Online Advertising, Affiliate Marketing Compliance and Fraud with Pace Lattin

Monthly archive

October 2016

FTC Hammers Operators of Money-Making Opportunity Telemarketing Scheme

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The Federal Trade Commission has charged numerous individuals and an interrelated network of companies with selling worthless money-making opportunities via an alleged phony grants program.

According to the FTC’s complaint, the defendant telemarketers misrepresent to seniors, veterans and indebted consumers that they represent Amazon and offer – for hundreds or thousands of dollars – to create a website for them linked to  In doing so, according to the FTC, the defendants claim that consumers will earn thousands of dollars every month in commissions for sales via the website and falsely offer to advertise the website via multiple means.

The Commission also alleges that the defendant telemarketers phone consumers from various call centers and falsely claim to represent the government, telling consumers that they can obtain government and corporate grants to help pay for home repairs, medical costs and debt reduction.

To allegedly determine the amount for which consumers are eligible, the defendants ask for information regarding income, employment, age, veteran status, home value and equity, savings and retirement funds, debt, drivers’ license and credit and debit card numbers.

According to the FTC, the defendants seek thousands of dollars, up-front, and falsely promise that consumers will receive grants worth tens of thousands of dollars within 60-90 days.

According to the FTC, the defendants also attempt to extract even larger payments from many of these same consumers using a tactic known as “reloading” – offering to sell them additional phony grants and typically promising that they can qualify for larger grants by forming a limited liability company.

The FTC alleges that consumers receive no money from these schemes and are not provided refunds.

The action has been brought under the Federal Trade Commission Act, and the Telemarketing and Consumer Fraud and Abuse Prevention Act.  The Commission seeks injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of alleged ill-gotten monies, the appointment of a receiver, an asset freeze, and other equitable relief for defendants’ purported practices.

The TSR prohibits sellers and telemarketers from misrepresenting, directly or by implication, in the sale of goods or services, any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer.

Likewise, the TSR prohibits sellers and telemarketers from making any false or misleading statements to induce a person to pay for goods or services.

A violation of the TSR constitutes an unfair or deceptive act or practice in or affecting commerce, in violation of the FTC Act.

Contact an FTC defense lawyer if you are the subject of a regulatory enforcement investigation or action, or if you are interested in implementing preventative compliance measures.

Richard B. Newman is an advertising compliance lawyer at Hinch Newman LLP focusing on internet marketing and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns across all media channels, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

FTC Complaint Filed Over Google “Influencer Marketing” to Kids

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Influencer prmarketing joins both customary and digital media strategies. Organizations advance their brands and items through purported influencers — people with a significant web-based social networking or online movement draw. The problem is that most “influencer marketers” don’t disclose the relationship between the “influencer” and the company they are promoting. Even worse, when it comes to kids, there are other laws that need to be considered.

The Center for Digital Democracy, Campaign for a Commercial-Free Childhood and Public Citizen filed a complaint with the Federal Trade Commission (FTC) against Google, Disney’s Maker Studios, DreamWorks (owned by Awesomeness TV) and two other companies. The groups allege these firms’ practice of targeting influencer marketing toward children is unfair and deceptive.

Filed on Oct. 21, the complaint alleges that several marketing companies (Collab Creators, Wild Brain, Maker Studios and AwesomenessTV) produce and distribute ads and other commercial material targeted to children that appear as content. The groups say Google both encourages and benefits from the production of child-directed influencer videos and distributes them to children on YouTube and YouTube Kids.

The advocacy groups called on the FTC to investigate and take action against companies that “create and distribute child-directed ‘influencer’ marketing.” They also called on the federal agency to release policy guidance making it clear that using influencer marketing to persuade children to buy a product (or urge their parents to buy it for them) is an “unfair and deceptive marketing practice prohibited by Section 5 of the Federal Trade Commission Act.” In other words, influencer marketing aimed at children violates federal law.

“Child-directed influencer marketing is misleading to children because their developing brains do not process or understand advertisements the way adults do—especially advertisements disguised as content,” Laura Moy, director of the Institute for Public Representation at Georgetown University Law Center, which represents the groups, said in a statement.

“Corporate predators are using young Internet influencers, admired by kids, to hawk their wares to children, even to young children,” added Rob Weissman, president of Public Citizen. “The marketers and the advertising platforms enabling and promoting this activity should be ashamed. But since they’re not, we need the FTC to act to end their outrageous practice.”

Children have buying power of about $1.2 trillion, either through what they buy themselves or what they persuade their parents to buy. So, companies are tripping over themselves to reach children and influence them to buy their products. The complaint cites several cases of how companies target children with influencer marketing. One case involves the Collab Creators who make videos with influencers, including Baby Ariel who has 1.6 million subscribers on YouTube. In a few videos, Baby Ariel “unboxes and touts toys and games for children in a fun and entertaining manner,” the complaint describes.

