In its first enforcement action against an education lead generator, the Federal Trade Commission reached a deal with the operators of over charges that the company claimed it was "pre-screening" job applicants for hiring employers but was actually gathering data for other purposes.

Gigats gathered online job announcements posted by various entities (including government agencies, multinational companies, and other employers) seeking workers. It summarized the positions on its website, which created the impression it was accepting applications and which prompted job applicants to call. Many of the positions were not even current, the agency added.

According to the FTC, Gigats intended to collect personal information from consumers and pass it along to third-party schools and programs that paid between $22 and $125 for each lead.

Consumers believed they were moving closer to a possible job, primarily because Gigats, in a series of questions, falsely claimed it was helping employers with the interview process, stating, "We get paid by employers to screen their applicants for them and only send out qualified candidates."

The questions were steered toward education, the FTC said, and consumers who expressed an interest in further training or classes were transferred to "Education Advisors" or "Academic Guides." These individuals, although they claimed to be independent advisors who could help the interviewees find the best option for educational opportunities, were in fact employees of Gigats and only connected consumers with schools or programs that paid for leads. So, instead of connecting consumers with the best fit, the advisors in fact only shared consumer information with schools or programs that paid for leads.

To settle the allegations, Gigats agreed to halt its deceptive conduct and refrain from promoting job openings without a reasonable basis to expect that employers are currently hiring for those jobs to avoid deceiving consumers about the possibility of a job that doesn't exist. Absent clear disclosures that data will be shared with third parties and the relationship with the third party, the defendants— and Ayman A. Difrawi, the self-described "quarterback" of the operation—are prohibited from transferring personal information about consumers. Information already obtained by the defendants may not be shared unless consumers affirmatively opt in.

In addition, the stipulated order in the Florida federal court case imposes a $90.2 million judgment that will be suspended upon payment of $360,000.

To read the complaint and stipulated order in FTC v. Expand, Inc., click here.

Why it matters: The lesson from the agency's first education lead generator action: the need for transparency, and a reminder to lead generators to be upfront with consumers about their activities and refrain from using deceptive practices.