The FTC just announced a $500,000 settlement with affiliate marketers of debt relief services.
The marketers advertised debt relief services with the goal of getting leads to sell to debt servicing firms. CPA advertising where they were paid $50-$65 per lead.
According to the FTC
The defendants's ads included sales pitches such as:Read the above very carefully and please do not skim it.
The FTC alleges that the defendants' claims that they could reduce debts substantially, settle debts quickly, and stop calls from debt collectors, were false or unsubstantiated, and that the defendants did not obtain adequate evidence from sales lead buyers that they could achieve the promised results. The complaint also alleges that the defendants falsely claimed they provided the debt relief services they advertised....
- "With one simple call you can eliminate your debt in a fraction of the time and for less than you owe."
- "Find out today how quickly and easily you can eliminate your debt."
- "Stop the harassing calls!"
In addition to banning the defendants from the debt relief business, the settlement order prohibits them from making unsubstantiated claims about financial related products or services, or misrepresenting material facts about any product or service. The order also prohibits them from disclosing or otherwise benefitting from customers' personal information, and failing to dispose of this information properly.
Takeaways for affiliate marketers:
- Disclose you are not providing the ultimate service but just marketing, reviewing, promoting, etc., someone else.
- Obtaining consumer permission to transfer their personal information to the ultimate service provider.
- Obtain "adequate evidence" from the merchant that the merchant's claims are correct, and thus the affiliate marketer's claims are correct.
(* This can obviously be a problem *)
(*** THIS IS EXTREMELY IMPORTANT - THE FTC LAWSUIT CLAIMS A VIOLATION OF FEDERAL LAW BECAUSE THE AFFILIATE DID NOT SUBSTANTIATE THE MERCHANT'S CLAIMS - REGARDLESS OF WHETHER THE CLAIM WAS ACTUALLY TRUE OR FALSE ***)
[Kindsvater note: huge 1st Amendment issue here, but the affiliates accepted a stipulated judgment putting them out of business instead of litigating the claims]
- Be careful that your advertising does not "overstate" the product. For example, don't state or imply that all debt can be quickly and easily eliminated. Rather, experts may be able to reduce your debt.
- This particular example can be very tricky. For instance, you can stop calls from third party debt collectors, but not necessarily the original creditor.
(* This seems to be splitting hairs in claiming false advertising, but you should be aware of it *)
The FTC Press Release is here, where you can also find a link to the lawsuit that was also filed:
FTC Settlement Bans Marketers from Debt Relief Business