WASHINGTON, DC — Google has become a leading purveyor of ads by scammers who prey on struggling homeowners, according to a study released today by Consumer Watchdog, and the nonpartisan, nonprofit public interest group has asked the Federal Trade Commission to stop the Internet giant from hosting the ads.
“Because Google so far has turned a blind eye to these fraudsters, perhaps because of the substantial revenue such advertising can generate, we ask that the FTC investigate Google’s role as a facilitator of deceptive and fraudulent advertising and act to prevent the Internet giant from continuing its harmful behavior,” wrote John M. Simpson, director of Consumer Watchdog’s Inside Google Project, in a letter to FTC Chairman Jon Leibowitz.
Read the letter here: http://www.consumerwatchdog.org/resources/ltrleibowitz020811.pdf
The Consumer Watchdog study found that many foreclosure rescue firms advertising on Google falsely imply they are affiliated with the U.S. government, while others are the subjects of current or previous fraud allegations.
Other firms are merely fronts for marketers who seek to violate the privacy of consumers by persuading them to provide personal financial information that is then resold to other Internet marketing companies.
Read the study here: http://www.consumerwatchdog.org/resources/liarsandloansplus021011.pdf
Consumer Watchdog also called on Google to stop hosting all misleading advertising and to make amends by donating revenue from these ads to assist consumers who have been victimized by fraudulent mortgage modification and credit repair companies.
The report made five recommendations:
– Google should be more diligent in screening advertising in areas such as mortgage modification and credit repair where fraud is known to be a serious problem. If the company finds that screening ads is not feasible, it should ban all advertising in areas where regulatory agencies have shown that fraudulent advertising is endemic.
– Where fraud is a known problem but legitimate firms also operate, Google should use its advertising techniques to post public service ads that counter deceptive ads. For example, if a loan modification ad refers to the federal government, a Google-sponsored disclosure statement should appear prominently alongside to warn consumers that they should be wary of mortgage lenders using such terms.
– Google should initiate and help set industry-wide standards to prevent fraudulent advertising on the Internet.
– Google should donate revenue it has received from questionable financial advertising to non-profit groups that help consumers with credit problems, including homeowners seeking to avoid foreclosure.
– The Federal Trade Commission should begin using its legal authority under the Lanham Act to seek injunctions against search providers who accept large inventories of advertising from firms they have reason to believe are engaged in deceptive practices.
Google charges top dollar to “foreclosure rescue” firms for advertising keywords that help them lure desperate homeowners, according to Google’s own data.
Foreclosure rescue sites advertised on Google make numerous false or misleading claims and many seek to harvest personal financial information of consumers for resale to marketers, the study found.
Federal and state officials say thousands of homeowners have been victimized by companies falsely promising to modify onerous mortgages.
“Unfortunately, once most of these foreclosure fraudsters take your money, you lose your home, too,” the Federal Trade Commission warns.
FTC alerts about rampant fraudulent advertising by such firms have gone unheeded by Google and other search advertising firms such as Bing and Yahoo! Google, the study found, typically rejects advertising with dubious promises of mortgage help only after regulatory authorities have taken action against the companies.
“Google’s willingness to accept such obviously deceptive advertising is the problem,” Simpson wrote in the letter to the FTC. “The company must take a proactive role in preventing deceptive ads that prey on vulnerable consumers.”
Consumer Watchdog has been working to protect consumers’ online privacy rights and educate them about the issues through its Inside Google Project. The goal has been to convince Google of the social and economic importance of giving consumers control over their online lives. By persuading Google, the Internet’s leading company, to adopt adequate guarantees, its policies could become the gold standard for privacy for the industry, potentially improving the performance of the entire online sector.
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Consumer Watchdog, is a nonprofit, nonpartisan consumer advocacy organization with offices in Washington, DC and Santa Monica, Ca. Consumer Watchdog’s website is http://www.ConsumerWatchdog.org. Visit our new Google Privacy and Accountability Project website: http://insidegoogle.com.