According to a press release issued today by the FTC, the defendants have paid a combined $621,000 to settle charges that their practices violated federal laws. The FTC pointed out that the settlement did not constitute an admission of guilt by the defendants.
While an affiliate sent most of the emails that brought the action against the companies, the FTC reiterated that under the Can-Spam Act, all programs being promoted by the affiliate were held responsible for the emails.
In addition to levying fines against the defendants, the court’s settlement order requires that they include in all commercial emails a working opt-out mechanism, notice that the emails are advertisements and a physical postal address.
Of particular interest is an affiliate monitoring requirement that said the defendants — and presumably all affiliate program operators going forward — must collect certain required information about email campaigns, as well as identification information about the affiliates, before they can begin a campaign. Once e-mails are sent, the defendants are required to survey new subscribers to their sites to make sure affiliates are following the rules set forth in the order.
Defendants in the case included Las Vegas-based companies Global Net Solutions, Open Space Enterprises, Reflected Networks and Southlake Group, as well as London-based Global Net Ventures and Latvia-based corporation Wedlake. Also named in the suit were Dustin Hamilton, an officer of GNS, director of GNV and officer of Reflected Networks; Tobin Banks, a director of Open Space; Gregory Hamilton, an officer and director of Southlake; Philip Doroff, an officer of Reflected Networks; and Paul Rose, an independent operator who allegedly sent several email messages promoting the GNS defendants’ websites.
The FTC had charged that the emails violated the Can-Spam Act and the FTC’s Adult Labeling Rule by failing to include the required label for sexually explicit content; displaying sexually explicit content in the email itself; using misleading header information; using misleading subject lines; failing to include the required opt-out notice; failing to have a functioning opt-out mechanism; failing to identify emails as advertisements or solicitations; and failing to provide a valid physical postal address.
The stipulated order was entered in the U.S. District Court for the District of Nevada on August 5. The default judgment was entered September 8.
