Federal Regulators Take Aim At Junk E-Mail Fraud Ftc Vows To Punish Businesses Which Push Scams On Internet

Federal regulators on Thursday put the junk e-mail industry on notice that they will punish businesses that put false information in the unsolicited mail sent to millions of World Wide Web users.

The Federal Trade Commission also asked the industry to figure out ways to stem the flood of commercial mail that has clogged the Internet, making it difficult for users to go online.

The FTC said it would ask industry groups to supply lists of junk-mail senders to help its new drive to detect fraud. Penalties for junk mailers who break the law could include court injunctions to stop the practice, the agency said. Repeat offenders could face fines of tens of thousands of dollars.

“We will try to go after them and prosecute some fraud,” FTC Commissioner Christine Varney said in an interview Thursday, the third day of the agency’s week-long hearings to address concerns about an array of online privacy intrusions.

Concern about junk e-mail has mounted as more and more businesses try to make money off the Internet. Sending mass volumes of e-mail is vastly cheaper than traditional mass mailings. A mailing list of Web users costs as little as $11 per million names, an industry player testified at the hearing.

The low cost of e-mailing has led to network bottlenecks that have slowed the flow of information across the Internet.

In addition, users increasingly are reporting e-mail scams from conartists seeking money or credit-card numbers.

FTC officials plan to focus on two types of scams: businesses that use a bogus name or Internet address, leaving consumers with no way of stopping the junk mail because their messages bounce back from the false addresses, and junk mailers who lie to consumers in an effort to lure them into investment, business opportunity or other scams.

Several major e-mailers and industry groups said they would cooperate with the FTC and would supply names of fellow mailers.

“We have to play by the rules,” said Sanford Wallace, president of Cyberpromotions Inc. “We want to set an example.”

For now, at least, the FTC has decided to let the industry figure out how to slow the flood of unsolicited mail instead of pushing for government rules, such as an outright ban on junk mailings. Regulators at Thursday’s hearing asked industry and consumer groups to create a group to examine the problem and report back in six months.

Junk e-mail costs Web users money because many pay for each minute of Internet connection time, including the time it takes them to read and delete offending messages.

On another Internet privacy front, the FTC is pressuring information services companies to let ordinary Americans see the companies’ records containing their personal information.

Lexis-Nexis and other information services assemble and sell the private details to law-enforcement agencies, private investigators and other professionals.

“The message was, ‘You have to show it to the consumer,”’ said David Medine, associate director of the FTC’s division of credit practices.