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What Do All the Federal Enforcement Actions Against Marketers Mean?

  |  June 13, 2011   |  Comments

It's time to take more steps to not only prevent compliance and fraud issues, but to expose and remove those in the industry who are persistent offenders.

This year has seen numerous legal and enforcement actions against the interactive advertising industry. Actions by authorities range from Jesse Willms being accused by the Federal Trade Commission of defrauding almost a billion dollars, to DigitalPoint.com founder Shawn Hogan being criminally prosecuted for cookie stuffing. On top of that, dozens of other advertisers, networks, and marketers have been linked to fake news sites, acai berry diet scams, credit card fraud, and a general lack of ethics or common sense. It seems that almost every week there is a new scandal facing some company in the industry.

Taking action against unscrupulous members of the industry is generally a step in the right direction. However, it also deeply concerns me what these actions mean to us as an industry and how they will affect us all. Here are some key points that the industry needs to consider and seriously think about:

  1. Actions are no longer just against "fringe" elements of the industry. Attorney generals and the Federal Trade Commission used to only take on the "worst of the worst" in the industry. Now actions have been taken against companies with serious connections to the industry - companies worth hundreds of millions of dollars, not just spammers and scammers making a few million here and there. For example, if you Google Jesse Willms you note that he was already sued alongside a major player in the industry just a few years ago. Jesse Willms was a major advertiser in the industry over the years and had connections in almost every display, affiliate, or PPC network. Don't think that enforcement agencies aren't connecting the dots between companies.
  2. Consumers are more educated and know how to complain to the authorities. For those who think that they can "get away" with deceptive, fraudulent, and questionable advertising, think again. Almost every three-letter agency in the U.S. has a website where you can submit reports. Combine this with the media's fascination with exposing anything in interactive advertising as a possible method to invade your privacy, and there's a real possibility that if you're doing something scummy, you will be shut down, exposed, sued, or even arrested.
  3. The industry is suffering because of these actions. As mentioned, the media loves to connect the dots and accuse the industry as a whole of being in league with Al-Qaeda. Front-page articles on major tech sites constantly connect our industry to issues with privacy, hacking, and general mischief. Every time the industry is brought up in a negative light, whether it's because of networks allowing deceptive messages or an affiliate hacking Facebook, it creates a backlash from the media, legislators, and the general public. Remember, most of the population has no idea how a browser works, or why they are getting spam on Facebook - so they assume every company is the same, that their privacy is somehow being invaded. Because of this, ridiculous laws are passed against the industry, making it harder for legit companies to do business.

As an industry, we need to take more steps to not only prevent compliance and fraud issues, but to expose and remove those in the industry who are persistent offenders. If you are a display network, you need to take proactive steps to prevent deceptive or fraudulent advertisers from advertising with you: it's no longer an acceptable excuse to say you aren't responsible for their actions. If you are a technology company, you need to prevent known scammers from using your technology, because you are hurting the rest of your clients' reputations. If you are one of those scammers, the guys who keep on promoting scams, showing up on the radar of enforcement agencies and consumers' complaints, you will eventually get what you deserve: more lawsuits, more enforcement actions, and hopefully, eventually jail time.

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ABOUT THE AUTHOR

Pace Lattin

Pace Lattin has been working in interactive advertising since its inception. From being a co-owner of the company that sold advertising in ClickZ before the turn of the century to founding a major interactive advertising publication, he has been involved with all aspects of the interactive advertising industry. He is currently the executive director of the Executive Council of Performance Marketing, an industry organization that represents over 100 C-level executives. 

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