Online advertiser ValueClick will pay a record $2.9 million to settle with the Federal Trade Commission (FTC). The FTC said that ValueClick’s advertising claims and e-mails were deceptive and violated federal law. The FTC also charged ValueClick’s child companies, Hi-Speed Media and E-Babylon, for failure to secure consumers’ sensitive financial information, despite claims stating otherwise.
According to the FTC, Hi-Speed Media used deceptive e-mails, banner ads, and pop-ups to drive consumers to its Web sites. The e-mails and online ads claimed that consumers were eligible for “free gifts,” including laptops, iPods, and high-value gift cards. The annoying pop-up ads included come-ons such as “Free PS3 for survey,” and “CONGRATULATIONS! Select your FREE Plasma TV.”
Consumers lured to websites by these promises were led through a maze of expensive and burdensome third-party offers – including car loans and satellite television subscriptions – which they were required to “participate in” at their own expense, in order to receive the promised “free” merchandise.
The FTC says that ValueClick’s use of deceptively labeled e-mails offering “free gifts,” and the failure to disclose the fact that consumers would be required to spend exorbitant amounts of cash to obtain the promised “free” merchandise, violates the CAN-SPAM Act and the FTC Act.
According to filed papers, ValueClick, Hi-Speed Media, and E-Babylon misrepresented that they secured customers’ sensitive financial information. In published online privacy policies, each company claimed that they encrypted customer information. However, the FTC reports that they either failed to encrypt the information at all or used a non-standard and insecure form of encryption.
The agency also charged that several of the companies’ e-commerce Web sites were vulnerable to SQL injection, a commonly known form attack, contrary to claims that the companies implemented reasonable security measures.
The settlement, filed by the Department of Justice on behalf of the FTC, requires ValueClick to disclose the costs and obligations in order to receive the products it touts as “free” and bars future violations of the CAN-SPAM Act. The settlement also bars deceptive claims about the security of the consumer information collected at its e-commerce Web sites.
get2getherMar 23rd, 2008 - 04:54:25
Good on the FTC, its long overdue that this sort of deception was nailed, but feel the fine should have been doubled, this is chicken feed to most of these leeching type advertisers. ValueClick? What a joke!
I hope the FTC rats out some others now, as this type of issue is becoming an epidemic, and it certainly needs stamping out!
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