The Federal Trade Commission (FTC) has announced an enforcement action against the operators of education lead generator Gigats.com for allegedly deceiving consumers that it was "pre-screening" job applicants for hiring employers when it was actually gathering information for other purposes, including lead generation for post-secondary schools and career training programs.
As discussed in our prior article about the FTC's focus on lead generation and push for transparency, companies need to understand when disclosures are necessary to prevent deception and how to make clear and prominent disclosures when engaged in online marketing. It also is critical for companies to be familiar with the FTC's views regarding telemarketing, and data security and privacy. This is the FTC's first enforcement action related to an education lead generator, and comes on the heels of the FTC's Workshop on Lead Generation. Lead generation marketing also has come under intense scrutiny by the Consumer Financial Protection Bureau (CFPB) and state attorneys general.
According to the FTC's complaint, the operators of Gigats.com gathered online job announcements and summarized them on its website, which appeared to accept applications for the jobs. The FTC claims that the employers had not authorized Gigats to collect applications or screen or interview applicants. In addition, the defendants never sent the information they collected from consumers to the employers. Instead, according to the FTC, consumers who had provided Gigats job application information were directed to call the defendants' "employment specialists" and "education advisors," who then steered the consumers toward enrolling in education programs that had paid the defendants for consumer leads.
The settlement prohibits a host of misrepresentations and makes it illegal for the defendants to transfer consumers' sensitive personal information without their express consent. In addition, the defendants have to clearly and conspicuously disclose what they're doing and their relationship to the third party. The proposed court order imposes a $90.2 million judgment that will be suspended upon payment of $360,000, due to ability to pay.
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Jonathan L. Pompan, Partner and co-chair of Venable's Consumer Financial Protection Bureau Task Force, and Alexandra Megaris, Associate, advise on advertising, marketing, and consumer financial services matters. They represent clients in investigations and enforcement actions brought by the CFPB, FTC, state attorneys general, and regulatory agencies.
This article is not intended to provide legal advice or opinion and should not be relied on as such. Legal advice can be provided only in response to a specific fact situation.