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.”
