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March 16th, 2011
FTC Announces $250,000 Settlement with Online Marketer
The Federal Trade Commission ("FTC") announced on Tuesday, March 15 that Nashville, Tennessee-based Legacy Learning Systems Inc. ("Legacy Learning") and its owner will pay $250,000 to settle FTC charges that they deceptively advertised products through online affiliate marketers who falsely posed as independent reviewers. This settlement is another example of the FTC’s efforts to make sure that all advertising to American consumers, whether appearing in traditional or newer forms of media, is truthful and not deceptive. It also demonstrates FTC's heightened interest in affiliate marketing practices.
According to the FTC, Legacy Learning advertised its series of guitar-lesson DVDs using an online affiliate program, through which it recruited “Review Ad” affiliates to promote its courses through endorsements in articles, blog posts and other online editorial material that appeared close to hyperlinks to Legacy’s website. The FTC alleged that, in exchange for their endorsements, these affiliates received substantial commissions on the sale of products resulting from referrals.
The FTC claimed that these online endorsements were deceptive because Legacy Learning and its owner represented that they reflected the views of “independent” reviewers, when, in fact, they were written by affiliates without clearly disclosing that they were paid for every sale they generated.
The proposed settlement order requires that Legacy Learning and its owner:
- pay the FTC $250,000; and
- monitor and submit monthly reports to the FTC about their marketing practices.
The proposed settlement order will be subject to public comment for 30 days, until April 15, 2011, at which point the FTC will decide whether to make it final. Written comments can be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, DC 20580.
If you have any questions about the FTC’s announcement, please contact Jeffrey A. Greenbaum at (212) 826 5525 or jgreenbaum@fkks.com, Terri J. Seligman at (212) 826 5580 or tseligman@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.
Disclaimer. This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.
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“Made in the U.S.A.” Claims Continue to be Scrutinized
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June 4 2018
