Last Friday, the Federal Trade Commission (FTC) hosted “Follow the Lead: An FTC Workshop on Lead Generation” in Washington DC. After a brief welcome by Katherine Worthman, Attorney with the Division of Financial Practices for the FTC, Jessica Rich, Director of the Bureau of Consumer Protection with the FTC set the stage for the day’s workshop. Although the FTC acknowledges that lead generation is ubiquitous and a long-standing practice to the benefit of both consumers and advertisers, the agency is now evaluating the trends in the marketplace and where lead gen has left the door open for scams and deceptive practices.
These concerns began 5 years ago when cases against pay-day lenders started to appear related to practices for phantom debt collection. Regulatory bodies have also investigated other fraud related to debt relief and inappropriate posting of sensitive consumer data such as detailed loan applications, banking information, social security numbers, birthdates, and other identifying information that is being openly sold or posted in the market.
The purpose of the workshop was to talk about standards, consumer protection concerns, lead gen best practices, legal applications, overall business practices, and ways to gain a better consumer understanding of today’s lead generation environment.
Lead Gen Industry and Mechanics
The morning sessions were dedicated to learning and understanding the lead generation industry and mechanics: From the creation and flow of a lead to the data management. Concerns and questions regarding misleading advertising, false statements and the storage of highly personal information were discussed.
Discussions focused on tools and processes that consumers and/or businesses could use to determine where and how their information was being used as well as the current disclosures and whether they are enough to protect the consumer.
As the workshop moved in to late morning and afternoon, the focused changed to how we manage the process, protect the consumer and if there was enough resources in the market place to give consumers as well as end users the tools to determine: 1) how their information was to be used; 2) if what they are buying the open market is accurate. In addition was there enough regulation? These sessions provided insights into lead gen in lending and education, consumer protection concerns and the legal landscape, and how best to protect and educate consumers.
Types of lead gen include search, pay-per-click (PPC), banner ads, email marketing and contact/call centers. Lead gen mechanics include data verification, data augmentation, lead scoring, the relationship between marketing partners, and channel controls (i.e., ensuring the advertiser can control where their offers appear).
When it comes to efficiencies in the space, panelists shared that international call centers that have generated leads in the past have largely been driven out as they’ve proven less productive to advertisers and less valuable to consumers. Likewise, selling leads to more than 2 parties has proven disruptive and with diminished return. Finally, using an opt-in standard where businesses are restricted from selling consumer data to marketing partners has proven restrictive for business.
Lending and Education
Within the lead gen lending space, privacy advocates have raised various concerns in efforts to protect consumer’s data. Whereas some identifying consumer information is required, some data may not need to be collected and may in fact fall under protected status through existing legislation. The concerns raised revolve around consumers who may not understand that their information is being distributed at various levels in the lead cycle, scored and/or augmented or aggregated with other information.
On the education front, there was discussion on whether schools or the lead intermediaries drive the relationship when securing leads and how the industry has self-imposed limiting or removing advertising from job-related web sites out of fear of regulatory oversight. Recent headlines have attracted attention to the fact that some education institutions have used deceptive practices to attract new students, many at the taxpayer’s expense, with little to show for positive outcomes. So who should be responsible for regulating the industry? Lead generators? Schools? Government regulatory bodies? Or through some form of self regulation?
When it comes to consumer protection, in many instances, government enforcement to date has been piecemeal. Whereas the CAN-SPAM Act and TCPA legislation has proven helpful in addressing email and call communications, respectively, many industry watchers implore the government for clearer standards and guidance to help advance the industry and protect consumers. Such guidance could help eliminate deceptive offers in the market and help schools advertise their products and services responsibly and transparently with prospective customers. Still, many believe that existing rules go far enough and better enforcement to eliminate deceptive offers is a more appropriate response.
“The overall feeling is there are enough regulations in the market and the majority of the business participants are taking measure to ensure disclosure and transparency,” said Greg Gragg, CEO of Blue Chair, LeadsCouncil advisory board member, and workshop panelist. “The feeling is there are still ‘bad actors’ in the space and through spider and marking tools we can determine where 99% of the information started and came from and what information was used to generate the interest.
Continuing on the topic of consumer protection, issues of compliance, fairness, lead buyer and seller responsibilities, and liability are all examples of concerns raised in recent legal cases brought to the industry primarily based on deception. Several speakers addressed the question of whether companies can contract their way around liability of how consumer data is used between marketing partners and that solutions such as using disclaimers simply are not enough to protect the consumer or protect the lead seller or advertiser. Whereas sometimes the context of the consumer data being gathered plays an important role in the value of a lead, that information can still have value and be dangerous in the wrong hands even if it no longer serves the direct needs of the lead intermediaries.
As lead gen has evolved, advertisers have become better educated by using analytics and metrics to find efficiencies and eliminate the bad actors in the process. Self regulation can work, has proven effective in other areas of commerce, and can adapt to market changes. Whereas some raise concerns that such practices do more to protect the vendors rather than the consumers, it becomes imperative for the lead generators to provide transparency at all stages of data collection and use. Finally, technologies exist to help audit and analyze the industry at scale.
“Each lead gen space is a little different. They share some similarities but establishing wholesale policy for lead gen is difficult,” said Greg Gragg. “Pay Day is different from traditional mortgage, which is different from Insurance, which is different from Education, which is different from funeral homes, which is different from home repair. The industry will need to tackle this issue.”