This is the wake-up call for those of you who garner traffic from affiliates. "Affiliates: Sign up here and share the wealth," your site says. And they sign up. And they generate traffic. But how do they generate that traffic?
Materially nobody in the Adult Internet world remembers the Watergate scandal, other than perhaps something that was in the news when they were in elementary school. (The aging author was in law school then.) Presuming you don't recall, the rallying cry when they were trying to connect President Nixon to the high jinks at the Watergate Hotel was, "follow the money." In other words, whoever had the money must have been at the bottom of it.
That theory may also be applied to spam. Say someone receives illegal spam and forwards it to the FTC's spam-complaining email address. The FTC makes an "undercover" purchase of what the spam advertises – a subscription to your Website – and two-plus-two are put together: You are the culprit!
"But wait! It was an affiliate that sent the spam – contrary to our strict affiliate policy. The affiliate agreed to the 'no spam' (or no illegal spam) terms of service and then went out and blatantly violated its promise. We can't be responsible for affiliates over which we have no control. That would be the same as holding Smith & Wesson responsible for gun homicides."
While that certainly is an appealing argument, it has not touched everyone's heart. Consider the other view of it.
Americans whose livelihoods are dependent upon the Internet are shelled daily with spam, often hundreds of spams every day, as if you are not a personal witness to that fact. The average Internet user spends significant time every day erasing spam from the inbox. And mothers are really tired of their 12-year-old kids being bombarded with pornography, which likely is a particular sore spot with the current Republican administration.
So what kind of sympathy does a Webmaster expect from the plea, "Gee, I had no idea that I was making thousands of dollars every month from spam – we have a strict no-spam policy and, if some affiliate in some Eastern European country was spamming, you should do something to them, not me." As explained above, follow the money.
Here is how things are going in this realm: First, the CAN-SPAM Act saved lots of folks from facing a blizzard of lawsuits. Indeed, the reason that the CAN-SPAM Act was zipped through Congress was that California had enacted its own anti-spam law, which was trumped by the CAN-SPAM Act, but otherwise would have totally outlawed spam and created a bounty on any spam, giving roughly 200,000 California lawyers a new source of income. Since CAN-SPAM, there have been only the Federal Trade Commission and state attorneys general with which to contend, plus ISPs that are really angry. But as things are developing, the FTC and attorneys general are gravitating to the "follow the money" approach. So, if you are getting the spam money, you could well be at risk. Moreover, California has enacted a new spam-bounty law that supposedly complies with CAN-SPAM. Cal. Bus. & Prof. Code �17529.5.
For background, you might re-read some old AVN Online Legal Commentary columns about the federal anti-spamming regulations if you need to be brought up to date (most are online now), particularly February 2004 ("The New Federal Anti-Spam Law") and July 2004 ("The FTC Interprets the CAN-SPAM Act"). The nub of all of this is that if you are going to send spam you must do it exactly as the FTC says. For Adult spam, the first 19 characters of the subject line must say "SEXUALLY-EXPLICIT:" and then a space. If the space is left out, or there is a space where the hyphen is required, or a space before "SEXUALLY", it is a violation. There is an additional list of equally precise requirements about what Adult spam must and must not include. An Adult spam falls into either one of two categories: Either it is exactly correct or it is illegal. Period! And there is another laundry list of regulations that apply to any kind of spam, such as dealing with fraudulent subject lines, opt-out requirements, etc.
The most popular method of generating traffic for pay sites these days is the affiliate-program model. One can instantly create a huge sales force – an army of Website operators who are capable of building sites but, for whatever reason, are lacking the wherewithal or interest to set up a billing mechanism.
Obviously, a successful operator of an affiliate program has no control over how affiliates generate traffic. They often do not know how their affiliates are generating traffic, and probably do not have the ability to find out. (There is emerging technology whereby a likelihood of spamming can be detected, but counter-technology is emerging just as quickly.) An affiliate sends a piece of referral traffic. How did that piece of traffic find the affiliate's site? Google is always a possibility. But if the affiliate sent out spam, the spam sent the traffic to the affiliate's site and the affiliate's site sent the traffic to you, how is it possible for you to know that spam was responsible for the traffic? It isn't. And, moreover, even if it were spam, it could have been legal spam because, after all, there is a legal way to send spam.
Now, you have affiliate terms and conditions. And, responsibly, the terms and conditions include a strict policy about spam. If you find out that an affiliate is spamming (or illegally spamming, as the case may be), your policy is to immediately cut off the affiliate and the affiliate forfeits any checks in the pipeline.
