A US federal court has upheld a ruling that affiliate marketing network LeadClick must pay out $11.9 million taken from “deceptive marketing”, stemming from its connections to a number of fake news sites promoting weight-loss products.
In response to a request made by the Federal Trade Commission (FTC), the court found San Francisco-based LeadClick responsible for false claims made by affiliate marketers on behalf of LeanSpa, LLC – a company selling acai berry and “colon cleanse” health products.
“LeadClick knew that deceptive false news sites were prevalent in its affiliate marketing network, directly participated in the deception, and had the authority to control the deceptive content of these fake news sites,” the panel wrote.
“LeadClick’s own actions – recruiting and paying affiliates who used fake news sites for generating traffic, managing those affiliates, suggesting substantive edits to fake news pages, and purchasing banner space for fake news sites on legitimate news sources – caused significant harm to consumers.”
Five-year case
The case dates back to 2011, when the FTC charged LeanSpa with publishing fictional news articles about acai berry and other products. Affiliate marketers on the network were reported to have created fake news sites – including ‘dailyhealth6.com’ – where articles were posted with titles such as “Acai Berry Diet Exposed: Miracle Diet or Scam?”.
In some cases, the deceptive nature of the sites was further shrouded with the use of logos from major news networks.
According to the FTC, the issued complaint stated that LeanSpa reeled in customers with a “free trial ploy”, before enrolling them into a recurring purchase programme that cost $79.99 a month, that was “difficult” to cancel.
It wasn’t until 2012 that LeadClick was named as a defendant in the case, eight months after charges had been brought against LeanSpa and other defendants.
LeadClick and parent company CoreLogic’s attempts to appeal against involvement with the production of fake articles resulted in the court disbanding the latter from the case, while ruling that LeadClick “caused significant harm” through its involvement with the scheme.