Spam Kings (11 page)

In their battles against junk emailers, anti-spammers constantly remind themselves of a
bit of folklore known as "The Three Rules of Spam":

In January of 2001, Davis Hawke got a rude introduction to Rule #3. He had accidentally
left a sensitive file exposed at one of his web sites. When Shiksaa stumbled upon it and
announced her discovery on Nanae, a fellow anti-spammer cried out, "Rule number three
shining bright!"

Shiksaa had been poking around at CompuZoneUSA.com
after someone on Nanae called attention to Hawke's
Spam
Book
ads, which included a link to the site. Shiksaa had taken to referring to
Hawke on Nanae as "that neo-Nazi idiot" or "the creep Mad Pierre exposed." So she was
pleased to discover Hawke's server had been improperly configured and allowed any Web surfer
to view files not intended for the public. (She had used the same trick two years before to
find unprotected customer order logs at a site run by computer seller and convicted stock
manipulator Glenn Conley.)

Shiksaa didn't uncover any order logs at CompuZoneUSA.com, but she did stumble across
something known as a file transfer protocol (FTP) log. It included a list of over two dozen
web sites operated by Hawke, most of them previously unknown even to anti-spammers such as
Mad Pierre, who had been tracking Hawke closely.

Hawke wasn't the first spammer to fall victim in that way to Rule #3. In the past, the
discovery of FTP logs had helped anti-spammers notify ISPs that they had a chronic spammer
in their midst. And this time was no different. An anti-spammer volunteered to report all of
the sites on Hawke's FTP log. A few days later, he proudly announced "Nuked and paved!"
after the ISP hosting CompuZoneUSA.com shut down the site.
^[
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It wouldn't be the last time Hawke was susceptible to dangerous lapses in his site
security. But on this occasion, he was able to shrug it off without major damage. Following
some downtime, he lined up new ISPs to host his sites. Soon, the refurbished
CompuZoneUSA.com would become the online storefront for his newest spamming endeavor:
androstenone pheromone concentrate.

Hawke had first heard about pheromone concentrate from the discussion forums at the
Send-Safe spamware site. A company in Kansas called Internet Products Distributors had been
spamming pheromones for nearly four years. The owner of the Wichita firm was looking to get
out of spamming and instead wanted to wholesale the compound and other herbals to "bulkers,"
a term many spammers used to describe themselves.

Androstenone came in little bottles and was worn like cologne. The substance was
essentially odorless, despite that fact that trace amounts are present in human sweat. But
according to the supplier, wearing androstenone concentrate would make any guy into an
instant babe magnet. It supposedly caused a special receptor in a woman's nose to send a
powerful signal to her brain, announcing the wearer as a highly desirable sexual
partner.

Hawke decided to buy a couple cases of concentrate and see how well it sold. He paid
just over five dollars per bottle and planned to sell them for twenty-nine dollars each.
Hawke wasn't crazy about shipping and handling the little glass vials. But it was time for a
change. The
Spam Book
and the Banned CD he'd been offering from
PrivacyBuff.com were profitable, but the sales volume had stalled, and the books about
becoming a private investigator and other topics weren't selling at all.

Hawke had a feeling androstenone could take off, though. As he was writing the ad copy,
he imagined some lonely guy just out of college, sitting at his computer, looking for love
in all the wrong places:

The ad continued for several paragraphs. In strategic places Hawke had sprinkled a call
to action ("Order Now!") along with a hyperlink to his revamped CompuZoneUSA.com site. For
readers who still needed convincing, the copy continued:

Hawke fired off a couple hundred thousand spams for androstenone in March. They carried
the subject line, "Turbo charge your SEX life! Attract women FAST!"

The stuff moved quickly. Hawke sold out his supply in a week and had to get a rush order
from the supplier to restock. He considered charging more for the pheromones, but from
experience he had learned that there was a sweet spot in pricing spamvertized products. Even
if Internet shoppers suspected you were selling snake oil, they'd whip out the plastic and
take a chance as long as you kept the price under thirty dollars. Another plus to pricing
right was that most people would just chalk it up to experience if the product arrived and
didn't work as advertised. But if you charged too much, they'd be lining up to get their
money back.

