Online Scam Data Collection in the Sights of the FTC

At a recent compliance conference, a major topic of discussion was the practice of the purchase of consumer data that has been collected through online scams such as bogus product pages, fake news pages, banners, etc. This affiliate marketing practice draws in consumers for the sole purpose of collecting consumer data by making false promises to the consumer. Once the data is collected the marketer then sells the data to a third party for its use. Consumers not only did not authorize the sale, they didn’t know their information was being collected for the purpose of a sale. Once bombarded by ads for products and services they don’t want, the consumer is understandably upset and begins to complain – many to the Federal Trade Commission (“FTC”). In response, the FTC told a group of marketers that they will be looking at the companies that collect data using these “bad” tactics. More importantly, the FTC also stated that they will be looking into those companies that buy such data. What we expect? More cases against advertisers who use purchased or managed data derived from deceptive and false scams. The FTC focus will now be on all parties involved in the consumer data collection ecosystem. No company - no matter how big or small- will be safe from scrutiny of the FTC.