Bad Traffic Still in the FTC’s Headlights: Lead Generation Under Scrutiny

The Federal Trade Commission (FTC), under the leadership of Director Andrew Smith, continues to focus its consumer protection enforcement efforts on the lead generation industry. As we reported last Spring, the FTC is cracking down on companies that generate or purchase consumer data gathered without the proper consent and that “big, responsible companies” are no safer from FTC scrutiny than fly-by-night advertisers. In its most recent enforcement action, the FTC  announced today that it entered into a Stipulated Order (Order) with several companies in the for-profit education sector. The Order provides a roadmap for compliance for both lead generators and sellers alike.

In a statement regarding the enforcement action, the FTC cautioned that the “proposed settlement has a lot to say to businesses in the lead generation ecosystem. The FTC has brought numerous actions challenging the conduct of companies that extract personal information from consumers under false pretenses and then sell that data as leads. <This> settlement focuses on businesses that use those leads. The case illustrates the importance of monitoring what others – including lead generators – are doing on your behalf and the need to respond forcefully in the face of misleading claims or conduct. Advertisers should take the lead in ensuring the leads they use weren’t the product of deception.”

The Order is the latest in a series of enforcement actions that target robocalls to consumers. In June, the FTC spearheaded over 90 enforcement actions in Operation Call it Quits, a joint enforcement effort involving twenty-five federal, state and local law enforcement agencies.

The key takeaway from these enforcement actions is that lead generation forms must make it clear and conspicuous to a consumer what they are consenting to and to whom that consent is being provided. The FTC defined clear and conspicuous to mean that “a required disclosure is difficult to miss (i.e., easily noticeable) and easily understandable by ordinary consumers.” Clear and conspicuous disclosures should be:

• Unavoidable
• Easily readable
• In type that is equal to or larger than the surrounding text
• In contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language
• In at least 10-pt. font
• Placed above any type of “submit” button
• Optimized to account for the medium in which the consumer may view the form, including a smart phone

Additionally, the consumer’s attention should not be drawn away from the disclosure through the use of graphics, bright colors, or other distractions.

Regulators are focused on lead generation forms and it will be critical to ensure forms are sufficient. We urge businesses to retain competent counsel to review your leads and to ensure your compliance process and procedures are providing your company with the best possible defendable position.