• Marketer Fined $900,000 for Spam
  • April 18, 2006
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • Jumpstart Technologies, a San Francisco-based Internet marketer, will pay a $900,000 fine to settle CAN-SPAM-related charges, in a consent decree announced March 23, 2006, by the Federal Trade Commission.

    The FTC said the fine is the largest thus far under the 2004 CAN-SPAM Act. Since the law's enactment, the agency has filed more than 20 CAN-SPAM lawsuits against alleged spammers; another 30 suits have been filed by other enforcement agencies and Internet service providers.

    Jumpstart provided direct marketing opportunities for advertising partners and collected marketing data to sell to third parties, the FTC said. The company allegedly violated the antispam law in its FreeFlixTix promotion by disguising its commercial e-mail messages as personal messages and by misleading consumers about the terms and conditions of the promotion. Jumpstart offered free movie tickets to consumers in exchange for the names and e-mail addresses of five or more friends. It then sent commercial e-mails with the original consumer's e-mail address in the "from" line and a seemingly personal subject line, such as "Hey," "Happy Valentine's Day," "Happy New Year," or "Movie time. Let's go." Jumpstart also made it look as if the consumer had written the message text. In this way, Jumpstart's commercial e-mails circumvented some spam filters and were opened by consumers who thought they contained personal correspondence, the FTC said.

    People received six or more e-mails urging them to join FreeFlixTix, some containing advertisements for other products or services offered by Jumpstart or its partners. In many instances, the subject lines of the e-mail messages falsely indicated that their friend was sending them free tickets, and many people who tried to opt out of the promotion kept getting similar e-mails for weeks afterward, according to the agency.

    The FTC's complaint also alleged that the company engaged in deceptive advertising by misleading consumers about the terms and conditions of the FreeFlixTix promotion. To qualify for a "free" movie ticket, some consumers had to submit their credit card information to one of Jumpstart's advertising partners and sign up for one of their promotions. Some of Jumpstart's advertising partners required that consumers pay for the promotion, while other so-called "free" offers required consumers to cancel at a later date to avoid a charge.

    According to the FTC, Jumpstart violated provisions of the CAN-SPAM Act by sending commercial e-mail messages with false or misleading subject and "from" lines, and by sending e-mail messages more than 10 business days after receiving an opt-out request from consumers. The company also did not clearly identify messages as advertising or solicitations, and did not clearly inform recipients that they could opt out of receiving more e-mail messages.

    Significance: As reported in the December 28, 2005, issue of [email protected], the FTC announced in December that the CAN-SPAM Act is proving "effective in providing protection for consumers." The percent of spam, the report said, has declined, although another study has found that only about 4 percent of all e-mails comply with CAN-SPAM. It's hard to say whether this settlement will act as a shot across the bow for other noncompliant spammers, but the FTC is sure to keep pressing ahead in its campaign against spam.