The FTC recently announced a $30M settlement with a company because their lead generators were deceptive in their marketing efforts towards consumers. The operator of several post-secondary schools, the FTC alleged, used lead generators that used unlawful and deceptive tactics, including falsely telling consumers they were affiliated with the U.S. military, to market its schools. The company also violated the Telemarketing Sales Rule (TSR) by harassing consumers registered on the National Do Not Call (DNC) Registry.
In light of this enforcement, here are 3 key takeaways on how regulators are cracking down on the use of lead generators, partners and third parties and deceptive marketing tactics.
You Are Who You Partner With
There is an immediate connection between your organization and who you choose to work with. You assume the risk of what third parties and partners say on your behalf, if they are deceptive in their marketing efforts, or if they misrepresent your brand. You can trust but verify-trust that your partners will be truthful and compliant, but verify by monitoring their communications for compliance.
"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 to stay on the right side of the law."
Andrew Smith, FTC's Director of the Bureau of Consumer Protection
Lead Generation Is Becoming A More Significant Focus For Regulators
Lead generation could be considered a misunderstood or unknown area for regulation. However, there is a history of enforcement actions against lead aggregators and generators as the FTC and other regulators alike continue pushing to demystify the lead generation ecosystem and expose ways to better protect consumers within it. This is becoming an increased area of risk for companies and all parties involved must ensure that they are within regulation, or they will be held liable for each other's incompliance.
"You can't skirt the law by outsourcing illegal conduct to your service providers."
Companies Should Be Concerned About All Regulators, Not Just the FTC
The FTC is not the only regulator cracking down on deceptive marketing by lead generators. The CFPB has made enforcement actions against lead generators and aggregators a priority since its inception. State regulators as well as the FTC have hosted workshops on the subject, including this one back in 2015 with our own executive on the panel discussion. In the past, for-profit education companies and other organizations may have been able to turn a blind eye to the illegal activities by their third parties-but the most recent case yet again shows why plausible deniability is no longer a defense, especially now with regulatory technologies that can automatically uncover such egregious activities. No matter the industry, the enforcements by the FTC, CFPB and State AGs shows that regulators will continue to make enforcement actions to protect consumers.
“The [CFPB] will work to ensure that American consumers receive the protections and fair treatment they deserve.”