Spam judgment not covered by insurance

Earlier this month a judge ruled that two insurance policies held by Scott Richter’s Media Breakaway were not liable to pay $6M in damages awarded in a previous case.
Myspace initially sued Media Breakaway in 2007 for allegedly using phished Myspace accounts to send emails advertising Media Breakaway websites. In summer 2008 and arbiter ruled in favor of Myspace and against Media Breakaway. After the ruling, Media Breakaway attempted to have insurance cover the fine. The insurance company denied the claims so Media Breakaway took them to court. Media Breakaway lost.
Scott has been around in the email marketing arena for a very long time. He’s had multiple run ins with the law, including a 2003 felony theft charge for stealing a number of things, including a Bobcat loader and a 2004 suit brought against him by the NY Attorney General’s office and Microsoft for spamming and deceptive advertising. That court case bankrupted his previous company, OptInRealBig. Scott has also appeared on the Daily Show, in a side-splittingly funny story about spam and email marketing…. er… high volume email deploying.

The Daily Show With Jon StewartMon – Thurs 11p / 10c
Email Trouble
www.thedailyshow.com
Daily Show
Full Episodes		Political HumorJoke of the Day

Have a great weekend all. It looks like I’m going to get the blog carnival post out Wednesday or Thursday next week so if you have a late entry feel free to drop it to me before then.
HT: Venkat

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TWSD: Run, hide and obfuscate

Spammers and spamming companies have elevated obfuscating their corporate identities to an artform. Some of the more dedicated, but just this side of legal, spammers set up 3 or 4 different front companies: one to sell advertising, one or more to actually send mail, one to get connectivity and one as a backup for when the first three fail. Because they use rotating domain names and IP addresses all hidden behind fake names or “privacy protection services”, the actual spammer can be impossible to track without court documents.
One example of this is Ken Magill’s ongoing series of reports about EmailAppenders.
Aug 5, 2008 Ouch: A List-Purchase Nighmare
Sept 9, 2008 Umm… About EmailAppenders’ NYC Office
Sept 15, 2008 E-mail Appending Plot Thickens
Nov 11, 2008 EmailAppenders Hawking Bogus List, Claims Publisher
Dec 23, 2008 Internet Retailer Sues EmailAppenders
Feb 1, 2009 EmailAppenders Update
Mar 10, 2009 Another Bogus E-mail List Claimed
April 14, 2009 EmailAppenders a Court No-Show, Says Internet Retailer
April 21, 2009 EmailAppenders Gone? New Firm Surfaces
May 5, 2009 EmailAppenders Back with New Web Site, New Name
Their actions, chronicled in his posts, are exactly what I see list providers, list brokers and “affiliate marketers” do every day. They hide, they lie, they cheat and they obfuscate. When someone finally decides to sue, they dissolve one company and start another. Every new article demonstrates what spammers do in order to stay one step ahead of their victims.
While Ken has chronicled one example of this, there are dozens of similar scammers. Many of them don’t have a persistent reporter documenting all the company changes, so normal due diligence searches fail to turn up any of the truth. Companies looking for affiliates or list sources often fall victim to scammers and spammers, and suffer delivery and reputation problems as a result.
Companies that insist on using list sellers, lead generation companies and affilates must protect themselves from these sorts of scammers. Due diligence can be a challenge, because of the many names, domains and businesses these companies hide behind. Those tasked with investigating affiliates, address sources or or mailing partners can use some of the same investigative techniques Ken did to identify potential problems.

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Jon Leibowitz: New FTC chair

Jon Leibowitz is slated to be appointed the new chair of the FTC as reported by Bloomberg and CNet. This may mean tougher regulations online. In the past Mr. Leibowitz has advocated that online advertisers move to opt-in for website cookies. This may signal his intention to put more control in the hands of the consumer. According to Bloomberg, Mr. Leibowitz has also “advocated more aggressive enforcement by the FTC.” We may see more CAN SPAM prosecutions as a result.

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12% of email recipients respond to spam

Twitter and some of the other delivery blogs are all abuzz today talking about the consumer survey released by MAAWG (pdf link, large file) looking at end user knowledge and awareness of email security practices.
The survey has a lot of good data and I strongly encourage people to look at the full report. There are a couple of results that are generating most of the buzz, including the fact that nearly half of the respondents have clicked on a link or replied to a spam email. Additionally, 17% of respondents said they made a mistake when they clicked on the link.
The magic statistic, though, is that 12% of the respondents said that they responded to spam because they were interested in the products or services offered in the spam. This, right there, is one of the major reasons why spam continues and is a growing problem. Out of 800 people surveyed, almost 100 of them were interested enough in the products sold by spam to respond positively. There are roughly 1.6 billion people on the Internet, which gives spammers a market of 200 million people for their spam.
Other studies have seen similar responses, that is consumers do respond to spam. Most surveys don’t define spam, however, and given a lot of consumers call “mail I don’t like” or “all commercial email” as spam it’s hard to know what the respondents are responding too. In some studies, some respondents even defined mail from companies that they had given their email address to, but had not explicitly asked for email from as spam.  In this study MAAWG did request how the respondent defined spam. Of the respondents, 60% say spam is mail they did not solicit, and 41% say spam is mail that ends up in the spam folder. Given that 60% of respondents define spam as “unsolicited email” it is possible that some people are responding to mail they never requested.
Sad news for those of us who were hoping that lack of consumer response would make spamming unprofitable enough that spammers would stop.
The crosstab between “how do you define spam” and “how do you react to spam” may be an interesting data set to see.

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