Thursday, January 13, 2005

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Attorney General Abbott Files First Texas Lawsuit For Violations Of E-Mail Spam Laws

AUSTIN - Texas Attorney General Greg Abbott today filed the state’s first lawsuit against one of the world’s largest spam operations in an effort to crack down on the massive flow of illegal e-mail into Texas consumers’ in-boxes.

Ryan Samuel Pitylak, a University of Texas at Austin student, and Mark Stephen Trotter of California, are named in the Attorney General’s federal complaint as controlling PayPerAction L.L.C., Leadplex L.L.C. and Leadplex Inc., three companies registered in Nevada. One watchdog group, SpamHaus.org, ranks the defendants as the fourth largest illegal spam operation in the world.

Sample Fraudulent
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PayPerAction
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“Spam is one of the most aggravating and pervasive problems facing consumers today,” said Attorney General Abbott. “Unwanted, unsolicited e-mail clogs computers of Texas consumers and Texas businesses, wasting precious time and money. Texans are fed up, and today’s action aims to give them relief by shutting down one of the world’s worst spam operations.”

View video of Attorney General Abbott announcing lawsuit

Today’s complaint was filed under the federal Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM), which carries penalties of $250 per violation, up to $2 million. Attorney General Abbott is also alleging violations of the Texas Electronic Mail and Solicitation Act – which allows for penalties of up to $10 per unlawful e-mail or $25,000 per day – and the Texas Deceptive Trade Practices Act, which authorizes penalties of up to $20,000 per violation.

One involved citizen, Dewey Coffman of Austin, has been an instrumental player in Attorney General Abbott’s investigation. Mr. Coffman, who has significant expertise in spam filtering, firewalls and other mechanisms to protect consumers, set up “trap” e-mail accounts on his personal server to capture the defendants’ unsolicited e-mails. He archived and forwarded these messages to investigators with the Office of the Attorney General OAG), who then pinpointed their origin.

Internet service providers and the Federal Trade Commission (FTC) also supported the Attorney General’s spam-fighting efforts. Like Mr. Coffman, Microsoft Corp. forwarded to OAG investigators e-mails captured in its trap e-mail accounts. In only a six-month period last year, these undercover accounts alone received 24,000 illegal e-mails sent by the defendants. The FTC provided the OAG access to its database of spam complaints.

Attorney General Abbott added: “I am grateful to all those who assisted in our investigation. Through collaborative efforts like these, we can more effectively fight the vast public menace of spam.”

Since Pitylak and Trotter established PayPerAction in 2002, it has operated over 250 assumed names, leading Internet users to believe they are being deluged by different companies soliciting for services.

The defendants engaged in the common, but illegal, practice of using misleading subject lines that give recipients the false impression the e-mail contains information specific to them. By law, such promotional e-mails must clearly indicate they are advertisements and cannot use misleading subject line to trick recipients into opening them.

When opened, most e-mails sent by the defendants contained hyped-up language pitching mortgage refinancing services, even though the defendants are not licensed in Texas to provide such services. Consumers often responded to these e-mails by providing additional information after being told their privacy would be protected. Instead, the defendants sold the information as sales leads to other companies for as much as $28 per lead.

In passing the CAN-SPAM law, Congress recognized spam as a growing threat to the convenience and efficiency of e-mail. Internet service providers reported to Congress that unsolicited e-mail accounted for more than half of all e-mail traffic in 2003, up from an estimated 7 percent in 2001.

Lawsuit Against PayPerAction Et Al.
Consumer Tips on SPAM Prevention
View video of news conference