Lawsuits drive 'Spam King' Richter to bankruptcy

The Register ^ | 31 March 2005 | Andrew Orlowski

[ShadowAce]

The received wisdom in libertarian circles is that email anti-spam laws don't work, so they're not worth trying. In fact, they're working so well that the notorious 'Spam King' Scott Richter has filed for bankruptcy.

Last Friday, Richter's OptInRealBig.com filed for bankruptcy, brought to the brink by lawsuits from New York Attorney General and consumer champion Eliot Spitzer and Microsoft. OptInRealBig.com claimed assets of less than $10 million and liabilities of over $50 million thanks to the legal onslaught from Redmond, and Spitzer the Blitzer, which began in December 2003. Both sued under local state antispam laws. Although Richter settled with the NY AG's office last year, he says that Microsoft's claims top $19 million, and have forced him into insolvency.

It's a rare example of Microsoft deploying its legal muscle to socially beneficial ends.

But why, asks a reader, has the MSM [mainstream media] ignored this story? Probably because after a decade of libertarian propaganda, a kind of weary fatalism has set in. There are two strands of idealism that present an obstacle to fixing our broken internet email system, and this is one of them. The other is the belief that enacting technical changes would violate the "end to end principle" on which the open internet was founded, back in a more innocent day, when its only users were expected to be students and scientists.

Internet email is now so broken that Suzanne Sluizer, the author of MTP, SMTP protocol's immediate predecessor, told CNET two years ago, "I would suggest they just just write a new protocol from the beginning."

So the internet lobby insists that the law can't be made to work, and seeks to define the range of technical fixes to a very narrow range of politically-correct options.

Both are high-minded principles, but are means, not ends in themselves. A purely open network will be abused because spammers are behaving as rational economic actors: spamming exists because it's worth doing. In short, it pays. But as the Richter example shows, a local legal remedy can help.

Spam may never die on open networks, but a global consensus for legal and technical remedies will go a long way to stamping it out. Richter's bankruptcy shows that one part of the solution can be effective, it needs to be taken globally. The technical consensus, for now, remains elusive, but the lobby needs to take it much more seriously.

Every day billions of people use both closed and private computer networks, such as text messaging, and open computer networks, such as the internet, to communicate. Spam isn't a problem on the closed networks. To the question "What price freedom?" we can pose the counter-question, "What price reliability?"

Internet email is now so broken that only the way to be sure a recipient actually received your email is to call them and verbally confirm that they got it. If the public is to choose between spam and reliable messaging, which one do you think it will choose?

The internet lobby has a simple, and fairly stark choice ahead of it: fix messaging, or become irrelevant. ®

[ShadowAce]

[SeeRushToldU_So]

My spam is way down in my only public use email addy.

I have at least 4 addys that are not used for retail or eBay.

[stainlessbanner]

"I would suggest they just just write a new protocol from the beginning."

Any takers?

[Truth29]

But does Scott Richter just go down the street and open up another shop, or does he already have multiple alternatives. Punishment needs to involve more than judgments against shell companies.

[Graybeard58]

I get 5 to 10 credit card offers per week in my "snail mail" If the credit card companies could mail them as cheaply as the spammers send emails I would need a box car size mail box.

[Maceman]

Spamming ought to be a criminal felony with severe and lengthy prison time for perpetrators.

[coloradan]

The received wisdom in libertarian circles is that email anti-spam laws don't work, so they're not worth trying. In fact, they're working so well that the notorious 'Spam King' Scott Richter has filed for bankruptcy.

Some deconstruction necessary here:

1. Whether or not anti-spam laws "work," like all laws they run the risk of being perverted for other uses, e.g. a tax on the internet, ostensibly to may spammers pay, that turns into a prohibitive tax for everyone, or that harms non-spammers.

2. Making someone file for bankruptcy doesn't prove a law "works" - Donald Trump has filed for bankruptcy several times, and is still in business and still wealthy. Bankruptcy isn't a way to make people pay, it's a way to make people NOT pay.

[Redbob]

Microsoft want monetary damages?

