The announcement made by the Federal Trade Commission yesterday that pay-for-performance online marketing services firm ValueClick settled deceptive advertising charges for $2.9 million is not news.
ValueClick announced the settlement—which it reached without admitting wrongdoing—almost exactly a month ago in a filing with the Securities and Exchange Commission.
What is news, however, is why the FTC says the company was charged. The reason involves what is considered by traditional direct marketers to be one of the two most powerful selling words in the English language: “free.”
According to the FTC, ValueClick subsidiary Hi-Speed Media used e-mail, banner ads and pop-ups that deceptively claimed consumers were eligible for “free” gifts, such as an iPod, or plasma television.
“Consumers lured to ValueClick’s Web site by these promises were led through a maze of expensive and burdensome offers—including car loans and satellite television subscriptions—which they were required to ‘participate in’ at their own expense in order to receive the ‘free’ merchandise,” the FTC said in a statement.
The FTC contended that ValueClick’s failure to adequately disclose that consumers must spend substantial amounts of money to qualify for the “free” merchandise constituted violations of the Can-Spam Act and the FTC Act.
The FTC also charged that ValueClick, Hi-Speed Media and another subsidiary, E-Babylon, failed to encrypt people’s financial information properly.
This is the largest Can-Spam related settlement yet, according to the FTC. Also, this is the third time the commission has gone after an online lead-generation firm for what the commission deemed were deceptive promises of free merchandise.
Bottom line: Marketers using the word “free” as part of their online lead-generation strategy should be aware the FTC is watching.
Oh, and for those who are curious, the other most powerful selling word in the English language is “you.”
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