The CAN-SPAM Act, in its fifth year of existence, should have become reasonably well refined by this time-one would think.
On May 21, 2008, the Federal Trade Commission issued yet another batch of regulations pursuant to the Act's rule-promulgating authority. The new regulations clear up a number of things, but fall far short of dealing with the central issue to readers of this publication: Affiliate programs.
Where there has been litigation over liability of affiliate programs for the CAN-SPAM transgressions of affiliates, the result has been a blurry line. United States v. Impulse Media Group, Inc., 2007 WL 1725560 (W.D. Wash., June 8, 2007) and 2008 WL 1968307 (May 1, 2008); United States v. Cyberheat, Inc., 2007 WL 686678 (D. Ariz., March 2, 2007). Having defended some of these cases, I can testify that evaluation of them can be impossible. The FTC takes the position that if an affiliate was advertising your website, then you are responsible for its CAN-SPAM violations, to the tune of up to $11,000 per e-mail, no matter how much you did to try to stop them.
Significantly, in settling CAN-SPAM cases against affiliate programs, the Commission demands that the defendant consent to an injunction, including language that is almost identical from one settlement to another, which includes very specific terms of what the affiliate is required to undertake to prevent spam. If the Commission can spell out specific spam-avoiding techniques in consent decrees, why won't it do so in regulations?
If the Commission can draft a standardized anti-spam injunction, it can draft a safe harbor. But it chose to not do so.
The new regulations address this issue in the section of the regulations titled, "Safe Harbor for E-mail Messages Sent by Affiliates":
"In the NPRM [Notice of Proposed Rule Making], the Commission asked whether it should adopt a 'safe harbor' with respect to opt-out and other obligations for a sender whose product, service, or website is advertised by affiliates or other third parties. Moreover, the Commission sought guidance on the criteria for a safe harbor."
In first addressing these questions, the Commission reinforces its doubtful litigation position that an affiliate program is an "initiator" under the Act, thus rendering it liable regardless, ignoring the court decisions cited above which refused to sustain that position. Notably, the Commission does not address the issue of when an affiliate maintains its own website, sending spam that only advertises that site, and then converts the traffic by way of banners and other features on its own site, all driving traffic to the affiliate program's sites.
The Commission acknowledged what it refused to address:
"A 'safe harbor' would absolve a marketer of initiator liability (or of sender liability if the affiliate is not the designated sender under the final Rule) if the marketer takes prescribed steps to ensure that the affiliate complies with CAN-SPAM."
The comments submitted were a mixed bag, but those favoring a safe harbor appear more credible. The safe-harbor opponents claimed that it would allow affiliate programs to "circumvent CAN-SPAM requirements," which is ridiculous on its face. Someone needs to take this in perspective. After all, spam filters are inexpensive-in fact, services like Earthlink will furnish them for free-and significantly effective. And no affiliate-program safeguards can ever guarantee to eliminate all spam. And, given the draconian sanctions for violating CAN-SPAM, it is manifestly unfair for the FTC to refuse to set guidelines.
The excuses the Commission gave for declining to formulate guidelines were (1) that nobody articulated sufficiently specific safe-harbor guidelines and (2) "e-mail marketing models continue to evolve, and there may not be enough transparency in the e-mail marketing to support a safe harbor." As to the first, perhaps a better approach would be to follow the procedure more usually undertaken in establishing regulations of this character: Let the Commission propose a safe harbor, taken from all of the injunctions that it has negotiated, and then invite public comments on that safe harbor. As to the second, one would think that a safe harbor would presume and articulate currently known marketing models, and condition the safe harbor upon operating under one of the stated marketing models. Regulations can be amended over time to accommodate a changing market.
Clyde DeWitt is a Los Angeles and Las Vegas attorney, whose practice has been focused on adult entertainment since 1980. He can be reached through AVN Online's offices, or at [email protected].
This article originally appeared in the September 2008 issue of AVN Online. To subscribe, visit AVNMediaNetwork.com/subscribe.
