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FTC Accuses Cleverlink of Spamming

FTC Accuses Cleverlink of Spamming
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May 26, 2005 3:32 PM PDT    Text size: 
SAN DIEGO, Calif. – Under the shield of the Can-Spam Act, affiliate program Cleverlink was suspended from spamming and ordered to return its “ill-gotten gains” by a federal judge this week as a result of more than 550,000 complaints.

The three principals of Cleverlink, Brian Muir, Jesse Goldberg and Caleb Wickman, were charged individually and as representatives of Real World Media LLC and Cleverlink Trading Company, the latter incorporated in Cyprus.

The Federal Trade Commission alleged that Cleverlink spammed thousands of people with a link to a “lonely housewives” site, not providing opt-out information and displaying sexually explicit material in the immediately viewable area of the email.

Muir also owns affiliate program AdultCash.

Reports that AdultCash’s assets were seized are untrue, Muir told XBiz. Further, the charges were not levied against AdultCash, nor was the lonely housewives site in question available to AdultCash affiliate partners. Muir also said he has read the complaint but has not yet been subpoenaed.

“Cleverlink's assets were preserved,” FTC attorney Steve Wornikoff clarified with XBiz. “Seizures of assets are common to criminal cases, but in this case Cleverlink’s assets are frozen; they cannot use them to conduct business.” Unlike a seizure, the assets, technically, are still within Cleverlink’s control.

In addition to the 550,000 reports generated by individuals and companies, Microsoft was also instrumental in bringing the case to the FTC’s attention. Microsoft operates several thousand “trap accounts,” Wernikoff said, that appear to be individual email addresses, but function as spam catchers.

Counsel representing Muir, his partners, and his companies met with U.S. District Court judge Amy St. Eve yesterday to discuss the temporary restraining order levied against Cleverlink. “They are allowing us to pay our expenses and affiliates with the other companies that have nothing to do with this,” Muir told XBiz. “So it's business as usual with Adultcash.com.”

The complaint was filed in U.S. District Court because a significant amount of business was conducted in Chicago, Wernikoff said. Because Cleverlink’s payment processor was based on the island of St. Kitts and due to the company’s foreign incorporation, he said that sometimes tracking companies to where they actually do business (in this case, San Diego) is difficult, so the complaint was filed where the investigation started.

“We weren't sending any emails ourselves,” Muir said. “We were buying the traffic and were not aware of the severity of the issue.”

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