Commission Junction’s parent company, ValueClick, who has been under investigation by the FTC for quite a while announced today they are settling the suit for 2.9 Million Dollars.
This is the 4th Affiliate company I have heard of to settle for a nice chunk of cash in the last 4 months. All of these have been to government agencies for deceptive marketing practices and their are many open investigations that will be settling in the months to follow.
AzoogleAds Settled for 1m last November – I asked the CEO of AzoogleAds about the incident on my radio show a couple weeks ago.
Aderactive settled for $650,000 last November also. They were being investigated for there “free gift” websites. It seems this low settlement number is only because the company was broke.
$650,000 civil settlement is a very light slap on the wrist given the volume of past complaints, we believe the company’s current financial condition influenced the size of that settlement with the FTC.
World Avenue aka “The Useful” settled with the FAG (Florida attorney general office) for 1M less then 1 month ago for very similar deceptive marketing practices.
Now that there is money blood in the water I expect 2008 to be a big year for government agencies.
Is this actually getting anything accomplished or are government agencies just cashing in on the affiliate industry?
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{ 21 comments… read them below or add one }
To your question, I believe it’s the latter. Tsk tsk.
The possibility of losing money to big payouts like this is only thing that will force affiliate companies to finally start cleaning up their acts and ban shady affiliates/offers. That can only be a good thing for our industry IMHO.
What doesnt the government want to cash in on these days? But Chad is right, it should make shady deals and offerings less ambiguous.
well, unless the companies really went overboard, sounds like gov’t is just cashing in.
agreed.
The settlement was in regards to the practices of Hi-Speed Media, which is/was an email publisher, not really an “affiliate company” like VC’s Commission Junction.
1. These fines have been the result of informal investigations. Lawsuits by the FTC would have resulted in larger fines.
2. Certain standards have been agreed upon, which were not published. This is not particularly helpful.
Bottom line: the affiliate marketing industry had better self regulate quickly, otherwise the FTC will use section 5 to litigate the industry to death. Have you heard of the FTC ehavioral (not misspelled) program?
Hmm….looks like a payoff is a nice way for these companies to get out of bein investigated
Well, your right ! Im totally agree with you this time too.
Well someone has to pay for that war in Iraq.
Only problem is they might have lower payouts if they aren’t allowed to scam as much.
The government just takes, they don’t give. Somebody has to pay the big salaries and retirement plans for our reps.
I think the government is acting like its trying to clean up the industry, but the real reason is to add more cash flow to fill in the gaps for them wasting money in other places. No good reason for this.
That’s an interesting perspective…I would rather not burn my customers
…No more shooting basketballs with monkeys dressed like Leo? Oh man…I just needed two more ducks..
2,9 million, low bid:P
I was talking to a guy who worked for ValueClick and he was telling me that they have had some, um, problems with executives and stock option compensation. Still, CJ has way more legitimate businesses than you see in your average CPA network. The question you must ask yourself is: if CPA networks could sell crack to schoolchildren and get away with it, would they? It’s sad to see affiliates that will promote anything for money regardless of what it is. Truly pimping to the lowest common denominator. If the government has to go in and clean out the rot, then so be it. It happens in every other industry.
I can’t believe how much money these companies are making. Is there an ad company that isn’t getting sued? Which one is the best to use? By best I mean one not being sued.
They are all getting sued eventually, but they don’t care they just pay off a couple hundred thousand and keep going as they were
If the government if pulling in the money off of unscrupulous marketers, then good for them. I’m sick of people always trying to take advantage of others.
The article said it was in violation of a SPAM law. I had no idea CJ did any email. I thought they were affiliate programs only.