Riding the coattails of last week’s FTC crackdown on false advertising, a private touring company has sued Groupon for allegedly driving up its advertising costs by diverting consumers with false and misleading ads. MediaPost reports:
The lawsuit, filed in the U.S. District Court for the Northern District of California, alleges that Groupon uses keywords relating to popular tourist attractions to trigger ads, but doesn’t actually offer coupons related to those attractions. One effect, says San Francisco Comprehensive Tours, is that Groupon diverted consumers searching for touring companies to its own site.
The touring company also makes a more complex false-advertising allegation: That it must pay more for top ad spots on Google’s search results pages because Groupon wrongly drives up the price of search ads. Google determines the price-per-click based on a combination of factors, including quality score, or its assessment of the relevance of the ads.
In addition to recent lawsuits over potential trademark infringement via metatag advertising (e.g., Google Adwords), the field of competition law is beginning to substantially expand into the internet realm. Where many companies now rely substantially, if not totally, on internet advertising to source consumers, we are likely to see far more litigation over internet practices which have, up until today, gone largely ignored and unregulated.
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