Online Advertising, Affiliate Marketing Compliance and Fraud with Pace Lattin

Tag archive


Krispy Kreme Facing Federal Lawsuit for Not Being Nutritious.

in News by

Occasionally there is that lawsuit that makes you realize the legal profession might have a little too much time on their hands. According to court documents, Krispy Kreme is facing a class-action lawsuit filed in Los Angeles federal court Wednesday by a former customer who says the doughnut chain is guilty of false advertising and fraud because some of its supposed fruit-filled and maple-glazed products are made with “nutritionally inferior ingredients.”

Yes, the 32-page complaint  filed in U.S. District Court for the Central District of California this week on behalf of Jason Saidian, said he wouldn’t have bought the doughnuts if he didn’t know they were healthy and not nutritious.

“Unbeknownst to Plaintiff and other consumers, the Raspberry Products do not contain actual raspberries, the Maple Products do not contain actual maple syrup or maple sugar and the Blueberry Products do not contain actual blueberries,” the lawsuit reads.

Let’s clear this up: Doughnuts aren’t health food.


FTC Hammers Operators of Money-Making Opportunity Telemarketing Scheme

in News by

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.

AOL Caught Partnering with Fraudulent Banner Farm

in Analysis by


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

in News by

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.

Lack of Standing Results in Dismissal of TCPA Suit

in News by

A federal district judge in California recently ruled that a TCPA plaintiff lacked standing to bring her TCPA claims because she failed to set forth evidence that she suffered an injury-in-fact with respect to each telephone call. The matter is Romero v. Department Stores National Bank, et al., No. 15-CV-193 (S.D. Cal. Aug. 5, 2016).

In Romero, the plaintiff alleged that the defendant, a creditor that attempted to call the plaintiff on her cell phone number after she failed to make payments on her credit card, was responsible for initiating approximately more than 300 telephone calls to her cell phone via an automatic dialing system. The plaintiff only answered a few of the calls, yet alleged that she suffered “severe and substantial emotional distress.”

The defendant moved to dismiss, based in large part upon the recent ruling by the Supreme Court in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (A statutory violation alone is not sufficient to establish the injury-in-fact requirement of Article III. If the defendant’s actions would not have caused a concrete, or de facto, injury in the absence of a statute, the existence of the statute does not automatically give a plaintiff standing).

In response, the plaintiff asserted that the harm suffered was grounded in privacy and the aggravation associated with unwanted telephone calls. The court disagreed, stating that “one singular call, viewed in isolation and without consideration of the purposes of the call, does not cause any injury that is traceable to the conduct for which the TCPA created a private right of action, namely the use of an ATDS to call a cell phone.”

The court found that the plaintiff was unable to establish evidence that the use of an ATDS by the defendant “caused her greater lost time, aggravation, and distress than she would have suffered had the calls she answered been dialed manually, which would not have violated the TCPA.”

According to the court, distress related to telephone calls could potentially be an injury-in-fact to establish standing, so long as the harm has a nexus with the each specific call. The argument being, the plaintiff could not connect an injury to telephone calls that were not answered. Thus, standing could only potentially exist for the small handful of calls that were actually answered

This defense-oriented decision based upon Article III standing for each individual call is a small victory for marketers.

Please contact an advertising compliance lawyer if you are interested in discussing the design and implementation of telemarketing campaigns, or if you are the subject of a telemarketing related investigation or enforcement action.

Richard B. Newman is an Internet law, online marketing compliance, telemarketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing and defending clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, complex commercial litigation defense, SPAM law compliance and litigation defense, intellectual property transactional and litigation matters, 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.

Exchange Wire: Fraud Protection from Impact Radius Works

in Analysis by

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

in News by

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.

ITT Shuts Down After Defrauding Students and Losing Accreditation

in News by

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.

Go to Top