FTC, a U.S. District Court judge has barred continued e-mailing by the two defendants and frozen both defendants’ assets, the FTC said. The FTC worked with the U.S. Attorney’s Office in Detroit and the U.S. Postal Service in filing its complaint against Phoenix Avatar, and with the Australian Competition and Consumer Commission and the New Zealand Commerce Commission in acting against Global Web Promotions. The FTC said it also received assistance from the Computer Crime and Intellectual Property Section of the Criminal Division of the U.S. Dept. of Justice.

The FTC said Phoenix Avatar earned nearly $100,000 a month by persuading consumers to pay $59.95 for diet patches, which the FTC charges were bogus products. It added that Global Web sold similar products at close to $80 each.

 

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