FTC Lawsuits Could Hit Before 201431 Jul, 2013 By: Doug McPherson
WASHINGTON – The Federal Trade Commission (FTC) could launch lawsuits by the end of the year against Internet search companies that disregard calls for objectivity and transparency in ads, says Marc Roth, partner in Manatt Phelps, and Phillips’ Advertising Marketing and Media Practice, and former attorney at the FTC.
Earlier this year, the FTC sent letters to AOL, Ask.com, Bing, Blekko, DuckDuckGo, Google, Yahoo and 17 others asking them to comply with updates and suggested they were committing unfair business practices. “The FTC will look for blatant disregard,” Roth told MediaPost last week.
Based on responses to the letters, the FTC will determine any violations of the law and – if violations exist – will file a complaint. Violators can settle financial penalties, get injunctive relief or go to court to fight charges. All this can happen within six months to a year after receiving the letter, Roth said.
Violations include not making it clear that ads served in query results are sponsored. The FTC suggests that some sponsored ads are not distinguishable from natural search results. The FTC issued guidelines to search engines in 2002, ensuring that they make a clear distinction between paid and organic listings, and recently updated the guidelines.
Roth said the FTC is serious and explained that Delta Airlines recently came under fire for not adhering to the California Online Privacy Protection Act.
Some believe consumers should take more responsibility for identifying the ads they click on, but Roth believes the answer lies with the consumer expectation that the search query results are fair and Yelp recommendations are honest.
“Once you start compromising an expectation you diminish the relevance of the site and the reliance of the Web for providing information,” he said. “As consumer confidence diminishes they stop using these sites.”