Microsoft settles with 'Spam King' for $10 million

Promises to use money to fight online crime

Microsoft has settled a lawsuit that it filed two years ago against the self-proclaimed "King of Spam", Scott Richter, who at one time helped distribute more than 38 billion unsolicited emails per year, Microsoft said on Tuesday.

Richter and his online marketing company, OptInBig.com, have agreed to pay Microsoft US$7 million (NZ$10 million) to settle the suit, which was filed in December 2003, Microsoft and Richter said in a joint statement.

Richter and his affiliates have also agreed to comply with US federal antispam laws and stop sending spam to anyone who does not opt in to receive marketing emails, according to the statement.

The settlement depends on the dismissal of bankruptcy cases filed by Richter and his company earlier this year. Richter and OptInBig planned to file for dismissal of those cases later Tuesday.

After refunding its legal costs, Microsoft will pump US$5 million of the settlement money back into fighting internet crime, by providing technical training and forensic assistance to law enforcement staff and developing new technology tools, the company says. A further US$1 million will provide computers for poor children at community centres in New York state.

Helped by Microsoft, New York Attorney-General Eliot Spitzer also sued Richter over spam offences in December 2003. Spitzer settled that case with Richter last July for US$50,000.

Microsoft's case, brought in Washington state, accused Richter of sending mass emails with misleading subject lines and forged sender addresses in violation of state and federal law. Before mending his ways he sent, or helped others to send, 38 billion unwanted emails a year, Microsoft says.

Richter has freely admitted to sending large volumes of unsolicited email and has cheerfully embraced the title of "Spam King". But he has denied breaking any laws, saying his company operates within US regulations including last year's CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act.

As part of Microsoft's settlement, OptInBig.com has agreed to three years of oversight.

The case shows that strong partnerships between governments and the private sector are vital for fighting spam and other internet problems, Brad Smith, Microsoft's general counsel, said in a statement on Tuesday.

"This one legal victory will not end spam, but it is a relief to know that the magnitude of spam attacks need no longer be measured on this particular Richter scale," he says.

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