CRTC fines individual for company violations under CASL

The Commission finds that nCrowd, Inc. committed one violation of paragraph 6(1)(a) and one violation of paragraph 6(2)(c) of Canada’s Anti-Spam Legislation (the Act) in relation to commercial electronic messages sent to recipients in Canada. The Commission also finds that Brian Conley is liable, under section 31 of the Act, for those violations. Accordingly, the Commission imposes an administrative monetary penalty of $100,000 on Brian Conley. CRTC
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The commission’s report is well worth a read as it discusses many of the things I’ve noticed from spamming operations over the years. It’s pretty standard business practice for spammers to have a complex set of sorta but not really different businesses. They all interact and share data, but not legal liability. They’re mostly treated as one business by the principles and there’s no real dedication to any one brand name.

I don’t think I can describe it much better than the commission did:

The investigation uncovered a complex corporate network and a business pattern, characterized by acquisitions, foreclosures, and bankruptcies. During this chain of acquisitions, the customer email distribution list grew exponentially to reach more than 2 million email addresses. The common threads amid this corporate network and string of acquisitions of email distribution lists are the key players involved, namely Ghassan Halazon and Brian Conley Footnote3 , as shown in the chart below and detailed in the corresponding description.

Besides this chain of acquisitions, the investigation uncovered a whole network of corporations in various lines of businesses, throughout several countries, and characterized by (a) high frequency of business registrations, (b) high frequency of business acquisitions, (c) high frequency of corporate changes, including names and addresses, and (d) dealings with companies specialized in dividend routing and tax optimization services.

Through the years I’ve dealt with folks in this space as they regularly have delivery problems. Seeing the image of the myriad companies and bankruptcies and list transfers from the CRTC solidified in my mind that this really was a nest of spammers. Just look at how many businesses they went through without losing any email addresses.

It’s not coincidental that there are so many business name changes. In this case, there was some fraud going on for the customers, but frequent domain changes are a hallmark of spammers. If you talk to them, and I have, they will tell you they have to change names otherwise the ISPs block their mail. They’ll tell you they keep bounces low and remove complainers and follow all the best practices, but the ISPs hate them so they have to change business names.

Business models like this are nothing new, of course. One of my earliest clients asked me to help them set up a fake ESP. The idea would be to set up a whole bunch of different entities each with their own domains and business information. When one of the entities would get blocked, they’d tell the blocklist or ISP that it was a customer who was now terminated. After the block was lifted, they’d spin up a new customer and keep sending.

The ease at which spammers set up companies and sending domains and Its is the reason why ISPs treat mail with new domains and IPs as spam unless proven otherwise. 20 years of history indicates spammers do go so far as to create new companies to send spam. Given the recent action by the CRTC, it’s pretty clear that this isn’t ancient history, it’s continuing to this very day.

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Conversations with spammers

It’s amazing how many spammers try and fool deliverability into accepting a questionable list. All too often they fall back on a story. The basic points: a company you’ve never heard of collected millions of email addresses on a website hosted on a low end VPS.

