FTC Orders Online Advertiser To Pay $200,000

    January 30, 2008

The Federal Trade Commission has reached an agreement with Member Source Media, an online advertising company for its use of spam emails with misleading subject lines that failed to disclose to consumers that they would have to spend money to receive "free" items.

Federal Trade Commission

The settlement requires Member Source Media to disclose the costs and obligations for the advertised products and bans them from sending email that violates the CAN-SPAM Act. The company must also pay $200,000 in civil penalties. That amount is quite a bit less than the $650,000 Adteractive had to shell out in a similar settlement back in November.

According to the FTC, Member Source Media, doing business as ConsumerGain.com, PremiumPerks.com, FreeRetailRewards.com, and GreatAmericanGiveaways.com and the company’s owner, Chris Sommner, used deceptive spam and online advertising to attract people to its Web sites. For example, Member Source Media used e-mail subject lines such as, "Congratulations. You’ve won an iPod Video Player"; "Here are 2 free iPod Nanos for You."

When people visit the company’s Web sites they have to go through a series of ads from third parties to "qualify" for their "free products." Then they must "participate in" a number of third-party promotions that require them to do things such as purchase products, subscribe to satellite television or apply for multiple credit cards.

The settlement requires that Member Source Media clearly disclose in its ads that people have to spend money or commit to other obligations to qualify for a free product or service. The settlement also requires the company to provide a list of what a person will have to do for their chosen item.