Other cases include:

Disney’s Maker Studios has a popular YouTube influencer show called EvanTubeHD, which features 8-year-old Evan and his 5-year-old sister Jillian “as they review and play with the most popular kids toys currently on shelves.” They also taste test and review snack foods. The show’s videos “blur the line between commercial and non-commercial content, targeting young children,” the groups allege.

DreamWorks, owned by AwesomenessTV, has a show on YouTube called Swamp Talk which features the animated character Shrek. Life Hacks for Kids is another show that features “life hacks” designed for kids, and many of the show’s videos include product placements.

Online advertising as a whole is a game-changer. Or as Common Sense Media described it in a 2014 report, online advertising “has fundamentally changed the nature of marketing to children and youth.” The company-funded YouTube shows targeted to children demonstrate just what a game-changer online advertising really is and how it is geared to influencing kids to buy toys and junk food. When it comes to junk food, those YouTube shows can contribute to the childhood obesity epidemic. And on the whole, they may run afoul of the law. Stay tuned.

AdMaster is Combating Online Ad Fraud in Asia

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In the first half of this year, up to 28% of the traffic in advertisers’ digital campaigns was recognized as fraud, bringing serious concern about the integrity of the online advertising inventory the advertisers are buying, according to AdMaster’s newly released “2016 Digital Advertising Anti Ad-fraud White Paper”, which covers a big number of advertising campaigns in China by more than 500 advertisers from a wide range of industries in the time period between Jan 1st to May 30th.

“Compared with traditional media such as print and television, the online platforms are more complex, and their growing sophistication and intricacies make it often impossible to monitor and highly vulnerable to abuse,” said Tenly Wu, Chief Product Officer of AdMaster.

Both in China and around the world, digital ad spending has enjoyed robust year-over-year growth over the past few years. According to the Interactive Advertising Bureau’s annual study, in 2015, digital ad revenues reached nearly $60 billion, a 20%jump compared to the year before. In China, despite the economic slowdown, digital ad spend is expected to reach $40.42 billionin 2016, a 30% increase on last’s year’s spend, according to eMarketer.

Tenly insists that, “It’s becoming very imperative for advertisers to get to know how much of their digital advertising spend is wasted, and how, so they could take precautionary measures to minimize the potential loss.”

Fighting against ad fraud is a global war…

Advertisers have long known that fraud exists in digital media; however, due to the coming of the big data era and the rapid progress in digital advertising and programmatic buying, the scale of ad fraud has become rampant worldwide.

In a blog post by Facebook’s Head of Ad Tech this March, the social media giant decided to shut down its demand-side ad buying platform into Atlas after discovering that “many bad ads and fraud (like bots),” sometimes it could be as high as over 75% of the total volume.

And it’s not a single case. According to a recent estimate by the World Federation of Advertisers, between 10% and 30% of online advertising slots are never seen by consumers because of fraud, and it forecasts that marketers could lose as much as$50bn a year by 2025 unless they take radical action.

China, standing at the center of the global digital marketing evolution, is no exception.

“The evolution of ad placement technology from a time-based pricing model to CPM-based and now people-based gave rise to a variety of ad frauds ranging from non-human traffic (or ‘bots’), to video ad fraud and more,” said Tenly. “The whitepaper is not only aimed at presenting a reality-check on the escalating ad fraud issues in China, but most importantly, showing how we can use reliable and plausible solutions and technology to ensure that as little as possible of advertisers’ advertising budgets fallvictim to ad fraud,” Tenly said.

Highlights of the Whitepaper

Overall, the the ratio of fraudulent traffic varies among different campaigns, ranging from 5% to 95% against total traffic. The ratio of ad fraud among 63% of the campaigns covered in the whitepaper was lower than 20%, while 7% of the campaigns found more than 50% of its traffic was fraudulent ads.
The most pernicious and common variety of ad fraud was Non-human Traffic, or “bots”, that simulate the activity of a real person browsing the web or using an app. As a result, the paid online display ads that ad networks, media buyers and ad agencies have knowingly been selling to clients have never appeared in front of live human beings. In this regard, vertical media (41%) and DSP/Ad Networks (technology platforms that aggregate large numbers of websites) (34%) see the highest volume of fake inventories. Compared to mobile (19.8%), PC (36%) had more fake inventories.
The growing popularity of online video over the past few years has drawn the attention of fraudsters. The most common varieties of video ad fraud in this category include ad placement in the wrong title (13%), or the video ads don’t appear in the place that they are supposed to appear (8%).
Fraud in customer-registration and the app download process is also very common today, and it’s very tough to tell the difference between fraudulent leads and true leads.
It’s time to clean up the industry, and to safeguard brand security

While it’s widely recognized in ad industry circles that the fraudulent traffic bears high stakes for advertisers, Hong Bei, Chief Technology Officer of AdMaster, believes the loss caused by ad fraud can be even bigger than the claimed loss of billions of dollars each year. “Besides the financial loss, ad fraud could also lead to shaping a negative image of the brand, bringing serious threats to brand safety, especially when ads are inadvertently placed on fraudulent websites.”

