Recent Ruling Highlights Importance of FTC Compliance

Recent Ruling Highlights Importance of FTC Compliance


The FTC continues to crack down on affiliate marketing, highlighting the need for merchants to work with a trusted affiliate management partner who will ensure they’re in compliance with all FTC rules and regulations.

A recent summary judgment ruling by a United States District Court forced affiliate marketing network LeadClick Media and its parent company, CoreLogic, to turn over $16 million in “ill-gotten gains” earned through affiliate marketing.

Many of the affiliates in LeadClick’s network were using fake news sites to promote and sell acai berry diet products from one of its merchants, LeanSpa.

According to the FTC,

One of the ways LeanSpa pushed its products was by hiring LeadClick Media, which at the time was a big name in the affiliate marketing business. The FTC alleged that LeadClick used its extensive network of affiliate marketers to lure consumers to LeanSpa’s online store. One eye-catching method many of LeadClick’s affiliates used were those bogus news sites, which misappropriated the logos of legitimate media outlets and falsely claimed that independent journalists had endorsed the products. Many of the sites included glowing consumer comments that were just as phony as the “reporters.”

LeadClick defended itself by claiming that it wasn’t responsible for the creation of the fake news sites. But, LeadClick knew about them, recruited affiliates that used them, and paid them, all of which made the company liable in the eyes of the law.

For those who have been following the FTC in recent years, this development will come as no surprise. But it does further reinforce the need for merchants to work with a trusted partner when it comes to affiliate marketing.

Many in-house managers aren’t very experienced and are so swamped with the day-to-day tasks required to run an affiliate program that they don’t have time to worry about FTC compliance. Likewise, many agencies force their managers to oversee ten or fifteen programs, leaving little bandwidth to monitor compliance carefully.

When selecting an affiliate partner, make sure they have the ability to help you comply with FTC regulations. If you don’t do it properly, it could end up costing you a lot more than quality management.

Find out more about our affiliate management services here.