FTC Settles With Adult Website Operators Over Affiliates’ Spam

Michael Hayes
WASHINGTON — The Federal Trade Commission and the Justice Department have announced a Dec. 7 settlement in a civil case filed against TJ Web Productions for liability incurred when its affiliates allegedly used pornographic spam to promote the company’s paysites.

TJ Web Productions attorney Clyde Dewitt told XBIZ the parties had actually reached an agreement as early as June 2006, but it took several more months for the U.S. District Court in Las Vegas to enter the judgment.

Under the terms of the stipulated judgment entered into by the parties, TJ Web Productions agreed to pay a civil penalty of $465,000, the bulk of which is payable by the defendants over three years.

The company also is permanently enjoined from violating either the CAN-SPAM Act or the FTC’s Adult Labeling Rule.

“Although TJ Web Productions did not send the email directly to consumers, the Nevada-based company operated an affiliate marketing program and induced others, by monetary payments and other considerations, to transmit commercial email messages on its behalf,” an FTC release said.

The agreement also calls for TJ Web to obtain agreements from prospective affiliates saying that they will comply with the terms of the court order.

Dewitt said liability for affiliate programs is an ongoing problem because there is no foolproof way to stop affiliates from using spam to promote paysites. However, Dewitt said he believes many spammers have opted to pursue more lucrative products such as Viagra, investments and phishing schemes.

“Whatever CAN-SPAM was meant to do, it isn’t working,” Dewitt said. “The law ambushed the adult industry and for a while it took affiliate programs some time to figure out how to cope. U.S. affiliate programs, including TJ Web, have clamped down on the problem and terminated affiliates who spam. Yet, spam has doubled in the past year.”

The FTC filed its complaint against TJ Web Productions in July 2005. At the time, the government also filed suit against six additional companies, charging similar violations of the Adult Labeling Rule and the CAN-SPAM Act.

To date, the FTC has settled with five of the seven total companies identified in the 2005 crackdown. Total settlements have netted more than $1.6 million in civil penalties.

Under the Adult Labeling Rule and CAN-SPAM, commercial emailers must use the phrase “sexually explicit” in the subject line of the email. Commercial emailers are also required to give recipients a method to opt out if they choose not to receive the messages.

TJ Webb Productions is the parent company for Adultpaymaster.