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UPDATE 3-Craigslist agrees to crack down on erotic ads

(Adds background on eBay stake in Craigslist, history of company)

NEW YORK, Nov 6 (Reuters) - Craigslist, the popular Internet classifieds listing service, agreed on Thursday to crack down on advertisements posted by prostitutes in a pact struck with 40 U.S. states.

The listings site has been under pressure to screen out cyber advertisements that offer sexual services. These listings have given prostitutes easy access to potential clients cruising the Web, law enforcement authorities say.

Craigslist, whose listings are generally free to post except in some apartment and job categories, will require that advertisers in its “erotic services section” pay a fee with a valid credit card and give a working phone number, Connecticut Attorney General Richard Blumenthal said.

The site will provide the information in response to law enforcement subpoenas, he said.

“Prostitutes will hopefully stop using Craigslist to break the law, knowing that their posts could lead to arrest and conviction,” Blumenthal said in a statement.

The privately held listings service is partially owned by online auctioneer eBay EBAY.O, which bought a 25 percent stake in 2004.

Blumenthal had complained to Craigslist in March about postings from prostitutes, which he said have often included explicit photographs, hourly rates and detailed descriptions of the services on offer. He said a Connecticut woman had been arrested for advertising sexual services on the site.

Thirty-nine other states joined in the pact, as well as the District of Columbia, the U.S. Virgin Islands and Guam. Blumenthal said Craigslist will also explore new technology, including better filters, to stop ads for illegal activity.

Craigslist says the terms of use on its site state that advertising illegal services, including prostitution, is prohibited, but that the new measures should help further prevent misuse.

“Requiring credit-card verification, and charging a fee to post in this category raises accountability to a point where we expect few illicit ads will remain,” CEO Jim Buckmaster said. He said that “more than ever, those who would misuse Craigslist to violate the law will find that Craigslist is a very inhospitable place.”

The San Francisco-based service also said it had filed 14 lawsuits against businesses selling software and other services designed to evade its terms of use.

Craigslist was started as a hobby by founder Craig Newmark in 1995, and it now has websites in more than 50 countries. (Editing by Richard Chang and Maureen Bavdek)