Spammers Settle With FTC, Pay $621,000

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Spammers who sent millions of illegal e-mails, including sexually explicit messages, paid $621,000 to settle charges that their practices violated federal laws, the Federal Trade Commission said yesterday.


The settlement bars future violations and requires the marketers to monitor their affiliates to ensure they are complying with federal laws.


According to the complaint, filed in January, the defendants sold access to sexually explicit Web sites through spam. Four defendants control a network of corporations that own and operate the sites, payment systems and servers used to distribute and sell sexually explicit content.


One defendant was an affiliate hired to market the content from the Web sites, the FTC said. Though the affiliate sent many of the e-mails alleged to have violated federal law, under the CAN-SPAM Act all of the defendants are responsible for the e-mails, including the defendants who paid others to send the e-mails on their behalf.


The FTC said that the e-mails 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 e-mail 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 e-mails as advertisements or solicitations; and failing to provide a valid physical postal address.


The court entered a default judgment against one defendant, requiring him to pay $79,018. The remaining defendants settled the FTC charges. Both the settlement order and default judgment bar the defendants from violating the CAN-SPAM Act, the Adult Labeling Rule and the FTC Act.


The settling defendants are Global Net Solutions Inc.; Global Net Ventures Ltd.; Open Space Enterprises Inc.; Southlake Group Inc.; Wedlake Ltd.; WTFRC Inc., doing business as Reflected Networks Inc.; Dustin Hamilton; Tobin Banks; Gregory Hamilton and Philip Doroff. The U.S. District Court judge entered the default judgment against defendant Paul Rose, an affiliate.


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