For Hawke, selling pheromones was his way of cashing in on the sex-starved people who
seemed to flock to the Internet. He had briefly mulled over the idea of sending ads for
pornography sites. The market for digital images of naked people was huge, with sex sites
among the biggest revenue generators on the Internet. (The domain sex.com itself was said to
be worth sixty-five million dollars.)

But compared to the Publishing Company in a Box and other e-books, porn spam generated
many more complaints. Plus, you couldn't rip off someone's porn content for very long
without expecting trouble. Porno producers policed their copyrights, and some of the sex
sites, he'd been told, were connected to organized crime. Hawke did not want to be messing
with them.

On the other hand, porn site operators made going to work for them very easy. They had
created affiliate programs that were advertised heavily on the message boards at the
Send-Safe site and at BulkBarn.com, a spamming forum Hawke joined in early 2001. Spammers
could earn commissions of between ten and twenty dollars for driving a new customer to a
porn site.

Bottom line, being a porn spammer meant being a middleman. And that was something Hawke
never wanted to do. He was a leader, not a follower. But most importantly, spamming on
commission ran against his business strategy.

As Hawke saw it, the way to stay off the Spamhaus Rokso list and the Realtime Blackhole
List run by Mail Abuse Prevention Systems (MAPS)—not to mention off the radars of regulators
and anti-spam litigators for ISPs such as AOL—was to keep his volume of spams as low as
possible. He could do that and still make a lot of money if his net income from each spam
was as high as possible. Ensuring that his mailing lists were clean—free of undeliverable
addresses and those of anti-spammers—was one way to keep the response rate high. But beyond
that, the best way to maximize profits with the least amount of spamming was obvious:
efficiently sell his own unique, high-margin products. It was boutique spamming, and it
meant walking away from spammer-for-hire jobs.

After his quick success with pheromones, Hawke decided to try another product in the
herbal-pharmaceutical niche. At the time, diet pills were all the rage with many bulk
mailers, but Hawke was justifiably cautious. The U.S. government had already shown its
willingness to prosecute online marketers of weight-loss products. The Federal Trade
Commission (FTC) had been running a sting called Operation Waistline. As part of the FTC's
crackdown, seven companies had agreed in 1997 to pay a total of nearly a million dollars to
settle charges of deceptive practices.

The agency followed up in 1999 with an unusual program to educate Internet users about
online scams. The FTC mocked up a convincing web page for a fake weight-loss product called
NoriCaLite
. The ads promised to help users shed thirty pounds in a month. But clicking the
site's ordering link pulled up an FTC-created page with the title "You Could Get Scammed!"
It warned users to resist "the false and deceptive advertising claims made by many so-called
'weight-loss' products."

Still, by 2001 the Internet remained awash with ads for diet pills. Even eBay was full
of them. During a visit to the auction site Hawke noticed a particular glut of ads for an
herbal weight-loss product called Extreme Power Plus
. The pills sold for thirteen dollars per bottle and contained a mixture of over
a dozen herbs. The active weight-loss ingredient was ma huang, a Chinese herbal stimulant
also known as ephedra. The pills were being offered by distributors working for a company in
Louisiana called Dutch International Products
. Dutch had built a multilevel scheme to market Extreme Power Plus and a handful
of other herbal remedies, including Extreme Colon Cleanser
and Extreme Coral Calcium
.

Hawke had no desire to be a foundation stone in a pyramid scheme. But he was eager to
try spamming diet pills. So he made arrangements to purchase some in bulk from Peak
Nutrition
, a supplier in Syracuse, Nebraska. In place of ma huang, Peak's weight-loss
pills contained what it called lipotropic fat burners. The ingredients supposedly produced
none of the jitteriness and other side effects of ephedra. Hawke ordered a couple of cases
of the ninety-tablet bottles and started working on an ad.

