AOL Settles Spam Case

AOL Time Warner’s America Online is claiming victory with a settlement in a lawsuit against accused spammer Netvision Audiotext.

While specific terms of the settlement are confidential, Fort Lauderdale, Fl.-based Netvision Audiotext, which operates a network of adult Web sites, agreed to pay what AOL spokespeople called “significant” monetary damages.

The company, which also does business as Cyber Entertainment Network and Net Management Corporation, also agreed to a permanent injunction barring it from sending unsolicited emails to America Online members.

In addition — in a stipulation addressing an issue at the heart of the 16-month legal battle — 40 of the company’s affiliates similarly are enjoined from sending email to AOL users through the settlement.

Like many e-commerce plays — including firms like Amazon.com , eBay and indeed, America Online — Netvision Audiotext enlists Webmasters to promote links to its subscription-based adult network and pays a bounty for each subscription that it signs through their links.

But while Netvision Audiotext claims to have an anti-spam policy of its own, sources close to the company point out the difficulty in regulating the activities of affiliates. In other words, while affiliates might send unsolicited bulk email — which include sign-up links for Netvision Audiotext’s sites — to America Online members, Netvision Audiotext itself might have little idea of how their subscriptions are being marketed.

At least, that was the crux of Netvision Audiotext’s argument. Lawyers for the company declined to comment on the settlement.

For its part, America Online maintains that Netvision was aware of its affiliates’ activities, and ought to have taken responsibility to curb their bulk email use.

“Our complaint basically stated that Netvision conspired with these Webmasters to send junk emails to millions of America Online members,” said AOL spokesman Nicholas Graham. “This settlement has now determined that an adult Website operator can be held responsible for negligence and the hiring and employment of Webmasters as a part of an affiliate program. This goes to the issue of holding those who incentivize the act of spamming accountable in court.”

Dulles, Va.-based AOL’s policies prohibit companies from using its systems to accept, transmit or distribute unsolicited bulk email sent from the Internet to AOL members. In its policy — which formed the basis of its case against Netvision Audiotext — the company cites federal laws and legislation in Virginia and Washington state, which grant networks like AOL a measure of recourse against “unauthorized use” of their systems.

While an out-of-court agreement technically isn’t enough to set a legal precedent, Graham agreed that AOL’s arguments could have far-reaching consequences for affiliate marketers and their networks.

“This determines that the act of sending email through Virginia-based email networks is going to subject Webmasters or any defendant to a lawsuit in a Virginia court,” he said. “It’s also important because essentially the injunction broke apart a network of porn spammers and now going to bind Netvision and other Webmaster programs to enforcing certain policies … on their affiliate Webmasters, which [affiliates] must now abide by. It resets policies that are employed by Netvision and companies like them in their Webmaster programs.”

“This is a landmark case, and we’re very proud of our efforts in court. It’s a valuable precedent for AOL and others in the industry, and spam is an industry-wide problem,” Graham added.

Indeed, while the matter naturally concerns consumers and ISPs like America Online, which shoulder the burden of transmitting unwanted email, mainstream email marketers also complain mightily about spam. As the argument goes, the explosion in unwanted email stands to damage the reputation and effectiveness of even legitimate marketers.

Meanwhile, the AOL settlement comes just a day after the successful crackdown by the U.S. Federal Trade Commission and international government agencies on fraudulent email advertisers.

Efforts by the FTC to stamp out fake offers and to monitor the proliferation of unsolicited commercial email have redoubled in recent months, just as industry analysts are predicting unprecedented levels of unwanted commercial email in coming years.