The Saturday seminar side of ia2000 began on a note which some might call ominous but others might consider a mere advisory to caution - a potential coming Federal legal focus on the adult entertainment industry, if not one which has already begun.
And panelists for the first Saturday seminar, "Washington and the Web," paid attention to the Federal Trade Commission's involvement in two high-profile cases involving the adult business, one involving fraud and the other involving the controversial practice of mousetrapping - drawing Web surfers into seemingly endless loops of porn sites when they don't want to be there.
The panelists also focused secondarily on the general political climate and election seasons in which politicians, almost traditionally, find convenient bogeymen around the adult entertainment business.
"The adult (entertainment) industry leads the way in consumer satisfaction, but there is a rise in deceptive practices," Federal Trade Commission representative/investigator Stephen L. Cohen told the seminar Saturday.
Fellow panelist David Steiner, a copyright and art litigator, spoke of a recent FTC trend toward the Internet in general and the adult Net in particular, a trend Cohen did not exactly deny. First Amendment attorney David Wasserman reminded listeners the FTC isn't interested in content but in business practice.
The FTC's authority is unfair or deceptive business practices. And, most recently, it made headlines when it arrested Carlos Ferrera, a Portugese adult Web provider who sent thousands of Web surfers into endless loops to porn sites by stealing other Web pages and inserting a line of code into their composition languages to such the surfers into the loops with seemingly innocuous keywords or URL names.
The Ferrera arrest prompted an FTC crackdown on the practice, a crackdown various adult Web industry representatives at ia2000 endorsed cautiously earlier during the convention.
"You have to understand that the FTC act is very, very broad," Steiner said. "The deck is somewhat stacked in favor of the FTC…they have the power to seek all sorts of equitable remedies, such as restitution…or other redress for consumers."
Cohen - whom panel moderator Greg Piccionelli introduced as "a fair regulator" - told the gathering the adult business isn't just the leader in online consumer satisfaction but is also on the cutting edge of technological advance online.
But the industry has also been a commission focus for "a variety" of abuses, including deception and unfair trade, Cohen said. His first example was what he called the Sexy Girls Case, in which Audiotext, using e-mail and newsgroup postings among other methods, failed to disclose that their customers were unknowingly being taken off their own ISPs and re-routed to an international telephone line costing them $2 per minute.
The FTC got a restraining order and an asset freeze in the case, Cohen said. Earlier, Steiner focused on the seizure process, which he called "a sort of sickening process" for potential defendants, and the FTC has wielded the seizure bat somewhat liberally, Steiner said. He says a federal court order freezing assets during an FTC probe can extend globally and cover individuals as well as their businesses.
"You can imagine that if you're not prepared for something like that, that it can be somewhat daunting for someone to keep running their company when they're faced with something like that," he said.
In fact, Steiner pointed out, the process was used in a very recent and somewhat celebrated case, involving Ken Taves, the California man involved in a $45 million fraud case involving adult Web merchants and bought and sold credit information. That case is still ongoing, particularly in light of recent disclosures of Taves's past felony record.
But Cohen reminded listeners the FTC cannot freeze assets on its own. "We have to have a court order," he said.
Wasserman also told the Saturday seminar something similar to what he'd told a different seminar earlier during the convention - the current political climate regarding free speech issues and the adult business is "a calm before the storm."
And he says the adult entertainment business is a very convenient target for opportunistic politicians lost for other linchpin issues.
"Oftentimes, a politician in need of some issue to gain support for re-election needs to create a problem if there isn't one," Wasserman said. "Or, he wants to divert attention from another significant problem. And, often, to do that, they need a bogeyman. They no longer have Communism or the Evil Empire to kick around."
But Wasserman and his fellow panelists also warned that, in speaking politically of the adult business, one could not limit that talk to the American Web. He also criticised the recent international conference on content monitoring held in Munich under the auspices of some of the Internet's heaviest players, including America Online, as well as various government officials.
"It's inconceivable that adult Webmasters were not represented at (Munich)," he said. "They're not hearing from you, they're hearing from all these other companies that are concerned that you are creating a bad image on the Web. They never heard your ideas; they never heard your concerns."
Steiner said a key for Internet adult merchants protecting themselves is keeping mindful of terms and conditions. "Obviously, there's a problem for everyone in trying to disclose a lot on a small page," he said. But he said full, complete disclosure is a must - as is "a full and robust customer service component".
"That's your way of dealing with all those consumers the FTC concentrates on," he said.
Cohen said the Fererra case illustrated how important it is for adult Web sites and groups to know where their real audiences will come from. Fererra, Cohen said, often used copied Web pages from sources as diverse as Paine-Webber and the Harvard Business Review - sites not necessarily those where adult entertainment seekers might begin surfing for their entertainment.
Cohen also attacked another practice said to be endemic among the lower-level, lower-reputation adult Web world - lacing keywords with frequently searched terms, or what he calls "the Pamela Anderson Lee syndrome."
"I would generously call (the matter) irrelevant search results," Cohen went on. "Why is it that, when I type in a search for a specific item having nothing to do with sex, I've got a search result that appears to be nothing but adult content…it abuses the search engines, wastes consumers' time, and in my opinion is deceptive."
Piccionelli followed up Cohen's comments with a caution toward "appropriate" Web traffic management. "One of the reasons for this panel is that people can learn where the lines are drawn," he said. "One, you want to stay out of the line of sight of the FTC. Two, we hope that, as the industry matures, we will get a level playing field such that what will prevail…are the better business persons who have the better mousetraps to offer" - drawing a chuckle at his pun on the porn looping, which is known as "mousetrapping" to the FTC.
