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Adult Web Sites nailed by FTC

WASHINGTON — Four people operating adult-oriented Web sites and an affiliated e-mail marketer have paid $621,000 to settle a Federal Trade Commission (FTC) complaint that they violated federal antispam laws, the agency announced Thursday.

The settlement also bars the defendants from violating the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, passed in 2003. The settlement also requires the adult-oriented businesses to monitor their affiliates to make sure they also comply with the law.

The defendants sold access to sexually explicit Web sites through unsolicited e-mail, or spam, according to an FTC complaint filed in January.

Four defendants control a network of businesses that operate adult Web sites, and the other defendant was an affiliate hired to market the content from the Web sites. The affiliate sent many of the e-mail messages that allegedly violated federal law, but under CAN-SPAM, all of the defendants are responsible for the e-mail, including the defendants who paid others to send e-mail on their behalf.

The FTC charged that the e-mail violated CAN-SPAM and the FTC’s Adult Labeling Rule by failing to include the required label for sexually explicit content. The e-mail also displayed adult material, used misleading header information and subject lines, and failed to include the required opt-out notice, all violations of the law, according to the FTC.

The U.S. District Court for the District of Nevada entered a default judgment against one defendant, requiring him to pay $79,018, the FTC said in a statement. The remaining defendants settled the FTC charges. Among other requirements, the court orders require the defendants to include working opt-out mechanisms in their commercial e-mail, label any sexually explicit e-mail, and keep sexually oriented material out of the subject line and out of the initially viewable area of any e-mail.

The settlement also requires the adult-oriented business to monitor its marketing affiliates by collecting information about an e-mail campaign, as well as identification information about the affiliates, before they can begin the campaign. Once the e-mail messages are sent, the defendants are required to sample new subscribers to their Web site to make sure the affiliates are complying with the settlement order when sending out marketing e-mail. In addition, the defendants are required to establish a system to gather and respond to consumer complaints.

The settling defendants are Global Net Solutions, Global Net Ventures, Open Space Enterprises, Southlake Group, Wedlake, and WTFRC, doing business as Reflected Networks. Individual defendants are Dustin Hamilton, Tobin Banks, Gregory Hamilton, and Philip Doroff. The district court judge entered the default judgment against defendant Paul Rose, an affiliate.



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