"Spam" Scammers Settle FTC Charges

In an ongoing effort to fight unsolicited commercial e-mail - spam - the Federal Trade Commission has charged an online entrepreneur with making false and unsubstantiated claims in bulk e-mail messages used to sell products and services. Settlement of the FTC charges would bar the spammer from making deceptive claims in future bulk e-mail and would require him to substantiate claims for the programs he promotes. In addition, he would be required to obtain a $100,000 performance bond before sending unsolicited commercial e-mail (UCE) in the future.

The FTC charged that East Haven, Connecticut-based LS Enterprises, LLC; Internet Promotions, LLC, and their principal, Louis Salatto, used a variety of misrepresentations, including false earnings claims, to promote and sell software and mailing lists that would allow purchasers to send their own bulk e-mail. The complaint alleges that the defendants used spam to promote other work-at-home business opportunities, and made false claims about their experience and their ability to provide the products or services, as well as false claims about free merchandise and income that purchasers could expect to earn.

The proposed settlement of the charges would require Salatto and his companies to post a $100,000 bond before advertising, promoting, offering for sale, selling or distributing any UCE product or service or any other product or service via UCE. It would bar misrepresentations about their ability to provide, or their experience in providing, certain products or services, that they act as contractors for other companies in hiring consumers for any type of work, the existence of employment opportunities, or the level of assistance provided by them in securing employment opportunities. In addition, the proposed settlement would prohibit misrepresentations in the subject line or the text of any UCE, and would bar them from making claims about the benefits, performance, efficacy or success rate of any product or service they sell unless they possess and rely upon competent and reliable evidence that substantiates the representation. They also would be barred from making unsubstantiated claims about earnings; typical time to attain a level of earnings, income or sales or to recoup an investment; the availability of free merchandise or the receptivity of persons on mailing lists toward receiving UCE, without substantiation.

The settlement contains record keeping provisions to allow the FTC to monitor compliance.

The Commission vote to accept the proposed consent agreement was 4-0. An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint and consent and a free consumer publication, "Trouble@The In Box," are available from the FTC's web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 972 3149)