An arbitrator has ruled that Scott Richter and his Web marketing company, Media Breakaway LLC of Westminster, Colo., must pay MySpace $4.8 million in damages and $1.2 million in attorney’s fees for barraging MySpace members with unsolicited advertisements. Media Breakaway and its employees were also banned from the site.
MySpace, a unit of News Corp., had alleged that some of the messages were sent from accounts whose sign-on information had been hijacked by “phishing.” Media Breakaway countered that rogue business affiliates – independent contractors who sent messages for Media Breakaway – were to blame for phishing and other improper behavior.
In a statement, Media Breakaway celebrated the fact that the arbitrator had awarded MySpace “95 percent less than the amount demanded” by the company.
Indeed, Thursday’s arbitration ruling pales next to a $230 million verdict MySpace won in U.S. District Court last month against two Internet marketers, Sanford Wallace and Walter Rines. Nonetheless, MySpace hopes the Richter case will rachet up the pressure it has been trying to place on spammers.
“MySpace has essentially declared a war on spam and phishing on our site,” Hemanshu Nigam, MySpace’s chief security officer, said in an interview.
Richter is a familiar figure in such matters. Microsoft Corp. won a $7 million settlement against him in a spam lawsuit in 2005, and the state of New York got $50,000 from Richter the year before.
However, Richter’s father, Steven Richter, who serves as Media Breakaway’s president and general counsel, said Monday that the company has worked harder in recent years to stay clean. He said Media Breakaway now has five employees tracking its legal compliance, up from one in 2006.
In this case, he said, Media Breakaway had misunderstood MySpace’s rules prohibiting commercial messages. “Once they told us it was wrong we threw the iron curtain down on it,” Richter said in an interview.
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