A federal court in Chicago has issued a court order halting illegal spamming and deceptive product claims, and has also frozen the assets of Creaghan A. Harry, a resident of Boca Raton, Florida. Harry sells bogus “human growth hormone” products over the Internet through spam. The Federal Trade Commission alleges that Harry is responsible for what likely amounts to millions of illegal spam messages. From January 1 through May 31, 2004, consumers have forwarded approximately 40,000 complaints to the FTC concerning spam messages linked to Harry.
The text of the illegal spam messages contain hyperlinks to various Web sites that market Harry’s products, “Supreme Formula HGH” and “Youthful Vigor HGH.” The Web sites claim that the products stop or reverse the aging process, causing a veritable laundry list of effects like weight loss, muscle gain, hair regrowth, wrinkle removal, and higher energy levels. Experts for the FTC have concluded that the claims are wholly false and that Harry’s products had no discernible effect on the body. Harry charges $79.95 for a one-month supply of the bogus products. The FTC alleges that these false product claims have defrauded thousands of consumers of hundreds of thousands of dollars.
The FTC also asserts that Harry took many steps to hide his involvement with the bogus product operation, including using a variety of names, foreign addresses, anonymous Web sites and spam, and having the proceeds of the product sales deposited into a bank account in Latvia. The defendant disguised the source of spam by sending the messages through “open proxies,” which are vulnerable computers through which a spammer can route email messages. Sending the messages through these vulnerable computers essentially “launders” the emails, making it appear as though they were sent by the party with the vulnerable computer. The FTC also alleges that in certain instances, the source of Harry’s emails was disguised by forging return addresses in the “reply-to” or “from” fields of his spam – a practice known as spoofing.
The FTC’s complaint specifically charges that the deceptive product claims violate the FTC Act, and the spam email messages violate the Controlling the Assault of Non-Solicited Pronography and Marketing Act of 2003 (CAN-SPAM Act) by: 1) disguising their source; 2) failing to provide a clear and conspicuous notice for consumers to opt-out from further e-mail; and 3) failing to provide a valid physical postal address in the message text. On July 27, 2004, a U.S. District Court Judge issued a temporary restraining order prohibiting illegal spamming, prohibiting false product claims, and freezing Harry’s assets to preserve the funds for possible redress to consumers who bought his bogus products.
The Commission vote to authorize staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of the Northern District of Illinois, Eastern Division, on Wednesday, July 21, 2004.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.
Copies of the complaint are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
(FTC File No. 042 3085)
(Civil Action No. 04C 4790)