ADOTAS — Amid an underperforming lead generation business, and with speculation it might be sold, a *recently proposed $10 million settlement in a lawsuit brought by shareholders, and the details of it, does not put ValueClick’s past practices in a good light. ValueClick denied the allegations at the time the lawsuit was filed.
According to the shareholders’ lawsuit, ValueClick knowingly concealed from prospective investors “the willful and ongoing violations of federal law governing the conduct of the advertising and promotion business that lie at the heart of ValueClick’s business operation.
The lawsuit alleged that the online advertising company used “such tricks as false and misleading computer trailer and “pop-up” ads, ValueClick promises “free” gifts to induce innocent victims to complete forms disclosing personal information, such as email and home addresses and telephone numbers. However, rather than provide the “free” gifts, consumers are required, in clear violation of federal law, to make purchases of promoted products before they receive any gift.”
According to the lawsuit, victims were enticed to provide this information to enter contests offering fantastic prizes, such as cars, trucks and college scholarships, where no prizes are ever awarded. Instead, after the victims’ personal information is extracted, the entries are thrown out without any prizes being awarded. “The trusting victims assume that someone else won the contests while ValueClick, which does not even bother to purchase these highly touted prizes because they are never awarded, uses their personal information and laughs all the way to the bank.”
In addition, the lawsuit says ValueClick concealed this critical information from the investing public, despite the fact
that it knew that the government was viewing its industry with increasing concern and had commenced an investigation of such practices.
This was connected to last year’s $2.9 million settlement with the Federal Trade Commission over allegations that it used deceptive marketing practices in violation of the CAN-SPAM and FTC Act. In addition, ValueClick and its subsidiaries settled a lawsuit with publishers and advertisers that worked with it. That lawsuit alleged that ValueClick had allowed adware creators to hijack commissions from other advertisers.
*Corrected from an earlier version. A judge has yet to rule on the settlement agreement.