If you’re deceiving consumers, the FTC means business: exploring the recent settlement with MediaAlpha

Are you a collector of lead data, a seller of leads, or a purchaser of leads? There’s something for you in today’s FTC settlement with MediaAlpha. The FTC alleges that the online lead generation company misled consumers interested in health insurance into sharing personal information MediaAlpha then sold to telemarketers. As a result, consumers were allegedly bombarded with millions of illegal robocalls, live telemarketing calls, and other unlawful sales tactics.

So how did MediaAlpha draw people in and get them to turn over their contact information? The FTC asserts the defendants used false or misleading social media, paid search, and other ads that faked an affiliation with the government and claimed they provided online quotes for supposed low-cost, comprehensive health insurance. In fact, according to the FTC, MediaAlpha knew its telemarketing partners rarely offered the coverage MediaAlpha advertised and instead sold consumers very different products that covered much less than was promised.

Companies must make truthful and substantiated claims about the products and services they market. To settle allegations that they violated the FTC Act, the Telemarketing Sales Rule, and the Rule on Impersonation of Government and Businesses, MediaAlpha will pay $45 million. MediaAlpha is also barred from misrepresenting that the products they market are affiliated with nonexistent government-approved programs or offer benefits that MediaAlpha hasn’t verified.

The upshot for MediaAlpha — and others in the lead-generation industry — is a lesson in some well-established compliance issues: 

The FTC enforces laws that apply to lead generation, including the FTC Act, the Telemarketing Sales Rule, and the Rule on Impersonation of Government and Businesses. Violating these laws could lead to serious liability — including civil penalties and consumer redress.

Lead generators should tell the truth when they collect consumers’ information. It’s illegal to make false or misleading claims about your identity and affiliations, how a consumer’s information will be used, or what consumers will get if they provide their information.

Lead generators should avoid assisting or facilitating others’ Telemarketing Sales Rule violations. If a company knows or consciously avoids knowing of a partner’s unlawful conduct, but still provides substantial assistance or support, that can be a TSR violation. A company can’t avoid responsibility for deception it facilitates by intentionally burying its head in the sand.

A priority at the FTC is coherently and systematically addressing unlawful lead generation. Businesses should know the FTC will take action when lead generators break the law, engage in unlawful deception, and harm the American people.