I want to see him publicly flogged.
100 lashes with the cat o'nine tails, administered by a tag team of internet users to be drawn by lottery.

[BookaT]

I would really like to no how bad people really hate spam.

I tend to see who it is from and if it is not from someone I am dealing with or not titled with a title I would recognise I dont waste time opening it.

Spam affects people who open it and read it.

I think spoofing,fishing, and the spyware is a WAY WAY bigger problem.

I almost through my computer through my window after a spyware attack. Everytime I typed a URL in it would go to a search engine and say did you mean ..... and it was relentless.

I think the spam complaints are overrated. Until email becomes mandatory reading, be smart and only open the ones you know are for you, from someone you know.

Any thoughts on the spam thing? Now I could see that if you get hundreds a day it would suck and make you unproductive. I get about 20-50 a day and I can very quickly put the check in the box and delete then Without opening them.

Any thoughts on this?

[agitator]

If I have to wade through 50 spams to get to one legitimate email, I have wasted a significant amount of time. Multiply that by 100,000 employees for one company and you have a significant loss of productivity. Multiply that across the the entire world and you have a few parasites costing the entire world a huge amount of money.

[null and void]

pit-y

[SlowBoat407]

Spamming ought to be a criminal felony with severe and lengthy prison time for perpetrators.

E-mail has, from the first, been a wonderful side benefit of the internet, which in turn has been a wonderful side benefit of a government/university research network. E-mail has not, to my knowledge, been codified in any legal way as has the U.S. mail. So on what basis can a federal law be enacted to control it? The only way that can happen is if the federal government or, even worse, some other entity, takes over complete control and regulation of the internet and its use becomes a privilege, not a simple fact of technology.

Does a company's business depend on e-mail? That's their choice. There's no law or requirement (except in terms of business to business relationships) stating that correspondence must take place in this manner. Therefore, spam does not conflict with any federal statutes (again, that I know of) except when it directly interferes with government business.

I hate spam. I loathe it. I detest it. But the minute we start putting laws on the books to try to stop it, we open the door for more and worse regulation.

[TChris]

Minimizing spam, if not outright eliminating it, is pretty easy:

1. Close your current "spammed" email account. Have your ISP make a new one for you with a different name.
2. Never, EVER use this new email address online (registering at a web site, etc.)
3. Give the email address out to people only. When you give it out, instruct the person to use it for personal correspondence ONLY. Tell them never ever to put you on one of those "List five email addresses to share this opportunity" lists!
4. Open a free email account on Yahoo, MSN, etc.
5. Use this free account for all "high risk" uses. (Web site registration, etc.) These accounts come with pretty strong anti-spam tools too.
6. Check the free account occasionally, deleting the mountains of spam.
7. Never, ever, ever click the "click here to be removed from the mailing list" links on a spam mail! Those links are used to create a list of verified email addresses. They know there's a person behind the address now! This verified list nets a higher price when its sold to other spammers. Just. Delete. The. Spam.

[dead]

Richter's bankruptcy shows that one part of the solution can be effective, it needs to be taken globally. The technical consensus, for now, remains elusive, but the lobby needs to take it much more seriously.

Every day billions of people use both closed and private computer networks, such as text messaging, and open computer networks, such as the internet, to communicate. Spam isn't a problem on the closed networks. To the question "What price freedom?" we can pose the counter-question, "What price reliability?"

Spam Shmam. This guy is nine miles down the ten mile road to taxation and government regulation the internet.

He can kiss my spammy ass.

[Maceman]

E-mail has not, to my knowledge, been codified in any legal way as has the U.S. mail. So on what basis can a federal law be enacted to control it? The only way that can happen is if the federal government or, even worse, some other entity, takes over complete control and regulation of the internet and its use becomes a privilege, not a simple fact of technology.

I disagree with your analysis. E-mail is part of the nation's critical commercial and interpersonal commnications infrastructure, and spam renders it -- if not unusable -- at least less reliable.

I get 50-100 spam messages a day, and have had to install a spam filter. Guess what? The spam filter ocasionally eats critical e-mail that I need from clients. Guess what else? My clients are all Fortune 1000 companies, and in the past several months ther have been a number of occasions where my critical e-mails to my clients have been eaten by the corporate spam filter.

