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FTC, AFF Settle Pop-Up Ad Complaint

The settlement requires AFF to conduct 'compliance monitoring' of affiliates to avoid displaying sexually explicit ads to consumers not seeking such content.
FTC, AFF Settle Pop-Up Ad Complaint
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Dec 7, 2007 4:45 PM PST    Text size: 
WASHINGTON — The Federal Trade Commission and AdultFriendFinder.com parent company Various Inc. have agreed to a settlement barring AFF from "displaying sexually explicit online ads to consumers who are not seeking out sexually explicit content.”

Ira Rothken, an attorney representing Various, told XBIZ that the agreement “was settled quickly, efficiently and with no money changing hands.”

“The agreement is consistent with the goals of the company and is further affirmation of the company’s policies,” Rothken said. “We do what we can to make affiliates abide by our terms of use.”

Under the agreement, Various is required to conduct “compliance monitoring” of its affiliates, including the establishment of a “functioning email address or other Internet-based mechanism, including a hyperlink to a web-based complaint form, for consumers to report complaints regarding defendant’s advertisements or promotions that contain sexually explicit material.”

“[The settlement] requires the defendant to take steps to ensure that its affiliates comply with the restriction, and end its relationship with any affiliates who do not comply. It also requires the defendant to establish an Internet-based mechanism for consumers to submit complaints. Finally, the settlement contains bookkeeping and record- keeping requirements to allow the Commission to monitor compliance,” the FTC said in a press release.

In the FTC complaint against Various that led to the settlement, the FTC asserted that “[s]ince at least May 2006, defendant has forced consumers, including minors, to view unsolicited sexually explicit online advertisements for AdultFriendFinder.com and Cams.com.”

“Defendant, directly or through marketing partners acting on its behalf, including but not limited to its marketing affiliates, have used ad-serving software, often referred to as ‘spyware’ or ‘adware,’ that has been installed on consumers’ computers, often without consumers’ knowledge or consent, to cause defendant’s sexually explicit, full-screen advertisements to ‘pop-up’ on consumers’ computer screens,” the FTC said in the complaint.

Rothken asserted that Various and AFF have always prohibited the use of spyware by their affiliates and said that the company “believes in the goal of the FTC … to stop the display of unwanted pop-ups, especially those with sexually explicit content.”

According to the FTC, some of the pop-up ads used by AFF and its affiliates “have included graphic depictions of sexual behavior, exposing consumers, including children, to sexually explicit images.”

“Such ads were displayed to consumers who were searching online using terms such as ‘flowers,’ ‘travel’ and ‘vacations,” the FTC said. “In some cases, defendant’s sexually explicit ads were distributed using spyware and adware.”

Rotken asserted, however, that AFF “as never allowed the use of spyware or unsolicited exposure of sexually explicit material” by its affiliates and put the blame squarely on affiliates that failed to adhere to the company’s terms and conditions.

“Online affiliates act on their own, and we don’t know what they have done until after the fact,” Rothken said.

Researcher Ben Edelman, who has served as an expert witness in cases involving adware and spyware and has been a vocal critic of advertising techniques like those described in the FTC’s complaint against Various, said he was skeptical of Rothken’s explanation and that AFF should have conducted more rigorous oversight of its affiliates’ practices long before receiving the FTC complaint.

“AFF is in a sensitive, high-risk business — recruiting and paying affiliates to show explicit materials,” Edelman told XBIZ. “In that context, AFF should have been far more careful who it paid to show its ads. Furthermore, AFF should have carefully and rigorously supervised its affiliates to assure their compliance and to enforce high standards.”

Edelman added that beyond the issue of pop-up ads, AFF “provides highly explicit landing pages, which it knows some affiliates will show without obtaining any indication that a user is interested in viewing explicit material.”

“It may be true that AFF doesn't know, in advance, which affiliates will present problems,” Edelman said. “But AFF well knows that its business creates the risk of showing explicit materials inappropriately. AFF could have chosen to structure its business differently — by using less explicit landing pages, by showing explicit material only after a user specifically requests such material, by being more selective of what affiliates it does business with and/or by better supervising its affiliates. But for too many years, AFF chose instead to look the other way.”

Under the agreement Various is required to “[p]romptly and completely investigate any complaints that [it] receives through or any other source to determine whether [Various] or any of its marketing affiliates or other third parties has engaged or is engaging in acts or practices prohibited by this order, whether directly or through another person or entity.”

Various is also required to “terminate immediately” any affiliate or other third party that it “reasonably concludes has engaged in or is engaging in acts or practices prohibited” by the order.

Rothken downplayed the significance of the requirements, saying that “we have to maintain these sorts of records for our own purposes, anyway, so there is no extra burden [imposed by the order].”

Asked whether the settlement established any manner of precedent, Rothken replied that it “depends on how you define ‘precedent,’” adding that while the agreement has no legal precedent, per se, it might set a behavioral precedent of sorts within the online adult industry.

“AdultFriendFinder plays a leading role as a major Internet site,” Rothken said. “In signing this agreement, we’re trying to set an example to the industry, and that to avoid showing unsolicited pop-ups is a good thing to do.”

Edelman said that it was the FTC and not AFF that has sent a message through pursuing the settlement and indicated that AFF will have many eyes looking over its shoulder to ensure that they comply with the FTC’s order.

“As the FTC’s action demonstrates, AFF either needs to shut down the improper portion of its business or accept responsibility for what its affiliates do on its behalf,” Edelman said. “I and others will be watching carefully in search of further infractions.”

Representatives of the FTC were unavailable for comment by press time.

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