Spam-A-Lot: FTC Shuts Down World's Largest Network

The Federal Trade Commission Tuesday shut down what it said is the largest spam network in the world after receiving more than 3 million complaints about a bombardment of e-mails touting bogus drugs such as male-enhancement pills.

According to the FTC, the network included spammers from the U.S., Canada, Australia, New Zealand, China, India and Russia.

Computer security researchers told the FTC that the spamming was so pervasive that at one point nearly one-third of the world's spam came from this network of compromised computers, also known as a botnet.

The defendants are Lance Atkinson, a New Zealand citizen living in Australia, and Jody Smith of Texas, and four companies they control: Inet Ventures Pty Ltd., Tango Pay Inc., Click Fusion Inc. and TwoBucks Trading Limited. The FTC holds Lance Atkinson responsible for all product claims, and Smith liable for claims made for the pharmaceutical products.

The FTC said the defendants recruited spammers from around the world to send billions of spam messages that directed consumers to Web sites operated by an affiliate program called "Affking." The FTC said the accused spammers also used false header information that hid the origin of messages, failed to provide an opt-out link and failed to list a physical postal address, all in violation of the CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act of 2003.

The spam blanketed e-mail boxes with messages promoting male-enhancement pills, prescription drugs and weight-loss pills.

One of the male-enhancement products, "VPL," was marketed as 100 percent herbal and safe. At the FTC's request, the pills were tested by the FDA, which found that they contained sildenafil, the active ingredient in Viagra. Doctors warn that men taking nitrate-containing drugs can experience an unsafe drop in their blood pressure when they take sildenafil.

In addition, the defendants used spam to sell prescription drugs. The e-mails claimed that medications came from a bona fide, U.S.-licensed pharmacy that dispenses FDA-approved generic versions of drugs such as Levitra, Avodart, Cialis, Propecia, Viagra, Lipitor, Celebrex and Zoloft. However, the FTC said that the defendants do not operate a U.S.-licensed pharmacy, and instead, sell drugs that are shipped from India.

FTC staff also had staff members make undercover pharmacy purchases; they were not asked to provide verification for prescriptions, and the drugs they received contained no dosage information or doctor's instructions.

In addition, the commission said that the defendants made false claims about credit card information security and other data required to provide to buy products.

In operating the online pharmacy, which was called "Target Pharmacy" and later "Canadian Healthcare," the defendants' Web site assured potential consumers that "TARGET PHARMACY treats your personal information (including credit card data) with the highest level of security."

The Web site also described its encryption process, which supposedly involved Secure Socket Layer technology. However, FTC investigators found no indication that the Web sites were encrypted using SSL technology.

In June 2005, the FTC obtained a $2.2 million judgment against Atkinson and another business partner for running a similar spam affiliate program that marketed herbal products. Tuesday's spam shutdown originated from a sealed complaint that the FTC filed with the U.S. States District Court for the Northern District of Illinois, Eastern Division, on Oct. 6. The commission requested that the court issue a temporary restraining order against the defendants. On Oct. 9, the seal was lifted after the defendants were served with the complaint and the temporary restraining order.

Among other organizations, the FTC worked on the case with the St. Louis and Chicago field offices of the FBI and the FDA's Office of Generic Drugs and Division of Pharmaceutical Analysis.