There’s been a lot of focus in the $800,000 Spokeo settlement with the U.S. Federal Trade Commission (FTC) on alleged violations of the Fair Credit Reporting Act (FCRA).
However, it’s important to note that the FTC also went after Spokeo for purportedly engaging in deceptive trade practices with regard to endorsements. This is a big no-no, particularly after the FTC’s revised guidelines concerning endorsements and testimonials went into effect on December 1, 2009.
Here’s what the FTC had to say about Spokeo endorsement issue…
The FTC also alleged that Spokeo deceptively posted endorsements of their service on news and technology websites and blogs, portraying the endorsements as independent when in reality they were created by Spokeo’s own employees. In addition to imposing the $800,000 civil penalty, the FTC’s settlement order bars Spokeo…from making misrepresentations about its endorsements or failing to disclose a material connection with endorsers.
As an Internet lawyer, I see this issue all the time even though the FTC has made it clear that you can’t engage in a campaign of deceptive endorsements and testimonials. Expect the Federal Trade Commission to continue making examples until companies finally “get it” that such misbehavior is anti-consumer.