$30M Fine for Illicit Lead Generation to Push More Consumer Data Scraping Services Offshore

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To eradicate a disease, treat the symptom, but eliminate the cause.

For the first time, when it comes to consumer data privacy, the US Federal Trade Commission appears to be focusing on the cause.

The FTC just fined Career Education Corp $30M for the deceptive lead generation practices of more than 70 marketing agencies it has been using to scrape consumer data for online lead generation since 2012.

This is the first time the FTC has gone upstream and held a client responsible for the marketing practices of lead aggregator and Career Education’s stock price is down roughly 25%.

The way I see it, by making Education Career Corp an example, the Federal Trade Commission message is essentially telling marketers that they can’t throw an intern or an agency under the bus for unlawful lead generation services.

By going after the lead buyers, rather than the lead aggregators, the FTC’s regulatory posture is sure to get marketers thinking more carefully about online personal information collection practices.

But due to their limited jurisdiction, it remains to be seen just how effective teh FTC’s enforcement action will go toward really ending illicit online lead generation practices.

If clients can get lead generation firms to sign a contract releasing them of liability for their lead aggregator’s consumer data collection methods, we could see stateside information collection services dry up.

Meanwhile, online lead generation services would still be big for Asian and Russian-based data collection factories, since they can assume liability with impunity, and beyond the reach of US and EU enforcement actions.

I’m looking forward to hopefully hearing what attorneys Robert Freund and Rebekah S. Guyon think about this recent development this Tueaday at General Assembly.

Perhaps an update to my Social Media Compliance Training course is in order?

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