Judge awards ISP US$1 billion in spam damages

Antispam activists disagree about whether a US$1.08 billion judgment Friday against three spammers in Iowa will discourage others from sending unsolicited bulk e-mail.

Judge Charles Wolle, with the U.S. District Court for the Southern District of Iowa, awarded the money, believed to be the largest spam judgment ever, to Robert Kramer, owner of CIS Internet Services, an ISP (Internet service provider) based in Clinton, Iowa. Kramer accused the three companies of sending his 5,000-customer ISP millions of pieces of spam between August and December 2003.

Wolle, using an Iowa antispam law and a U.S. racketeering law, ordered Cash Link Systems of Florida to pay Kramer US$360 million; AMP Dollar Savings of Arizona to pay US$720 million; and TEI Marketing Group of Florida to pay US$140,000. The Iowa spam law allows damages of US$10 per spam sent, plus punitive damages.

Kramer doesn't expect to collect the entire judgment, but he hopes to collect at least enough money to cover the damages caused by the spam, said his lawyer, Kelly Wallace, of Wellborn and Wallace in Atlanta. The damages total "several hundred thousand dollars," and the spammers have "considerable assets," Wallace said.

"This is the best kind of law you can practice on the civil side," said Wallace, whose law firm specializes in suing spammers. "You feel good at the end of the day. We're putting spammers out of business."

But Laura Atkins, president of the antispam group SpamCon Foundation, questioned if the award would actually stop many spammers. The three companies are likely to pay a small fraction of the judgment, she said, and many spammers are based in Florida because the law there allows those filing bankruptcy to keep significant assets.

Another factor may make collection difficult in this case. Defendant Cash Link Systems, which used unsolicited e-mail to advertise a cashless automated teller machine (ATM), had its assets seized in July by the U.S. Securities and Exchange Commission (SEC). The SEC accused Cash Link Systems of conducting a fraudulent investment scheme.

The judgment was the largest against a spammer that Atkins can recall, and it may cause some small-time spammers to think twice after seeing the judgment, but will not affect large-scale spammers, Atkins said. "(The defendants) will file for bankruptcy, they'll reincorporate under a new name, and they'll move on," she added.

Spam prosecutions resulting in jail time, such as a Virginia case in November that included a jail sentence of nine years, would be more effective in discouraging other spammers, Atkins said. "Spammers can avoid the judgment, but jail is different," she said.

But John Levine, a board member of the Coalition Against Unsolicited Commercial Email, said the judgment could help educate spammers and judges about spam law. "This should help get the message across that spamming is illegal, that you can actually get in trouble ... if you do it," said Levine, also chairman of the Internet Research Task Force's antispam group.

The case is also an opportunity to show judges the damage spam does, Levine said. "Spam law is so new," he added. "That's one educated judge, and 10,000 to go."

The lawsuit may also allow Kramer's ISP to seize the computers owned by the spammers, slowing their opportunity to start a new spamming business, Levine said.

Kramer accused Cash Link Systems of sending his ISP 60,000 pieces of spam a day, and AMP Dollar Savings of sending 120,000 pieces of spam a day, between August and December 2003. TEI Marketing Group, marketing software buyers could use to "find out anything about anyone," was accused of sending the ISP 1,400 spam messages.

AMP Dollar Savings was a bulk e-mailer for hire, sending pitches for mortgage refinancing, penis enlargement pills and Cash Link Systems' ATMs, said Wallace Kramer's lawyer. "If you can sell it with spam ... they were doing it," he said.

Phone numbers listed for Cash Link Systems and AMP Dollar Savings were disconnected Monday.

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Grant Gross

IDG News Service

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