I’ve never heard of your company. We’re just that much better at marketing. This list is guaranteed 100% opt in. Subscribers are desperate to hear from us. The mail is vital and important. We had some problems at our last ESP, but that’s just because they don’t understand our business model. And we had a brief problem with complaints. But they weren’t real complaints. Our competitors are signing up for the list and complaining to hurt out business. It’s not a list problem, it’s that we’re so dominant they have to subvert us. That’s just because we’re that much better at their jobs than anyone else.
You’re looking for deliverability help. Well, yeah, sometimes Gmail delivery is bad, but that’s simply because we won’t pay Google money for advertising. Google is so afraid of us they deliberately filter all this spectacularly wanted email into the bulk folder. They have problems with us as a business. Oh, and we might, sometimes, occasionally have a minor problem with Yahoo. But, again, it’s because we threaten them and they don’t want to have to compete on a level playing field.
If they’re a potential customer, I tell them about our services and offer a proposal. Once some company I’ve never heard of tells me their bad delivery is because global companies are afraid of them, there’s really nothing I can do. They’re unlikely to listen to me explain reality to them.
Sometimes, though, this conversation happens because I’m consulting for an ESP or an Agency. They’ve brought me in to discuss deliverability with a customer or vendor. In those cases, it’s my job to keep going.
Your site doesn’t actually have a signup form. That’s because we’re in the middle of an upgrade cycle and had some problems with the back end. [Alternative: We stopped collecting new email addresses because of their deliverability problems and removed the form.] Your site has a signup form, and I signed up, but never got any mail from you. We disconnected the signup form while we handle our deliverability problems. [Alternative: That shouldn’t happen. We can forward you some messages instead.] I have received spam advertising your company. We had a rogue affiliate that we discovered was spamming and we cut them off.
No, this is direct from your IP space. Oh, well, you must have opted in and forgotten about it. [Alternative: We had a rogue sales guy, but we fired him for spamming.] Your company has only been in business for 3 years, this is an address I haven’t used since the ’90s. Oh, we probably bought a company that you opted into and so have permission that way.
That’s not really permission. Of course it is!
OK…. How can I help you. We want you to call Google / Yahoo / Hotmail and tell them we’re really a legitimate company that’s sending content and we shouldn’t be in the bulk folder.
What have you changed? Nothing! Why would we change anything? We’re great marketers. We have all these plans but need to get back to the inbox before we can implement them.
Um… there’s no filter setting for “laura says they’re a good sender.” They’re going to look for new sending patterns so let’s change a few things. Well, we recently removed 2/3 of our database, but it made no difference so we don’t know what else you think we can do.
Let’s talk about your technical setup.

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SaaS systems are spammer targets

There are probably hundreds of thousands of really awesome SaaS products out there. They provide a framework to do all sorts of stuff that used to be really hard to do. Almost all of them include some email component. They dutifully build the email piece into their platform and, because they’re smart, they outsource the actual sending to one of SMTP providers. They’re happy, their customers are happy, and spammers are happy.

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Random thoughts on spammers

I recently received a 419 spam that had a message at the top of the email.

Yup, a 419 spammer is trying to convince me there are millions of dollars waiting for me, but he won’t pay his software vendor 29.99 to comply with a license.
This is only the most recent in a long line of examples of spammers being cheap and attempting to steal services.
Back when I was working abuse almost every ISP had a story about a spammer who refused to pay their bill. Or spammers who were so high maintenance they cost the company money.
The company I worked for had a spammer that was on our system for far too long. Eventually they were cut off for non-payment and their hardware was confiscated. Still, the spammer came in and managed to remove the hardware before the building guards were alerted. It was disappointing, but at least they weren’t spamming off our network any longer.
Even now, ESPs share stories of customers who come in, spam and never pay their bill. Works for the spammer, they can get a few weeks of spamming in without having to pay for the service. They spew their stuff and leave a giant mess for the ESP to clean up. Next week, they’re on to the next ESP.
The real problem with this is that with enough ESPs and enough sends you can clean a list. This list can then be sold, or moved to a credible ESP without any of the tell tale signs of a purchased list. It’s so common it even has a name: waterfalling. It’s profitable, though, and there are enough small ESPs out there with little compliance experience that it can work.
I regularly get questions from folks who’ve worked themselves into a hole about swapping IPs or domains in order to get out of the hole. My answer is always the same. Changing identity might work in the short term, but it won’t work longer term. I also tell them that spammers have been trying to avoid filters for a lot longer than they have. Spammers are good at it, and still get caught in filters. Better to spend time trying to fix the underlying problem – typically users aren’t engaged with your mail – then trying to obfuscate who is sending the message to avoid filters.
Focus on sending good email that users want, rather than trying to avoid filters. That’s the key to getting into the inbox.

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