Even More to Worry About: FTC Hammers Colleges for “Deceptive” Lead Generation Tactics– But LeadsCouncil May Hold the Answer for Sellers

The Federal Trade Commission’s (FTC) Telemarketing Sales Rules (“TSR”) as well as the deceptive practices restrictions found in Section 5 of the FTC Act, live alongside the Telephone Consumer Protection Act (“TCPA”) as a powerful triad of restrictions regulating outbound calls.

While the TCPA focuses on the manner calls are placed–limiting both the delivery of certain calls without consent and the content of pre-recorded calls– the TSR and FTC Act govern forbid, inter alia, the use of deceptive or unfair methods to market to consumers over the telephone and otherwise.

We here at TCPAWorld mostly focus on the TCPA, but every once in a while something arises on the FTC front that merits universal attention for callers. Today we have just that kind of news to report.

The FTC is now Focusing on the Conduct of Lead Aggregators

Over recent months the FTC has become particularly attentive to the practice of lead generators/performance marketers– companies that generate lists of individuals potentially interested in a sellers goods or services to be sold to, or used by, a third party. Certain practices–such as the use of written consent hyperlinks containing the names of hundreds of potential callers to whom a consumer is providing consent– have been frowned upon in public statements by the FTC. Other conduct, however, such as baiting a consumer with information about one topic before switching to obtaining consent to be contacted about something related-but-separate  is now plainly intolerable to the FTC.

Exhibit A: An operator of post-secondary schools will pay $30 million to settle FTC it was using leads generated by companies that falsely told consumers they were affiliated with the U.S. military.

The alleged deception operated thusly: lead aggregators would obtain official-sounding military websites–such as army.com–and then provide encourage consumers to “serve” their country in ways other than by joining the military–such as by obtaining a higher education. Here’s an alleged example:

FTC.jpeg

The FTC was deeply concerned about this conduct:

This case demonstrates that the FTC will seek to hold advertisers liable for the deceptive or illegal practices of their affiliates, publishers, or other lead generators. We expect companies purchasing leads to implement strong vendor management programs and stay on the right side of the law.

So says Andrew Smith, Director of the FTC’s Bureau of Consumer Protection.

Notably, the FTC wanted sellers to understand that they and not just the lead aggregators will be held responsible:

You can’t skirt the law by outsourcing illegal conduct to your service providers

Eesh. Thats a pretty clear admonition.

Sellers and Advertisers Must Now Be Ever Cautious of the Tactics of the Lead Aggregation Partners they Employ

The takeaway for TCPAWorld is simple–  you must be careful about the lead aggregators you are choosing to do business. As regulatory scrutiny of “robocalls” heightens, legitimate calls and callers are operating under increasingly-watchful regulatory eyes. And, as TCPA litigators already know, TCPA defendants are not receiving any assistance from courts where evidentiary gaps exist precluding proof of consent because–for instance–one lead aggregator uses a sub-lead aggregator to obtain undocumented consent.  Sellers must assume then that they will be on the hook for any and all misdeeds of their lead aggregators.

And with FTC enforcement gearing up, sellers must understand that potential misdeeds transcend the narrow confines of express written consent–  marketing content and tactics being employed by retained lead generators must also be carefully reviewed to avoid a costly penalty.

So beyond merely assuring that aggregators are obtaining the proper technical consent, you must also assure they are playing straight with consumers–not just with respect to the consent disclosures being obtained but with respect to the entire consumer experience on the lead aggregator’s website. If a lead aggregator employs a bait and switch or other deceptive tactic you may be left holding the bag. This creates a whole additional level of concern for sellers to keep in mind when turning to the increasingly crowded–and influential–lead aggregation industry.

LeadsCouncil Responds–and Offers Resources to Help

Importantly, however, many legitimate lead generators do exist out there as part of an extremely valuable multi-billion dollar performance marketing industry. And these companies are none to pleased about a few bad actors pulling down the prestige of the industry.

Indeed, LeadsCouncil, an independent association of performance marketing professionals, responded to the FTC’s action with a statement today “applaud[ing]” the FTC’S order as reinforcing “the need for advertisers to ensure consumer information gathering and performance marketing meet industry standards.”

LeadsCouncil, which describes its mission as “creating and promoting those standards, along with education on the technology and business processes that can meet them” stated that “[t]oday’s FTC’s statements emphasize the importance of disclosure in obtaining consumer consent, as well as the subsequent path of that consent. LeadsCouncil believes this practice should be implemented across all performance marketing verticals.”

Indeed, Joey Liner, LeadsCouncil Chairman and President emphasized the point that the industry needs standards and education: “There is a clear need for increased education and transparency between advertisers and publishers to ensure consumers get what they expect and their data is respected… LeadsCouncil is a resource to help advertisers and publishers achieve that, including via our LeadsCouncil Standards and Know Your Affiliate Checklist.”

That last point is critically important. LeadsCounsil is hoping to harmonize performance marketing tactics into a set industry standard that should help defray uncertainty. So take a note TCPAWorld sellers– you are not alone in your quest for validated and trusted performance marketing partners.  Even as the task of vetting qualified lead aggregators becomes all the more arduous–and essential–at least one organization of quality performance marketers seems ready to answer the call.

But probably manually dial though, just in case.

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