It's All Perfectly Illegal

Ever get an e-mail chain letter promising to be perfectly legitimate? The spam is legal but the scam sure isn't. An FTC sting operation rounds up seven perpetrators who get nothing more than a slap on the wrist.

by Roy Mark of dc.internet.com [February 13, 2002]

Paul K. Boiven—aka Paul Bowen, aka Paul Boevein, aka Paul Bowvein, aka Paul Brown—promised users up to an easy $46,000 in 60 days to participate in an e-mail chain letter. The e-mail advised readers to send $5 in cash to each of the four or five participants at the top of the list. It then told new recruits to place their own names at the top of the list and remove the name at the bottom.

In return for the $5, recruits received "reports" providing instructions about how to start their own chain letter schemes and recruit tens of thousands of others via spam.

It was all perfectly legal, Brown contended. In the e-mail, he even urged readers with doubts to contact Eileen Harrington, Associate Director of the Federal Trade Commission's (FTC) Division of Marketing Practices.

In fact, many readers did just that and today the FTC announced that Boiven and six others caught up in an agency sting operation had agreed to settle charges that they were spamming consumers with deceptive chain letters.

In October, the FTC searched online newsgroups and the agency's junk e-mail database looking for the chain letter scam. They found more than 2,000 participants in the chain letter from almost 60 countries around the world. Using undercover post office boxes and e-mail accounts, FTC investigators and paralegals sent the requisite $5 fee to individuals who had previously been warned, but who appeared to be continuing in the scheme. Those who responded by sending the undercover FTC employees the "report" demonstrated that despite the FTC warning letter, they continued to participate in the illegal chain letter spam.

"This chain letter deceptively claims the program is legal and urges recruits who question its legitimacy to contact the FTC's Associate Director for Marketing Practices. Well, I am the Associate Director for Marketing Practices," said Harrington, "and these chain letters are illegal."

The stipulated final judgments and orders for permanent injunction bar all the defendants from promoting, marketing, advertising, offering for sale, selling, or assisting others in any Ponzi scheme, chain marketing scheme, or other prohibited marketing schemes. They bar misrepresentations about the potential earnings, income, benefits, amount of sales, incentives, profits, or rewards derived from any marketing scheme.

They also bar misrepresentations about the legality of any program. The settlements bar the defendants from providing others with the means and instrumentalities to make false or misleading statements and bar them from selling or sharing lists of their recruits. In addition, the defendants must return any money they receive in the future from this scheme. The settlements all contain record-keeping requirements to allow the Commission to monitor compliance.

In addition to the settlements, the FTC announced it will mail warning letters to more than 2,000 individuals who are still running this chain letter scheme. The addresses were culled from the FTC's unsolicited commercial e-mail (UCE) database. Consumers currently send spam to the agency at a rate of approximately 15,000 e-mails a day using the agency's database address, uce@ftc.gov. The FTC has collected more than eight million spam messages since 1998.

"Almost everyone with an e-mail account gets spam," said Timothy J. Muris, Chairman of the FTC. "It's intrusive, unwelcome, and annoying. Deceptive junk e-mail is also illegal. We want to send a message today: we're going after deceptive spam and the people who send it. We want it off the Net."

In addition to its actions to individuals engaging in fraudulent e-mail schemes, the agency will launch a public/private education effort in conjunction with various Internet service provider (ISP) associations, including the Washington Association of ISPs and the Texas ISP Association. The Texas Association's 250 members and Washington Association's 30 members will publicize and disseminate consumer education materials developed by the FTC to warn consumers about illegal chain mail schemes.

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