December 13, 1996 5:00 PM PST

Spam king strikes out in court

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Prodigy today became the third major online service to win a legal victory against "spam king" Sanford Wallace.

In a case similar to the one CompuServe (CSRV) won in October, Wallace's Cyber Promotions agreed to stop using Prodigy's name to deliver its junk email.

The settlement also includes a cash payment, which Wallace must make to Prodigy. The settlement forbids disclosure of the amount, but sources put it around $10,000--the legal equivalent of a slap on the wrist.

While Prodigy called the settlement a "very big victory," the unflappable Wallace called it "a win for both sides."

Wallace had been using accounts on both CompuServe and Prodigy to send email to the 1 million members of his 1.3-million-member mailing list who are on America Online (AOL). AOL had erected an email block that filters incoming messages for mail coming from Cyber Promotions. By using CompuServe and Prodigy addresses in the email, Wallace was able to bypass that block and deliver mail to AOL members, who form the bulk of his mailing list.

Now, however, Wallace said he no longer needs to use those accounts because he has since found other ways to bypass the AOL block and claims he is getting email through to AOL members with no problems.

Instead of going through ISPs (Internet service providers), which kept dropping Cyber Promotions because of complaints and other problems, Cyber Promotions is now getting access straight from private companies, Wallace said. Fifty different businesses are each willing to give Cyber Promotions access to their T-1 lines for $1,000 a month. Of course, Cyber Promotions won't use all the businesses at once, but with access to so many different places, it is unlikely that Cyber Promotions will be kicked off the ether by an ISP.

In addition, Wallace said Cyber Promotions is completely bypassing AOL's technological blocks both through software it has developed and by constantly changing domain names when it sends out its two to three mailings per day.

CompuServe, observing the technological cat and mouse game with AOL, has decided to try to stop Cyber Promotions from spamming its members by simply asking a judge to order the company to stop sending unsolicited email to its members on the grounds that doing so could be construed as trespassing.

The case could set a legal precedent, but Wallace said he's extremely confident that he'll win, even though he's a three-time loser in court. AOL also has won an important victory against Wallace, in which a court decided that Wallace has no First Amendment rights to send spam to AOL members.

"We're still in business," Wallace said. "We're sending mail every day and we're keeping our clients happy."

 

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