Published by LawTechie - March 18, 2011 - LawTechie

Federal Trade CommissionWith a $250k fine against Legacy Learning Systems, Inc., the FTC has announced its intention to extend its policing against false and deceptive advertising into the online realm. Legacy Learning Systems was fined for hiring affiliate marketers to praise its educational DVD series. PaidContent reports:

According to the FTC, the problem was that Legacy Learning and its owner, Lester Smith, said that the affiliate endorsements “reflected the views of ordinary consumers or ‘independent’ reviewers, without disclosing that the affiliates were paid for every sale they generated.

Fake consumer reviews have likely been around since the beginning of the web, but there have only been a handful of legal actions in this space, and this appears to be the first action by federal authorities that included a fine.

These days it’s impossible to visit a consumer review site a la business directory (e.g., Citysearch.com, Yelp.com, Menupages.com, etc…) without running into a suspiciously glowing review from a suspiciously enthusiastic anonymous consumer. It will be interesting to see whether and how the FTC decides to pursue such micro-shilling.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

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