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Friday, 07 October 2016 16:56

Affiliate Marketing Network Liable For Deceptive Third Party Claims

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As a result of an action brought by the FTC, the U.S. Court of Appeals for the Second Circuit recently found LeadClick Media, LLC liable for false claims made by third party affiliate marketers, which drove traffic to LeanSpa, a maker of weight-loss supplements. As a result, LeadClick was ordered to pay $11.9 million for its part in helping to promote a deceptively marketed weight-loss supplement. This decision marks the first by a court of appeals, which holds the operator of an affiliate marketing network liable for the deception of third-party marketers.

In this ruling, the court found that Leadclick had recruited affiliate marketers who used fake review and news sites to drive traffic to the LeanSpa website. Notably, the court rejected LeadClick's claim of immunity under the Communications Decency Action Section 230, finding such immunity inapplicable, because LeadClick itself had participated in the development of the deceptive content. Specifically, LeadClick knew that the news sites were fake, and activately participated in creating the content thereon. 

For more on the case, visit https://www.ftc.gov/system/files/documents/cases/160923leanspaopinion.pdf

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Tony Guo

As a specialized technology counsel, Tony supports his clients in the high tech, creative, and online industries. His primary areas of practice include intellectual property protection, Internet law, and startups. Tony is a USPTO registered patent attorney, as well as a licensed lawyer in California and Florida. He comes from a background involving considerable hardware and software development experience, having worked in both development and IT roles in the tech and finance industries.

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