In a world where 60 billion email messages whiz by every day, spam filters can deflect a lot of legitimate emails.

Des Cahill spends much of his time steering businesses around the collateral damage problem. Mr. Cahill is the CEO of Habeas, a Mountain View, California-based startup that, for a fee, can assure customers their messages will be delivered.

There are many reasons emails don’t get through. Sometimes senders do not have their systems configured right, so emails end up smelling like spam, Mr. Cahill (pictured) says. Sometimes, he explains, they don’t follow the best practices for sending large messages—which can be trouble for financial institutions and companies sending out important notices to their customers.

Habeas promises to certify emails as safe, much like VeriSign issues digital certificates for web sites, to ensure they reach the people they’re meant for.

“Email is woven into the fabric of our lives, but it isn’t free and it takes hard work to build something that can reliably reach users,” says Mr. Cahill. Habeas was started in 2002 and has raised $8.4 million in two rounds of funding so far. With just 30 employees, the company has tripled its growth every year, he says.

If Mr. Cahill plays his cards right, his company could become the VeriSign of the email business.

Gartner estimates that in 2005 about 2.4 million Americans were victims of email fraud or phishing attacks. The soaring growth in online scams has also led to a dramatic decline in consumer trust in the Internet.

More than 80 percent of U.S. online consumers say their concerns about online attacks have affected their trust in email from companies or individuals they don’t know personally, says Gartner. Of these consumers, more than 85 percent delete suspect email without opening it. “This has serious implications for banks and other companies that want to use the email channel to communicate more cost-effectively with their customer base,” says Avivah Litan, vice president and research director at Gartner.

At the same time, anti-spam efforts have produced powerful but overzealous filters that often block legitimate emails. The result is that a flurry of startups like Habeas, Goodmail Systems, Bonded Sender, and Trustee have sprung up, all offering to certify and guarantee delivery of bulk emails.

Restoring Trust

Richard Gingras, CEO of Mountain View, California-based Goodmail, sounds like a man used to giving customers the drill. “We have a desperate problem in email safety,” he says, “and if anyone believes in the future of commercial transactions we have to look at alternatives that can restore trust in email.”

Mr. Gingras started Goodmail in June 2003 to offer a service called certified email. It charges businesses anywhere from one-quarter of a cent to a penny for each commercial message delivered. The alternative, Mr. Gingras asserts, is to watch emails get blocked, delivered late, or deflected into spam or bulk message folders; sometimes emails will get through, he allows, but with their graphics or links removed.

Goodmail has raised about $8 million in venture funding from investors including Doll Capital Management and Emergence Capital Partners, and it’s easy to see why VCs should find this sort of business interesting.

Legitimate bulk email caught in spam filters or in bulk folders discourages financial services companies from switching from snail mail for sending out things like monthly statements, which cost $1 a piece by snail mail. An e-bill can cost less than half of that, says Gartner. But companies can’t switch from paper if they can’t be sure their messages will be delivered. With volume email sends, one in five won’t find its way into user inboxes, according to Ferris Research.

“It’s a much bigger problem than your mom not being able to get a mail across to you,” says Richi Jennings, an analyst for Ferris Research. “For these companies there’s huge money involved and their messages are more likely to get filtered out because they are sent in bulk.”

Still, two years ago Mr. Gingras had trouble selling the concept to investors. For nearly a year he made the rounds of the offices of email services giants Yahoo and AOL and coaxed them into trying out his product. When news of the AOL-Goodmail partnership broke in February, it caused an outcry from anti-spam companies. The Electronic Frontier Foundation, a digital rights group, derided the service as an email tax. Some industry executives even pronounced the idea “dead on arrival.”

“It violates the democratic principles of the Internet and many people will see this as a transparent attempt to develop a new revenue stream despite the company’s façade of good intentions,” complains David Hughes, CEO of Reflexion Network Solutions, an anti-spam and email security company.

AOL held its ground and the service is heading for implementation—and it couldn’t come at a better time, say analysts.

So-called whitelists—or lists of legit-imate email sources service providers maintain to ensure bulk delivery while weeding out spam—are no longer up to the task, experts like Gartner’s Ms. Litan say. And even if they were, many smaller companies don’t have the resources or reputation to get on them.

Mr. Cahill says Habeas can achieve delivery rates of up to 94 percent largely through instituting better email practices, such as using standard authentication, getting recipients’ permission, and dealing expeditiously with opt-out requests and bounce-backs.

He argues that companies like his offer sweet deals in a variety of ways. For their customers, email certification offers an inexpensive alternative to snail mail for getting messages out. (Habeas charges businesses about $2,000 to guarantee delivery of 600,000 emails, nonprofits a tenth that.) For service providers like AOL, the concept offers a neat way of outsourcing part of their email management system.

But here’s a problem: What if a spammer slips in and signs up for guaranteed delivery?

“It’s an ethically murky area,” says Mike Rothman, an analyst with research firm Security Incite. “There’s a suspect value proposition to these kind of services because over time you end up taking some business you shouldn’t because you need to keep the lights on.”

Revealing Spammers

Companies like Goodmail and Habeas insist they have processes in place to check the credentials of their customers. Goodmail does credit checks on potential clients—through Experian and other credit bureaus. It also checks with Dun & Bradstreet to ensure prospects have been in business for at least a year. Habeas, for its part, uses a set of 42 automated tests to check on the reputation of customers.

Goodmail and Habeas both say they won’t send out cold-call solicitations, or send anything to any recipients who haven’t given their permission. To be doubly sure, they monitor complaints or unsubscribe requests received from the recipients—feedback used to build a profile of the sender.

So how many complaints does it take to decide if a well-paying client is a spammer? That’s a tough one. “Because they have a per-message business model, it’s in their short-term interest to turn a blind eye and allow some of the messages to go through,” says Ferris Research’s Mr. Jennings.

But turning a blind eye to a spammer would defeat their whole purpose, the startups counter.“We won’t have a product of any value if we don’t maintain that integrity,” says Mr. Gingras. Companies like AOL and Yahoo wouldn’t stake their reputation on services that could boomerang back on them. “They have to be very comfortable with us so clearly we have had to make extraordinary systems and processes to support that,” he says.

Flourishing as these startup services are, analysts still wonder if they’re worth the money. “I don’t see how these guys can help increase delivery rates for large senders who already have established email practices,” says Mr. Rothman. “As for service providers like AOL and Yahoo, they are playing around with the trust of their customers, who will eventually get pissed off.”

Contact the writer: PGanapati@RedHerring.com