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Spamford Wallace's MySpace riches come under attack

The FTC's quest for spam stopping balls

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Wallgotten Gains

It's been more than a decade since Wallace first unleashed his torrent of spam on the internet. After facing private lawsuits from AOL and CompuServe and Earthlink, he ultimately agreed to stop spamming and disband his Cyber Promotions outfit. Then, taking the low road, he embraced the more lucrative field of spyware and adware, and so far, no amount of lawsuits or enforcement actions has been able to stop him.

Ben Edelman, an assistant professor at Harvard Business School who studies online advertising fraud, says the FTC is constrained by federal statutes that prevent the agency from seeking criminal penalties or punitive fines. That leaves enforcers largely defanged because they can only go after ill-gotten proceeds.

"There's been a history of inadequate monetary judgments against spyware purveyors and other anti-consumer advertising cases," he said.

But Edelman holds out the possibility that this time Wallace may finally be stopped. Even if the FTC can't seek the kind of harsh penalties necessary to prevent people from getting into the spyware business, there's nothing stopping the agency from sharing its evidence against Wallace and others with the public. That, in turn, could aid lawyers representing private clients who aren't prevented from seeking, and winning, massive punitive fees that could bankrupt the defendants.

Last March MySpace sued Wallace, and four months later the company obtained a preliminary injunction that banished him from the social networking site.

It will be worth watching this latest action by the FTC to see if enforcers really have learned anything new. As things stand now, Wallace is an inspiration for countless aspiring cons throughout the world. The lesson: with a little experience writing code and enough determination, you can make a lot of money gumming up people's PCs, and there's little anyone can do about it.

A half million dollars is a decent chunk of change for six months' work. Until public enforcers and private attorneys figure out a way to remove these handsome rewards, the malware scourge is only going to get worse. ®

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