In Big Crackdown, FTC Charges 7 Online Adult Companies

Rhett Pardon
LOS ANGELES — In its most aggressive crackdown to date, the Federal Trade Commission accused seven companies on Wednesday of hiring affiliates to send spam emails to tempt surfers into visiting adult sites.

Four of the online adult companies have already agreed to pay nearly $1.2 million to settle charges that they violated the Can-Spam Act. Inc. of Miami, agreed to pay $650,000; MD Media of Bingham Farms, Mich., will pay $238,743; APC Entertainment Inc. of Davie, Fla., will pay $220,000; and Pure Marketing Solutions LLC of Miami and Internet Matrix Technology of New Orleans will together pay $50,000, the FTC said. owns Ox Ideas; MD Media is parent company of Pimproll; Pure Marketing owns nearly two dozen adult sites, as well as the Pure Cash affiliate program; and APC operates

The three other companies include Tucson, Ariz.-based Cyberheat/Top Bucks; Seattle-based Impulse Media Group, which operates; and TJ Web Productions LLC of Henderson, Nev.

The FTC said it directed the Justice Department to file civil lawsuits against those three. The suits will seek unspecified payment to the government for every Can-Spam violation.

Cyberheat, in an open letter on Wednesday, denied the charges by regulators.

“We would like to proclaim publicly and vehemently deny any and all accusations that Cyberheat Inc. knowingly participated in any email campaigns that violated the Can-Spam Act,” the letter said.

“We find that the FTC’s motives in this instance are not to stem the flow of illegal spam, but rather to generate money and force companies like ours to police our affiliates with extreme measures and take on unnecessary liabilities.

“We have been explicit in our communications that we have zero tolerance for webmasters who do not comply with FTC regulations and the Can-Spam Act. In our case, the FTC has admitted that they are attempting to make our company liable for affiliates who have broken the Can-Spam law and violated our terms. We are confident that we have done due diligence to banish Can-Spam violators and that the law clearly is on our side.”

Impulse Media founder and CEO Seth Schermerhorn told the King County Journal that he should not be held liable for the actions of spammers who he said are acting on their own.

"I'm not so much worried about being fined [by the FTC] but about how much it's going to cost to prove my innocence,'' he said.

In the seven individual complaints, the FTC said the companies did not send emails directly to consumers but operated affiliate programs, paying others to send unwanted messages to drive Internet traffic to adult websites.

Regulators said that under Can-Spam defendants in such cases are liable because they paid others to send emails on their behalf.

In the case of MD Media, for example, the FTC alleged that the company “provided monetary payments and other consideration to third-party affiliates, including, among others, Montana Marketing Networks, Galio Ltd., Jinhau Dai and SED Group, for consumer memberships resulting from website hyperlinks and links in commercial email messages.”

Regulators said the email messages were not prominently marked "sexually explicit," did not include instructions for consumers to block future emails and did not include a postal address, all required under Can-Spam, also known as the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003.