So you cut off an affiliate. The affiliate, unbeknownst to you, resurfaces as another foreign corporation at a different post office box in a different foreign city. Then you are unwittingly the recipient of more illegal-spam-driven traffic from the same source.
Moreover, there are many other folks with affiliate programs. So you cut off one illegally spamming affiliate who then switches to another affiliate program... and you get a new illegally spamming affiliate that was cut off from the other program! This game of spamming-affiliate musical chairs could go on indefinitely, with nobody taking away any chairs between songs.
Under classical conspiracy law, you could not be held responsible for a law-breaking affiliate unless you had basis for believing that illegal spamming was taking place. That includes, by the way, a theory called "willful blindness," where you can be guilty if you look the other way because you don't want to see what you suspect is going on. For example, a pawn-shop operator cannot be held accountable for dealing in stolen property just because a guy pawns a stereo system that turns out to be stolen. But if the same guy pawns three or four stereo systems a week and never claims any of them, that is a different story.
But CAN-SPAM does not work quite that way. Here is an example of the statutory language of a CAN-SPAM violation: The statute says, "It is unlawful for any person to initiate the transmission" that has header information that is misleading under the statutory rules. "Initiate" means "to originate or transmit such message or to procure the origination or transmission of such message." To have "procured" the origination of a message in this context, it means "intentionally to pay or provide other consideration to, or induce, another person to initiate" a "commercial electronic mail message? on one's behalf." Importantly, it does not say intentionally induce an illegal email, but only intentionally induce any email.
The FTC is apparently testing this theory in a Nevada district court, charging affiliate spammers – and, more significantly, the sponsor sites – with violation of the CAN-SPAM Act. The action seeks not only injunctive relief to stop a practice that the defendants – and any other affiliate program – may be powerless to prevent short of entirely shutting down their affiliate programs. Moreover, it seeks to recover the costs of bringing the action, rescission of contracts and "disgorgement of ill-gotten gains, and the refund of the moneys paid." In theory, then, what the FTC appears to be asking the court to do is order the defendants to shut down the affiliate programs and give back all the money.
In the Commission's application for an emergency injunction (a temporary restraining order and preliminary injunction, for you technicians), which the judge granted, it used the above statutory scheme to explain why it thinks that everyone, not just the affiliates, were responsible:
"CAN-SPAM imposes liability for commercial email messages upon 'initiators' of the email. This includes not only those who 'originate or transmit' the message, i.e., the button pushers, but also those who procure the origination or transmission of the message.... CAN-SPAM defines procurers as those who 'intentionally pay or provide other consideration to, or induce, another person to initiate' a message on their behalf.
"Under this statutory scheme, those who induce others to send emails promoting their websites are liable for violations of CAN-SPAM regardless of whether the actual button pusher can be identified.... As a result, the [non-button pushers] are procurers, and hence initiators, of emails promoting all of their websites because they offer to pay, though through affiliate programs[s], or otherwise induce their affiliates to send email promoting their websites."
While elsewhere in the motion the FTC claimed that the sponsor Websites knew that the affiliates were using spam and knew that it was illegal, the above makes relatively clear that the Commission doesn't think it is necessary to establish knowledge that the spam is illegal; rather, only knowledge that some kind of spam is involved. In fact, under the FTC's stated theory, a defendant could be liable for an affiliate's illegal spamming notwithstanding having in place a carefully policed, no-illegal-spam policy and believing in good faith that all of the affiliates' spamming was legal. That is pretty harsh! Federal Trade Commission v. Global Net Solutions, Inc., et al., Case No. CV-S-05-0002-PMP-LRL (D. Nevada, January 3, 2005).
Time will tell whether the FTC will advance that theory against Webmasters alleged to be only innocent victims of affiliates' illegal spam and, if so, whether the Commission's position in that regard will withstand a court challenge.
Clyde DeWitt is a partner in the Los Angeles-based, national law firm of Weston, Garrou & DeWitt. He can be reached through AVN Online?s offices, at his office at 12121 Wilshire Boulevard, Suite 900, Los Angeles, CA 90025, or at [email protected]. This column does not constitute legal advice but, rather, serves to inform readers of legal news, developments in cases, and editorial comment about legal developments and trends. Readers who believe anything reported in this column might impact them should contact their personal attorneys.