To speed things up, Hawke went to eBay and downloaded a web page containing the auction
listing for Dutch International's Extreme Power Plus. He made a few customizations to the
ad, such as in pricing. He charged twenty-nine dollars per bottle, almost a
twenty-five-dollar premium over what Peak charged him. Hawke also added hyperlinks that
would take buyers to his ordering site. To capitalize on the work others had already done
promoting the brand, he swapped out the words Extreme Power Plus with a name confusingly
similar: Power Diet Plus
.

The original ads had included testimonials from satisfied Extreme Power Plus customers,
which Hawke modified only slightly. This led to some contradictions with the rest of his ad
that Hawke overlooked. In one testimonial, a happy Power Diet Plus user named Sheryl told
how her doctor proclaimed that ma huang was perfectly safe. Yet higher up in the ad, Hawke
boasted that Power Diet Plus, unlike "the other stuff," doesn't contain the
stimulant.

In April of 2001, Hawke fired off his first batch of spams for Power Diet Plus. "Lose 80
pounds by June GUARANTEED! #1 Diet Pill!" they said. What Hawke didn't know as he pushed the
send button was that he was about to stomp on the toes of George Alan Moore, Jr., a Dutch
International Distributor.

Moore lived in Linthicum, Maryland, and referred to himself as "Dr. Fatburn." He had
been selling Extreme Power Plus via eBay and his own web site, UltimateDiets.com, for a
couple of years. Unbeknownst to Hawke, Dr. Fatburn had hidden a digital watermark in the
source code of the web page Hawke had copied from eBay. To prevent other eBay sellers from
stealing his ad copy, Dr. Fatburn had inserted the words "This diet ad is property of
UltimateDiets.com" in white-on-white text in several places within the ad. When casually
viewed with most web page editors, or with an email software program such as Microsoft
Outlook, the watermark was invisible. But it was plain to see for anyone who scoured the
source code of the ad.

Anti-spammers often examined the source code of spammer web sites and email messages in
their quest for clues, and they were quick to notice the reference to UltimateDiets.com in
Hawke's ads. As copies of Hawke's Power Diet Plus ads began showing up in their email
inboxes, some fired off complaints to the Florida ISP hosting Dr. Fatburn's site. In turn,
the ISP forwarded the messages to Dr. Fatburn.

Prior to selling diet pills online, Dr. Fatburn had made money through occupations such
as delivering pizzas and selling collectible sports cards and autographs. His new
weight-loss business was doing nicely, and he intended to keep it that way. In the
eighteen-plus months that he had been marketing diet pills, Dr. Fatburn had never resorted
to bulk email. That's not to say he hadn't contemplated it. In 2000 he purchased on eBay a
bulk-emailing program capable of sending 100,000 messages per hour. But Dr. Fatburn didn't
use it. He stayed with his strategy to build a network of downline distributors by word of
mouth and by discreetly placing messages in newsgroups such as alt.entrepreneurs and
alt.make.money.fast.

But now, some guy was ripping off his ad copy and getting Dr. Fatburn unfairly branded
as a spammer to boot.

Using the email address listed in QuikSilver's spams, Dr. Fatburn sent a message warning
the company to stop stealing his ads. But he never heard back, and QuikSilver continued to
send out messages using the same ad copy. So Dr. Fatburn decided to do some reconnaissance:
he placed an order for QuikSilver's Power Diet Plus. When the package arrived, the bottle
inside was labeled "Peak Nutrition Lipotropic Fat Burners." He realized there was no such
thing as Power Diet Plus. QuikSilver hadn't even arranged for private labeling; it was just
selling Peak's house brand.

Dr. Fatburn located a phone number for Peak Nutrition and managed to reach one of the
owners. He told her QuikSilver had ripped him off, and he wanted to know who was behind the
company.