Microsoft & The price of spamming for some (Up-dated 11th Aug 2005)

Microsoft Corp. said yesterday that it had settled a lawsuit against Scott Richter, whom it identified as a former "spam king." Microsoft said that as part of the settlement Richter and his company agreed to pay $7 million (£3.95m) to Microsoft.

Richter and his company will file a motion on Tuesday to dismiss bankruptcy proceedings they filed in March in the U.S. bankruptcy court in Denver, according to a joint statement by Microsoft and Richter. The settlement is conditioned on dismissal of the bankruptcy cases.

More on Richter spam-king case

Microsoft will invest the $7m (£3.95m)it is expecting from a damages settlement with "spam king" Scott Richter into fighting internet crimes, paying its legal bills and "rewarding" the state of New York. The announcement was made by Microsoft general counsel Brad Smith in an open letter posted on the company's website.

Describing Richter - who is said to have sent or assisted others in sending more than 38 billion emails per year - as one of the world's most "prolific" spammers, Smith called the settlement a milestone and expressed hope that the decision would send a clear warning to those dabbling in spamming.

After covering its legal expenses, Microsoft will dedicate $5m (£2.82m) dollars to helping law enforcement agencies address computer-related crimes, Smith said. Smith said in the letter: "In appreciation of the role of the New York attorney general, another $1m (£560k) of this settlement money will be directed to New York state... to expand computer-related skills training for youths and adults."

Richter could have paid a fraction of the millions if he had settled at the end of 2004 when Microsoft allegedly offered to settle the dispute for $100,000. Then, Richter said: "We told them where they could go stick it. It's nothing but harassment. It's free publicity for them. They pay a few thousand bucks to file the lawsuits. They get a bunch of free press, and people sign up for their spam-fighting products."

At the end of March, Richter filed for Chapter 11 bankruptcy protection for his email marketing company, OptInRealBig.com. One condition of the settlement with Microsoft was that Richter would file a motion to dismiss the bankruptcy proceedings.

Microsoft, along with the New York Attorney General, had filed a lawsuit against Richter back in December 2003 as part of an effort to fight spam. In the lawsuit, Richter was accused of violating federal laws by sending email that contained forged sender names, false subject lines, fake server names, inaccurate and misrepresented sender addresses and obscured transmission paths. Some, according to Microsoft, were sent through compromised Internet Protocol addresses in 35 countries spanning six continents.

The emails also allegedly contained Internet domain names and IP addresses that were registered using pseudonyms and aliases. Richter and OptInRealBig.com, however, denied all of the allegations.

The settlement also stipulates that Mr. Richter will fully comply with all federal and state anti-spam laws, including the US CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act.

'In response to Microsoft's and the New York Attorney General's lawsuits, we made significant changes to OptInRealBig.com's e-mailing practices and have paid a heavy price,' said Scott Richter said. 'I am committed to sending e-mail only to those who have requested it and to complying fully with all federal and state anti-spam laws.'

It wasn't only Microsoft that had Richter in its sights. Another anti-spam outfit SpamCop had included his company on a list of known spammers, but he won a temporary restraining order won a temporary restraining order against such a blacklisting. He claimed that by holding the identity of complainants against his company confidential, SpamCop made it impossible to address their concerns and so comply with the Can-Spam legislation.