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August 10, 2005

The mixed message from spam lawsuits

An editorial today says that Microsoft's recent $7-million settlement with spam king Scott Richter "sends a signal to email marketers."

Sure it does. Unfortunately, the outcome of that litigation, along with the AOL spammer's gold sweepstakes, arguably sends the wrong message -- to spammers, anyway.

To be sure, it's good for Microsoft and AOL to show vigilance about keeping spam out of member in-boxes. AOL in particular can use the sweepstakes stunt to draw attention to its measurable success in the spam wars. And Microsoft definitely deserves credit for its courtroom persistence against the crafty Richter legal team.

But when you parade a stack of gold bars, coins, and a loaded Hummer H2 in front of a spammer, it's like waving red meat in the face of a Rottweiler.

Hard core spammers today know that the business is full of risks. They are not especially deterred by news of multi-million dollar settlements or spammer booty giveaways. If anything, these developments simply confirm to them that spam is a potentially rewarding, if dangerous, profession.

From a spammer's perspective, even the most celebrated spam litigations often have ambiguous outcomes. Microsoft originally claimed that Richter caused $50 million in damages. In the end, Microsoft came away with a $7 million settlement. That's better than the settlement obtained by New York Attorney General Eliot Spitzer, who managed to take only $50,000 from Richter. Yet Richter's company OptInRealBig reportedly makes several million dollars per month.

My guess is that Scott Richter and his lawyer father Steve calculated that the $7M settlement was a reasonable price to pay for all the widespread (and ultimately positive) media OptinRealBig has received in recent days about its transformation into a law-abiding business.

As for AOL's giveaway of Brad Bournival's SUV and cash, AOL says "it "serves as a message to anyone thinking of making a living sending spam to AOL members: AOL will find you and sue you. And AOL will do everything it can to make sure its members end up with any money you made as a spammer."

No doubt about it -- AOL knows how to hunt down and sue even the most stealthy spammers. But let's do the math. The total value of the Bournival sweepstakes is around $140,000. As I reported in Spam Kings, Bournival's company Amazing Internet Products was raking in at least that much every week during the summer of 2003. Sure, AOL may have cleaned out Bournival's stash. But it still hasn't caught up to his partner Davis Hawke, who owes AOL $12.8 million from an anti-spam judgment.

Anecdotal proof of how seriously AOL's sweepstakes is being taken by spammers: I talked to a couple spammers about it, and they didn't act worried that the same thing could happen to them. They just wanted to know how to enter the contest.

Posted by brian at August 10, 2005 10:52 AM