WWW- THE self-proclaimed “Spam King”, accused of pumping out billions of unsolicited e-mail messages, for everything from cut-price mortgages to sex pills, has agreed to pay millions of dollars in damages to Microsoft and to change his ways.

Scott Richter [pictured], once one of the world’s top three spammers, will pay Microsoft $7 million (£4 million) for deluging its Hotmail service with at least 50,000 illegal e-mails.

The payment is the second settlement in a string of lawsuits filed by Microsoft and Eliot Spitzer, New York’s crusading attorney-general, after the software giant set “spam traps” that netted about 8,000 e-mails that contained 40,000 fraudulent statements.

“People engage in spam to make money,” Brad Smith, Microsoft’s chief counsel, said.

“We have now proven that we can take one of the most profitable spammers in the world and separate him from his money. And I think that sends a powerful message to other people who might be tempted to engage in spam.”

The first spam message was an advertisement for Digital Equipment Corporation’s DEC-20 system that went out on Arpanet, the internet’s predecessor, to about 600 people in 1978.

But unsolicited e-mail has since become a major problem, clogging the internet as it has grown into a virtual global community.

Mr Richter, 34, started his first company to provide bubblegum machines and video games to local arcades while he was still at high school near Denver, Colorado.

By the tender age of 20 he had started a restaurant that he called Great Scott’s Eatery, which he then expanded into a chain of four.

But, after trying an electronic pager business, he discovered that easy money was to be made by spamming.

Considered a “porn and pills spammer”, his company, OptIn RealBig.com, was able to pull in millions of dollars a month by sending out an estimated 38 billion unsolicited e-mails a year.

At one point, he even tried to start a “SpamKing” clothing line.

A backlash among computer users whose in-boxes were clogged with unwanted spam prompted Microsoft, which owns the Hotmail e-mail service, to sue.

Announcing the settlement, Mr Richter denied Microsoft’s accusations that he had used forged sender names, false subject lines, bogus sender addresses and fake server names to distribute e-mails.

But he said that OptIn had made “significant changes” in its e-mailing practices and had “paid a heavy price”.