FTC Lead Generation Marketing Violation Lawsuit Settles - Consumer Protection

United States of America: Settlement of FTC Marketing Lead Generation Violation Case

January 13, 2022

Klein Moynihan Turku LLP

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The Federal Trade Commission (“FTC”) recently announced that it has settled a lawsuit against ITMedia Solutions LLC and its affiliates (collectively, “ITMedia”) for allegedly violating certain lead generation marketing laws. The FTC complaint alleged that ITMedia misled consumers into disclosing their sensitive financial information by arguing that they would be in contact with lenders when that information was often sold to marketing companies. The underlying allegations against ITMedia and the associated settlement agreement should serve as a cautionary tale for the major generators and their marketing affiliates.

What are the allegations of lead generation abuse of marketing?

The FTC alleged that ITMedia misled consumers and sold their data without permission. In its complaint, the FTC argued that the ITMedia websites were designed to deceive consumers seeking loans into sharing their sensitive financial information (for example, Social Security numbers and bank account information). ITMedia sites (including cashadvance.com, personalloans.com and badcreditloans.com) have allegedly “promised consumers to share their information with ‘…our network of trusted lenders….’or it may be shared only with qualified lenders.”

Instead, the FTC claimed, “84 percent of loan applications collected through these websites since January 2016 have not been sold to lenders, but are instead posted to a range of marketers, debt forgiveness and credit repair sellers, and businesses.” that will resell consumer information without regard to how the information is used.” The FTC complaint asserted that “the harm to consumers from ITMedia’s indiscriminate” sale of consumer data has been significant, putting them at risk of identity theft and deception.

Additionally, the FTC alleged that ITMedia violated the Fair Credit Reporting Act (“FCRA”) by “unlawfully obtaining credit scores for consumers who provided information and reselling it.” According to the FCRA, companies are limited in how and when they obtain and use consumer credit scores. In particular, companies may not use these credit points to market potential customers to outside buyers.

Resolving potential customer marketing violations

After investigation, ITMedia agreed to pay $1.5 million to settle the FTC’s actions. As part of the settlement, ITMedia is now prohibited from selling personal information to consumers outside of a limited set of circumstances. Where the sharing of consumer personal information is permitted, ITMedia shall establish procedures to verify recipients’ need for such information and to monitor their use of it.

This settlement highlights the important fact that lead generators must properly disclose the purpose(s) for which they collect and share consumer personal information. If lead generators inform consumers that they will only sell their information to one class of buyers (such as lenders), they can sell only to those buyers. Additionally, lead generators cannot request consumer credit scores if this information can be sold to marketers.