Member Source Media, an online advertising firm, has agreed to pay $200,000 to settle charges by the Federal Trade Commission that it used deceptive junk e-mails and ads to lure users to its Web sites, in violation of the federal CAN-SPAM Act.
The agency claims that Member Source Media would send spam promising prizes such as a free iPod or a $500 Visa gift card. The company would also buy ads on Web sites informing users they had been chosen to win similar prizes, the FTC contends.
Upon clicking on the ads or the URLs embedded in the e-mails, users would be sent to Web sites offering them the promised products only if they browsed several pages of optional offers, the FTC reports. After doing this, the Commission says, the consumers were then told they must participate in third-party promotions "that require them to do things such as purchase products, subscribe to satellite television service or apply for multiple credit cards."
Under the settlement with the FTC, Member Source Media will pay a $200,000 civil penalty and will be required to "clearly and conspicuously disclose in its ads and on its promotional Web pages" that consumers must actually spend money before they receive their "free" product. The settlement also bars any future violations of the CAN-SPAM Act, which forbids the use of deceptive subject lines in promotional e-mails.
A Member Source Media spokesperson says the company is pleased it has reached a settlement but denies it sent any spam. The company says it has no idea who sent the e-mails and claims it did not authorize them. The spokesperson acknowledges the company was responsible for the Web ads that the FTC claims were deceptive, but maintains its ads were in compliance with federal regulations. The spokesperson also says the company is glad that the FTC is "clarifying" its regulations and emphasizes that Member Source Media is now complying with them.