FTC Fined Online Advertiser with $2.9 Million

As a part of a settlement agreement, an Internet advertising company, which is accused of tempting customers with misleading internet offers like "free" laptop computers, iPhones plasma televisions and various other goods, has been imposed a fine of $ 2.9 Million by Federal Trade Commission (FTC).

A court filing released by federal court on March 17, 2008, an Internet advertising company called ValueClick, based in Westlake Village, California, and its subsidiary, Hi-Speed Media, alleged the companies luring consumers by sending them spam emails and Web-based ads. The fake mails and ads claim to offer them with "free gifts" on ValueClick's Website, since early 2005.

But, apart from misleading consumers with free gift offers, ValueClick along with its subsidiaries, High-Speed Media and E-Babylon, also claim to collect and secure financial information of customers' financial by encrypting all transactions and other stored information.

The Federal Trade Commission (FTC) also alleges the companies forcing consumers to obtain car loans, purchase satellite television subscriptions or buy expensive products or services to obtain the free gifts.

The complaint filed by FTC said that all the ads contain attractive slogans such as PS3 for survey absolutely free and get 42-inch color plasma TV just by entering your zip code. However, it seems the only motto of these companies to divert "lead generation" to links of advertisers in order to sell goods and services.

But, the companies did not reveal that the mentioned products are not free at all and consumers have to complete certain formalities like apply for automobile loans or apply for credit cards to be eligible to get the products for free.

FTC alleged ValueClick for violating 2003 Can-Spam Act that regulates spreading of bulk emails by sending consumers emails with misleading subject lines. FTC further claimed that that the "free gift" offers were a complete lie and the ad company has either failed to encrypt information at all or have chosen to use the form of encryption that is insecure and non-standard.

The agency have also claimed that several Websites relating to e-commerce are vulnerable to SQL attacks, a commonly used hacking technique by criminals, in contrast to companies' claim that they have implemented essential security systems.

Related article: FTC Reaches Million-Dollar Settlement For Spyware

» SPAMfighter News - 3/25/2008