A federal judge in
California has ordered Sanford Wallace to pay Facebook $711 million for spamming its members. But it's unlikely that the social networking site will be able to collect much from Wallace, who filed for
bankruptcy earlier this year.
Facebook sued Wallace in February, alleging that he sent more than 14 million spam messages to members. The messages appeared to be legitimate, but actually
contained links directing people to phishing sites, according to the court papers. Once visitors arrived, they were tricked into revealing their log-in data -- which Wallace then used to spam users'
friends. Facebook also said some messages directed users to sites that paid Wallace for the traffic.
The company sought damages of around $7.5 billion, but U.S. District Court Judge Jeremy Fogel
instead awarded $50 for each CAN-SPAM violation. In a written ruling issued Thursday, Fogel said he wasn't convinced that "an award of statutory damages in excess of seven billion dollars is
proportionate to Wallace's offenses."
The judge also issued a permanent injunction banning Wallace from spamming members in the future. If Wallace violates that order, he could theoretically be
jailed for contempt of court.
Earlier this year, Wallace allegedly violated a preliminary injunction in the case. Fogel referred the matter to the U.S. Attorney's Office for a criminal contempt investigation.
Wallace
filed for bankruptcy this June in federal court in Nevada, but his petition was dismissed in July.
Facebook also sued two other individuals who allegedly worked with Wallace, but said in court
that it plans to drop the case against them.
Wallace defaulted in the case, but had he contested the charges, he might have been able to mount an argument that messages sent via a social
networking site don't fall within the definition of CAN-SPAM. Two years ago, a federal judge in the central district of California rejected that argument in a case involving messages sent through
MySpace -- but other judges might reach different conclusions, says Venkat Balasubramani, an Internet law expert based in Seattle.
"The law is not black-and-white on whether sending messages to
somebody's Facebook wall fits within the definition of CAN-SPAM," he says.
Wallace became known as the "Spam King" in 1997, when he ran the email marketing company Cyber Promotions. In 2006, a
judge ordered him to pay more than $4 million for installing ad-serving programs on consumers'
computers without obtaining their consent.
Last year, a federal court in Los Angeles ordered Wallace and another individual to pay MySpace $230 million for sending members unsolicited messages
that appeared to have come from their friends.