Microsoft & Former “Spam King” Scott Richter Announce $7M Settlement

Mr. Richter agrees to fundamental change of e-mailing practices, pays $7 million in damages.

Microsoft Corp. and Scott Richter today announced they reached a full settlement of Microsoft’s claims against Mr. Richter and his company OptInRealBig.com LLC. As part of its effort to fight spam, Microsoft filed a lawsuit against Mr. Richter and his company in December 2003, when he was ranked one of the top spammers in the world. In July 2005, Mr. Richter was removed from the Register of Known Spam Operators maintained by the Spamhaus Project, a leading anti-spam and consumer advocacy organization.

The settlement is conditioned upon dismissal of the bankruptcy cases filed in March by Mr. Richter and OptInRealBig at the U.S. Bankruptcy Court in Denver. Mr. Richter and OptInRealBig plan to file today a motion to dismiss these cases.

As part of the settlement, Mr. Richter and his company agreed to pay $7 million to Microsoft. The settlement also stipulates that Mr. Richter, his company and his affiliates will continue to comply fully with all federal and state anti-spam laws, including the U.S. CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act, and will not send spam to any person who has not confirmed a willingness to receive the e-mail.

Microsoft will direct $5 million of the settlement to expand the company’s Internet safety partnerships with governments and law enforcement worldwide through technical training, investigative and forensic assistance, and the development of new technology tools. The company has pledged an additional $1 million to provide many community centers in New York state broader access to computers for underprivileged children and adults through Microsoft’s Unlimited Potential Program.

Mr. Richter said today he had changed his e-mailing practices in part because Microsoft and the New York Attorney General sued him in December 2003. “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,” Mr. 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.”

Microsoft’s senior vice president and general counsel, Brad Smith, expressed satisfaction regarding the impact of Microsoft’s litigation. “When we filed this action, Mr. Richter was listed as one of the top three spammers in the world,” Mr. Smith said. “Because of this litigation, Mr. Richter has fundamentally changed his practices and forfeited ill-gotten gains. Microsoft looks forward to a permanent change in Mr. Richter’s practices.”

In its lawsuit, Microsoft contended that Mr. Richter and his companies violated Washington and federal law by sending e-mail, and helping others send e-mail
• that contained Internet domain names and IP addresses registered using pseudonyms and aliases from around the world;
• that contained subject lines such as “fwd: we have to talk,” “make sure you do this,” “re: your home loan” and “Your Federal Stafford Loan”; and
• that contained forged sender names, false subject lines, fake server names, inaccurate and misrepresented sender addresses and obscured transmission paths, some of which was sent through compromised Internet Protocol addresses in 35 countries spanning six continents.

Mr. Richter and OptInRealBig.com LLC have denied all of these allegations.

Under terms of the settlement and to ensure compliance, Mr. Richter and his company have agreed to submit to three years of oversight. Mr. Smith said that Microsoft will continue to combat spam through a combination of technology, consumer education and enforcement.

“In addition to pursuing civil lawsuits against spammers, Microsoft will partner with industry, government and law enforcement to tackle spam and other Internet safety threats,” Mr. Smith said.