Two men were arrested and two spam operations face civil complaints in the first legal crackdown launched under the CAN-SPAM Act, the Federal Trade Commission said yesterday.
The defendants are accused of being “saturation spammers” who flooded inboxes with spam, said Howard Beales, director of the FTC consumer protection bureau, at a news conference in Washington.
CAN-SPAM took effect Jan. 1 to place limits on unsolicited commercial e-mail, but spam-filtering companies have reported that spam volumes have remained unchanged.
In the first case, authorities obtained arrest warrants for four men associated with Phoenix Avatar, a Detroit-based operation that sold bogus diet patches, the FTC said. Postal inspectors arrested two of the men, Christopher M. Chung and Mark M. Sadek, at a residential location in Bloomfield, MI, after executing a search warrant.
Their two associates, James Lin and Daniel J. Lin, are expected to surrender, said Jeffrey Collins, U.S. attorney for the eastern district of Michigan, at the news conference. Chung and Sadek are free on bond, he said.
The four men each face up to five years in prison under the CAN-SPAM Act and up to 20 years under mail-fraud laws if convicted.
A federal judge also approved an FTC request for a restraining order and asset freeze on Phoenix Avatar. The operation earned about $100,000 per month. The diet patches sold for $59.95 each.
In the second case, the FTC filed for a restraining order against Global Web Promotions, an Australian operation that sells diet patches and “Natural HGH” or so-called human growth hormone products, according to the FTC. Spam from the company claimed the products could maintain a user's “appearance and current biological age for the next 10 to 20 years,” the FTC said.
The order sought by the FTC would halt Global Web Promotions fulfillment activities in the United States. The FTC also asked authorities in Australia to pursue charges against the company.
In both cases, the spammers violated CAN-SPAM by failing to disclose their mailing addresses and opt-out information in their e-mails, the FTC said. They also spoofed e-mails, meaning they forged e-mail headers to make it appear their spams came from innocent third parties, according to the FTC.
A representative from a small e-mail service provider who spoke at the news conference claimed his company's address was used in forged spam headers from Phoenix Avatar. Up to 1 million spams sent to invalid addresses by Phoenix Avatar bounced back to the provider, disrupting its systems.
The FTC has received 490,000 consumer complaints about Phoenix Avatar spam and 399,000 complaints about Global Web Promotions spam, the agency said.