Don’t Mislead Consumers, Not in Texas Anyway

by Scott Jangro on December 3, 2009


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Are you misleading consumers who visit your website? You don’t think so? I bet the guys at Intercept, LLC didn’t think so either. Or at least they didn’t worry about it.

Don’t Mess With Texas

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The Attorney General of the State of Texas, Greg Abbot, announced on Monday, Cyber Monday no less, that they’ve taken legal action against Intercept (and a second company, Everyprice.com) for misleading consumers.

The Charges

The issue is that these companies on several price comparison websites have represented to consumers that they are promising independent, reliable, and trustworthy information about online retailers when in fact retailers are paying for higher rankings.

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The charges are that these companies have misled consumers describing merchants as reliable and trustworthy while representing themselves as neutral and unbiased. They have been using words like “Trusted“, “Recommended“, “Lowest legitimate price“, and “Customer certified” to describe merchants when, as the attorney general asserts, these labels are in fact for sale not earned.

The Outcome

The prosecutors won an injunction.

According to Abbott, Intercept has agreed to cease this practice and pay $300,000 or cease business operations entirely in the State of Texas, which in practical terms means everywhere.

As such, Intercept has taken all of their websites offline, including Shopcartusa.com, Diduprice.com, Flyingprices.com, Digitalsaver.com and Pricingdepot.com. I guess $300,000 was too steep a price to pay.

How bad is bad?

I’d like to think that the offenses were egregious and deserving of such attention and prosecution. At the very least, they pissed someone off in Texas. Unfortunately, now that the sites are down, we cannot look to see exactly how the websites operated.

I don’t know if it is related, but searching the Google for “ShopcartUSA” turns up no shortage of consumer accusations of “scams” by this company. Case in point:

I would like to say that I was a naive consumer when I went online to purchase a Nikon D200. I could only wish I had come across this website before expending much time and frustration in my persuit of finding a low priced D200. Yes, I am guilty of going on ShopCartUSA and falling for the BS of the low priced merchants (all in Brooklyn I may add). (source)

Make enough enemies like this and I guess this sort of action is a disaster in the making.

Check Yourself

The lesson here is pretty clear, watch how you represent information on your websites.

On the surface, these accusations sound a lot like the sort of behavior that many (many) publishers may be toeing the line on (or crossing it) without even knowing it.

Watch the video of the press conference held in TX on Monday.

  • The crux of the charges seems to be

    "But online shoppers need to know that the Office of the Attorney General has charged multiple Web sites with unlawfully promising unbiased rankings while secretly accepting undisclosed payments for inflating sellers’ online ratings. "

    It seems what was presented as consumer-based ratings were really paid for.

    I agree with Scott that there are probably a good number of publishers doing this (or at least providing what appears to be consumer ratings but aren't really) & they should do a serious risk assessment when engaging in the practice.

    I know I've gone to I don't know how many affiliate sites and seen all merchants with a 5-star rating. Not just on shopping comparison sites either, but coupon sites and others.

    I'll see if I can get access to the court documents filed..maybe there are some screen shots are such of the sites to get a better idea of what exactly was happening on the sites.
  • The short-term scum strike again. The legitimate sites are self-policing, but the cheaters come in and leave a smudge on the space and may result in more legislation.

    Nice that they just took down some offenders in this case, rather than a CAN-SPAM approach that missed the bums and made things more burdensome for legitimate marketers.
  • I'd like to think that these guys are short-term scum, but I wonder how close to home the sorts of things they were doing is for many publishers who simply see what they're doing as optimizing for conversion.

    It starts with matching color schemes with adsense ads, making them blend with the site. The disclosure that ads are ads starts to become diminished. The word "Advertisement" becomes fainter and fades into the background. CTR goes up. More testing, words like "best price" is used, CTR goes up. At some point it crosses this blurry line into "misleading".

    The scum push the limits and raises the ire of consumers and government. But once they start looking, how far does it go.

    Scary if you ask me.
  • > I'd like to think that these guys are short-term scum...

    I guess short-sighted is more in line with their behavior.

    > The scum push the limits and raises the ire of consumers and government. But once they start looking, how far does it go.

    That's the crappy part - we can perform above board, and then we'll have to digest all of the regulations, because of these clowns.
  • IMHO, people should be scared by it. I worked for years in a very government regulated industry (health care). I witnessed first-hand the ramifications of attempting to comply with all the regulations as well as the fallout of "reform" and practice crack downs. I remember Medicare coming to town and inspecting a bunch of home health agencies. Within 48 hours, they had shut down over 50% of the agencies they had visited. Sure most of those were indeed engaging in Medicare fraud, but a lot of innocents paid the price as well (employees, those with true health care needs, etc).

    Over the years I've heard affiliates ask why increased government intervention in our biz would be a bad things (i.e. let the government catch the bad players). Then answer to that is 1) the industry-wide bad PR and 2) lots of babies get thrown out in the bath water

    It's a sphinctor tightening experience when the government descends upon you.

    I think as an industry there is still a lot of room for us to improve our own internal quality control.
  • > Over the years I've heard affiliates ask why increased government intervention in our biz would be a bad things...

    I cry a sad tear about this.
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