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Internet

Giving spam the network boot

A recent court case highlights gray areas that are opening up in the world of commercial bulk e-mail as some in the industry seek to cast off their shady pasts and go legit.

A promotion arrives in your e-mail box from a company you've never heard of before--but is it spam?

Consumers on the receiving end would probably say yes, as would many Internet service providers, which frequently adopt terms of service banning unsolicited bulk e-mail as a measure to keep spammers off their networks.

But if a recent court decision is any indication, all may not be what it appears in the hotly contested world of Internet junk mail.

Last month, a New York state judge granted bulk e-mailer MonsterHut a temporary restraining order forcing ISP PaeTec Communications to allow the company to send commercial e-mail over high-speed Internet pipes.

"PaeTec is painting us to be spammers and we're not," said Todd Pelow, chief executive at MonsterHut. "This is a simple breach of contract."

Few spammers, if any, would agree to the reviled label, of course. But the MonsterHut case highlights gray areas that are opening up in the world of commercial bulk e-mail as some in the industry seek to cast off their shady pasts and go legit.

The dispute also illustrates the sensitivity surrounding bulk e-mail and the mounting tensions between e-mail marketers and the ISPs that are essential to their livelihood. Under the gun to deliver profits, ISPs are increasingly trying to land the big-fish customers that can buy high-speed Internet lines worth up to tens of thousands of dollars a month.

In the worst case, ISPs have resorted to signing what's known as "pink contracts," or addendums to acceptable-use policies that allow the marketer to send spam or host a spam-related Web site on its network in exchange for "danger money," or for a higher fee because of the risk involved. Late last year, AT&T and PSINet separately acknowledged within days of each other use of pink contracts that violated their respective spam policies.

"When an ISP is hurting for revenue, as many are right now, they're more likely to take on an unsavory customer," said John Mozena, co-founder and vice president of the Coalition Against Unsolicited Commercial Email.

Pink contract?
MonsterHut, based in Niagara Falls, N.Y., said it sends targeted, opt-in e-mail campaigns for clients such as OverStock.com, ProFlowers.com, Ourhouse.com and Giftbaskets.com.

The company says it is not a spammer, partly because it uses opt-in e-mail lists and legitimate return addresses on messages--something bulk e-mailers targeted by state anti-spam laws typically do not do.

Despite claims to legitimacy, MonsterHut's wedge in court appears to have come from a signed addendum to PaeTec's acceptable-use policy. The document, submitted in court filings, acknowledged that MonsterHut would send "targeted" e-mails and that PaeTec may receive up to 2 percent of the volume of e-mails sent back in complaints from consumers. In other words, if MonsterHut sent out 1,000 e-mails, only 20 people could complain. In the event complaints amounted to more than 2 percent, PaeTec could terminate the agreement. The company also agreed to forward those complaints to MonsterHut.

For its part, PaeTec says MonsterHut violated the terms of its contract.

"We knew they were going to send e-mail, but we did not know they were going to send unsolicited commercial e-mail," said John Messenger, vice president and associate general counsel for PaeTec. "They told us that there might be complaints from the e-mail, but the language we agreed to doesn't give them a license to spam."

PaeTec's acceptable-use policy prohibits subscribers from sending unsolicited bulk e-mail. Messenger said that anything contained in the addendum does not modify that agreement.

The controversy, however, doesn't end there. PaeTec is a reseller of Verio's services, and the deal with MonsterHut has drawn the attention of that ISP, which also has an acceptable-use policy banning spam.

"Our understanding is that PaeTec didn't agree to any spam arrangement or 2 percent levels," said a representative of Verio. "Our acceptable-use policy applies to any company that they sign on, and Verio reserves the right to shut down sites if we feel there is unsolicited e-mail going out."

The company is reviewing court documents.

In a bid to have the contract voided, PaeTec is making a plea to subscribers to sign a legal document charging that Internet marketer MonsterHut is a sender of spam.

So far, PaeTec said it has received dozens of affidavits from consumers wanting to charge MonsterHut as a spammer. The document requires subscribers to attest that they never agreed to receive e-mail from MonsterHut, among other points. It plans to use the documents in a court appearance in May.

"The significance of these affidavits (is they prove) that the customers didn't opt in to receive the e-mails from MonsterHut," said Suzanne Galbato, outside counsel for PaeTec.

John Levine, a New York state resident and the author of "The Internet for Dummies," is among those who have sent notarized affidavits to PaeTec.

Levine said he knows that MonsterHut is spamming because he hosts a handful of different domains on a network from his home and hasn't disseminated any of those addresses to marketers or Web sites.

"It's clear to me that MonsterHut scraped a bunch of contact information from the Whois database (a general register of domain owners) and is using that to send out spam," he said in an interview. "They spammed me for at least one domain that I don't host anymore."

PaeTec says it has received more than 750 complaints from subscribers about MonsterHut e-mails, and it has received further notification from Verio about complaints.

MonsterHut said it has received only 11 complaints from PaeTec.

But the complaints rolling into Verio can't help the situation for PaeTec.

"The terms they have given to MonsterHut are not Verio's?If Verio finds that there really is a pink contract, Verio will undoubtedly kick PaeTec out of there," said Steve Linford, an anti-spam activist with The Spamhaus Project.

Defining spam
Despite the charges, MonsterHut says it's a legitimate company with a lawful contract. To send its commercial e-mail, the company gets names and e-mail addresses from companies around the Internet with lists of people who have agreed to receive information of interest from third parties. Therefore, the company argues, it is not spam.

"This is a simple breach of contract that allowed 2 percent complaint of mail, we didn't come within 1/1000 of that," said MonsterHut's Pelow, who added there was extensive communication between the two companies before the contract was signed. "We think PaeTec has backed themselves into a corner with their upstream provider, Verio."

What makes such a dispute so tough is that there are no federal laws specifically prohibiting spam or even defining what it is. Several bills, however, are being considered in Congress, including the Unsolicited Commercial Electronic Mail Act of 2001, or HR95, which provides criminal penalties for anyone who intentionally sends spam from a bogus e-mail address.

It also enforces ISP anti-spam policies and gives recipients and ISPs the right to act against spammers. But modifications made to the bill, which was passed by the House Commerce Committee last month, have taken some of the teeth out of its original form, consumer advocates say.

About 18 states have enacted spam legislation. California, for example, approved a bill in September 1998 that requires unsolicited commercial e-mail to include opt-out instructions and contact information, and opt-out requests must be honored.

HR95 goes further by defining spam. Spam's three main characteristics are that it comes with forged return addresses, has deceiving headers, and doesn't allow consumers a valid way to opt out.

But MonsterHut says its e-mail does not violate any of these guidelines. And more of this type of e-mail will crop up on the Internet, according to Pelow.

"There's an enormous, growing body of mail where people send e-mail with legitimate return addresses, with accurate headers and a working opt-out mechanism," he said. "Not all unsolicited e-mail is spam. But the e-mail most certainly comes from something you've done online where companies have partnerships to exchange that information."