Affiliate Marketing Network Held Liable for its Publishers’ Deceptive Content

Print Friendly, PDF & Email

October 5, 2016

affiliate-marketingThe U.S. Court of Appeals for the Second Circuit recently affirmed a ruling of a lower court that held an affiliate marketing network liable for its role in promoting a deceptively-marketed product.  Despite the fact that the network did not itself produce the deceptive content at issue, the Court affirmed the judgment in favor of the Federal Trade Commission (“FTC”), requiring the affiliate marketing network to pay a $11.9 million penalty.

Why did the Court find fault with the affiliate marketing network?

LeadClick Media, LLC (“LeadClick”) served as an affiliate marketing network through which it connected merchants to affiliate publishers in order to advertise participating merchant products.  What drew the scrutiny of the FTC was a purported weight-loss and colon-cleansing product.  The vast majority of traffic driven from LeadClick’s network to the product merchant’s websites was from phony news sites that touted fake reporters’ claims of independent studies that attested to the efficacy of the subject weight loss products, as well as fabricated testimonials from fictional customers.  The Court found that LeadClick not only approved of its affiliates’ use of the fake news sites, it also suggested substantive edits to those web pages and purchased advertising space on legitimate websites for banner ads that linked to those fake news sites.

Protecting Your Affiliate Marketing Network

Operating an affiliate marketing network can be an effective means of leveraging the marketing capacity of thousands of web venues and marketers without actually incurring the expense of establishing those venues and hiring those marketers.  This case demonstrates, however, that even if the network is not directly responsible for producing the creative used by its affiliates to market a particular product or service, there is still exposure to the network for the conduct of its publishers.  As such, it is critical that affiliate networks work closely with experienced counsel to not only properly draft its affiliate network agreements in order to ensure that the network is afforded maximum protections, but also to review its practices and procedures to minimize the risk of being held liable for the acts of network affiliates.

If you are interested in learning more about this topic or need to review your marketing practices and procedures, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for information purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

Attorney Advertising

FTC Aggressively Targeting Health Supplement Advertising

Affiliate Marketing Agreements: Don’t Get Stuck in the Middle

Supplement Marketers to Pay $1.4 Million to FTC, Santa Cruz District Attorney

David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

Schedule a Call
In The Know

Trending Topics

Creating a Viral and Legally Compliant "Pin to Win" Contest- Klein Moynihan Turco

Creating a Viral (And Legally Compliant) “Pin to Win” Contest

Print Friendly, PDF & Email

We have frequently written about the marketing benefits associated with the use of promotional contests and sweepstakes.  Promotional contests and sweepstakes often appear on social media platforms, which provide companies with a free and effective means to increase the number of consumers participating in their respective contests. While companies must

Facebook Decision defines a TCPA Autodialer- Klein Moynihan Turco LLP

Facebook Aftermath: Courts Clarify Definition of TCPA Autodialer

Print Friendly, PDF & Email

On April 1st, the U.S. Supreme Court released its opinion in Facebook, Inc. v. Duguid, marking a newly clarified definition of “autodialer” within the meaning of the Telephone Consumer Protection Act (“TCPA”). In the two weeks that followed, two federal courts have directly addressed the definition of TCPA autodialer as

Critical Role that TCPA Plays in Outbound Telemarketing- KMT

The Critical Role that the TCPA Plays in Outbound Telemarketing

Print Friendly, PDF & Email

If you’re running any sort of outbound telemarketing campaign – phone calls, voicemail drops, or text messaging – you need to understand the Telephone Consumer Protection Act (TCPA) and its enabling regulations. Call center operators are not the only businesses that employ outbound telemarketing to reach out to consumers. Using

How to Use Promotional Marketing the Legal Way: Klein Moynihan Turco LLP

How To Use Promotional Marketing The Legal Way

Print Friendly, PDF & Email

The use of promotional contests, games and sweepstakes marketing can be a dynamic and cost-effective way to increase sales, build a database of interested consumers and otherwise increase brand awareness and buzz. Consumers are more easily attracted to your marketing message by the opportunity to win prizes than with more

Running a Telemarketing Business?

Get a Free Compliance Review From an Experienced TCPA Lawyer.

Share on facebook
Share on google
Share on twitter
Share on linkedin