Thanks.

After I searched their site it looks like adult entertainment club parties site, it's not site about homosexual rights and equality I was assuming first. That usage would be legal on agency they bought the image.

So, I was wrong in some way, but I friendly advised them not to use microstock images when putting text like "Sexy bitches" "go-go party" because it could lead them into a legal trouble.

On site where the image was downloaded that usage isn't allowed.

Your right.  Adult entertainment would be considered sensitive use on all sites most of us sell on.

Glad you were sucessful in taking it down.

Why should they be refunded if they used the file, even though against T&C?
What reason would they have not to try this again?
Glad it's been sorted to your satisfaction. Certainly I'd hate models to be used as gogo shower girls or suchlike.

double post, sorry

With all this in mind, I can't wait for the first homosexual man or woman to object to having his photographs used to promote a heterosexual event, club, or ad. Now that will be interesting to see how misrepresentation laws are going to tackle it.

It wouldn't necessarily come to misrepresentation laws. Depending where the file was purchased, it might be simply a case of breaking the terms of use. How much backup you'd get from the distributor or agency concerned would be the interesting point.

While I am absent of all of the specific facts, I have an answer for your question. Every single attribute of an image that you create and choose to license is controlled by you. From the specific agreement that you make with your model to who licenses the image, for what use and for how much, you control every single aspect of the image. You own it. With ownership comes the privilege to enjoy the rewards you choose to derive from an image. Responsibility also comes with ownership. You are also responsible for every single thing that happens to that same image. You control whether or not an image is sold into any specific environment. You can choose not to sell to tobacco manufacturers, homeless entities, any specific religious entity OR message, homosexual situations - everything. You have an agreement with a model that grants you specific rights. Do they include the right to sell to anyone for anything or are there limitations? Does the agreement that you have with agency 1,2, 3, 4 or 5 give them the right to license the image for all situations or are there limitations? It's up to you to ensure that you set whatever boundaries you want and then honor and enforce them. If you don't want to sell to tobacco, homosexual messaging, a particular religious message, don't. Set it up the way you want it to be. Here is how to answer your own question. Please remember I am not addressing my self to a specific situation, just showing the thought process. If the model precluded homosexual environments and you allowed it to be sold that way, you are at fault. If you have an agency working with Rights Managed images, have you limited their distribution accordingly? The specific facts have to align with the agreements that you have both backwards and forwards. Backwards to the components of the image and forward to the licensees. You don't need to ask us, although the fact that you don't know and thus are asking is good. Pull out your paperwork, look at the license that was granted. Is everything in alignment or has any one of the agreements you have along the way been violated? This is contract law - likely in any country. It isn't personal. If you engage in the business of professional photography, then you must know, exercise  and honor the agreements you have made. There are a lot of ways to do business and if you are a professional, make sure you know them. If photography is not one's profession, then one has a particular duty not to be upset when the Rules of the Road apply and one hasn't read the rule book. Everyone that is a professional has to start somewhere and that seems to be what you are doing. Realize that there may be some things you may not know and that you can learn before the next question comes up. I recommend ASMP Business Practices book It's very good. ASMP.org