In recent months the Office of Florida Attorney General Bill McCollum has proved a force to be reckoned with when it comes to deceptive online advertising. Its CyberFraud Task Force has gotten marketing firms including AzoogleAds and World Avenue to cough up $1 million each for alleged deceptive online marketing practices.
The Task Force, part of Florida's Economic Crimes unit, has in its crosshairs several firms allegedly perpetrating deceptive online ad practices. Its efforts have focused on companies it claims have duped consumers, mainly kids, into signing up for supposedly "free" mobile content like ringtones and other gifts, that in truth will cost them.
Now the AG's Office has even bigger fish to fry. In a talk with ClickZ News, Attorney General McCollum hinted at upcoming mobile content marketing related investigations of companies with "household names," in addition to efforts involving fraudulent online drug purveyors.
Q. Why have you made cyber fraud investigations such a priority for the State of Florida?
A. We've had a lot of complaints over the past year or two regarding cyber fraud on the Internet.
It has been a very successful operation. So far our team has developed cases particularly related to advertising promoting ringtones for free when there were actually charges. We've really gone after a number of companies related to this and are still doing that.
We're also engaged in efforts to go after online prescription fraud. [e.g. sales of prescription drugs, sometimes imported from outside the U.S.]
I don't want to name [companies] now because we don't have the cases actually filed.
There are still others we anticipate investigating... We are working on a lot of them. Unfortunately, this is not a one or two company deal. We're talking in the range of ten or 12 we're looking at with respect to ringtones... There are going to be some ringtone [related] companies that are household names.
There's a huge number of possibilities on the prescription side, outfits that are selling the prescriptions...They're really pharmacies as opposed to pharmaceutical companies.
Q. How has your office promoted its cyber fraud work?
A. We've certainly made Florida residents aware that if there is a cyber crime, they should call our scam hotline.
The reason we focus on the two we have [free ringtone offers and pharmaceutical sellers] is because we've gotten more complaints about those... Parents complain when they see those bills... By the way, it isn't all kids, but most of it is. It's easy for them to sign up for something on the Internet.
Q. Has the office requested complaints from Florida residents regarding potential fraudsters?
A. We do it every time we are out... We have it available on MyFloridaLegal.com... I mention it when I do radio interviews around the state, or when I do a television interview.
Q. Besides recouping legal costs, how does the state plan to use settlement funds from firms such as AzoogleAds and World Avenue?
A. Money is collected for fees. It is simply the way we operate. Our economic crimes division is self sustaining; it's not appropriated money... However, there is a provision potentially for fines up to $15,000 an occurrence, and for something like ringtones that could be a lot of occurrences as you can imagine.
Often the main result we're really looking for is for them to change their behavior and to advertise in a way that puts the proper disclaimers on what they're doing.
Unfortunately, when they come to an agreement with us, they may not change their behavior in another state... Quite often we will join forces with other AGs and we will have multi-state activities... So far, we haven't done it with ringtones, but I could see that could happen.
Q. What is Florida's legal jurisdiction in such cases?
A. It's all based on Florida or business activity originating in Florida... It could be somebody in Kansas and the victim is in Florida.
Q. As part of its settlement with Florida, AzoogleAds has agreed to assist in further investigations involving online marketing. How has the task force worked with Azoogle in other similar investigations?
A. Azoogle has been very helpful to us. They've told us how things work and how other companies do it as they see it, and of course that kept their settlement costs down.
Q. The Federal Trade Commission has also gone after companies promoting "free" stuff online like iPods or gift cards that turns out not to be free at all. Do you coordinate with the FTC on these sorts of efforts?
A. It's the same idea, the same problems. Some of these companies are also violative of FTC regulations and federal law... We have to do this in the states because there's too many of them [for the FTC to handle on their own]... There's communication, but in reality they have their own cases, and we have our own efforts.
Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.
June 5, 2013
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June 20, 2013
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