FTC Settles with Another Freebie Advertiser

After settling with EDP Technologies Corporation and its cohorts for $2.2 million over alleged deceptive marketing targeting “subprime consumers,” the Federal Trade Commission last week settled with another firm engaging in bad lead gen practices. This time, it was Member Source Media agreeing to pay a much smaller sum of $200,000.

The company used “deceptive spam and online advertising to lure consumers to its Web sites,” according to the FTC statement. Like a lot of misleading lead gen-driven ads and e-mails, they attracted consumers with promises of free iPods, laptops or gift cards. Turns out they weren’t exactly free.

Like similar settlements by the FTC and authorities such as the Florida Attorney General‘s Office, the firm must disclose the true cost of the so-called “free” offers, and can no longer violate the CAN-SPAM Act.

The FTC and Florida AG’s Office have focused on firms promoting “free” stuff. This approach appears to be working as a means of roping third-party companies using unseemly advertising techniques. The majority of the firms that have been caught in the regulatory net offer lead generation services, and collect contact info, mobile phone info, etc. on people showing an interest in free items.

We can probably expect more such settlements this year. Industry watchers believe the FTC is targeting the lead gen ad industry. Plus, we’re still waiting for an announcement on Valueclick, which has admitted it is under inspection by the FTC.

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