To eradicate a disease, treat the symptom, but eliminate the cause.
For the first time, when it comes to consumer data privacy, the US Federal Trade Commission is attempting to eradicate the cause.
The FTC just fined Career Education Corp $30M for the deceptive lead generation practices of the more than 70 marketing agencies it has been using off and on since 2012 to harvest consumer data for online lead generation.
This is the first time the FTC has gone upstream and held a client responsible for the marketing practices of lead aggregator. Career Education’s stock dropped 25% on the news.
By making Education Career Corp an example, the Federal Trade Commission message is telling marketers that they can no longer shirk responsibility by throwing their agency under the bus for unlawful lead generation services.
By going after the lead buyers, rather than the lead aggregators, the FTC’s regulatory posture is sure to get marketers thinking more carefully about online personal information collection practices.
But due to their limited jurisdiction, it remains to be seen just how effective the FTC’s enforcement action will go toward really ending illicit online lead generation practices.
You can’t cure a fatal disease like cancer by localizing treatment to a specific organ. Once it has metastasized, you have to treat the whole body, and the FTC can only police behavior inside the US.
If clients can get offshore lead generation firms to sign a contract releasing them of liability for their lead aggregator’s consumer data collection practices, stateside lead harvesting collection service providers will be replaced by companies beyond the reach of US and EU regulators.
My take is the FTC’s action will have minimal impact on illicit online lead generation. Asia and Russian-based data collection factories without similar protections in place will assume liability with impunity, and operate beyond the reach of western enforcement actions.
Perhaps a Social Media Compliance Training course update is in order?