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US Launches First CAN-SPAM Lawsuits

By Keith Regan
Apr 29, 2004 8:06 AM PT

In the first case brought under the CAN-SPAM Act that took effect January 1st, U.S. federal officials have charged four men from suburban Detroit, Michigan, with bombarding consumers with unwanted e-mail messages.

US Launches First CAN-SPAM Lawsuits

Prosecutors alleged the men sent more than a million messages attempting to sell bogus diet products and other items. Federal regulators said they traced more than 10,000 consumer complaints to the operation, which was known as the Avatar companies.

The charges include several federal offenses because the men are accused of using computers owned by government agencies -- at the U.S. Army Information Center and the Administrative Office of U.S. Courts -- as well as machines owned by private companies, such as Ford Motor Company and Unisys, to disguise the true source of the messages.

Although private companies previously have sought to use the CAN-SPAM Act in their pursuit of bogus e-mailers, the latest charges are the first to be brought directly by federal regulators under the new law.

Lots To Lose

The four men face criminal charges brought by the U.S. Attorney's Office in Detroit. Two of them, Christopher Chung and Mark Sadek, were arraigned in Detroit Wednesday. Authorities are seeking the other two men, Daniel Lin and James Lin.

The Federal Trade Commission (FTC) also is planning to file a civil suit that could enable regulators to levy millions of dollars in fines against the suspects, who each already face the prospect of up to 20 years in prison as a result of the criminal charges.

Authorities say the men operated a ring that sold an herbal weight-loss patch, using constant mass e-mailings to attract new business. According to the authorities, they have confirmed with medical experts that the patch does not work.

The investigation involved cooperation with AOL, where the men had registered e-mail addresses, and with Hotmail, whose users had been hit by a mass mailing from the company.

Waiting for Impact

Although the CAN-SPAM Act was passed with much optimism late last year, most analysts say it is not surprising that the amount of unwanted e-mail battering consumers has not diminished. Indeed, most of them predicted the law would do little to curb the spam problem.

"Hard-core spammers are going to find ways to work around any new laws or technical solutions," Forrester Research analyst Jim Nail told the E-Commerce Times. "Obviously, people are making money at it, so if you eliminate the front-line spammers, someone else is going to step up into their place."

Nail and others say a fundamental shift in the way e-mail is handled is what is needed, such as a pay-to-play system in which each message sent must have the equivalent of postage to be delivered successfully.

"There doesn't seem to have been a marked decrease in [the amount of] spam being sent since January," when the law took effect, Nail added.

In the Crosshairs

However, spammers clearly have been put on notice that they are in the crosshairs of regulators, prosecutors and private companies.

A broad coalition of Internet service providers and others filed scores of private lawsuits against alleged spammers earlier this year, and the FTC has made it clear that it considers spam reduction critical to ensuring the Web remains an engine for economic growth.


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Salesforce Commerce Solution Guide
Salesforce Commerce Solution Guide