Are Your Pay-Per-Call Affiliates Opening You Up to Regulatory Risk? We Talk to the Experts at Fraud Posse

Jennie Scholick Mar 31, 2015

A few months ago, as part of our Lead Gen Series, we published a post about pay-per-call sites and the questions they can raise about where exactly those calls are going. In that post, we didn’t delve into the possible FTC and FCC violations that these kinds of ads can give rise to, so we’re going to do that today as part of our FTC Compliance Series!

Last week, I had the pleasure of sitting down for a chat with our friends over at Fraud Posse, Jaimie Pickles, President, and Dave Stafford, CEO to discuss how some pay-per-call lead generation publishers violate FTC regulations--opening their advertisers to incredible risk. They had some great insight into what’s happening in this advertising channel and what you can do about it.

TCPA Violations:

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As they explained to us, the most common violation they see is a TCPA violation. The Telephone Consumer Protection Act (TCPA) is a federal statute administered by the Federal Communications Commission (FCC). Passed into law in 1991 and updated in 2012, the TCPA now requires express, written consent for a specific seller to use an autodialer to call or text a consumer. This 2012 update also did away with the “established business relationship exemption. Since this update, there has been a general uptick in the number and kind of TCPA lawsuits filed.

What Jaimie and Dave often see is publishers presenting a search ad with a click-to-call extension--which are becoming increasingly important in mobile search and which we discuss at length in our Lead Gen Series post on Pay-Per-Call--that uses a Google Voice number, or other disposable phone number, which makes it much harder to trace this activity. These ads usually appear only for short periods of time, almost always masquerade as the brand itself—using brand terms and trademarks in their ad copy--and the numbers are quickly disconnected to make it harder to identify the perpetrator. When called, this fake number re-routes the consumer to a pay-per-call number, associated with an affiliate ID. Following that call, the publisher either texts or calls the consumer back—usually with a new phone number to call, an offer of some sort, or an advertisement.

In these cases, the publisher has not received written consent from the consumer, making any contact following the initial call illegal under the TCPA. Fines associated with these actions start at $1500 per text message sent and range from $4,500 to $16k per phone call made. When you account for the thousands of possible messages sent and calls made, those numbers add up very quickly. And, past precedent states that brands--the insurance companies, for-profit colleges, and home services brands, all of whom use lead generation publishers extensively--will be on the hook for these violations. While that is changing somewhat, and affiliate managers and publishers themselves are being increasingly held responsible for their actions, the bulk of the risk associated with these marketing tactics falls on the advertiser.

FTC Violations

But it can get worse. Jaimie and Dave also see a lot of leads being routed through call centers, a process that opens up a whole new realm of regulatory concerns.

In these cases, phone numbers--either collected through lead gen forms or by a consumer calling a click-to-call ad--are sold to or routed through telemarketing call centers. These call centers then use automated calling systems to contact these consumers. These kinds of robocalls are illegal per the Federal Trade Commission, which forbids auto-dialed calls without the consumer’s written permission. These systems route consumers through various publishers and advertisers based on spoken keywords, often resulting in consumers speaking to a company that is different than the one they originally meant to contact, either via a call or webform.

Because these call centers essentially “launder” these calls--creating distance between the original lead acquisition process and the delivery of that lead to an advertiser--it becomes nearly impossible to tell from where they got the number or what publisher it was routed through. As with TCPA violations, in most cases, the merchant is on the hook for these violations, and, if caught, FTC fines tend to be significantly higher than FCC ones.

What Can You Do?

One of the most important pieces of information that Jaimie and Dave shared was that it can be harder for brands to catch these kinds of publishers than traditional PPC affiliates, simply because the technology is older. While software like BrandVerity is capable of tracking links back to affiliates with (relative, if highly sophisticated) ease, nothing about phone lines are set up to allow this kind of tracking. That’s where Fraud Posse comes in: they can monitor this kind of behavior and trace it back to the responsible affiliate.

The legal assumption made by both the FCC and the FTC is that companies are tacitly aware, if not fully authorizing, this kind of behavior by their affiliates and publishers. That means the only way to protect yourself is to--as we always say--monitor, monitor, monitor. A thorough auditing process that makes the most of tools like BrandVerity and Fraud Posse--which can be used together-- allows you to eradicate (or vastly minimize) this behavior while also complying with FTC and FCC protocols regarding the proper maintenance of an affiliate or partner program.

If you’re interested in getting in touch with Fraud Posse for a demo or trial, you can reach them at (888) 840-8785. And as always, if you have questions or comments for us, leave them below or contact us at BrandVerity.

Topics: Marketing Compliance

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