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Case Against Affiliate Network LeadClick

Discussion in 'General Affiliate Marketing Forum' started by ChrisM, May 9, 2015.

  1. ChrisM

    ChrisM Affiliate affiliate

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    Here a strong case of why getting accepted into a CPA network is challenging and why.

    I read an article today regarding a case between the FTC vs Leadclick in which
    Leadclick lost. It had to do with the practices of Leadclick's affiliate marketers
    practices and will cause new affiliates and old to be careful with their campaigns
    going forward. Here is a link to the article :

    You are responsible for your affiliates' actions | PR Week

    The article will give a reason to make adjustments to affiliates practices if they
    follow in the same path.

    It is good for the industry and consumers going forward.
     
  2. monetizer
  3. T J Tutor

    T J Tutor Administrator Administrator moderator affiliate

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    Yep, we've seen this before. However, they've not had a conviction before.

    Excerpts from the PR Week article:


    "Last month, a federal district court in Connecticut ruled that an affiliate marketing network was responsible for false claims made by its affiliate marketers in the network"

    "As affiliate marketing becomes increasingly prevalent, this case has significant precedential value."

    "LeadClick used its network of affiliate marketers to lure consumers to LeanSpa’s online store, including through the use of bogus news sites that misappropriated the logos of legitimate media outlets and that falsely claimed independent journalists had endorsed the products."

    "LeadClick had engaged in deceptive practices by representing that "objective news reporters" had performed independent tests demonstrating the effectiveness of LeanSpa’s products and that comments following these "news reports" expressed the views of independent consumers when, in fact, neither was the case. No news reporters had performed independent tests and the comments following the reports did not express the views of independent consumers.

    •Court decision

    "It found the affiliate marketer had engaged in deceptive practices by using fake news sites to promote LeanSpa products – with logos of genuine news outlets and a fake "news page format" that claimed a reporter was conducting independent tests of the LeanSpa products purportedly based on independent consumer comments."

    "LeadClick was liable under the FTC Act for the deceptive content on its affiliates’ websites"

    "The court explained that LeadClick employees had known that "fake news sites were being used to promote LeanSpa products on the eAdvertising Network," had recruited the affiliates, had the power to approve or reject their marketing websites, and had given feedback about the content of those sites."

    "The court also rejected LeadClick’s claim that it was immune from liability under Section 230 of the Communications Decency Act, which provides immunity from certain liability for service providers based on the content transmitted by their users"

    "LeadClick was responsible in part for the fake news sites promoting LeanSpa’s products and was not a mere service provider."

    "Accordingly, the court concluded that LeadClick had to disgorge nearly $12 million it had received from LeanSpa as payment for its affiliate marketing services."

    "LeanSpa settled with the FTC prior to the court decision against LeadClick. The court’s decision also establishes that affiliate networks can – and will – be held responsible for the acts of their affiliates even if they do not create the content used by the affiliates."


    Author: Michael Lasky

    ___________________________________

    This is just the tip of the iceberg. This isn't 1999 anymore where you could throw up a dozen cheap sites, collect emails, make edgy claims, and go home at the end of the day with a fist full of cash.

    It's a new game now, play nice boys and girls and the sun will continue to shine, your checks will keep coming, and the FTC will never knock on your door.
     
  4. ChrisM

    ChrisM Affiliate affiliate

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    Hi tj you can see why the networks vett new affiliates because they don't want to lose a case on what others are doing that maybe shady practices. 12 mil is a lot of mula!
     
  5. T J Tutor

    T J Tutor Administrator Administrator moderator affiliate

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    So true! I get requests for endorsement and help joining networks via Skype every week from people I don't know. Usually after they have been declined by several networks. Then they get mad at me when I say I cannot endorse someone I don't know and that I don't want to risk my relationships. More often than not, when I ask for references and credentials, they either disappear or get cocky. Most all of us here have helped many get into the networks, but always after they have demonstrated they are solid folks, honest, and have their ducks in a row. The networks have to protect themselves in order to work in today's business climate, and so do we!
     
  6. ChrisM

    ChrisM Affiliate affiliate

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    Well stated tj!
     
  7. azgold

    azgold Moderator moderator affiliate

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    This is exactly what happened to Frank Kern. And it cost him sooooo much! Apparently, the FTC wasn't interested in the fact that Frank was unaware that a pair of affiliates were responsible. It was Frank's product, that made him liable in their eyes. I have no idea if something happened to the affiliates.
     
  8. ChrisM

    ChrisM Affiliate affiliate

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    This is the small fineprint the gurus don't talk about but is so huge to take into consideration. Take something like putting up a web page and not having a privacy policy or terms of use could open someone up to huge fines if it was pursued. With marketing comes a huge responsibility to act in a professional manner and dot your I and cross your t s.
     
  9. T J Tutor

    T J Tutor Administrator Administrator moderator affiliate

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    With Franks case, he had his funnel structured too much like an MLM. He was instructing everyone to just copy what he was doing. The FTC proved this was a pyramid scheme and Frank lost.

    Article here: Frank Kern FTC

    There are other parts to the charges, but this is the short story. Eben Pagan, John Reese, and Ryan Deiss also had similar investigations but were never charged.
     
  10. azgold

    azgold Moderator moderator affiliate

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    Ouch!

    How is that they escaped, anyway? Were they making Frank an example, do you think?

    I like Frank, was sorry to read about this when it happened. He has since rebounded though, I think. :)
     
  11. azgold

    azgold Moderator moderator affiliate

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    You're right, they're important and you need them, I think, however, Frank mentioned in the article that @tjtutor referenced, that disclaimers don't mean a damn if the FTC has you in their sites.

    Pays to do everything by the book from the beginning. By the time you hear from the Feds, it's too late.
     
  12. ChrisM

    ChrisM Affiliate affiliate

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