LeadClick Media, an affiliate network based in the US, has been ordered to return $16 million in revenue by a US district court following the granting of a request by the Federal Trade Commission (FTC).
The charge relates to money obtained via a ‘deceptive’ promotion involving LeadClick Media, its parent company CoreLogic and LeanSpa, a provider of weight-loss products.
According to a prior ruling from the FTC, LeadClick Media and its affiliates promoted the sale of acai berry and “colon cleanse” weight-loss products via phoney websites which were made to appear as genuine news portals.
Consumers were also asked whether they’d like to pay $79.99 per month for a “free trial” of certain products, which they found hard to cancel.
The FTC has already asked LeanSpa to refund customers that acted upon the claims, and a new court order suggests the bulk of this will come from the money made by LeadClick and its partners.
The court was asked to look through a complaint by the FTC which related to a cunning way of promoting LeanSpa items through fake news websites.
LeadClick was deemed to have targeted potential customers by hosting LeanSpa content on fake “news outlets”, complete with reviews made by employees of the network. This tricked consumers into thinking they were taking in recommendations from genuine news sites and buyers, which was not the case.
While it was up to the affiliates to promote the items, notes from the court found LeadClick to be firmly in the wrong. This was based on factors such as the network’s active recruitment of fake news affiliates and its ability to provide feedback on some of the content that was published.
As a result, the company must pay back the $12 million it received from LeanSpa for its services along with $4 million which made its way across to CoreLogic.
Millions in losses
While the charge would seem high for gains made by a single affiliate programme up until 2011, the FTC estimates that $25 million was made in attracting customers to LeanSpa products.
Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said: “This ruling is good news because it takes ill-gotten gains out of the hands of companies who knew they were promoting a scam and gives them back to the consumers who lost millions of dollars.
“It also makes clear that a parent company cannot retain ill-gotten gains of its subsidiaries.”
A total of 449,044 claim forms have been addressed to customers who may have lost money from the promotion, with the FTC using Rust Consulting to manage the claims admin process.