Five of the firms have settled with the FTC, agreeing to pay a combined fine of $1.159 million, while legal actions have been filed against the remaining three companies, seeking civil penalties and a permanent bar on the illegal marketing.
“This x-rated email is electronic flashing,” said Lydia Parnes, Director of the Bureau of Consumer Protection. “It exposes kids and other unwary consumers to graphic sexual content, and it is unwanted, offensive, and illegal.”
“The Adult Labeling Rule was designed to protect consumers who don’t want to be exposed to random assaults of sexual material and others, like kids, for whom it is inappropriate. It’s the law, and we intend to enforce it,” she added.
The FTC’s Adult Labeling Rule was brought in under the Controlling the Assault of Non-Solicited Pornography and Marketing Act (the CAN-SPAM Act) to target sexually orientated spam. The Rule requires the warning "SEXUALLY-EXPLICIT:" to be included both in the subject line of any email message that contains sexually oriented material, and in the electronic equivalent of a "brown paper wrapper" in the body of the message.
The Rule and the Act also require that unsolicited commercial email contain an opportunity for consumers to opt-out of receiving future email and provide a postal address, among other things.
According to the FTC, the companies sent sexually explicit email messages that breached the Adult Labeling Rule requirements and did not provide a clear opt-out mechanism or postal address.
The defendants did not send email directly to consumers; rather, they operated affiliate marketing programmes in which they paid others to send spam on their behalf. Under the CAN-SPAM Act, the defendants are liable for the illegal spam sent by their affiliates because the defendants “initiated” the email by paying others to send it on their behalf.
Five of the firms have agreed settlements with the FTC, barring future violations of the Act and the Rule. The settlements also require that the defendants closely monitor the practices of their affiliate marketers to ensure that they are not violating the law.
BangBros.com, based in Florida, will pay $650,000 in civil penalties; MD Media, a Michigan corporation, will pay $238,743; APC Entertainment, a Florida corporation, will pay $220,000; and Pure Marketing Solutions, another Florida company, and Internet Matrix Technology of Louisiana, will together pay $50,000. The settlements contain record-keeping provisions to allow the FTC to monitor the defendants’ compliance with the orders.
In addition to the settlements, at the request of the FTC, the Department of Justice has filed a lawsuit against TJ Web Productions, a Nevada company; Cyberheat, an Arizona Corporation; and Impulse Media, a Washington corporation.
The FTC said that Microsoft provided technical assistance in the investigation of the cases.
