No Immunity for Affiliate Network with Ability to Control Advertising Process

In 2011, the Federal Trade Commission filed a series of lawsuits against affiliate publishers who used “fake news” websites to advertise weight loss products and other merchant offerings.  In one of those lawsuits, the Commission joined with the State of Connecticut to include an affiliate network as a defendant.

The complaint alleged, in part, that affiliate network LeadClick Media was responsible for the deceptive weight loss claims, bogus new reports, misleading claims of independent testing and fabricated consumer comments created by its affiliate publishers, all in violation of Section 5 the FTC Act.  Section 5 of the FTCA prohibits unfair or deceptive acts or practices in or affecting commerce.

The Commission considers health-related advertising claims to be high-profile and the court had little difficulty finding that the FTCA had been violated by the affiliate publishers.  What is critical to note about the FTC v. LeanSpa et al. opinion, however, is the United States District Court, District of Connecticut agency-centric analysis resulted in a decision that held LeadClick liable for the deceptive advertisements created by independent contractor affiliates long before they joined the LeadClick network.

The holding begs the question of what type of network action or inaction will lead to a similar result.  Perhaps more importantly, the decision may be a roadmap of what a network can do — if anything — to avoid liability for the acts of third party publishers.

To read more about how the decision could impact publishers, networks and merchants, click here.

This decision should be of interest to any company or individual engaging in interactive marketing, including corporate counsel.  If you are interested in discussing the design and implementation of meticulous compliance controls or measures designed to reinforce CDA immunity, please contact an FTC Compliance Lawyer at (212) 756-8777, rnewman@hinchnewman.com and hinchnewman.com.

Information conveyed in this article is provided for informational purposes only and does not constitute, nor should it be relied upon, as legal advice. No person should act or rely on any information in this article without seeking the advice of an attorney.