The New York Attorney General's office has filed a lawsuit against now-defunct MonsterHut, Inc., a Niagara Falls, N.Y.-based emailing marketing firm, and two of its executives.
The lawsuit accuses MonsterHut of fraudulent advertising and misrepresenting the company's email marketing service as "permission based" or "opt-in," meaning that every person in their database of 60 million email addresses had asked to receive email from them. The AG's office alleges that the company's email lists are only partly opt-in and include many consumers who never asked to receive email.
"Every day New Yorkers are being inundated with unsolicited commercial emails or spam," says Attorney General Eliot Spitzer in a written statement. "This lawsuit is the next battle in our continuing fight against online fraud, and an attempt to help consumers maintain control of their email in-boxes."
But Todd Pelow, CEO of MonsterHut, says he is not a spammer and he and his business were caught in the gray area of the differing opinions of what constitutes spam.
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"There's no one definition of spam," says Pelow, who explains that his one-and-a-half-year-old company had sent out 400 million emails from their database of addresses they bought from third parties. "There are tons of definitions but everyone needs to get on the same page. Mass unsolicited commercial email is a definition. Fraudulent headers. No opt-out options. Misleading subject lines. Not a valid to and from...So what is it?"
Pelow says the third parties who sold him the email addresses told him they were all permission-based emails. They weren't confirmed and could very well have been passively accepted, meaning the permission could have been in the fine print on a Web page that someone clicked on or in a survey someone filled out. But Pelow says that still leaves his emails in the realm of permission-based.
"We live in an age where we use the Internet to gather information," says Pelow. "An address...is a public entity. It's not private information. The information that goes along with it -- who lives there, who you are, what you do -- that's private."
Most anti-spammers, however, would disagree.
For the general anti-spam community, the definition of spam is simple -- unsolicited bulk email. If someone didn't specifically request that a company send him email, then it's spam. And there's a feeling running through the anti-spam community that U.S. law enforcement is finally stepping in and taking a stand to limit spam.
"This can't hurt," says Kelly Thompson, a privacy and responsible email activist and co-founder of Forum for Responsible and Ethical Email. "I think it's good that people who are not playing by the rules, who are not adhering to the standards set...that they're getting this kind of attention...You're not exempt from laws just because you have a dot-com after your name."
Sending A Strong Message To E-marketers
Thompson says she's not sure if this will put a scare in email marketers who are playing close to the line. That will depend on the outcome of the AG's lawsuit, she says.
But Ray Everett-Church, chief privacy officer for ePrivacy Group, a Philadelphia-based for-profit privacy consulting firm, says the fact that the New York Attorney General even stepped into the spam arena will send a strong message to the industry.
"It's the first time I've seen a law enforcement official take an action not based on the content of an email -- whether it's a fraudulent scheme -- but on the basis of the representations of the emailer about how people ended up on the list," says Everett-Church. "It's the quality and nature of the list that they're peddling. This represents a new approach."
Everett-Church says this lawsuit won't affect the get-rich-quick schemes, the pyramids and the porn site spam. But it should affect the legitimate businesses that have gotten into the spam game.
"We're starting to see more and more legitimate marketers get fast and loose with how they build their mailing lists," he says. "This is going to set a very different sort of bar for the respectable marketers...That will [cause a] difference given that more and more of the spam I receive in my mailbox is starting to come from legitimate companies that have purchased lists that may or may not be as clean as they were represented."
And making sure those lists are clean and that corporate policy mirrors corporate practice is the lesson that Patricia Faley, vice president of ethics and consumer affairs at the Direct Marketing Association's Washington D.C. office, says she hopes marketers will take from this situation.
"Once you make a statement public, whatever it is, you have to make sure your own practices are in line with that," says Faley. "I think it's a complex process. Many in the traditional marketing world are challenged to understand the full implications of how information can be used. You need to create a privacy compliance team. "If they are wondering if the attorneys general are enforcing things, they are," adds Faley. "You bet they are."
For Pelow, he says he is now in the process of determining if he should file for bankruptcy or dissolution for MonsterHut.
"I was just trying to create a new approach to email marketing somewhere in the middle of confirmed permission-based email marketing and spam. That's what MonsterHut tried to do," says Pelow, who adds that he's not looking to start another dot-com right away. "If I do marketing for someone, it will be as legitimate as anybody can possibly see. There will be no gray areas for Todd Pelow."