Firm to Pay FTC $250,000 to Settle Charges That It Used Misleading Online "Consumer" and "Independent" Reviews
FOR RELEASE
March 15, 2011
A company selling a popular series of guitar-lesson DVDs will pay $250,000 to settle Federal Trade Commission charges that it deceptively advertised its products through online affiliate marketers who falsely posed as ordinary consumers or independent reviewers.
The FTC complaint against Nashville, Tennessee-based Legacy Learning Systems Inc. and its owner, Lester Gabriel Smith, is part of FTC efforts to make sure that advertising to American consumers is truthful and not deceptive, whether the advertisements appear in traditional or newer forms of media.
The Learn and Master Guitar program promoted by Legacy Learning and Smith is sold as a way to learn the guitar at home using DVDs and written materials. According to the FTCs complaint, Legacy Learning advertised using an online affiliate program, through which it recruited Review Ad affiliates to promote its courses through endorsements in articles, blog posts, and other online editorial material, with the endorsements appearing close to hyperlinks to Legacys website. Affiliates received in exchange for substantial commissions on the sale of each product resulting from referrals. According to the FTC, such endorsements generated more than $5 million in sales of Legacys courses.
The FTC charged that Legacy Learning and Smith disseminated deceptive advertisements by representing that online endorsements written by affiliates reflected the views of ordinary consumers or independent reviewers, without clearly disclosing that the affiliates were paid for every sale they generated.