Earthlink Wins $25 Million in Spam Suit

Earthlink is emerging the victor in a $24.8 million judgment from one of its many lawsuits aiming to curb shady and unwanted e-mail marketing.

A federal court judge awarded damages to the Atlanta-based ISP after the defendant in the suit, Khan Smith, failed to show or contest charges of racketeering, computer fraud and privacy abuses. Whether the ISP will see any of the money is another question; the Johnson City, Tenn.-based entrepreneur represented himself and never appeared in court during the yearlong case.

In a complaint filed last August, Earthlink alleged Smith bilked its users out of their personal information and credit card numbers by sending bulk, unsolicited e-mail that relied on false names, subject lines and bogus offers.

Specifically, Earthlink charged that Smith duped its members into giving up their information through fake “get a free credit report” e-mails, and by misrepresenting himself as an e-tailer of goods purchased by the recipient, as a loan application office, and a representative of the ISP itself.

Earthlink also charged that Smith sent out Trojan horse viruses that would allow him “remotely to obtain … personal and private information from the innocent user’s computer” and to use that information to open new accounts from which to send spam.

Earthlink also claimed that Smith marketed illegal Ponzi schemes and abused its systems by using and marketing bulk e-mail software.

In addition to the fraud charges, the ISP said unwanted, bulk mailings like those used by Smith were hurtful to users, who have to foot the expense of receiving spam, and were causing expensive clogs on its own e-mail systems and damaging its reputation.

“Earthlink’s phone lines, servers, and computers have been bombarded with a multitude of complaint calls and e-mails from Internet users and other Internet-related companies and ISPs around the world” who believed that the ISP was responsible for the alleged spam, Earthlink said in the complaint.

A month after Earthlink filed its suit, Smith responded with a formal answer that claimed Fifth Amendment protection. Calls to Smith’s last known number were not returned.

Earthlink attorney Paul Wellborn III referred calls for additional comment to company spokespeople, who were unavailable at press time.

Simultaneously with its 2001 complaint against Smith, Earthlink filed similar suits against Livonia, Mich. entrepreneur Alan Krantz and other unnamed collaborators. Those cases still are ongoing.

The victory is the latest effort by providers and federal authorities to crack down on false Internet offers. In January, a California court upheld its anti-spam law, while the Federal Trade Commission has announced a series of wins against bogus e-mail marketers. In April, AOL Time Warner’s settled in a suit it had brought against an accused spammer.

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