Spam and Scams: China's Netizens Wallow In Junk Mail

　　But producers of spam could soon face the government's wrath.

　　By Mark Godfrey

　　Email has revolutionised communication. It's also becoming an increasingly effective channel for targeted marketing by companies with something to sell. But junk emails - more commonly known as spam - is also becoming a huge headache computer users. As China's population of netizens continues to grow, and Chinese becomes one of the most important languages on the Web1, spam and email marketing - and the thin line that divides the two - will become hotter topics for Internet users and regulators. China's government recently announced plans to control spam hitting the country's inboxes, and America's leading Internet Service Providers (ISPs) recently announced plans to hunt and punish spammers.

　　New technology and the Internet have handed scam artists a golden opportunity to reach more victims than ever before. Online scams usually take the form of junk email2, or Spam, that's sent whether it's asked for or not. China, a country with 68 million Internet surfers who receive 46 billion junk emails per year, has become the world's second most popular destination for spammers, after the United States.

　　The Internet Society of China (ISC) said last month that by late 2003 China's Internet servers had received altogether 150 billion spam emails. That's 30 percent of the country's total email traffic. "It's a great waste of resources," said Gong Shaohui, a member of an anti-spam association. "Moreover, if China is flooded with junk mail, fewer servers will be left in use here."

　　Junk email is slowing the Internet and causing a major headache for users. It's often fraudulent as well, however, according to regulators like the Washington-based Centre for Democracy and Technology (CDT). The CDT recently issued a report detailing the strain placed on the Internet by mass mailings of Spam. The CDT, alongside some of the biggest Internet names, like AOL, Compuserve and Hotmail, have spent over a year investigating Internet3 scams. The Spam-busting team have released a report, naming and shaming the worst offenders.

　　China too is getting tough on junk email senders. Servers responsible for sending spam mail throughout China will be cut off if they continue to harass computer users, the Internet Society of China warned late last year. "If they refuse to behave themselves, we will take stricter measures and even refuse to connect them," said Huang Chengqing, the society's deputy secretary-general

　　The society has already named 225 servers responsible for spam on its www.isc.org website. Most of the servers bouncing spam to China are based overseas, says Huang. "China's Internet users are increasingly finding that the majority of their emails are no longer personal - an average of 8.9 emails out of the 16 they receive each week are spam." Most of the spam swamping China's email inboxes comes from email servers that run on a default open relay system, which allows spammers to use them as transfer stations to send unsolicited mail.

　　Email scams range from "tip-offs to rip-offs" says Deirdre Mulligan, coordinator of the CDT campaign. Investment opportunities offered by email are usually no better than old fashioned pyramid schemes, offering huge amounts of income for a small investment in time and money. Several on-line companies specialise in bulk emailing or 'spamming', compiling lists of email addresses or software which they sell to companies or individuals to use. Chain letters with claims such as "Make $50,000 in less than 90 days" are just as illegal as the paper versions.

　　"Work-At-Home schemes offering money for filling envelopes or assembling crafts rarely produce any return" said Mulligan. "Health and diet scams offering scientific breakthroughs, miracle cures and secret formulas are just electronic snake oil."

　　"So called 'Easy Money' courses online offer people the chance to 'Learn how to make 4,000 dollars or euros in one day.' Many gullible people see this, need the money and fall for the offer. They hand over their cash to take part in the 'course', only to find it's as nonsensical as the claim sounds in the first place."

　　"Free computers or software, and phone cards are used as the bait to get consumers to pay membership fees for clubs that give things away. We call them Get-Something-Free rackets. Unfortunately, the "members" are then told they don't qualify unless they sign up more people."

　　One of the favourite scams of US Internet fraudsters is the Cable Descrambler Kit. It's not only illegal, says Mulligan, but the kits often don't do their job of allowing you to watch cable television without having to pay a subscription.

