Defense Verdict Reported in Affiliate Marketing Case

As recently reported in Direct, Washington-based adult website operator obtained a defense verdict in an action brought by the FTC who alleged that Impulse Media Group, Inc. violated the CAN-SPAM Act by virtue of the acts of its affiliate marketers.

In United States v. Impulse Media Group, Inc. No. 05-01285 (W.D. Wash), the FTC sued Impulse under the CAN-SPAM Act. Can-Spam restricts emailing marketing to require certain disclosures, mandatory opt-outs, and prohibits deceptive content and subject lines. It also requires sexually explicit e-mails to be labeled as such.

The government had alleged that affiliates who drove traffic to Impulse's websites violated Can-Spam, with the case against Impulse resting on whether Impulse Media "initiated" the illegal e-mails sent by its affiliates by intentionally paying or inducing another person to send the messages. It has been reported that during the trial, Impulse Media relied on its anti-spam policies and termination of affiliates who violated the policy. The government countered that the anti-spam policies were a "sham" -- essentially unenforced because terminated affiliate marketers could reinstate themselves.

In addition to the obvious impact in the affiliate industry, the verdict could impact other actions in which the government seeks to hold companies liable for the acts of its independent agents. Here, Impulse utilized various pro-active measures to combat misconduct by its affiliate marketers. Marketers should be clear that they police how their products/services are being marketed and to terminate those that fail to comply.

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