I see this button in my right click menu, and I wonder, how does this work? Does it work? Can I use it on this annoying person asking for money to replace his ship?
Ro'Kera
"ISK Spammer" in this context has a very specific meaning. As I understand it, this is intended to be used against so-called "Real-Money Traders," that is people selling ISK via those suspicious third-party websites.
It's the equivalent of gold farming in WoW or other such MMOs, and it is absolutely forbidden. If you are caught (and you will very likely be caught -- CCP takes this stuff seriously) the money will be removed from your wallet -- usually leaving you with a negative balance -- and further infractions will potentially get you banned. The ONLY sanctioned way to buy ISK is via PLEX or GTCs. Because they take this so seriously, the reports that come in via this option are investigated for these sort of transactions.
So, that said, you should ONLY use the "Report ISK Spammer" option on people who are actually advertising ISK-for-$$$. I vaguely remember hearing rumors when it was first introduced that using it for non-ISK-spammers would get you a sternly-worded warning, but I don't know if that's true or not. What I do know is, if it really bothers you, you're better off using the "Block" option on that beggar. It will have the same effect on you, and will make less unnecessary work for the GMs.
