For Release:
February 12, 2002 FTC Launches
Crackdown on Deceptive Junk E-mail
Scammers Claim The FTC Will Confirm
Legality of Illegal Scheme
They arrive unexpectedly by e-mail: chances to earn easy
money in a short period of time by following a simple program. They're intriguing. They're
inviting. They're illegal. Now, the Federal Trade Commission is launching a three-point
program to crack down on deceptive spam.
"Almost everyone with an e-mail account gets spam,"
said Timothy J. Muris, Chairman of the FTC. "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."
Seven defendants caught in an FTC sting operation have agreed
to settle charges that they were spamming consumers with deceptive chain letters. The
letters were slightly changed variations on the same message. They promised "$46,000
or more in the next 90 days," or similar extravagant amounts to recipients who were
to send $5.00 in cash to each of four or five participants at the top of the list. The
letters instructed new recruits to place their own name and address at the top of the list
and remove the name on the bottom. In return for the $5.00 payment, recruits received
"reports" providing instructions about how to start their own chain letter
schemes and recruit tens of thousands of others via spam.
"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. Well, I am the Associate Director for Marketing
Practices," said Eileen Harrington, "and these chain letters are illegal."
In September 2000, the FTC sent letters to 1,000 spammers,
warning them that their chain letter spam scheme was illegal and instructing them to stop
promoting their chain letters, 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
spammed. In October 2001, the FTC searched online newsgroups and the agency's junk e-mail
database looking for the chain letter scam. They found more than 2,000 participants in the
chain letter from almost 60 countries around the world. Using undercover post office boxes
and e-mail accounts, FTC investigators and paralegals sent the requisite $5.00 fee to
individuals who had previously been warned, but who appeared to be continuing in the
scheme. Those who responded by sending the undercover FTC employees the "report"
demonstrated that despite the FTC warning letter, they continued to participate in the
illegal chain letter spam.
The stipulated final judgments and orders for permanent
injunction bar all the defendants from promoting, marketing, advertising, offering for
sale, selling, or assisting others in any Ponzi scheme, chain marketing scheme, or other
prohibited marketing schemes. They bar misrepresentations about the potential earnings,
income, benefits, amount of sales, incentives, profits, or rewards derived from any
marketing scheme. They also bar misrepresentations about the legality of any program. The
settlements bar the defendants from providing others with the means and instrumentalities
to make false or misleading statements and bar them from selling or sharing lists of their
recruits. In addition, the defendants must return any money they receive in the future
from this scheme. The settlements all contain record-keeping requirements to allow the
Commission to monitor compliance.
In addition to the settlements, the FTC announced that today
it will mail warning letters to more than 2,000 individuals who are still running this
chain letter scheme. The addresses were culled from the FTC's unsolicited commercial
e-mail (UCE) database. Consumers currently send spam to the agency at a rate of
approximately 15,000 e-mails a day using the agency's database address, uce@ftc.gov. The FTC has collected more than eight million
spam messages since 1998.
Finally, the agency will launch a public/private education
effort in conjunction with various Internet Service Provider (ISP) associations, including
the Washington Association of ISPs, ( www.waisp.org )
and the Texas ISP Association, ( www.tispa.org ). 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. Two brochures, "What You Need to Know About Chain
E-Mails and Letters," and "The Lowdown on Chain Letters," are
located on a special FTC Web site at www.ftc.gov/chainmail.
The FTC materials tell consumers
- Chain letters that involve money or valuable items and promise
big returns are illegal. If you start a chain e-mail or letter or send one on, you are
breaking the law.
- Chances are you will receive little or no money back on your
"investment." Despite the claims, a chain letter will never make you rich.
- Some chain letters try to win your confidence by claiming that
they're legal, or even that they're endorsed by the government. Nothing is further from
the truth.
- If you've been a target of a chain e-mail scam, contact your
ISP and forward the e-mail to the FTC at: uce@ftc.gov
Defendants in the FTC cases are:
Paul K. Boivin, also known as Paul Bowen, Paul Boevien, Paul
Bowvien, and Paul Brown; doing business as (DBA) Destiny 1999, Destiny 2000, and Destiny
2001. The defendant is based in Clearwater, Florida and the case was filed in the U.S.
District Court for the Middle District of Florida, Tampa Division.
Chad Estenson and Megan Estenson, DBA CMJ Enterprises and
Rockin' E Marketing. The defendants are based in Warwick, North Dakota, and the case was
filed in U.S. District Court for the District of North Dakota.
Fernando Pacheco, also known as Frank Pacheco, DBA
E-Solutions and E-Solutions 101. The defendant is based in North Providence, Rhode Island
and the case was filed in U.S. District Court for the District of Rhode Island.
Arnold W. Larsen, also known as Arnold Larson. The defendant
is based in Sarasota, Florida, and the case was filed in U.S. District Court for the
Middle District of Florida, Tampa Division.
John Lutheran. The defendant is based in San Diego,
California. The case was filed in U.S. District Court for the Southern District of
California.
Dario Va. The defendant is based in Weston, Florida. The case
was filed in U.S. District Court for the Southern District of Florida.
The FTC vote to approve the complaints and stipulated final
judgments and orders was 5-0. |