Get Rich Quick With Highly Profitable Business Emailing Spam (Who Really Profits?)

After deleting the latest batch of junk mail full of random paragraphs lifted from fiction novels and purposely misspelled words to slip them past filters, did you ever start wondering who is really making enough money with spam to justify the effort? According to anti-virus software manufacturer F-Secure, a large percentage of the products advertised in junk mail are actually shipped to buyers.  The products sold are likely to be counterfeits or black market goods, but actual transactions are happening.  Additionally, they claim that while experimenting with placing orders from junk mail, they didn’t encounter any fraudulent use of their credit cards after the fact.  That means the banks and credit card processors involved in those transactions are one of the parties profiting from spam.  F-Secure points out an interesting University of California study that indicates almost all spam sales worldwide are handled by only three banks: St. Kitts-Nevis-Anguilla National Bank (in the Caribbean), Azerigazbank (from Azerbaijan), and DnB NOR (a Norwegian bank).

A new report from Cisco pegs the current annual worldwide revenue from spamming at approximately $300 million.  That figure is down from a claimed $1 billion in profits made last year, but at the same time Cisco reports revenue from malicious attacks and targeted scams is up from $50 million to $200 million.  The company claims this trend is due to the combination of low conversion rates and recent law enforcement efforts to dismantle large bot-nets powering mass email campaigns.  Targeted email attacks rely on extensive planning and research, achieving conversion rates as high as 70 percent without needing to mass mail nearly as large an audience.

Of course, certain individuals are more fascinated with spamming for profit than most.  Sanford Wallace’s name is one that keeps coming up.  The self-proclaimed “spam king” began his career in the early 1990s sending out junk faxes, but transitioned to email in 1995 with his company Cyber Promotions, specializing in sending bulk unsolicited email.  Wallace lost his internet connection for spamming in 1999 and appeared to lose interest.  He worked as a DJ in New Hampshire between 2003 and 2004 under the name DJ MasterWeb and ran the Plum Crazy nightclub.  However, by October of 2004, the FTC was filing a lawsuit against Wallace for infecting computers with spyware and offering a solution to the problem he created for $30, under company name SmartBot.  A second FTC lawsuit was filed against him in 2006 for a similar scheme.  In 2007, MySpace sued Wallace for writing automated software that created over 11,000 fake user profiles used to redirect MySpace users to other websites.  Facebook filed another suit over Wallace’s posting spam messages on users’ walls shortly afterward.  (By this time, Wallace was fined over $4.2 million in court rulings.)  He filed bankruptcy in 2009, just four months before Facebook was awarded $711 million in damages in their lawsuit. Most recently, Wallace was indicted on August 4, 2011, by a federal grand jury in San Jose after a two-year FBI investigation.  If convicted on all charges (three counts of intentional damage to a protected computer, six counts of email fraud, and two counts of criminal contempt), he faces as much as 40 years of prison time for hacking into over 500,000 Facebook accounts.

Daniel Balsam may be the yang to Wallace’s yin.  Dan dedicates his work life to suing spammers and currently makes his living from lawsuit judgements found in his favor.  Initially creating the DanHatesSpam.com website out of frustration with junk email, Dan went on to law school to learn how to deal with the problem more directly.  He uses state anti-spamming legislation to win his cases including requirements that sales pitch emails not contain misleading headers, rules against offering free goods or services that aren’t, and requirements of opt-out links actually functioning.  Although he’s only a one-man operation, his court winnings already exceed $1 million.

Perhaps illustrating the cyclical nature of such problems, Google now features a spam filter on their Google Voice service, allowing users to block telemarketing and other undesired phone calls before they ring a Google Voice-enabled phone.  It appears a combination of technology and legislation can force a shift in the methods used to spam, but as long as the process remains potentially profitable, we won’t see it going away any time soon.