RealTime IT News

Feds Hit Porn E-Mail Ring With Can Spam Law

Armed with new rules to supplement the Can Spam Act, the Federal Trade Commission (FTC) has won a court order to temporarily halt a pornography-related spam ring that stretches from Las Vegas to Latvia.

According to the FTC, the network spammed "hundreds of thousands" of consumers with sexually explicit or sexually suggestive e-mails, all without the consumers' consent. The FTC also claims the defendants failed to identify clearly all of their messages as advertisements, instead misrepresenting that their services are free.

The complaint also charges that the defendants violated the Can Spam Act by sending e-mail or procuring third parties to send e-mail that contained false or misleading transmission information, contained deceptive subject headings, failed to contain functioning opt-out mechanisms or did not contain any opt-out mechanisms, failed to identify the e-mail as an advertisement or solicitation; and failed to provide the sender's valid physical postal address.

In addition, the FTC alleges that the defendants violated the FTC Act by falsely stating that membership to their Web sites was free. According to the FTC, by the time consumers realized that the defendants charged a fee for their Web sites, consumers had already given them their e-mail addresses.

In convincing a Nevada federal court to issue a temporary restraining order (TRO), the FTC claims a network of corporations and individuals, acting as a single enterprise, violated various federal spam laws in distributing and selling sexually explicit content.

The TRO prohibits the defendants from engaging in what the FCC claims are deceptive practices and freezes the defendants' assets, pending a preliminary hearing for a permanent injunction hearing.

Stephen L. Cohen, an FTC attorney, told internetnews.com in a telephone interview from Las Vegas that the case is the first spam litigation brought by the agency under the Adult Labeling Rule of the Can Spam Act, which was signed by President Bush a little more than a year ago. The FTC approved the implementing rules last summer.

In addition to the injunction and seized assets, Cohen said the FTC would also seek "some sort of consumer redress."

The FTC alleges the defendants sent pornographic e-mails without the required SEXUALLY EXPLICIT warning in the subject line required under the Adult Labeling Rule. In addition, the complaint charges the e-mails contained sexually explicit material within the initial viewable areas of the e-mails and failed to include an opt-out clause, all violations of the Can Spam Act.

Corporations named in the FTC complaint include Global Net Solutions, Open Space Enterprises, Southlake Group and Reflected Networks of Las Vegas; Global Net Ventures Ltd. Of London and Wedlake Ltd. of Riga, Latvia. Individuals named include Dustin Hamilton, Tobin Banks, Gregory Hamilton, Philip Doroff and Paul Rose, all of Las Vegas.

The FTC claims four of the individual defendants controlled the corporations that own and operate the Internet sites, payment systems and servers used to distribute and to sell the pornographic content. According to the FTC, the network also marketed its sexually explicit content through an affiliate program that pays commissions to third parties who drive traffic to the network's sites.

"The law gives consumers a tool to control what comes into their inboxes," Lydia Parnes, acting director of the FTC's Bureau of Consumer Protection, said in a statement. "We are on the side of parents and kids to protect their ability to filter out sexually-explicit e-mails."