FTC Turns its Attention to the Business of Deceptively Using Purchased Search Terms

Section 5 of the Federal Trade Commission Act prohibits ‘‘unfair or deceptive acts or practices in or affecting commerce.” Traditionally, the Commission has focused upon direct advertising claims, both express and implied. However, two recent matters place online marketers on notice that the Commission is now closely scrutinizing indirect advertising through the use of purchased search terms.

Lumos Labs, Inc.

On January 5, 2016, the FTC announced a settlement agreement with the owners of Lumosity. The creators and marketers of the Lumosity “brain training” program agreed to settle charges alleging that they deceived consumers with unfounded claims that Lumosity games can help users perform better at work and in school, and reduce or delay cognitive impairment associated with age and other serious health conditions.

Interestingly, the complaint describes both the advertisements themselves, as well as the search terms Lumosity purchased and utilized in order to direct consumers to its website.

Specifically, the complaint states:

“Defendants have employed an extensive search engine campaign, including through Google AdWords, and have purchased hundreds of keywords, including many variations of words related to memory, attention, intelligence, brain, cognition, dementia, and Alzheimer’s disease.”

The FTC alleges that the use of these keywords constitutes a deceptive trade practice.

Stratford Career Institute

In conjunction with a recent regulatory sweep of academic degree and certification programs, the FTC also refers to false and misleading search terms in its complaint filed last month against Stratford.

In its complaint, the FTC alleges that Stratford’s extensive advertising for its high school program included multiple references to a “high school diploma” leading to an increase in earning potential, access to better jobs and promotions, and the ability to apply for higher education. The FTC’s complaint alleges that Stratford’s high school program fell short of its promises, meaning thousands of students nationwide paid as much as $989 for a diploma that could not meet their educational or career needs.

The Commission not only refers to the Stratford website, brochures, commercials, and letters to prospective applicants, the complaint also alleges that the school purchased online advertising tied to search terms like “official high school diploma,” “real high school diploma online,” and “legal high school diploma” in order to direct potential students to the Stratford website.

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Clearly, the Commission is broadening its definition of unfair and deceptive trade practices to include both direct and indirect advertising.

The foregoing should be of interest to any company or individual that utilizes search terms to direct consumers to a website. Keywords must meet the same regulatory standards as terms directly stated to consumers via other advertising methods.

If you require assistance, please contact Richard B. Newman at rnewman@hinchnewman.com.

Information conveyed in this article does not purport to cover every issue associated with the deceptive use of purchased search terms. 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.