FTC Slams Spammer in Pocketbook

An Internet marketer will pay a $900,000 civil penalty for violating the CAN-SPAM Act, the largest penalty yet for illegal spam, according to the Federal Trade Commission. The company also is permanently prohibited from its unlawful practices, according to a consent decree signed by the company.

According to the FTC, since July 2002, San Francisco-based Jumpstart Technologies LLC, has operated as an Internet marketer, providing direct marketing opportunities for its advertising partners and collecting marketing information to sell to third parties. The FTC’s complaint alleges that in its FreeFlixTix promotion, Jumpstart violated the law by disguising its commercial e-mails as personal messages, and by misleading consumers as to the terms and conditions of the promotion.

“These defendants intentionally used personal messages as a cover-up for commercial messages," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. “Deceptive subject lines and headers not only violate the CAN-SPAM Act, but also consumer trust.”

The FTC’s complaint alleges that Jumpstart offered free movie tickets to consumers in exchange for the names and e-mail addresses of five or more of their friends. Jumpstart then sent them commercial e-mails with the consumer’s e-mail address in the “from” line and a seemingly personal “subject line,” such as, “Hey,” “Happy Valentine’s Day,” “Happy New Year,” “Movie time. Let’s go.,” or “Invite.” Jumpstart also made it look as if the consumer had written the message text. In this way, Jumpstart’s commercial e-mails circumvented certain spam filters and were opened by consumers who thought they contained personal correspondence.

According to the FTC, people received six or more e-mails urging them to join FreeFlixTix, some containing advertisements for other products or services offered by Jumpstart or its partners. In many instances, the complaint alleges, the subject lines of the e-mails falsely indicated that their friend was sending them free tickets, and many people who tried to opt out of the promotion kept getting similar e-mails for weeks afterward.

The FTC’s complaint also alleges that the company engaged in deceptive advertising by misleading consumers about the terms and conditions of the FreeFlixTix promotion. To qualify for a “free” movie ticket, some consumers had to submit their credit card information to one of Jumpstart’s advertising partners and sign up for one of their promotions. Certain advertising partners required that consumers pay for the promotion, while others made “free” offers that had to be cancelled at a later date to avoid a charge.

According to the complaint, Jumpstart violated provisions of the CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act by sending commercial e-mails with false or misleading subject and “from” lines, sending e-mails more than 10 business days after receiving an opt-out request from consumers, not clearly identifying messages as advertising or solicitations, and not clearly informing recipients that they could opt out of receiving more e-mails. Its unfair or deceptive marketing also violated the FTC Act.

By a 4-0-1 vote in January, with Commissioner J. Thomas Rosch not participating, the Commission referred the complaint and consent decree to the U. S. Department of Justice for filing in U. S. District Court for the Northern District of California, which occurred on March 21.

NOTE: This consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. A consent decree is subject to court approval and has the force of law when signed by the judge.

Copies of the complaint are available from the FTC’s Web site, http://www.ftc.gov, and the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov/ftc/complaint.htm. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.