Can-Spam Worry Gets Better for Cyberheat

Rhett Pardon
TUCSON, Ariz. — Cyberheat apparently has dodged maximum penalties over alleged Can-Spam violations after a federal judge ordered the Justice Department and the online adult company to hammer out an agreement.

In a case at U.S. District Court in Tucson, Cyberheat, which operates webmaster program TopBucks, is defending itself against charges by the Federal Trade Commission over sexually explicit spam messages sent by its affilates. It contends it can't control the actions of affiliates.

If convicted, Cyberheat would be liable for $11,000 in civil penalties for each spam email, or $7.1 million. It would be the largest fine levied against an online adult company.

But U.S. District Judge David C. Bury in pretrial motions has asked both sides to come to some sort of accord.

In court documents obtained by XBIZ over the weekend, the Justice Department alleged that 10 of Cyberheat’s affiliates sent 642 sexually explicit spam messages.

The affiliates, the Justice Department said, were paid $209,120 in commissions within one year.

But Bury was wary of the government’s offense.

“Reasonable jurors could differ over whether or not [Cyberheat] was knowingly procuring or should have known or was consciously avoiding knowing that affiliates were violating the [federal] statute to promote [their] website,” Bury wrote in an order. “Cyberheat has raised more than some metaphysical doubt as to the material facts.”

The Justice Department contends Cyberheat’s alleged spam lodged more than 400 complaints to the government.

While Cyberheat attorney Robert Apgood and the U.S. Attorneys Office were not reachable Sunday, XBIZ learned that both parties — the Justice Department and Cyberheat — must submit a joint pretrial order on April 27.

The last case involving an adult company over alleged Can-Spam violations was settled in December. TJ Web Productions struck a deal with the Justice Department when its affiliates allegedly used online adult spam to promote its paysites.

Under the terms of the judgment, TJ Web Productions agreed to pay $465,000 over three years.

To date, the FTC has settled with five companies, netting more than $1.6 million in penalties.