Online Advertising, Affiliate Marketing Compliance and Fraud with Pace Lattin


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Pace Lattin has 19 articles published.

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)


Lube King Scott Fraser of Las Vegas Charged by SEC For Fraud in Fake Reviews

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Scott Fraser, the CEO and a main shareholder in Las Vegas-situated Empowered merchandise Inc., and paid promoter Nathan Yeung were charged by using the SEC for orchestrating fraudulent promotional campaigns to tout the manufacturer’s stock.

In step with the company, Fraser individually ran a publication publishing industry and hired Yeung to secretly support him promote Empowered merchandise by way of on-line publication articles that were supposedly authored by impartial writers.

Unbeknownst to traders, nevertheless, Fraser and Yeung virtually wrote, licensed and allotted these glowing articles about Empowered products themselves, working under such pseudonyms as “Charlie Buck” and then hiring different promoters to disseminate the promotions to their respective subscriber lists in trade for prices. And of direction the promotions failed to disclose that Empowered merchandise and Fraser approved and paid for the ads.

FTC Goes After 1-800 Contacts

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The Federal Trade Commission (FTC) has announced a lawsuit against 1-800 Contacts, charging the online retailer of contact lenses with allegations of unlawfully orchestrating and maintaining a web of anticompetitive agreements with rival companies.

The FTC alleges 1-800 Contacts entered into bidding agreements with at least 14 competing companies and networks.

These bidding agreements purportedly restrain price competition in Internet search auctions. Additionally, they restrict truthful and non-misleading advertising to consumers, according to the FTC.

This case stems from 1-800 Contacts’ alleged decision to threaten competing companies with lawsuits after learning that, when consumers searched online for “1-800 Contacts,” they would then see advertisements for both 1-800 Contacts and a competing seller

. In almost all cases, these competing companies agreed to sign the purportedly anti-competitive agreements. These agreements usually forced the company to use negative keywords designed to stop search engines from displaying their website when those search terms are used.

The FTC argues these agreements harm consumers by restraining competition and reducing the number of relevant advertisements on the Internet.

The FTC voted 3-0 to issue the administrative complaint.

Exchange Wire: Fraud Protection from Impact Radius Works

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Originally from ExchangeWire. 14 June, 2016, it was announced that Impact Radius, the marketing and affiliate solutions platform, had acquired ad fraud detection and prevention platform, Forensiq, for an undisclosed sum, in a bid to offer a unique market proposition. According to the press release at the time, no company before had combined algorithmic attribution of consumer journey touchpoints with cutting-edge ad fraud detection to reveal insights that are not polluted by fraudulent data. Keen to understand more about the acquisition, the rationale behind it, and the future of the new entity, ExchangeWire spoke with Mark Wrighton, commercial director, Impact Radius; David Sendroff, co-founder and CEO, Forensiq; and Julia Smith, director of communications, Forensiq.

ExchangeWire: On the face of it, Forensiq seems like an unlikely acquisition for Impact Radius, known as an affiliate marketing platform – what was the rationale on both sides? How does fraud manifest itself within the Impact Radius platform?

Mark Wrighton: Both of those questions are intricately entwined. While Impact Radius were regarded as an affiliate marketing platform, focusing on the incrementality of the performance channel, about three to four years ago we shifted our business focus to looking at performance in a cross-channel context. All activity from a performance perspective lent itself to cross-channel de-duplication. We were already looking at rules-based modelling from a performance basis. We focus on one system of truth into understanding where advertisers should spend and attribute correctly.

David Sendroff Headshot

David Sendroff, Forensiq

David Sendroff:  We have had a great relationship with Impact Radius for many years and have been a great advisor to them along the way. Impact Radius is interesting as a holistic platform; it’s a system of record where you can run your whole business on one platform and have integrity behind the data. There are so many bots, and there is so much non-human traffic, and because of the impact they have on metrics and understanding campaign performance, cleansing the data before it enters into the algorithm can provide a source of truth as to what’s actually happening. Forensiq sits at the top of the funnel, evaluating data before you have purchased an impression. This means you can determine the integrity and intent behind the user, page, or impression. What makes the combination powerful is the the deep understanding of the actual performance behind the media buys. It becomes a true, full-funnel platform, where you can manage all media, both online and offline, and track it all the way down the funnel.

