• by Joe Mandese  @mp_joemandese, December 19, 2003

In a move that has potentially far-ranging implications for even legitimate email marketers - and quite possibly for many other forms of online marketing - New York State Attorney General Eliot Spitzer Thursday filed suit against three companies and their principals, which he described as "some of the world's largest spammers."

What makes the legal action so significant, is that it is the first to make a legitimate email marketer liable for the actions of its partners. Or, as the specifics of this case imply, the actions of its partners' partners. That message became all too evident to Synergy6, the New York-based email marketing firm that the state's suit implies was at the top of a chain of events that led to the illegal transmission of spam. On Thursday, shortly after Spitzer and Microsoft General Counsel Brad Smith announced the suit, most of Synergy6's clients and vendors said they would no longer do business with the company, Synergy6 president Justin Champion told MediaDailyNews Thursday night.

"I did not kill anyone, I did not rape any young children," said Champion, adding. "Someone took a link from my affiliate program." Champion contends he and his company were unwittingly implicated in the action when a trusted, long-term affiliate OptInRealBig.com, brokered a Synergy6 marketing link to another third-party, Delta Seven Communications, which transmitted the link to consumers as unsolicited email - also known as spam.

However, indirect those actions may have been, they were enough to implicate Synergy6 in what New York describes as a "multifarious" spam crime ring that sends "consumers more than one billion junk emails each week."

The suit, which names Synergy6 and Champion, OptInRealBig.com and its president Scott Richter, and Delta Seven Communications and its principals Paul Boes and Denny Cole, charges they violated New York state laws carrying civil penalties of $500 per "fraudulent and deceptive act." The investigation, which was aided by Microsoft Corp., claimed to have identified "40,000 instances of fraud," which represented a "miniscule portion of the millions of fraudulent emails respondents were sent overall."

Microsoft, which detected the acts by creating 8,799 Hotmail email "spam traps," said it planned to file suit, as well.

"This type of collaboration between the New York attorney general and technology leaders like Microsoft will strengthen our ability to stop illegal spam and enable all of us to regain control of our inboxes," said Microsoft's Smith.

MediaDailyNews could not reach the principals of OptInRealBig.com or Delta Seven for comment, but a statement posted on OptInRealBig's site denied any wrongdoing and asked that "clients and friends make no decision regarding any liability on their part until they have the opportunity to respond to any allegations made against them."

Synergy6's Champion said he'd like that same opportunity, but that it may be a little too late for his 50-person company. In addition to the immediate client and vendor defections, Champion said his chief operating officer has resigned and that he doubted any legitimate marketers or Web affiliates would want to work with him while the specter of the suit hangs over him. "Right now, I'm basically being labeled right up there with Saddam," said Champion, a 29-year-old entrepreneur who said he has operated legitimately on the Internet for six years.

This is not the first time, however, that Synergy6 has been implicated in the indirect actions of its partners, or subsequent partners of its partners. On Nov. 5, MediaDailyNews reported that a new competitive email tracking system developed by Email Insider columnist Bill McCloskey had detected pornographic spam offers were ultimately distributed to consumer email lists generated by AmericanGiveaways, a unit of Synergy6. Champion claimed Synergy6 was unaware of those activities until it was brought to his attention by MediaDailyNews and that the company subsequently took steps to "get out of that business."

Champion acknowledged that many of the company's business models lead to "sketchy" third-party relationships that are difficult to track, much less manage, but he asserted that they are no different than what many other so-called legitimate Web marketers do. In fact, he claimed the outcome of New York's suit against him could well "establish legal precedent" that impacts a much greater array of Internet marketing activities, including how some of the industry's biggest companies conduct business. In addition to email marketing models that distribute consumer marketing links via affiliate email campaigns, Champion said the same liability could be extended to any type of Web marketing that utilizes an affiliate to distribute a marketer's link, including "banner, pop, email, skyscraper, etc."

To illustrate this point, Champion said that on Thursday, he went to Amazon.com and that "within 20 minutes" he had registered to become one of its affiliates. "Right now, if I do anything irresponsible with their link, Jeff Bezos [president of Amazon.com] is getting sued," asserted Champion, adding, "This is going to set precedent. It says that any single person is going to be responsible for what happens to their link."

While the legal implications of that are huge for the entire industry, it also raises important questions about the self-policing responsibilities of legitimate email marketers to monitor the efforts of their partners - even distant third-party ones - and to take steps to curtail activities like spam.

Champion said he believed Synergy6 had done this via explicit agreements with its affiliates prohibiting such actions, but as New York's suit contends, they were not sufficient to prevent Synergy6 promotions from turning up as spam.

Interestingly, news of this new legal twist did not appear to impact the confidence of investors of some of the largest affiliate marketing organizations. On Thursday, shares of company's like Amazon.com and ValueClick traded up for the day.