By: Linda L. Goodman
At a recent compliance conference, a major topic of discussion was the practice of the purchase of consumer data that has been collected through online scams such as bogus product pages, fake news pages, banners, etc. This affiliate marketing practice draws in consumers for the sole purpose of collecting consumer data by making false promises to the consumer. Once the data is collected the marketer then sells the data to a third party for its use. Consumers not only did not authorize the sale, they didn’t know their information was being collected for the purpose of a sale. Once bombarded by ads for products and services they don’t want, the consumer is understandably upset and begins to complain – many to the Federal Trade Commission (“FTC”).
In response, the FTC told a group of marketers that they will be looking at the companies that collect data using these “bad” tactics. More importantly, the FTC also stated that they will be looking into those companies that buy such data. What we expect? More cases against advertisers who use purchased or managed data derived from deceptive and false scams. The FTC focus will now be on all parties involved in the consumer data collection ecosystem. No company – no matter how big or small- will be safe from scrutiny of the FTC.
Many companies have built their business around gathering consumer data for sale or lease using honest marketing and legally compliant tactics. This means giving the consumer what is promised and telling the consumer that you intend to share, lease or sell their information to other parties. Those with high integrity also manage their data with more than revenue in mind – giving consumers access to ads that meet the consumers expectations and needs. For example, a campaign for home services might do well by providing data to satellite service provider. In such an instance, the consumer is not triggered because they have already demonstrated an interest in home services.
As an advertiser or aggregator, the FTC warns that you must undertake due diligence on the consumer data you are using to distribute your ads or face enforcement actions. What is that due diligence you ask – according to the FTC you should be asking a lot more questions about the data than how much is costs to use it. Instead, an advertiser must ask about the methods used in obtaining the consumer data, where it came from and what marketing was used to draw the consumer into providing their information. Most importantly, you must ask for proof that the marketer informed the consumer about the sale, lease or sharing of that data with companies like yours. According to the FTC, “legitimate companies should be able to answer those questions.”
According to Andrew Smith, director of the FTC’s Bureau of Consumer Protection, “It just cannot be the right answer that it’s OK for a brand to be buying this bad traffic and essentially funding this ecosystem of deception on the internet, and that’s something that matters a great deal to us. We have brought some of those cases in the past and I think that you will see more of those cases in the future.”
Bottom line – have a compliance program in place to vet out how your data was collected, whether the consumer was informed of the data owner’s sharing techniques and is your campaign something that the consumer expects. Lastly, vet the prior and concurrent use of the data by the data owner. If the data is overused, the consumer is being bombarded with ads and more like to be upset…and complain. It is better to vet than to hope that the consumer does not complaint to the FTC.
______________________________________________________________________
This article was originally posted on Cliclaw.com as part of my ongoing efforts to share valuable legal insights. I regularly contribute guest blogs to leading websites in the field of internet compliance. In these posts, I cover a range of topics to help businesses stay compliant in the ever-evolving digital world. You can read my latest guest contributions on Cliclaw.com.
This article is a publication of The Goodman Law Firm and is intended to provide information on recent legal developments. This article does not create an attorney-client relationship, nor should it be construed as legal advice or an opinion on specific situations. This may constitute “Attorney Advertising” under the Rules of Professional Conduct and under the law of other jurisdictions.
Linda L. Goodman is the founder of The Goodman Law Firm, concentrating its practice in internet business and law. Her firm’s clients include Advertisers, Affiliates, Affiliate Networks, and ISP’s.
© 2019 TGLF, A.P.C.