FTC shuts down California spam distributor

Federal and state investigators have sealed the envelope on a major California-based spam operation that allegedly violated federal law when it delivered nearly two million messages to unsuspecting PC users.

A joint lawsuit settlement between the defendants – Los Angeles residents Rick Yang and Peonie Pui Ting Chen – and the Federal Trade Commission (FTC) and the California attorney general's office has effectively halted the spam scheme. The $2.4 million represents financial gains the defendants earned through the email distribution.

But the two defendants do not have to make a full payment if they pay $277,000 in civil penalties and $100,000 in other fees and execute a half-million dollars in promissory notes on two pieces of property, according to a California Department of Justice statement issued Thursday.

The two defendants were accused of "bombarding individuals and businesses across the country with unlawful email ads that pitched mortgage services, car warranties, travel deals, prescription drugs and (online) college degrees," according to the statement.

The FTC said in a statement that the defendants violated the federal CAN-SPAM Act of 2003 because the emails contained false header information and deceptive subject lines; were not identified as advertisements; failed to tell customers they could opt out of receiving more messages and did not include a physical mail address.

"It's bad enough that spam pollutes our email boxes and invades our privacy, but the consumer protection and economic problems it creates go much deeper," state Attorney General Bill Lockyer said. "Con artists use spam as a high-tech crowbar to open the door to fraud and ID theft. And this computerized junk mail costs businesses billions of dollars every year."

Yang and Chen ran their operation under the corporate names Optin Global Inc. and Vision Media Limited Corp, according to the FTC statement.

But the spam recipients fought back, according to the FTC. Between March 2004 and April 2005, consumers forwarded to the agency more than 1.8 million spam messages that advertised websites connected to the defendants.

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