WASHINGTON, D.C. -- Paul K. Boiven -- aka Paul Bowen, aka Paul Boevein,
aka Paul Bowvein, aka Paul Brown -- promised users up
to an easy $46,000 in 60 days to participate in an
e-mail chain letter. The e-mail advised readers to
send $5 in cash to each of the four or five
participants at the top of the list. It then told new
recruits to place their own names at the top of the
list and remove the name at the bottom.
In return for the $5, recruits received "reports"
providing instructions about how to start their own
chain letter schemes and recruit tens of thousands of
others via spam.
It was all perfectly legal, Boiven contended. In
the e-mail, he even urged readers with doubts to
contact Eileen Harrington, Associate Director of the
Federal Trade Commission's (FTC) Division of Marketing
Practices.
In fact, many readers did just that. On Tuesday,
the FTC said it had caught Boiven and six others in a
sting operation. The seven werpetrators agreed to settle charges that they
were spamming consumers with deceptive chain letters.
Financial terms of the settlements were not disclosed.
In addition to Boiven, the Commission reached
settlements with Chad and Megan Estenson of Warwick,
N.D.; Fernando Pacheco of North Providence, R.I.;
Arnold Larsen of Sarasota, Fla.; John Lutheran of San
Diego, Calif.; and Dario Va of Weson, Fla. The FTC
filed its case and the settlement in the federal court
of each defendant's district.
The roundup is part of the Commission's renewed
focus on stamping out fraudulent e-mail advertisers.
Earlier this month, during the annual Privacy and Data
Security Summit in Washington, D.C., FTC chiefs gave
notice that the federal agency would begin brining
suspected deceptive or fraudulent advertisers to task.
In September 2000, the FTC sent letters to 1,000
promoters of an e-mail Ponzi scheme, warning them that
their activities were illegal and instructing them to
cease, to return any money they had received by
participating in the program, and to forward a copy of
the FTC's warning letter to everyone they had
e-mailed.
Thirteen months later, the FTC went back and
searched online newsgroups and within the agency's
junk e-mail database looking for the chain letter
scam. The search found more than 2,000 participants in
the chain letter, from almost 60 countries around the
world. Working undercover, FTC investigators and
paralegals contacted the scheme's promoters -- who
they confirmed were continuing the scam, despite
earlier warnings.
"This chain letter deceptively claims the program
is legal and urges recruits who question its
legitimacy to contact the FTC's Associate Director for
Marketing Practices," Harrington said. "Well, I am
the Associate Director for Marketing Practices, and
these chain letters are illegal."
The FTC's settlement with the seven defendants
included a permanent injunction barring them from
promoting, selling or participating in any Ponzi
scheme, in addition to forbidding misrepresentations
about the potential earnings or rewards from any
marketing scheme.
The injunction also bars misrepresentations about
the legality of any program, and from providing others
with the tools -- in this case, an e-mail template --
to make false or misleading statements. The
defendants are also barred from selling or sharing
lists of their recruits and making money from the
scheme in the future.
Additionally, the settlements all contain
record-keeping requirements to allow the Commission to
monitor compliance.
In addition to the settlements, the FTC announced
it would mail warning letters to more than 2,000
individuals still involved in the chain letter, using
addresses culled from the FTC's unsolicited commercial
e-mail database.
Consumers currently send unsolicited e-mail to the
agency at a rate of approximately 15,000 e-mails a
day, it said. (The FTC has a specific e-mail address,
uce@ftc.gov, that it asks consumers to use in
reporting and forwarding unwanted e-mail.) The FTC
has collected more than eight million unsolicited
commercial e-mail messages since 1998, it said.
"Almost everyone with an e-mail account gets spam,"
said FTC Chairman Timothy J. Muris. "It's intrusive,
unwelcome, and annoying. Deceptive junk e-mail is also
illegal. We want to send a message today: we're going
after deceptive spam and the people who send it. We
want it off the Net."
In addition cracking down on fraudulent e-mail
advertisers, the agency also reiterated its plans for
a public/private education effort, which it intends to
launch in conjunction with Internet Service Provider
trade associations, including the Washington
Association of ISPs and the Texas ISP Association.
The Texas Association's 250 members and Washington
Association's 30 members will publicize and
disseminate consumer education materials developed by
the FTC to warn consumers about illegal chain mail
schemes, it said.
For ISPs, which shoulder much of the costs for
delivering unwanted e-mail, the government's crackdown
comes as good news.
Additionally, the same is true for legitimate
e-mail marketers, who have to contend with the eroding
effect that junk-filled inboxes have on consumers'
willingness to open commercial e-mail. Several online
marketing groups -- such as the Direct Marketing
Association and the Responsible Electronic Communications Alliance
-- have proposed guidelines to restrict e-mail
marketing to companies that have tacit permission to
send mail, or else have prior business relationships
with their recipients.
Still, consumer advocates and not-for-profits like
Mail Abuse Prevention Systems (MAPS) want to see the
standard taken further: to an explicitly "opt-in"
policy by marketers, rather than the "opt-out" policy
now favored by the industry's major players.
InternetNews.com senior editor Christopher
Saunders contributed to this story.
IE 7
Firefox 2.0
