New Lawsuit Dogs MonsterHut After Court Defeat

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Fresh off a May legal defeat in which a judge approved their network provider kicking them off the Internet due to allegations of spamming, the operators of now-defunct MonsterHut Inc. face a new courtroom battle from the New York attorney general.

State Attorney General Eliot Spitzer on May 28 announced his office's lawsuit charging that the e-mail marketing firm sent more than 500 million unsolicited commercial e-mails and falsely claimed they were permission-based.

Also named in the lawsuit are MonsterHut CEO Todd Pelow and the company's chief technical officer, Gary Hartl. Pelow and Hartl falsely claimed that every recipient of commercial e-mail sent by MonsterHut explicitly asked for it, according to the lawsuit.

But only part of the company's e-mail lists contain opt-in contacts, the attorney general's office said. MonsterHut's false advertising enabled it to profit at the expense of its Internet access provider, clients and consumers, according to the charges.

Pelow said the attorney general's office tried to make the complaints against MonsterHut appear worse than they were. In 1 1/2 years of operation, MonsterHut sent 400 million e-mails, and these generated only about 2,000 complaints, in contrast to the "tens of thousands" claimed by the lawsuit.

Other e-mailers hosted by MonsterHut did generate tens of thousands of complaints, including one case in which about 40,000 consumers complained in 30 days, Pelow said. But these e-mails did not originate from MonsterHut, and the company terminated the access of abusers.

"They're grandstanding," Pelow said of the charges. "They, in fact, are misrepresenting."

MonsterHut bought its e-mail lists from third parties that said the owners of the e-mail addresses gave their permission to receive commercial e-mail, Pelow said. The company never claimed the addresses were confirmed opt-in, and they were priced accordingly, he said.

The company offered an alternative to confirmed opt-in e-mail that was low risk and offered a real return on investment, Pelow said. MonsterHut never guaranteed results and never tried to deceive anyone with false headers or subject lines.

On May 3, a New York state appeals court overturned a lower court's ruling last year temporarily prohibiting MonsterHut's Internet provider, PaeTec, Rochester, NY, from cutting off the e-mail marketer's access. In addition, the appeals court approved PaeTec's request for summary judgment allowing PaeTec to cut off MonsterHut immediately.

Though the ruling was a victory, it would not prevent MonsterHut from finding another Internet provider, Spitzer's office said. The state's lawsuit seeks to force MonsterHut to cease claiming that all its e-mails are permission-based, to reveal how it came by its e-mail lists and to pay unspecified civil penalties and court costs.

"We are seeking to prevent MonsterHut from continuing its fraudulent, deceptive and illegal practices, not just over PaeTec's network, but over any ISP in New York," Spitzer said in a statement.

But Pelow said MonsterHut shut down the day PaeTec began denying it Internet access.

"They're trying to crush a dead bug," Pelow said. "You can so tell it's an election year."

MonsterHut once included among its clients The New York Times and Altec Lansing. Pelow personally called his clients to let them know MonsterHut had gone out of business -- another sign, he said, that MonsterHut was a legitimate company.


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