　　Worse are the loan scams which prey on unfortunate people looking for a way out of debt and poverty. "Guaranteed loans or credit on easy terms can turn out to be lists of lending institutions or credit cards that never arrive. Credit Repair scams can charge a fee to clear up a bad credit record. But such records cannot be erased. You still pay a fee for the 'service' though," said Mulligan.

　　Deirdre Mulligan's clean-up team want better technical tools to give Internet users greater control over incoming email. Government policies should be pursued to protect email users' privacy. The group also wants to stop sly spammers from creating false email addresses to make junk mails look more "normal" or personal, thus disguising their real goal. "Efforts should be stepped up to eliminate email fraud. The relevant standard-setting bodies must keep searching for technical ways to help users block or refuse spam and so ease the burden it places on the Internet."

　　Fraudsters and scam artists have rarely had it so good. Well practised in the art of the rip-off, fraudsters graduate from street side card tricks and carnival cons to sweetheart scams, identity thefts, psychic frauds and pyramid schemes. Ordinary decent Chinese folk are being increasingly subjected to scams and frauds by the unscrupulous wheelers and dealers of this thriving underground industry. And now the advent of the Internet opens up a whole new world for fraudsters, who can reach millions of people anonymously in their own offices and living rooms.

　　Junk mail bungs the mailboxes of Chinese households and businesses every day, promising incredible riches and eternal happiness to those who open them. Sprayed with colour, these envelopes promise the addressee that they've only to open the seal and - "Congratulations!" - they'll read of their amazing luck in winning thousands or millions of yuan. Other letters bring equally joyous news: you've just won a dream long-distance holiday, or perhaps that shiny new model in the local car salesroom that you could never really afford. "Well now it's yours, you've just won it!" screams the congratulations letter.

　　Except you haven't really won anything. The fine print tells a different story. You'll have to send away some applications, then you'll be entered into a draw, which, you're promised, you've a very big chance of winning. Before you get to the draw however, you must first put your hand in your pocket and take out a year's subscription of a particular magazine, or buy a certain product. Both at amazingly low rates specially reserved for you...

　　Responding to several of the "fantastic offers" this writer didn't find any riches at the end of the rainbow. Psychological pressure, lies and illegalities lie behind the dirty dealings of junk mail companies. Behind the scam are companies of every type, including seemingly respectable firms in the mail order and catalogue business, as well as others selling time-shares and holiday packages.

　　Online scams will hopefullybecome rarer in China. The Internet Society of China last year publicised two groups of spammers' IP addresses and set a deadline for them to stop sending junk email. But the situation didn't improve much. "There are two major reasons for this," said Huang Mingsheng, president of the 263 Group, one of China's leading Internet service providers. "One is the lack of legal penalties for spammers. The other is that many email service providers are reluctant to invest in anti-spam technology."

　　Junk mail might be the most visible and annoying type of scam but many people, particularly businesses, are subjected to telephone calls, and junk faxes from national and international scam artists. A favourite hoary old chestnut: European businesses and law offices regularly receive phone calls from foreign "princes" seeking investments to allow them raise enough money to reclaim a lost inheritance or to help them move family riches out of a war-torn country. A large pay-back is promised by the cheeky fraudsters who hit on similar targets around the world for some easy money.

　　One of the world's biggest producers of junk mail, Arcadia International offers "presents" such as flash lamps and electronic gadgets. They're free, but only when an exorbitant post and packing charge is paid. And you only get those presents when you buy something else, usually at a premium price, from the junk mailing company. "It's not a present to despise or look down on: it costs between 12 and 30 euros" insists Enric4 Joyver, director of marketing at the company.

　　Junk mail and catalogue companies get addresses from other firms which specialise in collecting names and addresses from government records and public sources. These companies also use surveys to get addresses and other information, usually using the promise of a draw and major prizes to get more people to supply their personal details. Lists of names, addresses and personal details are then sold to marketing companies, charities and junk mailers who mail the unwitting people who supplied the details.

　　Consumer groups are swamped with complaints from angry consumers who've been duped by a fraudulent junk mail offer. Watchdog bodies see junk mail offers as crooked and deceitful because they induce confusion in the victim, says international anti-fraud expert Richard Nogales. "Presents", he accepts, are an accepted way of getting business for direct marketing companies, but "many of these offers are used in a fraudulent way."

