LAS VEGAS, NV – The Federal Trade Commission (FTC) announced Thursday that multiple defendants accused of violating the CAN-SPAM act have paid $621,000 to settle charges against them, and that terms of the settlement require the defendants to closely monitor affiliates to assure future compliance with federal laws.According to the Stipulated Order for Permanent Injunction and Monetary Judgment, signed by representatives of the defendants, the FTC and a district court judge in Nevada, 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. Global Net Ventures’ businesses include the affiliate program Signup4Cash.com.
As part of the settlement, the Defendants “waive all rights to seek appellate review or otherwise challenge or contest the validity of this Order,” although the agreement also states that “No provision of this Order shall be construed as an admission or denial that Defendants have engaged ln violations of the FTC Act, CAN-SPAM. or the Adult Labeling Rule.”
The settlement also has the effect of lifting a freeze on the Defendants’ assets, which according to the Stipulated Order had been frozen “pursuant to the Preliminary Injunction Orders entered by this Court on January 11, 2005.”
The agreement calls for close future monitoring of affiliates, and proscribes reporting from the Defendants in order to confirm compliance with CAN-SPAM and other federal regulations.
Among the requirements is that the Defendants notify prospective affiliates of the FTC’s Order. “Prior to a person’s participation in Defendants’ affiliate program, Defendants shall provide each prospective participant with a copy of this Order… obtain from each prospective participant an express written agreement to comply with this Order, the CAN-SPAM Act, and the Adult Labeling Rule, and an acknowledgment of receipt of this Order.”
The Order also provides stipulates that the FTC is “authorized to monitor compliance with this Order by all other lawful means,” including “posing as consumers and suppliers to Defendants, to any of Defendants’ employees, or to any other entity managed or controlled in whole or in part by Defendants, without the necessity of identification or prior notice.”
The court also entered a default judgment against one defendant, Paul Rose, citing “his failure to answer or otherwise defend this matter”. Rose has been ordered to pay $79,018; a sum based on the “Affidavit of Dustin Hamilton dated July 6,2005, attesting that Defendants paid to defendant Paul Rose $79,018 in commissions during 2004.”
Under the Order, 180 days after the date of entry of the Order, the defendants are to “provide a written report to the FTC, sworn to under penalty of perjury, setting forth in detail the manner and form in which they have complied and are complying with this Order.”
The FTC’s Order also leaves the door open for more trouble to come, should the Commission find that the facts stipulated to by the Defendants are inaccurate or incomplete.
Under the terms of the Order if the Court finds that the “defendants have materially understated the revenues derived by Defendants during 2004 as a result of email solicitations or overstated the amount paid to defendant Paul Rose as commissions” the Court will enter judgment against them, accordingly. The Order further states that the “Proceedings instituted under this Part are in addition to, and not in lieu of, any other civil or criminal remedies that may be provided by law.”
The FTC has settled several such complaints this year, including a settlement with BangBros.com Inc., and has filed suit in US District Courts citing TJ Web Productions (Adult Paymaster), Cyberheat Inc. (TopBucks) and Impulse Media (Soul Cash).