Julia Smith: Advertisers desire transparency. The role of the CMO is changing. They are taking higher focus on fraud, attribution, transparency, how it’s all linked, and where their money is being spent. Forensiq has a strong relationship with many advertisers and this makes us a much stronger team.

How has the process of tackling fraud for Impact Radius changed since the acquisition?

Mark Wrighton: We have different processes for individual products versus the full cross-channel piece. There are inherent trust issues in the industry, so we started by making sure we had the highest quality, premium publishers in place before allowing people into our marketplace. Beyond that, we built a system of alerts. You have to have a best-in-class solution, because of how fraud continually evolves. We would often rely on API data from Forensiq for any analysis we’re doing. This was one reason I was excited about joining forces. Big agencies would constantly talk to us about Forensiq being in that space, so to have them on side is incredibly compelling.

Does having Forensiq on-board remove the human element required in fraud detection?

Mark Wrighton, Impact Radius

Mark Wrighton, Impact Radius

Mark Wrighton, Impact Radius: There will always be a human element, and you won’t ever completely remove it, but Forensiq does have accelerated capabilities.

David Sendroff: We evaluate massive amounts of data and our data science team build algorithms so that we can create probabilistic risk around different elements. We have got real-time capabilities and we’re in the process of rolling out a deeply integrated solution, which flags and blocks the platform to protect our clients. There is always a human element to remove bad traffic sources, and that’s true within the data science team as well. It’s understanding the type of fraud being detected. We can incorporate real-time actions back in our algorithms to minimise the false positive, and even false negative, and this can be adjusted based on varying factors.

Will this deal take Forensiq off the table as a solution for other advertising platforms?

David Sendroff: Forensiq is a strong business and a strong brand and we plan on continuing that, even with an independent offering. Clients can leverage us as a model within the Impact Radius platform, as well as outside of it.

What does Forensiq have in the pipeline, which Impact Radius will help to drive?

Mark Wrighton: As part of the acquisition, we raised USD$30m (£22.7m) to use towards growth. Outside of that, we now have 80% of our resources going into the data engineering and science team, to contribute to platform advancement, so a lot of investment is going into new products and our R&D capabilities.

This move could signal a trend of marketing/advertising platforms owning and operating their own fraud-detection solutions – do you expect that to be the case?

Julia Smith, Forensiq

Julia Smith, Forensiq

Mark Wrighton: Perhaps. The power in the platform comes from the suite we have in brand safety and viewability; and, if you look at the landscape, viewability is becoming a commoditised solution, in that everyone is using the same two methods for identifying it and brand safety has become commoditised as well. Ad fraud is the most difficult. I think it’s possible other companies could acquire some types of solutions, but I think building them can be challenging. One of the greater benefits we have is our centralised ad-fraud intelligence. As so many clients are feeding into this database, access to data to create those insights is crucial. But I do believe there will be more consolidation over time.

Julia Smith: There is a need for independence. If you have your own in-house tool, how trustworthy is that data? People say they prefer to have an independent company and the industry often calls upon agencies to have to show due diligence in using an independent verification tool.

Mark Written: As Julia says, independence is important. Impact Radius is not a media owner, so we don’t have the challenge of justifying our position on the credibility of our fraud detection.

David Sendroff: Innovation within fraud will make it difficult for others. If you look at the importance of decision making, it’s based on the insight provided by Forensiq. It’s difficult for other companies to reach that scale. There’s an awful lot of inertia. It would be interesting to watch, but it would be very difficult from a board-level perspective.

FTC Announces Seminar on Disclosures

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As previously discussed here, on September 15, 2016, the Federal Trade Commission will host a public workshop to examine and evaluate disclosures that marketers make to consumers about advertising claims and privacy practices, including data dissemination and tracking technologies. The workshop will delve into the effectiveness of disclosures to ensure consumers notice them, comprehend them, are not misled by them and can utilize them in their decision-making.

Discussion topics will take into account factors that influence a disclosure’s efficacy, including those that are made in conjunction with financial products. Principles tested and discussed by regulators (FTC and CFPB) during the workshop, particularly those pertaining to specific industries, should be incorporated into the design and implementation of corporate disclosures across all platforms.

