- September 28, 2012
- Posted by: Seth Heyman
- Categories: Marketing & Advertising Law, Regulatory Compliance
In a recent letter to Chairman Jon Leibowitz of the Federal Trade Commission (FTC), a group of United States Senators called for a federal investigation into the practices of lead generators and other third party marketing companies.
The letter, written by Senators Richard Durbin (D-IL), Tom Harkin (D-IA), Frank Lautenberg (D-NJ), and Barbara Boxer (D-CA) stressed concerns regarding the aggressive practices of companies generating leads for for-profit colleges. The scenario outlined in the letter is one that should be familiar to many lead generation companies: through the use of deceptive PPC ads and landing pages, prospective students are offered free college admission assistance by lead generators operating under generic names such as “GIBill.com,” falsely touting connections to well-known public and non-profit colleges, when in fact the only institutions to which consumers are being referred are those for-profit colleges that pay for the leads.
The Senators stated that the FTC can and should take several steps to better protect consumers from deceptive lead generators both by educating consumers and by investigating their practices. They further encouraged the FTC to create meaningful guidelines for lead generators and strengthen their oversight to protect against misleading and predatory marketing tactics.
Those tactics are a result from a certain “follow the leader” mentality common in the lead generation industry, in which one company discovers a new vertical, which its competitors then seek to exploit. As competition drives down lead prices, companies engage in increasingly aggressive marketing strategies to increase volume, which inevitably results in consumer harm and regulatory action.
As demonstrated by several recent cases, the FTC has already set its sights on lead generation companies. The Senators’ request will doubtless spur the Commission to further action, a fact that should not escape the notice of lead generators both large and small.