Yesterday, the Federal Trade Commission (FTC) issued its first successful enforcement action against education lead generator, Gigats.com, for Deceptive Lead Generation Tactics. Gigats.com settled charges that it tricked job seekers by claiming to represent hiring employers. The proposed court order imposes a $90.2 million judgment that will be suspended upon payment of $360,000. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition. The defendants include Expand Inc., also doing business as Gigats, EducationMatch and SoftRock Inc., and Ayman A. Difrawi, also known as Alec Difrawi and Ayman El-Difrawi. This was not the first enforcement action against a lead generator and it will not be the last.
To quote the FTC’s Business Blog: “The settlement prohibits a host of misrepresentations and makes it illegal for the defendants to transfer consumers’ sensitive personal information without their express consent. What about transferring to third-parties other information covered by the order? The defendants have to clearly and conspicuously disclose what they’re doing and their relationship to the third party. Most of the $90 million judgment is suspended based on the defendants’ inability to pay, but if the Court finds that the defendants made material misstatements or omissions about their financial condition, the order includes a clause making the $90 million immediately due.
Members of the lead generation industry should take this as one more reminder of the need for transparency. Be upfront with consumers about what you’re up to and don’t use deception to elicit personal information.”
Capitol Hill has also waded into the lead generation pool through introduction of S. 2760, the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act introduced on April 7, 2016, which would impact payday lending lead generation specifically. S. 2760 is sponsored by Sens. Jeff Merkly (D-OR) and is cosponsored by: Mark Udall D-NM, Bernie Sanders (I-VT), Patty Murray (D-WA), Dick Durbin (D-IL), Richard Blumenthal (D-CT), Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), Jeff Markey (D-MA), Ron Wyden (D-OR), Cory Booker (D-NJ), Martin Heinrich (D-NM), and Dianne Feinstein (D-CA). The legislation specifically targets sites, which describe themselves as payday lenders, but are actually lead generators that collect applications and auction them to payday lenders and others. The SAFE Lending Act bans lead generators and anonymously registered websites in payday lending. Note that some of the states – IL, CT, OR – coincide with the AG efforts on higher education Best Practices and the Student Debt Symposium. These are definitely coordinated efforts on the part of lawmakers, regulators, and AGs.