The FTC has expressed hope that the event will generate discussion among industry leaders, academics, and regulators on efforts to improve the evaluation and testing of disclosures.

The workshop comes following the FTC’s lead generation “Follow the Lead” workshop in October 2015. Given today’s regulatory investigation and enforcement environment, the role that disclosures play, how they are structured and the specific content thereof should be afforded considerable attention.

The full agenda for the upcoming workshop can be seen, here.

Please contact an FTC defense lawyer if you are interested in discussing the design and implementation of compliant disclosures, or if you are the subject of an advertising related investigation or enforcement action.

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.

Ad Fraud Could Top $50 Billion This Year

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THE World Federation of Advertisers (WFA) has estimated that the value of advertising fraud (ad fraud) on the digital platform could reach in excess of US$50bil by 2025.

Due to growing concerns over cyber crime, WFA is currently spearheading an awareness campaign through its freshly published Compendium of Ad Fraud Knowledge for Media Investors.

Ad fraud, by definition, is associated with an activity where impressions, clicks, actions or data events are falsely reported to criminally earn revenue or for other purposes of deception and malice.

 But, as of now nobody really could gauge how serious ad fraud penetration is in the industry.

Some researchers have reported ad fraud exposure between as low as 2% and as high as 90%, it seems clear that there are no widely available ways of assessing the absolute exposure rate.

The challenge of establishing such figure is underlined by recent WFA research findings which demonstrate that 36% of respondents don’t know to what extend they are exposed to ad fraud.

Nevertheless, one of the highest profile research initiatives into ad fraud was the recent ‘Bot Baseline’ undertaken by the Association of National Advertisers (ANA) in the US where the cost of ad fraud is estimated at US$7.2bil, approximately 5% of the total global digital media market.

WFA marketing director (Asia) Ranji David tells StarBizWeek that now that the industry is equipped with a better understanding of issues at hand, the stakeholders have a certain guidance to combat this problem or crime.

Hogan says what brands could do first and foremost are to educate themselves.

“This compendium is downloadable from our website and we are ready to assist any brands that would like to know more on the issue. We are happy to come to Malaysia and work together with Malaysian Advertisers Association (MAA) on this.

“Malaysia has a great unified market and the community is very strong,” she says after Ad Fraud conference organised by MAA earlier this week.

Star Media Group was the media partner for the event.

Beyond this compendium, Ranji says WFA is will work across its working group to take this into the operational level to help brands adopt the right approach to address this issue.

MAA vice-president Chan May Ling thinks that the industry needs an independent party to really measure the digital media buying as marketers currently don’t have the tools to gauge the digital adveritising dollar.

“Transparency is the key as ad fraud is probably a growing concern now but we still do not have the numbers and measurement of advertising dollars is the key and MAA is working to form a technical committtee to measure digital advertising expenditure,” she says.

Chan: ‘MAA is working to form a technical committee to measure digital advertising expenditure.

Integral Ad Science managing director UK and strategic development EMEA Niall Hogan says what brands could do first and foremost are to educate themselves.

“Then, they must work with a technology company that could identify that there is a problem, gauge the level of the problem and help them by giving them some solutions to it,” he says.

In terms of the criminality side, Hogan admits that it is difficult to identify as the criminals are always two steps ahead and because of the jurisdiction in some of the countries the ad frauds are based.

“Make it more important for the industry to take on our measures and use our technology to limit the impact of fraud,” he says.

ITT Shuts Down After Defrauding Students and Losing Accreditation

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ITT Educational Services Inc said it would discontinue operations at its ITT Technical Institutes, in line with the U.S. Department of Education’s directive, affecting more than 8,000 employees.

The for-profit education provider said on Tuesday that the move would also affect hundreds of thousands of students and alumni.

“We reached this decision only after having exhausted the exploration of alternatives, including transfer of the schools to a non-profit or public institution,” ITT said.

The company has been under investigation by government authorities for allegations of fraud and deceptive marketing tactics.

In August, the U.S. Department of Education banned the company from enrolling students who get federal aid.

ITT’s accrediting agency said in April that ITT Technical Institutes – which provide career-oriented education programs – had not demonstrated compliance with certain accreditation standards.

The for-profit education sector has been struggling with falling enrollment, poor job placement records and regulatory scrutiny.

ITT’s shares were halted in premarket trading.

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