In fact, despite the unprecedented growth of digital marketing over the past few years thanks to the rise of the mobile internet,ad budgets for digital campaigns still only account for 31% of worldwide ad budgets in 2016, according to the forecast by WPP’s GroupM. “One of the main reasons behind this is a ‘lack of trust’ in the online ad market, especially the doubt from advertisers in terms of whether digital ads can be delivered as promised,” said Calvin Chan, the Chief Operating Officer of AdMaster.

“In the meantime, ad fraud, which always results in unseen ads, brand safety concerns and false audience numbers, could further undermine the trust and confidence of advertisers in digital media,” says Calvin.

With people-based marketing and marketing automation becoming the mainstream of today’s digital media buying/planning strategy, AdMaster sees an increasing importance of equipping the advertisers with the tools to fight online ad fraud, thus minimizing their potential loss from false inventory and impressions in their digital ad campaigns.

Sift out the true from the false with AdMaster’s innovative anti-fraud technology

As advertisers typically pay media for their ads based on the basic metrics like page views and video views, regardless of whether the users are actual people or bots (computers hijacked by viruses that are programmed to visit sites and mimic human behavior, creating the illusion of authentic web traffic in order to lure in advertisers), one common scheme of ad fraud involves manipulating the computers of unsuspecting consumers.

In this regard, based on its 10 years of rich experience in ad tracking and measurement and its corporate strategy of becoming a”data hub” in China’s marketing ecosystem, AdMaster is committed to building a “device ID-based credit system” to combat fraud.

Combined with scientific modeling and statistics, this credit system is built on online behaviors of all different device IDs (including IP address and device IDs). By adding the fake ones onto a blacklist as a reference, the system serves as a sifter to detect and mark in real time the fraudulent activities from the fraudulent IDs.

Regarding identifying the video ad fraudulent activities as mentioned above, the key lies in how to use detection technologies to peek into what, where and how the ads were displayed in the automated ad marketplace.

“It’s all about how to use anti-fraud tools to police the system by providing ad verification and further evidence for ad fraud activities, so as to help advertisers minimize their loss,” Tenly said. For example, through analyzing the IDs of different program titles, the anti-fraud capability could tell whether the advertisers’ ads were displayed in the right titles that they invested. Besides, the anti-fraud tools are able to record all the ads in a massive sample pool when they were placed along the video content and capture the moments when ads were displayed. By matching the monitored ads with the ads in AdMaster’s database (provided by clients/agencies), advertisers could know whether their ads have been delivered in the right way as promised.

Accreditation for high-quality media and a trustworthy third-party measurement agency are the first step to address the problem

Globally, both advertisers, and industry as a whole, are joining forces and take concrete steps to fight online ad fraud.

“As an independent and trusted partner for advertisers, we hope our neutral, independent and comprehensive scrutiny onChina’s digital ad market, and our constant attempts to use data technology to safeguard the interests of advertisers, can shed light on the industry in terms of how to keep fraud out of our system, and build a healthy, reliable, transparent digital ad market in China,” said Wu.

The China Media Rating Council (CMRC) was founded on Aug. 10 this year by partners from China’s digital advertising ecosystem. As China’s first media evaluation and certification organization, CMRC is planning to introduce a new advertising ecosystem into China, in which IAB will be responsible to issue industry standards, while US MRC will be in charge of certifying high-quality media and third party measurement agencies. “This move will allow publishers to focus on selling quality impressions and enable them to garner higher CPMs that their inventory demand,” said Tenly.

” As a leading marketing data technology company, we are playing our part in helping push forward the establishment of quality standards for digital ad traffic, in the end, creating a favorable and healthy environment for the future development of China’sdigital advertising industry in the years to come,” said Vincent Yan, founder and CEO of AdMaster.


AOL Caught Partnering with Fraudulent Banner Farm

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AOL is desperate for income, and because of that, I’ve seen more and more examples of their ads being shown fraudulently on banner farms and other scams. Today I caught their advertising showing on pop-ups all over the internet for a “fake” site that entire purpose is to defraud advertisers.

In this case, the company “” is loading popunders and their site in 1×1 pixels on other banners. The site is made to look like it has actual content, but the entire purpose is to reload the ads over and over again and defraud the network. claims to have technology to detect this, but they clearly are not, and worse the tags show that they know EXACTLY what the site is.

This is bad news for AOL, that their system is NOT working to detect fraud.

We’ve included the HAR file of the loads, so one can see how many times just in a minute they load. You can analyze it in any HAR analyzer including Google’s

Here is the tag information for AOL.


Tag for network 10719: Marketplace: First USA Media // Website: // Page: 300x250_1 // Placement: PlayGolf365.com_300x250_1 (4277103)

You can visit an example here (as long as it works)


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