Judge Orders Spammer To Halt Deceptive Practices

Attorney General Spitzer today praised a ruling that enjoined Niagara Falls-based spammer MonsterHut from falsely representing to consumers that they had requested the company's email solicitations. A lawsuit brought by Spitzer last year sought to enjoin MonsterHut from representing to consumers that they were receiving the solicitation because they had affirmatively requested it. MonsterHut made these statements both on its website and in more than one half billion unsolicited commercial emails, or spam, that it sent out on behalf of its clients.

"We are pleased with the court's decision," Attorney General Spitzer said. "New Yorkers are being overwhelmed with unsolicited commercial email. This decision is another victory in our continuing battle against online fraud and will help consumers maintain control of their email in-boxes. The decision also advances the ongoing effort to set standards the will enable legitimate email marketers to honor consumer privacy and protect the integrity of the system."

Manhattan Supreme Court Justice Lottie E. Wilkins permanently enjoined MonsterHut, Inc., its Chief Executive Officer Todd Pelow, and its Chief Technical Officer Gary Hartl, from "further engaging in any of the fraudulent, deceptive and illegal acts and practices pertaining to representations of ‘opt-in', ‘opt-out' or the ‘permission-based' nature of their protocols or the collection and use of their email data."

A central issue in the dispute was the Attorney General's contention – which the court endorsed – that Monsterhut and its principals had violated New York's consumer fraud laws by falsely representing that the company had obtained consumers' "permission" to send emails, or that consumers had "opted in" to receive them. The court held that the term "opt-in" (like the term "opt-out") has a clearly defined meaning within the industry, regulators and that Monsterhut's practice did not qualify as "opt-in" under the accepted definition of that term.

The lawsuit arose out of the company's representation to consumers that its email transmissions are "opt-in," meaning that consumers have taken affirmative action, such as affirmatively checking a box on a web page, to consent to receive the emails. The court's decision not only supports the widely accepted definition of "opt-in" it also holds that a company's misrepresentation of its address collection and sign-up policies, may subject it to liability and penalties under New York's deceptive practices statute. Monsterhut's fraudulent use of the "opt-in" terminology permitted it access to consumers, advertisers, and internet service providers – groups that all tend, by a wide margin, to favor dealing with email marketers who first obtain consumer permission, rather than "spammers," who do not.

The court also rejected Monsterhut's argument that it ought not be liable for these misrepresentations, since it had acquired emails from third parties whom it believed had "used ‘opt-in' protocols in obtaining consent from their users." The court also set a hearing date of February 11, 2003, to determine remaining issues, including restitution to consumers, damages, and civil penalties.

"Millions of New Yorkers have received spam falsely claiming that we have opted in, or somehow consented to receiving what amounts to junk email," Attorney General Spitzer said. "This decision holds email marketers to the same standards that other retailers and advertisers are held to. It is a victory for consumers, and it shows that standards of honesty and integrity can be applied to and demanded of electronic marketers."

This case was handled by Assistant Attorney General Stephen Kline of Attorney General Spitzer's Internet Bureau.


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