Advertiser settles 'test it, keep it' charges for US$650,000

US FTC settles case involving use of misleading ads offering free laptops, TVs and gaming systems

Online advertiser Adteractive will pay US$650,000 to settle charges that it used deceptive spam messages to lure people to its Web sites.

The company ran e-mail and Web ads offering free Sony Playstations, laptop computers, and even a US$1,000 check, implying that consumers had been selected as secret shoppers and would receive the free gear or cash after they tested the products, the FTC said in court filings.

The U.S. Federal Trade Commission (FTC) has been investigating this behavior, called "promotion-based lead generation," in the advertising industry for several years now. It is also taking a look at online advertiser ValueClick. It announced the settlement with Adteractive on Wednesday.

The Adteractive promotions contained offers such as, "Test and keep this flat-screen TV," and "Test it - Keep it - Microsoft Xbox 360," and "Congratulations! You've been chosen to receive a free US$1,000 check," the FTC said.

But actually collecting the freebies proved to be complicated. "After the consumer navigates [Adteractive's] 'optional' promotions -- often taking up five or six consecutive computer screens, each with multiple offers -- he or she eventually reaches a link that, when clicked, takes the consumer to the first of three tiers of offers in which the consumer must participate to obtain the free merchandise," the FTC said.

In order to get the really good prizes, consumers would have to do things like take out a one-year subscription to satellite TVs, or sign up for CD or DVD deliveries. "In most instances, it is impossible for the consumer to qualify for... free merchandise without spending money," the FTC said.

Founded in 2000, Adteractive was earning US$118 million in revenue in 2005, and boasted clients such as Blockbuster, Netflix, Club Med, BMG and Citibank, according to an article in the San Francisco Business Times.

The company has been cooperating with the FTC since 2006 and is happy with the settlement, which spells out how the company can run these promotions in the future, said Greg Wharton, Adteractive's general counsel.

Online advertisers now have better guidelines on how to present their promotions to consumers, Wharton said. "The FTC has offered some guidance on how to use the word 'free' in advertising," he said. "At the end of the day, we're actually pleased to get this resolved."

Adteractive expects that the FTC will soon announce several other enforcement actions, Wharton added.

Not everyone was happy with Wednesday's news. If the FTC really expects to deter this kind of behavior, it's going to have to levy higher fines, according to Ben Edelman, an assistant professor at Harvard Business School.

"Time and again, the FTC accepts settlements that let defendants retain a portion of their ill-gotten gains," he said in an e-mail interview. "Tougher requirements are needed in order to make sure defendants actually regret their infractions, and to prevent others from turning to these ill-advised strategies."

The Adteractive promotions that caught the FTC's attention were run using the and domains. On Wednesday, both Web sites featured prominent displays for Sony Playstation Portables. The price? "Free... with purchase."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Robert McMillan

IDG News Service
Show Comments


James Cook University - Master of Data Science Online Course

Learn more >




Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?