Microsoft is suing a group of individuals and companies for creating millions of fake Hotmail accounts in order to subvert community spam reporting.

In a blog post last week, John Scarrow, general manager of safety services for Microsoft, said that earlier in June, Microsoft had filed a lawsuit in U.S. District Court in Seattle alleging that defendants Boris Mizhen, Dimitri Kovalsky, Muhommad Mohsan-ul Moula and their respective companies, in conjunction with DeCaptcher.com, and several John Does, "opened millions of Hotmail e-mail accounts and hired people to manually identify spam mails as legitimate mails in order to trick Hotmail into classifying spam as legitimate mail."

Microsoft runs its Junk E-Mail Reporting Program (JMRP) and Smart Network Data Services (SNDS) to allow Hotmail users to report spam, to provide data to legitimate marketers to improve message deliverability, and to help Microsoft tune its SmartScreen spam filter

The company's lawsuit alleges that the defendants "enrolled in Microsoft's JMRP and SNDS under false pretense to gain access to detailed data about Defendants' e-mail activity, hired a team and used computer software to generate millions of unauthorized Hotmail e-mail accounts, and then used those unauthorized Hotmail e-mail accounts to sanitize Defendants' spam by identifying their own spam e-mail messages as 'not spam.'"

In so doing, Microsoft's complaint says that the defendants were able to bypass its spam filters and ensure that their spam messages reached Hotmail users.

Microsoft, like other companies that provide free online services, relies on CAPTCHA puzzles to prevent automatic account creation. But computers have become increasingly capable of solving those puzzles using a variety of methods. Spammers, Microsoft concedes in its complaint, "continue to adopt practices and technological devices to evade Microsoft's technologies and to frustrate Microsoft's efforts."

The lawsuit alleges that Moula, a.k.a. Mr. Ranak, create "verified" Hotmail e-mail accounts with usernames and passwords for as little as $15 per thousand. Decaptcher.com offers to solve such puzzles for as little as $2 per thousand.

This is the second time Microsoft has sued Mizhen for spamming Hotmail users. In 2004, Mizhen settled a lawsuit brought by the company a year earlier for $2 million.