FTC Halts Illegal Spam Operation

Adult Web site violated CAN-SPAM Act.

by / May 7, 2008

The Federal Trade Commission and Department of Justice have halted the illegal conduct of an adult Web site that sent spam with false or misleading header information, that failed to include an opt-out mechanism, and that failed to include a valid postal address, all in violation of federal law. A final court order will bar violations of the CAN-SPAM Act in the future, require the defendants to establish an effective monitoring program for their affiliates, and impose a $75,000 civil penalty.

According to the FTC, since at least January 2006 the defendants have used affiliates who sent spam intended to drive users to the defendants' adult Web sites, including sexyfriendsearch.com, an Internet dating service where they collect payment for memberships. The affiliates, who are paid commissions for referrals who sign up as members, send spam with lurid subject lines that contains hyperlinks to the defendants' Web sites.

The settlement bars future violations of the CAN-SPAM Act and requires the defendants to establish a monitoring program to assure that their affiliates comply with the law. Based on the defendants' inability to pay, a judgment of $442,900 -- the amount the defendants made from the illegal spam -- will be suspended upon payment of a $75,000 civil penalty. Should the court find that the defendants misrepresented their financial status, the entire amount will be due. Finally, the settlement contains record keeping requirements to allow the FTC to monitor compliance.

The defendants named in the case are ATM Global Systems, Inc. and it principals, Mark Richman and Nathaniel Seidman.