Continuing its focus on potential dark patterns, the FTC has reached a settlement with the lead generation company Response Tree LLC and its president over allegations that the company ran sites that tricked people into opting into receiving marketing calls. The FTC brought the case arguing that the company had violated both Section V of the FTC Act as well as the Telemarketing Sales Rule (or TSR, which implements TCFAPA).
According to the FTC complaint, the company operated at least 50 websites that were designed to get people to provide their names, phone numbers and other contact details. That information was then packaged and sold as “leads” to third parties to market mortgage/refinancing products. According to the FTC, these sites did not get consent from consumers to be contacted by the seller (i.e., the purchaser of the leads) for marketing purposes as required by TSR. The sites also, the FTC alleged, “duped” people by, inter alia, getting alleged consent through “subterfuge” and/or “concealing key disclosures . . . in small text.” For example, listing its partners (the sellers) in small font on a page accessible only if a consumer clicked over to it.
Under the proposed order, not only have the company and its president agreed to a civil penalty of $7 million, but they have also agreed to a permanent injunction on their collecting and selling personal information for lead generation purposes. That injunction also extends to the company’s officers, directors and employees. The severity of this settlement reflects the FTC’s concerns with the activities in question, which resulted in the sale of millions of sold leads. The penalty has been suspended on the basis of an inability to pay. But, the FTC reports, it will become “immediately” due if the defendants are “found to have misrepresented their financial condition.”
Putting It Into Practice: This settlement is a reminder that the FTC is taking alleged dark patterns seriously. It also gives some guidance on what information gathering activities might be viewed by the FTC as deceptive. These include not making it clear what a consumer is agreeing to receive as a result of their consent, as well as making it clear to the consumer that the action they are taking is one that provides consent.