A couple weeks ago there was a post here on shoemoney talking about valueclick shady practices.
Looks like some people were paying attention. A report just released:
RBC’s Jordan Rohan out with a note today arguing that Valueclick’s WebClients business engages in sleazy practices that may violate DMA/IAB guidelines and, therefore, invite regulatory scrutiny. Jordan estimates that such practices account for a third of Valueclick’s revenue and, importantly, most of the company’s outperformance over the past year. He notes that regulators have recently been cracking down on certain lead-gen practices and suggests that Valueclick may be next in line.
Jason Jones’s Take: Something is going on here. This is the second time I have heard about FTC inquiries into lead gen. If this accelerates it could potentially be bad for VCLK, TRFX, TRAD.LL, Rakuten/Linkshare, APTM, and the companies most reliant on lead gen (VG, NFLX, the online education companies). This is worth digging into in more detail. I don’t think that AQNT has meaningful exposure to the affiliate marketing or lead gen space so it should be insulated from this issue (although it could probably be brought down with the group if this snowballs).
From the report:
Growth from Unsustainable, Aggressive Marketing Tactics: We believe that lead-gen activities represent one-third of VCLK revenue and that the following tactics may not be sustainable: 1) Using the word “free” when multiple purchases are required, possibly in violation of FTC guideline 251.1, 2) Using lengthy surveys to generate email addresses (personally identifiable information) for resale to marketers without sufficient disclosure (discussed in HR 964), 3) Pervasive trademark infringement, as alleged in a lawsuit by Wal-Mart against VCLK’s WebClients unit (settled March 2006), 4) Lack of fulfillment of incentives for consumers who have completed eligibility requirements, which may violate Direct Marketing Association rules.
• Writing on the Wall – Inquiries May Drive Reform: There are ongoing investigations into companies in the incentivized lead generation space by legislative/regulatory groups, including the FTC, state Attorneys General, and the House Subcommittee on Consumer Protection. VCLK management maintains that it is not under investigation, and that its general counsel ensures that lead-gen editorial and creative assets comply with current laws. However, the legislative/ regulatory efforts may narrow the definition of what is acceptable, making the highly-incentivized tactics unsustainable longer-term.
About the author...
Jeremy Schoemaker – who has written 2415 posts on ShoeMoney.com.
Hi I am Jeremy Schoemaker and ShoeMoney.com is my blog. 99% of the post here are done by me but you will see others occasionally make guest posts. This blog is fun to write but for my day job I run several online companies.
Images provided by ShutterStock
Where My Hatred of SEO Comes From 
Obama’s whitehouse.gov Squeeze Pages 
10 Tips for Freelance Writers Applying for Blogging Jobs 
{ 27 comments… read them below or add one }
Those incentives sites are pretty shady. And they run massive campaigns all over the internet. They must be bringing in major bucks.
Sounds like a lot of grandstanding.
If you actually read the terms that people are agreeing to it’s pretty clear that VC is disclosing what’s going on.
Furthermore, the use of words like “Free” are normally accompanied by an asterisk and “with completion of requirements” or etc. written at the bottom.
I might be wrong about this, but I don’t see how VC is doing anything wrong? They’re just taking advantage of the gray areas.
Yes I always see offers using “Free” with the asterisk next to it. Interesting news — could really be bad for those companies.
In the UK the goverment has been getting tough on this stuff for a while and thats why most companies are trading form offshore locations. In the long run it will only make it better for everyone
It is time for to clean up the web environment, fine the hell out of wrongdoers, hopefully companies will learn to stop taking advantage of people
What comes around goes around. Shady biz will eventually catch up with you and bite you on the arse.
its about as shady as saying ringtones are free when they aren’t, right?
I think anytime you commit fraud its pretty shady… period… ringtones or otherwise.
I have a lot of experience as im sure you know with ringtones and I have a big post that has been brewing for a long time in my drafts.
Sounds interesting. When will you post it?
Looking forward to that one
Quit being a tease and hit the publish button!
WHEN EVER HE WANTS!
jk
Wow Shoe. This could be huge if all of this turns out to be true. If they have been getting away with this for so long, you have to wonder what else is there if you scratch the surface. Has Vclick had anything to say, or are they quiet?
Yes fraud is fraud… no matter how you look at it.
I think big bucks might be an understatement, I hope they get nailed on this but like most white collar crimes I really doubt this will go beyond some small investigation and maybe a slap on the wrist at best.
Your right it is grand standing though only because nothing will be done about it, but it makes the writer look better for noticing something is up.
ya I think it goes against the whole spirit of the asterisk thing, I think companys could be allowed to get away with it but rather then burying the truth in a Terms of Service it should be out in the open where people will read it.. If they still don’t then they deserve what they get..
Honestly how many of you out there read every terms of service you come across?
Unless you have alot of money.. Then you generally get away with it
taking advantage of the grey area? not sure, I agree with the guys that said this practice should be cleaned out
I doubt they will get in trouble. They may change some things around but eventually this will die out.
tsk tsk tsk
What will the ringtone article contain? The chnages you’ve noticed over the last couple years or what ?
Grey area is one thing fraud is another… fraud is no no
One day I will have that affect on matters I post about!
You mean you can read those? I thought it was there to make it look “Official”.
Jeremy was asking for other people to post on his blog, right? Well, today could be your day.
With just my phone number they have been able to bill me without my consent. I am still fighting the charges.