‘Spam King’ Settles Microsoft Lawsuit

Self-described “spam king” Scott Richter’s email marketing firm OptinRealBig.com has agreed to pay $7 million to settle a lawsuit filed by Microsoft on behalf of its Hotmail users.

As part of the settlement, Richter, his company and his affiliates have agreed to continue to comply fully with all federal and state anti-spam laws, and will not send email to any person who has not confirmed a willingness to receive it. To ensure compliance, Richter and OptinRealBig have agreed to submit to three years of oversight.

“After covering our legal expenses for the case, Microsoft will then reinvest every penny from this settlement,” Brad Smith, Microsoft’s senior vice president and general counsel, said in a statement. “As this case demonstrates, a strong partnership between the public and private sectors is vital to taking effective action against spam and other Internet problems. By reinvesting these settlement proceeds, we’ll help to make that partnership even stronger.”

After paying its legal expenses with approximately $1 million of the settlement, Microsoft will direct $5 million to expand its Internet safety partnerships with governments and law enforcement worldwide, through technical training, investigative and forensic assistance, and the development of new technology. The company has pledged $1 million to New York State through Microsoft Unlimited Potential donations, which help community centers to expand computer-related skills training for youths and adults.

Microsoft sued OptinRealBig.com in December 2003 in conjunction with New York Attorney General Eliot Spitzer. The suit accused Richter’s company of being part of a network that hijacked computers and used them as drone machines to send billions of illegal and deceptive spam messages. Richter settled with the New York AG’s office for $50,000 in July 2004 without admitting any wrongdoing.

When the lawsuit was filed in December 2003, Richter was ranked one of the top spammers in the world. In July 2005, Richter was removed from the Register of Known Spam Operators maintained by the Spamhaus Project, a leading anti-spam and consumer advocacy organization.

Richter and OptinRealBig filed for bankruptcy in March, citing a potential $20 million debt to Microsoft among its obligations. Today’s settlement is conditioned upon dismissal of the bankruptcy cases.

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