June 27th, 2011

Fake News Ads Persist Despite FTC Crackdown

Advertising Age

You’d be excused for mistaking Action8Reports.com and sites like it for legitimate news outlets. They’re really ad vehicles, however, using the trappings of independent reporting to pitch consumers on work-at-home schemes or weight-loss plans. And despite intensifying efforts by the government, real news publishers and some ad networks, their kind will probably be with us for a while.

A Federal Trade Commission complaint filed in April alleged that 10 companies had violated federal law by, among other things, misrepresenting sites such as “News 6 News Alerts” and “Health 5 Beat Health News” as objective news sources and displaying fake user comments beneath their “articles.”

A month later the FTC said companies controlled by internet marketer Jesse Willms were using CNN, MSNBC, “60 Minutes” and other news logos alongside statements like “Featured on” and “As Seen on TV.”

Mr. Willms disagreed. “We believe our business practices are compliant with the law,” he wrote on his blog, “and are working to resolve this disagreement with the appropriate government agencies.”

Consumers often encounter the ads as “headlines”—such as “The New ‘Skinny’ Fruit: How This Strange African Fruit Is Making America Skinny”—in ad space on legitimate news sites. They then link to landing pages that resemble news sites, misappropriate real news logos to imply favorable coverage, or both. Publishers might reject such ads if someone tried to place them directly, but these ads travel through ad networks.

“Generally speaking, they have very limited control over what shows up,” said Jay Weintraub, founder of the LeadsCon conference, comparing the situation to a Whac-A-Mole game.

Some ad networks are promising to step up their efforts against fake news advertising. “Once the FTC signaled their intent regarding “fake news sites,’ we immediately put a new policy into place and are winding down advertisers by June 30,” said David Jacobs, senior VP-publisher services at AOL’s Advertising.com, in an email provided by a spokeswoman.It isn’t clear how many networks will take similar action.

MSNBC.com ran a story 18 months ago reporting on this kind of deceptive advertising, including a statement from its own VP-sales declaring its intention to clear its own site of the problem. But even that story still appears next to false-news headlines such as “New York: Work at Home Jobs EXPOSED,” which delivers consumers to a fake news site. The “Work at Home” ad was served by the Pulse360 ad network, which did not respond to a request for comment.

Richard B. Newman, an attorney for the Executive Council of Performance Marketing, said news organizations that carry these ads may violate the FTC Act, which prohibits unfair or deceptive acts or practices. But others hold that legitimate media sites aren’t liable. “Publishers are expressly exempted from the criminal penalties against false and deceptive advertising under the FTC Act except in circumstances when there is refusal to cooperate with the FTC,” said Jonathan Pompan, an attorney at Venable, in an email.

FTC spokesperson Frank Dorman said “at some point someone may be able to make that argument” for a case against news sites carrying ads disguised as headlines. For now, though, the FTC more often views sites as victims, particularly when the ads misappropriate their logos.

Read more: http://adage.com/article/mediaworks/fake-news-ads-persist-ftc-crackdown/228421/


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