The courts have upheld a Federal Trade Commission position that states advertisers should be held accountable for any deceptive or otherwise illegal acts and practices performed by affiliate marketers. The specifics? LeadClick Media, an affiliate marketing network, was ordered to return $11.9 million in payments that it received as a result of deceptive practices attributed to its affiliates. The affiliates used fake news sites to help promote their products.
The courts stated that ‘no reasonable jury could deny’ that the advertiser participated in and had the authority to control the affiliate marketers’ conduct.
The affiliates were LeanSpa, LLC, NutraSlim, LLC and NutraSlim, UK Ltd (all under the collective name of LeanSpa). They sold weight-loss and colon cleanse products by marketing them on their own websites. They also hired LeadClick to promote products. Turns out some of the affiliates that were working for LeadClick were using fake news sites to build credibility. They would list claims of independent testing, analysis and statements from supposed experts. None of this was legitimate, but consumers were deceived into believing it was, which lead to increased sales.
The FTC as well as the state of Connecticut brought a suit against LeanSpa, LeanClick and some individual defendants. LeanSpa and the individual defendants entered into stipulated orders for permanent injunctions and money judgments. The FTC and Connecticut went after LeadClick for summary judgments.
This case may change how affiliate networks oversee the advertising that affiliates do, even on their own sites. It may have shaken up LeadCLick big time: On their site it says they may be for sale.
Read the court documents and decide for yourself.