Florida AG to Sue Web Sites for Deceptive Offers in Banner Ads

  |  December 4, 2007   |  Comments

Prosecutors also have open investigations of ad networks and mobile carriers.

Within a year, the Florida Attorney General's office will launch at least one lawsuit against a Web site that's sold banner ads promoting deceptive mobile content services.

In an interview with ClickZ News, the Florida AG's Tallahassee bureau chief, Michael Palecki, said the investigation of Web publishers is part of a strategy to crack down on all the players that support and benefit from misleading online ads. He added the AG's office now has approximately 20 open investigations focused on a variety of companies with a hand in promoting deceptively sold ringtone subscriptions and other similar mobile content services.

The AG's office is waging an ongoing campaign against such services, having recently won a $1 million "contribution" from AzoogleAds and slapped ringtones marketer Buongiorno USA with a lawsuit.

"We want Web sites to know they're not going to be immune," said Palecki. "They will be next. We hope that some of these Web sites will start to look at the ads they're putting on those sites and will tell those entities that are fraudulently advertising that they're not welcome."

In addition to Web sites, he said, the Florida AG's office is pursuing mobile carriers, billing aggregators, ad networks, affiliate networks, and affiliates themselves.

Palecki emphasized these cases won't necessarily develop into lawsuits. However, he said the AG's office is confident a suit or public settlement with a Web site that's profited either directly or indirectly from the sale of ads to fraudulent businesses will come soon.

"The people that are running the site are aware that these advertisements are on these sites and know these advertisements are either false or misleading," Palecki told ClickZ.

"We believe that any entity that is profiting from illegal practices is responsible. As far as our approach in going after the industry, we're not just focusing on one component. We're looking at the entire industry and all those entities that profit from illegal advertisements."

The opaque nature of online ad sales makes the job tough. The relationships between Web properties, ad networks and affiliate marketers are often difficult to trace, preventing state and national prosecutors from identifying and shutting down fraudulent services before they inflict harm to consumers. That problem is compounded in part by the ease with which marketers can set up fraudulent mobile content services. They accomplish this through a combination of short codes rented from mobile carriers, promotional sites created by fly-by-night affiliates, and cheap remnant ad inventory purchased from some of the largest online publishers through a daisy chain of cut-rate ad networks.

"The wireless carriers that are making billions of dollars say they aren't responsible," said Palecki. "The content providers blame the affiliate networks. The affiliate networks say the affiliates aren't under their control. The Web sites tell us, 'We don't know who's advertising on our Web site and there's no way we can tell if these are false or misleading advertisements.'"

As far as the AG is concerned, those excuses don't cut it.

What specific Web site or sites has the prosecutor's office set its sights on? Palecki wouldn't say, although Web sites that broker inventory through such ad networks include some of the largest online publishers and social networking sites. The trick is proving that these sites understand that they're even trafficking fraudulent offers.

"We have a tough burden in that we have to show knowledge that the publisher and the Web site itself knew that these offers were false and fraudulent and misleading," said Palecki. But he added the AG does have such knowledge in certain instances, which is driving its selection of which cases to pursue.

In the end, he said, taking on Web sites and mobile carriers is really just a means to an end. The focus is stopping the originators of deceptive offers. "We want companies that use deceptive advertising to know that we're looking at them, that they are on our radar screen and that we're going to go after them," he said.

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ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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