Facts

ITMedia Solutions LLC represents clients in the finance and other industries providing management and consulting services. Their expertise includes lead generation, search engine marketing and customer experience design. Lead generation is a method of sales and marketing that is initiated after a company sends a communication soliciting action from a user and is considered a substitution for cold calling a prospect. In other words, it is used as part of a company's effort to transition a customer from a visitor of a website to an avid buyer and user of the product. Some of ITMedia's sites represent that they find loans for consumers who complete an online form that ITMedia has described as a loan application or request. These sites include: badcreditloans.com; borrowspot.com; mobileloans.com; personaloans.com; burstloans.com; mypaydayloans.com. The Federal Trade Commission (FTC) filed a complaint against ITMedia, along with its related companies, owners and officers.

PLAINTIFFS' CONTENTIONS: Plaintiff FTC contended that defendants including ITMedia, violated provisions of the Fair Trade Commission Act, Fair Credit Reporting Act (FCRA) and others, through its deceptive, unfair and unlawful acts and practices in pursuit of their lead generation activities. ITMedia has operated at least 200 internet sites where it posted advertising that targeted consumers seeking online payday loans, consumers with poor credit, and consumers seeking personal and installment loans for as much as $35,000. To induce consumers to complete loan applications, ITMedia published websites that assured consumers that it would share the information provided by consumers with only qualified trustworthy loan providers and only share consumers' information to find a loan. Instead, 84 percent of the loan applications collected through these websites were sold, not to lenders, but instead to marketers, debt relief, credit repair sellers and other companies that would resell consumers' information without regard for how the information would actually be used. For example, ITMedia sold consumers' information to a group of companies that were sued by the FTC for marketing payday loan products that overcharged consumers by tens of millions of dollars. ITMedia's "indiscriminate" selling of consumer data was substantial, putting consumers at risk for identity theft and scams. Not only did ITMedia mislead consumers and sell their data without permission, it also violated the FCRA by unlawfully obtaining and reselling the credit scores of consumers who submitted that information since using scores to market leads is not a permissible purpose under the Act.

DEFENDANTS' CONTENTIONS: Defendants neither admitted nor denied any of the complaint allegations but for what was specifically stated in the proposed settlement order. ITMedia contended that it was unaware for what purpose companies were buying consumers' data and that it was an intermediary, connecting businesses and consumers who would fulfill each others' needs.

Result

According to the proposed settlement order, ITCMedia will pay $1.5 million in civil penalties and is prohibited from making misleading statements to consumers. The order further prevents it from selling consumers' personal information outside of a limited set of circumstances, requires them to screen the recipients of that information, and details other compliance reporting and recordkeeping requirements.