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Adult Check Hit By Visa

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Nov 11, 2003 12:00 AM PST    Text size: 
ENCINO, Calif. -- Adult Check, one of the pioneers in the Adult Verification Service (AVS) space, showed signs of strain this week under newly imposed regulatory changes implemented by Visa at the beginning of October 2003.

Founded in 1996, Adult Check has been one of the founding fathers of the AVS model, but as times are changing, the company has decided to restructure its current business model and introduce a new hybrid program that will dramatically reduce its credit card liabilities and ensure compliance with Visa's new ratio caps.

XBiz contacted a representative for Adult Check, but was told that the company was not interested at this time in discussing changes in company policy. The representative also told XBiz that they had been receiving death threats from webmasters following the announcement of their new program.

Under Adult Check's restructuring plan, the company has reduced its roster of webmaster affiliates from thousands to only 350 "top producers," and from there the company plans to divide those webmasters into Tier 1 and Tier 2 categories. All other webmaster relationships will be terminated by Nov. 15.

The webmasters invited to stay on as Tier 1 vendors will supply adult content to Adult Check's end-users, and the additional 250 webmasters named Tier 2 affiliates will drive traffic to the Adult Check system.

According to Adult Check, its Tier 2 affiliates will no longer be allowed to manage content in the system, although Adult Check will continue to accept new signups through affiliate tours and pay out existing and future rebills to all Tier 2 affiliates who remain in good standing with program requirements.

As for all webmasters who have been excluded from Adult Check's new program, the company claims that it will continue paying out rebills, but that by the termination date, agreements will no longer be honored.

"Final payments will be paid out pursuant to existing accounting policies for any sums due," the AVS stated in an email to its affiliates. "This email is intended to serve as our official notification to you, that as of Nov.15, 2003, any limited use license to use any Adult Check registered service marks is revoked and all agreements and obligations of Adult Check to you are terminated."

As news of Adult Check's dramatic revamping circulated through the adult community, many webmasters were incensed that they would be blocked from collecting referral revenue they were entitled to.

There was also widespread speculation that Adult Check's changeover could possibly spell the end of the AVS business model, and the end for Adult Check as well.

According to SEGuru's Daron Babin, Adult Check might just be putting a good face forward and that its restructuring could mean any number of potential scenarios.

"I think it just means that companies, whether AVS or not, are having to run their web businesses like a real business," he told XBiz. "Lean and mean!"

"AVS = Dinosaur?" one webmaster posted on a message board. "Is this the end of an era?"

In an email sent to webmasters, Adult Check stated: "We realize that this announcement may come as a surprise, and it is with regret that we must take the steps outlined above. Adult Check has always strived to be an industry leader in regards to current and future trends, and thus we have reevaluated our entire business model. We want you to know that these decisions were not made hastily. We believe they are necessary for the continued viability of our business."

As of this printing, Adult Check had not updated its website to reflect its new policy.

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