Chapell & Associates

Tuesday, April 11, 2006

Feds Shut Down Spam Ring for Good

CNET - April 07, 2006
In a deal with the Federal Trade Commission and the state of California, the people behind a prolific spam operation have agreed to pay $475,000 and refrain from illegal activity. The deal, which does not include an admission of any wrongdoing, was reached with Optin Global, Vision Media, Qing Kuang "Rick" Yang and Peonie Pui Ting Chen, the FTC said in a statement Thursday. The defendants violated federal and state laws by sending millions of junk e-mail messages hawking mortgage loans and other products and services, the FTC charged. Consumers forwarded nearly 2 million of the messages to the agency.

The Chapell View
This case began about a year go when the FTC and state authorities in California sued these defendants, charging them with a number of violations of CAN-SPAM. In particular, the marketers were alleged to have failed to include a postal address in their commercial email, had falsified headers, did not include a valid opt-out mechanism, nor even identified the messages as advertisements. Given the number of violations, they might have gotten off lightly by settling - and not admitting any wrongdoing.

But I think this case emphasizes what we at Chapell & Associates have been hearing - and trying to repeat as many times as possible: vet your vendors. In online marketing, there's no excuse for not knowing who the third parties you contract with are, what they're doing on your behalf, and what they're reputation is.

CNET reports that the defendants in this case contracted with "third-party affiliates" to send the spam. Moreover, MediaPost reported today that as part of their settlement with regulators, the defendants must "obtain detailed information from any affiliates" and that "affiliates must submit emails in advance for approval."

It's always been a good marketing decision to know who is doing what on your behalf online; increasingly, it's becoming a good legal decision as well. The so-called "agency theory" of liability is gaining steam. The Center for Democracy and Technology (CDT) and the FTC have both made it clear in recent months that they intend to "shame" marketers who work with less than reputable affiliates. In addition, the New York Attorney General's office has made it quite clear that they will hold marketers indirectly liable for the actions of their affiliates.

I do think that more online advertisers are taking notice. But it's worth saying again: there's no replacement for knowing who you're working with.
posted by Isaac on Tuesday, April 11, 2006

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