FTC Shuts Down Porn Spammers

  |  April 24, 2002   |  Comments

UPDATE: Calling the e-mail campaign a 'bait and switch of the worstkind,' the federal agency freezes the assets of a well-known 900-numberoperator and gets ready for an injunction.

The Federal Trade Commission put the clamps on a deceptive spam campaign Wednesday that promised a chance to win a Playstation 2 console but in reality led to a porn site.

Lo/Ad Communications Corp. Co-Founder Nicholas Loader was the principal defendant named in the porn fraud complaint, a serious blow to a company that provides pay-per-call services to a blue ribbon client roster including Paramount, Turner News Network, Hewlett-Packard and AT&T .

The FTC has frozen the assets of the corporation (as well as the other defendants), pending a preliminary injunction hearing.

Loader calls the charges "grandstanding" and an attempt by the FTC to prove it is looking to protect consumers from the big, bad Internet. He said operations, which were shut down as a result of the complaint, will resume in 14 days.

"I have every confidence my company will prevail," he said. "We don't deny what happened. We shut down (the scam) within 12 hours after hearing about it; the FTC spent eight months investigating us, looking for other scams, and they found nothing."

The $11 million recompense the FTC is looking for can be attributed to a 17-year-old child, he said, who escaped charges and mention in the complaint so far because he is a minor.

"He's going to get charged in the next couple days, though" he added.

E-mails peppered inboxes around the world with the supposedly Yahoo-sponsored contest catered to entice children, which instructed them to download a program that would connect them to the contest Web site. Instead, it routed users to a 900 number charging $3.99 a minute to visit a porn site.

Calling it a 'bait and switch' of the worst kind, J. Howard Beales III, FTC bureau of consumer protection director, pressed for an injunction and temporary restraining order against three companies: BTV Industries, Lo/Ad and National Communications Team, Inc.

"The spammers promised a product that's particularly attractive to kids," he said. "They delivered a product that's offensive to many adults, and totally inappropriate for kids. Consumers were told it was free, but they were charged minute-by- minute. The FTC has put a stop to it."

The FTC complaint calls for a permanent injunction against the three companies and the principals involved in the spam campaign, as well as compensation to the consumer's duped by the fraud. The case was unsealed by the U.S. District Court for the District of Nevada after the original filing March 27.

While a victory for anti-spam organizations looking to put a stop to the flood of unsolicited commercial emails (UCE), the FTC is charging the parties involved with violating the Telephone Disclosure and Dispute Resolution Act of 1992, which requires 900 operators to announce the price of the phone call.

But the end result is a victory for the organizations that know well the practices of one of the indicted members.

Rik Covell, owner of BTV Industries (the domain name WHOIS shows it is headquartered in Spain), has been on "spammer" lists for years now, and advocates have continually warned consumers against the company's practices. The Web site is essentially closed now, picturing only the company's logo.

ClickZ Live New York What's New for 2015?
You spoke, we listened! ClickZ Live New York (Mar 30-Apr 1) is back with a brand new streamlined agenda. Don't miss the latest digital marketing tips, tricks and tools that will make you re-think your strategy and revolutionize your marketing campaigns. Super Saver Rates are available now. Register today!

ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

COMMENTSCommenting policy

comments powered by Disqus

ClickZ Today is our #1 newsletter.
Get a daily dose of digital marketing.

COMMENTS

UPCOMING EVENTS

UPCOMING TRAINING

Featured White Papers

Google My Business Listings Demystified

Google My Business Listings Demystified
To help brands control how they appear online, Google has developed a new offering: Google My Business Locations. This whitepaper helps marketers understand how to use this powerful new tool.

5 Ways to Personalize Beyond the Subject Line

5 Ways to Personalize Beyond the Subject Line
82 percent of shoppers say they would buy more items from a brand if the emails they sent were more personalized. This white paper offer five tactics that will personalize your email beyond the subject line and drive real business growth.

WEBINARS

    Information currently unavailable

Jobs

    • Lead Generation Specialist
      Lead Generation Specialist (The Oxford Club) - BaltimoreThe Oxford Club is seeking a talented writer/marketer to join our growing email lead-generation...
    • Health Marketing Editor
      Health Marketing Editor (Agora Inc.) - BaltimoreCome flex your intellectual muscle as part of Agora, Inc’s (http://agora-inc.com/) legal team...
    • Marketing Systems Analyst
      Marketing Systems Analyst (OmniVista Health) - BaltimoreOmniVista Health is looking to add a Marketing Systems Analyst to our expanding team. We...