Today the FTC released a Staff Perspective paper outlining discussions held at the October 30, 2015 “Follow the Lead: A FTC Workshop on Lead Generation” (“Workshop”). Following several sections outlining the nuts-and-bolts of lead generation and the potential benefits to consumers, the paper moved into areas of strength for lead generation, as well as topics of concern for consumers highlighted by the Workshop’s panelists.
Today’s marketplace is a rich ecosystem comprised of consumers and merchants with lead generators, in many cases, creating the connection between the two quickly and inexpensively. From the FTC’s perspective, lead generation also serves to spur competition, often resulting in lower prices for the consumer. In response to criticisms about deceptive or inappropriate marketing practices, many lead generators actively identify and reject leads generated by bad actors. Other lead generators utilize tools to track leads and monitor marketing claims. Self-regulatory efforts by the Better Business Bureau’s Electronic Retail Self-Regulation Program (“ERSP”) and the Online Lenders Alliance’s (“OLA”) Best Practices were both highlighted for their contributions to reducing instances of deceptive claims and strong self-regulatory policies that hold its non-compliant members accountable while also referring them to the FTC. In response to concerns about the handling of sensitive consumer information, some lead generators have banned the sale of certain personal or financial information other than specific purposes.
Lead generation was also viewed as a complicated universe virtually unknown and unseen by consumers, and concerns were raised by consumers, consumer advocates, and regulators about certain practices, which are seen to deceive or mislead the consumer. For example, the FTC stressed the seeming lack of transparency with the lead generation process. Consumers are often unaware that they are submitting information to a lead generator and believe they are submitting it directly to a merchant. Further, consumers are unsuspecting that the information they provide can be sold, sometimes multiple times over to other marketers. The FTC recommends that lead generators disclose these practices to consumers clearly and conspicuously.
The marketing techniques of lead generators also came under criticism as, “aggressive, or even deceptive” with respect to encouraging consumers to fill out web forms. To date, the FTC has brought law enforcement actions against lead generators making deceptive claims to consumers in the postsecondary, mortgage loan, and credit card debt relief assistance verticals. The FTC cautioned that lead buyers should be vigilant and monitor claims to consumers, unscrupulous lead generators, and lead sources, particularly where sensitive information is concerned.
The handling of sensitive consumer information by lead generators, a frequently referenced topic during the Workshop, was of particular concern to the FTC. Based on the Staff Perspective, practices such as lead aggregators inadequate monitoring of companies that buy their leads to make sure the information is used appropriately puts the consumer at risk and enables misuse. Further, selling remnant leads to non-lenders is unlawful, which the FTC has suggested in two recent enforcement actions against lead generators. The FTC advocated that publishers and aggregators should carefully choose only compliant lead buyers and monitor them for misuse. The Staff Perspective clearly stated, “Ignoring warning signs that third parties are violating the law and pleading ignorance will not shield companies from FTC actions.”
The link to the announcement is here: https://www.ftc.gov/news-events/press-releases/2016/09/ftc-staff-perspective-recaps-lead-generation-workshop