　　Some of the worst schemes don't need the Internet to be successful and rip people off. Pyramid schemes, for example, are commonplace but totally illegal. Despite the promises, there's no product or pay-back at the end of the line, just a drive to recruit people with money, so all the cash goes to the fraudsters at the top of the pyramid while the victims of the con at the bottom lose their investment. Well-known international scam pyramid schemes have included Future Strategies, Golden Circle, Prosper International League (PIL), and the Business Women's Network.

　　Playing on human emotion and our urge to help the less fortunate, bogus charities are perhaps the most unscrupulous of the scam artists. Says Nogales "They usually operate over the phone, where it's difficult to distinguish who is legitimate or not. Real charities normally work by mail appeal, where they can send information and verify that they're for real. The local police and Revenue Commissioners can be depended on to verify if a charity is registered and thus authentic."

　　Begging letters and junk mail cost Internet users and businesses time. And time is money. A report from the United Nations Conference on Trade and Development (UNCTAD) has warned that an estimated 50 percent of all email messages in circulation by the end of 2003 were unsolicited spam, which may have cost as much as 20.5 billion dollars in wasted technical resources.

　　Hitting back, four leading US Internet service providers, America Online, EarthLink, Microsoft and Yahoo, recently announced lawsuits against spammers responsible for hundreds of millions of junk emails. China's State Council will open a seminar to discuss laws and regulations to enhance Internet safety.

　　In the recently concluded National People's Congress (NPC), deputy Kong Xiangmei submitted a draft proposal for a law against spam. Kong, himself a dot commerce businessman, said the problem couldn't be solved by relying on alert Internet users and filtering by websites. Laws were essential, he said. Kong's proposals recommended 12 measures, including forbidding junk mails in communications links, forbidding to send junk mails by mobile phones or on the Internet and setting down legal penalties for spammers who refuse to stop mailing after a specified transition period.

　　The joint proposal has met with considerable support, butwith reservationstoo. Deputy Li Pengde, whose computer was crashed by emailed viruses, suggested it was impossible to root out junk mails merely by introducing stricter laws, and such laws would touch on issues such as privacy. "The intention is good," said Huang He, a law professor inNorthwest China. "Unlike other laws, anti-spam law is very complicated and merits serious and in-depth study."

　　About 80 per cent of Chinese Internet users spend close to 10 minutes a day just clearing unsolicited email, according to a survey of 500 Internet users carried out by Forbes Research, a market research agency. Commissioned by Symantec, an Internet security company, the survey found that few Internet users felt the volume of spam they received would decrease.

　　Even though free Web-based email accounts or those with Internet service providers (ISPs) provide spam-filtering services, filters in corporate office systems work better said a majority, or 278 respondents, who indicated they received more unsolicited email into their home accounts than their office accounts. "One man's spam is another's advertisement opportunity" said Ross Wilson, Symantec's senior regional director for Asia Pacific. US-based spammers produce 90 per cent of all spam, he said. Anti-spam legislation will, however, come into effect in the United States from next year.

　　American IT leaders are also moving against the scourge. Spam, security and the introduction of high-tech link-ups between communication devices are among the major challenges for the technology world, Microsoft's Bill Gates told IT executives at the annual Comdex technology convention earlier this year. Gates also suggested that both technology and legal efforts may help curb spam5.

　　Microsoft is using a tool called Smart Screen to determine the difference between legitimate mail and spam. "Smart Screen is going to be in every mail thing we do, MSN, Hotmail, in Outlook" said Gates. "It's a very big step forward."

　　1 The author has the curious habit of spelling things first one way, then another: e.g. web vs. Web, email vs. e-mail, Internet vs. internet.

　　2 See footnote 1.

　　3 See footnote 1.

　　4 Is that his real name, or might it be 'Eric'?

　　5 The meaning of spam has already been explained - at length.