Markets Wired

An operator who used more than 5,500 copycat Web addresses to divert surfers from their intended Internet destinations to one of his sites, and held them captive while he pelted their screens with a barrage of adult-oriented ads, has agreed to settle FTC charges that he was in contempt of a court order requiring him to halt the practices. Under the new FTC order, the defendant must give up $164,000 in ill-gotten gains, conform to enhanced compliance and monitoring requirements, and transmit a copy of the new order to his probation officer.

In October 2001, the FTC charged that John Zuccarini was registering Internet domain names that were misspellings of legitimate domain names or that incorporated transposed or inverted words or phrases. For example, the defendant registered 15 variations of the popular children’s cartoon site, www.cartoonnetwork.com, and 41 variations on the name of pop star Britney Spears. Surfers who looked for a site but misspelled its Web address or inverted a term – using cartoonjoe.com, for example, rather than joecartoon.com – were taken to the defendant’s sites. They then were allegedly bombarded with a rapid series of windows displaying ads for goods and services ranging from Internet gambling to pornography. In some cases, the legitimate Web site the consumer was attempting to access also was launched, so consumers thought the series of ads was from a legitimate Web site. It was difficult or impossible for consumers to close the windows or escape.

In May 2002, at the request of the FTC, the court permanently barred Zuccarini from redirecting or obstructing consumers on the Internet in connection with the advertising, promoting, offering for sale, selling, or providing any goods or services on the Internet, the World Wide Web or any Web page or Web site; misrepresenting that any Web pages, Web sites, domain names, or goods or services, are endorsed by, affiliated or associated with, any third parties; and participating in any affiliate marketing programs (revenue-sharing arrangements involving the marketing of goods or services through the use of online banners, ads, and text links). Zuccarini was required to give up $1.8 million in ill-gotten gains. The court also ordered certain bookkeeping and record-keeping requirements to allow the FTC to monitor his compliance with the court’s order.

In August 2003, the United States Attorney for the Southern District of New York criminally prosecuted Zuccarini for the misleading use of domain names and possession of child pornography. He was sentenced to 30 months in prison and 36 months of supervised release.

In December 2006, the FTC charged that Zuccarini violated the 2002 FTC order by redirecting consumers on the Internet, misrepresenting that his domain names were affiliated or associated with third parties, and participating in affiliate marketing programs. The agency also charged that the defendant did not comply with record-keeping and reporting requirements in the original order.

The court issued a temporary restraining order to halt the defendant’s prohibited practices, freeze the defendant’s assets, and require records preservation.

In January 2007, the court approved a stipulated preliminary injunction halting the defendant’s illegal conduct pending resolution of the contempt proceedings. On May 31, 2007, the court approved a stipulated order ending that litigation.

The defendant stipulates that he was in contempt of the original FTC order. The new order imposes a judgment of $164,000 – his ill-gotten gain from engaging in the prohibited practices. The original order remains in place, and the new order updates and enhances the compliance and monitoring requirements. Finally, the new order requires that Zuccarini transmit a copy of the new order to his probation officer.

The FTC order names John Zuccarini, individually and doing business as Cupcake Party, et al.

The Commission vote to accept the stipulated judgment and order was 5-0.

NOTE: A stipulated judgment and order is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Stipulated orders have the force of law when signed by the judge.

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.