File Sharing Operator Settles FTC Charges

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A Web site operator who claimed that membership to the site would let users of peer-to-peer file-sharing programs transfer copyrighted materials legally has agreed to settle Federal Trade Commission charges that his claims were false, the agency said May 25.

The settlement with Cashier Myricks bars misrepresentations about P2P file-sharing products or services and requires the Web site operator to disclose civil and criminal liability risks of downloading copyrighted material without the owner's permission. The settlement, filed in U.S. District Court in Los Angeles, also requires the operator to refund more than $15,000 to buyers of memberships.

In September, the FTC charged that Mr. Myricks used his site to market and sell a tutorial and referral service that promoted the use of P2P file-sharing software to download digital music, movies and computer games.

Unlike a licensed subscription service, the FTC said, the service did not provide its paying customers a license to download and share the copyrighted material. Instead, for $24.95, consumers were instructed on the use of free P2P file-sharing software provided by others.

The FTC alleged that consumers were lured into becoming members by deceptive claims stating that subscribing to the service made P2P file sharing "100% legal."

According to the FTC complaint, the customers who used P2P file-sharing programs to download copyrighted material, or who made it available to others, without the copyright owner's permission were engaged in copyright infringement that could subject them to civil and criminal liability. The court ordered a temporary halt to the claims. The settlement ends the litigation.

In another announcement May 25, the FTC said that a civil contempt judgment was entered in the U.S. District Court in Illinois against Mark E. Shelton, a defendant who previously was ordered to stop an envelope-stuffing scam in 2004.

The contempt judgment held that Shelton violated the 2004 court order by continuing to deceptively market and sell envelope-stuffing, work-at-home opportunities to consumers. Under the judgment, Shelton has been held liable for $1.49 million in consumer harm and permanently banned from participating in any work-at-home, employment, business or investment opportunities.

The FTC yesterday also announced the filing of a complaint against four individuals and three companies that operated the Illinois-based envelope-stuffing scheme with Shelton.


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