Does Google Need to Police Its Ads for Fraud?


Do Google and other search engines have an obligation to screen their advertisers for those who may be perpetrating consumer fraud?

Google has said in the past that its AdWords Content Policy will reject advertisements for sites that make false claims and that it investigates and removes any ads that violate Google’s internal policies, but a recent letter sent by a public interest group to the Federal Trade Commission may prompt new interest in this issue.

In the letter sent to the FTC on February 8, 2011, the group Consumer Watchdog contended that Google and other search engines have essentially been acting as accomplices in consumer fraud. The letter specifically noted recent FTC probes into alleged mortgage scammers that prey on struggling homeowners seeking to avoid foreclosure. According to the group, Google has turned a blind eye to their doings and has facilitated the alleged frauds. In the past, however, no federal agency has attempted to hold a search engine responsible for frauds committed by its advertisers.

Recently, more than 25 foreclosure rescue marketers have been sued for deceptive advertising by the FTC, which is conducting a major investigation under “Operation Stolen Hope.” Consumer Watchdog claims that Google has been lax in preventing fraudulent advertising and is profiting from the deceptive marketers that pay thousands of dollars for prime advertising space on the search engine. Some of the ads in question can be found by using search terms such as “stop foreclosure” or “loan modification.” A “cost per click” for these search terms can cost upwards of eight dollars, meaning that advertisers pay Google that amount every time someone searches that term and clicks on that ad. This translates into a big payday for Google given the thousands of times per month people search those terms.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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