Big Brother is alive and well in paid search advertising, too. This time it's the FTC, who is charge of compliance with fair marketing practices. They'll make you pay, literally, if you (or your affiliates) fail to comply with their rules for advertising.
Can they do this? Yes. Section 5 of the Federal Trade Commission Act prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.”
An act or practice is unfair when it:
- Causes or is likely to cause substantial injury to consumers
- Cannot be reasonably avoided by consumers, and
- Is not outweighed by countervailing benefits to consumers or to competition.
An act or practice is deceptive when:
- A representation, omission, or practice misleads or is likely to mislead the consumer;
- A consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances; and
- The misleading representation, omission, or practice is material.
Traditionally, the FTC has focused on direct advertising claims. However, two recent cases demonstrate the importance for online marketers as well. The Commission is now closely monitoring the use of purchased search terms.
Here's a summary of the recent cases:
Lumos Labs, Inc.
The creators and marketers of the Lumosity “brain training” program agreed to settle charges alleging that they deceived consumers with unfounded claims that Lumosity games can help users perform better at work and in school, and reduce or delay cognitive impairment associated with age and other serious health conditions.
describes both the advertisements themselves, as well as the search terms Lumosity purchased and utilized in order to direct consumers to its website.
Specifically, the complaint states:
“Defendants have employed an extensive search engine campaign, including through Google AdWords, and have purchased hundreds of keywords, including many variations of words related to memory, attention, intelligence, brain, cognition, dementia, and Alzheimer’s disease.”
The FTC alleges that the use of these keywords constitutes a deceptive trade practice.
Stratford Career Institute
In its complaint against Stratford, the FTC alleges that Stratford’s extensive advertising for its high school program included multiple references to a “high school diploma” leading to an increase in earning potential, access to better jobs and promotions, and the ability to apply for higher education. The FTC’s complaint alleges that Stratford’s high school program fell short of its promises.
The Commission not only refers to the Stratford website, brochures, commercials, and letters to prospective applicants, the complaint also alleges that the school purchased online advertising tied to search terms like “official high school diploma,” “real high school diploma online,” and “legal high school diploma” in order to direct potential students to the Stratford website.
Why Does it Matter?
These cases show that the Federal Trade Commission is broadening its definition of unfair and deceptive trade practices to include paid search advertising.
Are you monitoring your keywords (and your affiliates and resellers')? We can show you
how to set up automated monitoring so you are alerted of any compliance issues before the FTC is.