It is MY computer. I pay for MY e-mail account, which has limits on capacity.

Anyone who sends me an automated unsolicited e-mail -- especially where they take action to hide their identity and origin -- is trespassing on MY property, and eating up bandwidth that I pay for. Everytime I or a client lose a critical message to a spam filter that would not be necessary but for spammers, the spammers are arguably interfering with my contractes relationships.

Since spamming is an attack on the entire e-mail infrastructure, which is as critical to the US as telephone communications, sending large automated volumes of unsolicited and untraceable e-mail should be treated as the act of a terrorist, with very long sentences attached.

It is a legitimate function of the government to protect the property of its citizens from attack, and criminalizing spam would fit easily within that function.

The government would not need to control and regulate the Internet to criminalize spam, any more than it would need to control free speech in order to criminalize the act of inciting violence.

[conservative cat]

I think spoofing,fishing, and the spyware is a WAY WAY bigger problem.

Spam is annoying and a waste of resources, but I agree those others are way worse. I had a pc that needed reformatting due to a spyware attack that couldn't be fixed.

[SlowBoat407]

The government would not need to control and regulate the Internet to criminalize spam, any more than it would need to control free speech in order to criminalize the act of inciting violence.

I agree with the theory of what you have said. However, the reality, as we have seen it played out, is quite different. The government cannot get into a transmission medium only a little. They invariably end up regulating, taxing, controlling, and ultimately holding the master switch. I like my Free Republic the way it is, and I'd hate to think that the FCC would be sticking their noses into it if they get a loyal liberal in power. Plus, in order to enforce the new laws, there would have to be a new office created, and that takes money, and that means an internet tax or a charge for e-mails.

I think there many ways to address the problem of spam without creating new laws. Between my ISP and the spam filters I have installed, I have very few unwanted emails getting through, and I have lost nothing of value to them (that I know of!). I also believe that any laws that go on the books will be largely toothless, since most of the spammers are operating offshore and are out of reach. This is the epitome of unfettered, laissez faire communications.

My question is, who's buying this cr@p and making it so profitable for people to use the spammers' services? I know we probably can't convince them to stop, but it's a lot like drugs. As long as there is a demand, there will be someone to fill it. Maybe instead of spam we should start calling it "crack".

[Maceman]

I think there many ways to address the problem of spam without creating new laws.

How about something along these lines:

The federal government sets up a reward system for information leading to the arrest and conviction of spammers. If you get a spam message, you go to the website, you use a credit card or paypal to make a transaction for whatever is being sold. You turn your receipt along with the original spam message and the unopened package with the spammer/vendors information on it over to the feds, who then notify your credit card company of the transaction.

A law would be passed requiring card issuers to turn over the specific merchant's bank account information to the feds, charge the offending account for the amount of the transaction, issue a credit for the original sale amount to the cardhodler who reported the transaction and cancel the merchant's card account.

At that point, standard money laundering laws would allow the feds to track the flow of money until the perpetrators are caught. Once convicted, the original cardholder would be entitled to some type of reward (flat fee, percentage of assets confiscated from the spammer, or whatever.)

I don't really have time to figure out the details of how this approach would work, but certainly something along these lines could be developed, with little or no intrusion of the government into the actual workings of the Internet.

The general idea is that there are already enough laws that allow the government to follow the money trail from the consumer to the spammer (or the spammers' clients), and so it must be possible to trace the transaction flow and find the perps. All that is needed is the will.

Obviously, there are bugs to be worked out (for example, what happens if 50 million spam recipients take the same action in order to collect 50 million reward payments).

But if it is possible, as we have seen, to force or entice the card companies not to process transactions from Internet-tobacco sellers who don't collect and pay sales tax, certainly the card companies could be enlisted in this battle against spam as well.

Submitted herewith as a start to a grass roots brainstorming session about how this problem could be solved once and for all.

[SlowBoat407]

Excellent! I think that's where it needs to start. I'll keep brainstorming too.