FTC Sues Local Internet Company on ‘Spamming’

The Federal Trade Commission on Wednesday sued a Southern California online marketing company for allegedly swindling consumers in an advertising scam, marking the first time agency officials have targeted a producer of unsolicited e-mail.

FTC attorneys said Internet Business Broadcasting of Rancho Cucamonga was sued because its unsolicited e-mail--known as spam--was used to defraud consumers.

Executives at the company could not be reached for comment Wednesday. The company’s listed phone number yields a recording stating that the number is no longer in service. The company’s Web site apparently has been dismantled.

IBB is being sued because its spam allegedly contained misleading information, but mass e-mailings are legal and an increasingly popular advertising tactic with online marketers hoping to reach a large audience on the cheap. Computer users, however, say they are swamped and annoyed by spam and Congress is weighing bills that could curb the practice.

The FTC has asked a group of Internet experts to study the topic.

“Right now the agency is in a wait-and-see mode to see what the people in the industry and in privacy-advocacy groups have to say about it,” said Eileen Harrington, the FTC’s associate director of marketing practices.

According to the FTC, executives at IBB said they operated City Edition, an online newspaper. Investors who responded to IBB’s e-mailings were sold advertising space in City Edition, which then allegedly could be sold to businesses at a premium. The company offered a money-back guarantee and suggested that investors’ money would double in a year.

Few investors achieved anything close to those results and none got refunds, FTC officials claimed.