FTC Shuts Down Porn Spammers

The Federal Trade Commission put the clamps on a deceptive spam campaign
Wednesday that promised a chance to win a Playstation 2 console but in
reality led to a porn site.

Lo/Ad Communications Corp. Co-Founder Nicholas Loader was the principal
defendant named in the porn fraud complaint, a serious blow to a company
that provides pay-per-call services to a blue ribbon client roster
including Paramount, Turner News Network, Hewlett-Packard
and AT&T .

The FTC has frozen the assets of the corporation (as well as the other
defendants), pending a preliminary injunction hearing.

Loader calls the charges “grandstanding” and an attempt by the FTC to prove
it is looking to protect consumers from the big, bad Internet. He said
operations, which were shut down as a result of the complaint, will resume
in 14 days.

“I have every confidence my company will prevail,” he said. “We don’t deny
what happened. We shut down (the scam) within 12 hours after hearing about
it; the FTC spent eight months investigating us, looking for other scams,
and they found nothing.”

The $11 million recompense the FTC is looking for can be attributed to a
17-year-old child, he said, who escaped charges and mention in the
complaint so far because he is a minor.

“He’s going to get charged in the next couple days, though” he added.

E-mails peppered inboxes around the world with the supposedly
Yahoo!-sponsored contest catered to entice children, which instructed them
to download a program that would connect them to the contest Web
site. Instead, it routed users to a 900 number charging $3.99 a minute to
visit a porn site.

Calling it a ‘bait and switch’ of the worst kind, J. Howard Beales III, FTC
bureau of consumer protection director, pressed for an injunction and
temporary restraining order against three companies: BTV Industries, Lo/Ad
and National Communications Team, Inc.

“The spammers promised a product that’s particularly attractive to kids,”
he said. “They delivered a product that’s offensive to many adults, and
totally inappropriate for kids. Consumers were told it was free, but they
were charged minute-by- minute. The FTC has put a stop to it.”

The FTC complaint calls for a permanent injunction against the three
companies and the principals involved in the spam campaign, as well as
compensation to the consumer’s duped by the fraud. The case was unsealed
by the U.S. District Court for the District of Nevada after the original
filing March 27.

While a victory for anti-spam organizations looking to put a stop to the
flood of unsolicited commercial e-mails (UCE), the FTC is charging the
parties involved with violating the Telephone Disclosure and Dispute
Resolution Act of 1992, which requires 900 operators to announce the price
of the phone call.

But the end result is a victory for the organizations that know well the
practices of one of the indicted members.

Rik Covell, owner of BTV Industries (the domain name WHOIS shows it is
headquartered in Spain), has been on “spammer” lists for years now, and
advocates have continually warned consumers against the company’s
practices. The Web site is essentially closed now, picturing only the
company’s logo.

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