DMers Applaud FTC Spam Crackdown

Direct marketers with the biggest stake in the future of e-mail marketing are enthusiastic about the Federal Trade Commission's recent anti-spam activity.

On March 4, the FTC asked a federal district court in Maryland to permanently stop Internet Business Broadcasting Inc. (IBB) from sending e-mail it said violated federal advertising laws by containing false and misleading information. The FTC also said that IBB's home page contained bogus business claims. At press time, IBB's telephone and Web site had been taken out of service.

“This paves the way for responsible e-mail marketing,” said Regina Brady, head of interactive services at Acxiom, Conway, AR. “Many direct marketers are reticent about even talking to their own customers by e-mail because they don't want to be painted with the same brush as the spammers.”

Brady said the action will go a long way to help legitimate e-commerce take another step forward.

According to the FTC, IBB, Rancho Cucamonga, CA, said it operated City Edition newspapers and sold opportunities to lease billboards or banners, essentially classified advertising space. The FTC said that in unsolicited bulk e-mail, or spam, sent to would-be investors, the defendant said investors could sublease advertising space and earn a guaranteed return.

Also according to the FTC, IBB said in the e-mail and on its home page that investors, who generally invested between $5,000 and $7,500, could reasonably expect earnings between $240 and $800 a month, a return of 100.8 percent on their investment within the first year.

The FTC said that few investors reached the level of earnings IBB said they would and that the defendant did not provide a full refund.

“The rules for advertising by e-mail are the same as those for advertising through the regular mail,” said Jodie Bernstein, director of the FTC's Bureau of Consumer Protection. “Don't mislead or lie to consumers or the FTC will come after you.”

The FTC has asked the court to order refunds for the investors.

Eileen Harrington, associate director for marketing practices at the FTC, said more anti-spam activity is on the horizon. In January, it sent warnings to 1,500 spammers whose e-mail solicitations contained phrases that suggest deceptive advertising such as “Make lots of money in your spare time.”

“We have continued to monitor those who haven't heeded our warnings, and you can expect to see more enforcement action,” Harrington said, adding that the current laws governing deceptive advertising are sufficient to clean up cyberspace and that no new laws are needed.

Rosalind Resnick, president of e-mail list firm NetCreations, New York, said she is delighted to see the FTC use existing federal fraud regulations to crack down on spammers.

“Now, I think there will be a flight to quality in the marketplace,” Resnick said, “and legitimate e-mail marketers will benefit.”

John Lawlor, president of e-mail service bureau The E-Mail Channel, Boca Raton, FL, agreed.

“The climate is such now that people forget five minutes after they request to be put on an e-mail list,” he said. “When they get something they don't immediately recognize, they yell, 'Spam.' The more under control spam becomes, the more likely people will be to remember that they asked [to be put on legitimate opt-in lists]. The first spammer who goes to jail or has to pay heavy legal fees with the FTC breathing down their neck is going to change this business dramatically.”

Even so, the FTC's action is only the first step toward a marketplace safe for legitimate e-mailers, said Scott Stoegbauer, vice president of technology at list firm Worldata, Boca Raton, FL. The rest of the responsibility falls on marketers' shoulders, he said.

“Stay as far away as possible from harvested lists,” Stoegbauer said. For e-mail list rentals, “go to Web sites only where there is true opt-in verbiage [asking for permission to send marketing e-mail] right on the front of the site, not on some contract page four pages in.”

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