Novel Advertising Gone Wrong

One of the major challenges of retailers is how to increase business from consumers. Retailers advertise their services or products through various mediums, often using novel methods. Despite what method is used to drive business, retailers must still comply with the minimum disclosure and fair standards required by the Federal Trade Commission Act and the consumer protection laws of the individuals states.

A recent case illustrates how disconnected some businesses can get from these standards. In the matter of FTC v. Credit Bureau Center, LLC et al., the Federal Trade Commission (FTC) sued Credit Bureau Center, LLC and several connected individuals for using deceptive advertising to entice consumers to purchase its credit monitoring service. According to the complaint, the defendants placed ads on Craigslist for rental properties that they did not own or control. When contacted by consumers interested in the rental properties, the defendants would offer to setup tours of the rental properties if the consumers would first obtain their credit reports from defendants' websites. The websites would provide the credit reports and scores, and then enroll the consumers in a credit monitoring service with monthly charges. Many consumers were not aware that they had been enrolled in the credit monitoring service. When consumers followed up on the property tours, their emails went unanswered.

The FTC charged the defendants with violations of the FTC Act. Some defendants were also charged with violating the Restore Online Shoppers' Confidence Act (which I have highlighted before), the Fair Credit Reporting Act, and the Free Reports Rule.

The case is not over. The court entered a temporary restraining order against the defendants to halt their deceptive practices. I expect that it is not going to end well for the defendants because of the gross violations of the FTC Act and the Restore Online Shoppers' Confidence Act. 

The takeaway from this case is that retailers must always be cognizant of the consumer protection laws that regulate their activities with consumers. This case is an extreme example of novel advertising gone wrong, but the same situation can occur with more mundane attempts to engage in novel advertising methods. If you have any questions about your company's advertising methods or consumer protection law in general, please feel free to contact Harmony Law.