This story is taken from Business at sacbee.com.

'Spam' scam crackdown

A chain-letter scheme is halted but few see a drop in the onslaught of electronic junk mail.

By Clint Swett -- Bee Staff Writer
Published 5:30 am PST Wednesday, February 13, 2002

But while the Federal Trade Commission action may halt the spread of chain letters, a type of Ponzi scheme that promises big payoffs for a small investment, it will do little to stem the tide of other kinds of "spam," the mass mailing of unsolicited e-mails that choke nearly everyone's electronic inbox.

Spam has been growing at an explosive rate and is expected to make up 43 percent of all e-mail that consumers receive by 2006, according to Jupiter Media Metrix.

"We can't go after spam just for spam's sake," said Jennifer Mandigo, a staff attorney with FTC. "If there is some part of the e-mail that's deceptive, that's where we have jurisdiction."

In Tuesday's action, the FTC said it reached settlements with seven defendants caught in a sting operation.

The seven sent out mass mailings offering payoffs of $46,000 or more to participants who mailed $5 to people at the top of a list.

In September 2000, the FTC sent letters to 1,000 spammers who were sending out the chain-mail solicitations, warning them that their acts were illegal and ordering them to return any money collected.

The following month, an FTC Internet search found the seven defendants were still sending the chain-letter spam despite the warning letters. FTC investigators sent the $5 fee to the suspects and received replies indicating that the suspects were ignoring the FTC warning letters.

In announcing the settlement, the FTC said the seven defendants had agreed to return money to those who had sent it in and to refrain from participating in such activity in the future.

The FTC also said it would mail warnings to 2,000 individuals still running chain-letter scams and to start a public education campaign through various Internet service provider trade groups.

While the FTC is cracking down on the e-mail scams, other spam still goes largely unregulated.

A 1998 law sponsored by state Sen. Debra Bowen, D-Marina del Rey, requires spammers to provide a toll-free telephone number and a valid e-mail address with which recipients can ask to be removed from the e-mailers' list.

The law also requires spammers to include ADV. or ADV:ADLT in the subject line to indicate advertisements or adult material.

But that law has not been enforced while it undergoes a series of court challenges. Last month, the California Court of Appeal upheld the law, but it is now being appealed to the state Supreme Court.

Bowen's office acknowledges that the law, even if upheld in court, may be hard to enforce. That's because many spammers operate out of state and hide behind elaborate electronic curtains that mask the origin of the e-mail.

But regulators are not helpless. Mandigo of the FTC said her agency is studying other sorts of possibly deceptive e-mail ads that may be subject to legal attack.

"We have a few things up our sleeve," she said.

She declined to say what areas the FTC was investigating, but spam such as the type that touts huge incomes from working at home might qualify.

Still, that leaves plenty of other spam that will likely be unregulated, partially because of free-speech issues and partly because it's so difficult to track down and halt, said Jared Blank, an analyst for Jupiter Media Metrix.

"It's just not worth the time and effort to track the spammers down," said Blank, who estimates consumers will receive more than 1,400 pieces of spam a year by 2006. "I think it's much like receiving junk mail at home. It's just the cost of doing business."

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