Lead Company Sued Over Mortgage Spamming
Texas AG files lawsuit against LeadPlex January 26, 2005 By PATRICK CROWLEY |
The Texas Attorney General has filed a federal lawsuit against two alleged spammers, including a college student, accused of flooding e-mail recipients with offers of mortgage refis and other financial deals.Named in the suit are Ryan Samuel Pitylak, a student at the University of Texas in Austin, and Mark Stephen Trotter of California, according to a statement from Texas Attorney General Greg Abbott.
Abbott said the pair operate three companies based in Nevada — PayPerAction L.L.C., LeadPlex L.L.C. and LeadPlex Inc. — that are the fourth largest illegal spam operation in the world, according to a ranking from SpamHaus.org. Abbott’s lawsuit is the first ever filed in Texas against an alleged spamming operation. And it’s a sign that mortgage lenders who use e-mail advertisements and solicitations need to be aware of new laws governing the sending of so-called spam. “Spam is one of the most aggravating and pervasive problems facing consumers today,” Abbott said in the statement. “Unwanted, unsolicited e-mail clogs computers of Texas consumers and Texas businesses, wasting precious time and money. “Texans are fed up, and (the lawsuit) aims to give them relief by shutting down one of the world’s largest spam operations,” he said. Pitylak and Trotter are accused of using as many as 250 assumed business names, from “1 Minute Debt Reduction” to “American Loan Group” to “Mega Mortgage Man,” to lead Internet users to believe they are being “deluged” by different companies, Abbott said. Consumers reported receiving up to 200 e-mail solicitations a day “advertising everything from medical products to mortgage refinancing,” he said. The defendants in the suit are not licensed to do business in Texas and are accused of violating the federal Controlling the Assault of Non-Solicited Pornography and Marketing, or CAN-SPAM Act. The law does not prevent the sending of spam, but it does require proper disclosure of the sender. It carries a penalty of up to $250 per violation up to $2 million. “The defendants engaged in the common, but illegal, practice of using misleading subject lines that give recipients the false impression the e-mail contains information specific to them,” according to Abbott’s statement. “By law, such promotional e-mails must clearly indicate they are advertisements and cannot use misleading subject lines to trick recipients into opening them.” Abbott’s suit also claims the companies violated the Texas Electronic Mail and Solicitation Act, which has a penalty of up to $10 per unlawful e-mail or $25,000 a day, and the Texas Deceptive Trade Practices Act, which authorizes penalties of up to $20,000 per violation. Neither Pitylak nor Trotter could be reached to comment. Their lawyer, Lin Hughes, reportedly told The Houston Chronicle that their companies are legitimate Internet marketing companies in compliance with federal law. Most of the e-mails contained “hyped-up language pitching mortgage refinancing services, even though the defendants are not licensed in Texas to provide such services,” according to Abbott’s statement. After consumers responded and were promised privacy, the defendants sold the consumers’ private information to other companies for $28 a lead, Abbott said. Unsolicited e-mail accounted for more than half of all e-mail sent last in 2003, a 7 percent increase over 2001, Abbott said. In a white paper issued in October, the National Association of Mortgage Brokers (NAMB) warned mortgage companies that use e-mail solicitations to be aware of the new federal law’s implications and mandates. “Failure to comply…may subject you to imprisonment, regulatory enforcement actions and costly fines,” Roy DeLoach and Tobias Moon, who oversee government affairs for NAMB, wrote in the paper. The new law requires all commercial e-mails to contain a valid physical postal address of the sender, clear and conspicuous identification that the message is an advertisement or solicitation and a clear notice that the recipient can decline future e-mails. “The act also prohibits you from sending commercial messages with deceptive lines,” according to the NAMB paper. |
Patrick Crowley is a political reporter and columnist and former business writer for The Cincinnati Enquirer. Email Patrick at: [email protected]