This week, the Federal Trade Commission (“FTC”) announced that it has settled charges against and its owners and operators (“Gigats”), resolving the agency’s first ever enforcement action against an education lead generator.

What were the FTC’s charges against the lead generator and what are the terms of the settlement?

According to the Complaint, the FTC alleged that the lead generator’s violations of the FTC Act consisted of:

  • Gathering job announcements and/or listings posted on the Internet by other companies, employers and government agencies, respectively, and presenting the listings on its own website, where it appeared to consumers that Gigats would accept job applications;
  • In reality, the employers had not authorized Gigats to accept applications on their behalf, and
  • Instead, Gigats gathered the information provided by the would-be job seekers, created targeted leads, and subsequently steered those consumers toward education institutions, to whom Gigats had sold the leads.

The FTC has now submitted a proposed stipulation of settlement to the court for approval that provides for the following:

  • A $90.2 million judgment that will be suspended upon payment of $360,000;
  • Prohibiting Gigats from making any future misrepresentations similar to those set forth above;
  • Barring Gigats from transferring consumer information to third-parties without first clearly disclosing to consumers that such information will be transferred; and
  • Prohibiting Gigats from using any consumer data obtained through these means unless consumers provide the requisite affirmative consent for Gigats to do so.

Protecting Lead Generators From Deceptive Marketing Suits

As we have previously blogged, the FTC has been incredibly active in pursuing unscrupulous marketers, including online dating and social media websites. Using its enforcement powers under the FTC Act and other regulatory laws and rules, the FTC has been especially vigilant in its efforts to ensure regulatory compliance with respect to the collection, use, and sharing of consumer data. In order to avoid a similar fate to that of Gigats, it is imperative to engage knowledgeable counsel to ensure that your practices are fully compliant with all applicable state and federal laws.