FTC Settles With Post-Secondary Education Lead Generators

The operators of what the Federal Trade Commission alleges to be “copycat websites” have agreed to settle agency charges that they targeted people seeking to join the U.S. armed forces by misrepresenting affiliation with the military to generate sales leads for post-secondary schools. According to the FTC’s complaint, which was filed by the Department of Justice on behalf of the Commission, the defendants allegedly used the websites since at least 2010.

“Those who are considering a military career deserve to have confidence that the recruitment site is legitimate and their personal information will not be misused,” said FTC Chairman Joe Simons. “The FTC will take action against any party in the lead generation ecosystem – from sellers to purchasers – that fails to comply with the law.”

According to the FTC, the websites prompted consumers to submit their information to learn more about joining the armed forces. The complaint alleges that the defendants promised to use the information consumers submitted to the site only for military recruitment purposes and not to share it with anyone else. However, according to the FTC, the defendants sold the information as marketing leads to post-secondary schools.

Privacy is at the heart of lead generation regulation and the FTC is hyper-aggressive when it comes to enforcing unfair and deceptive practices. The FTC also alleges that consumes who submitted their information received telemarketing calls from individuals “posing” as members of the military, endorsing specific schools, and providing an impression that the U.S. military actually endorsed those schools.

The defendants were charged with violating the FTC Act and the FTC’s Telemarketing Sales Rule by, without limitation, placing unlawful telemarketing calls to phone numbers on the National Do Not Call Registry.

The proposed orders settling the FTC’s charges require the defendants to turn over to the various websites in order to partially satisfy the civil penalty judgments of $11.1 and $1 million, respectively. The judgments have otherwise been suspended, subject to avalanche clauses, due to defendants’ inability to pay.

The proposed orders also ban the defendants from misrepresenting a military affiliation, the endorsement of particular schools by the military, or the extent to which they share consumers’ personal information. They require the defendants to disclose that their websites are not official recruiting websites of the U.S. military, to solicit consumers’ acknowledgement of that fact, and to get permission to disclose consumer information collected in connection with lead generation for any purpose. The defendants also must notify the companies that bought consumer data from the defendants of the FTC’s allegations and instruct the companies to stop using the information.

The proposed orders can be seen here and here.

Richard B. Newman is an advertising law attorney at Hinch Newman LLP. Follow him on LinkedIn and on Facebook at FTC Defense Lawyer.

Informational purposes only. These materials are not legal advice, nor do they create a lawyer-client relationship. Do not act or rely on any information contained herein without seeking the advice of an attorney. Previous results do not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.

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