By Ray Schultz
Lead generation is a key tool in today’s marketing arsenal. But it can, like anything, be misused, judging by a suit filed last week by the Federal Trade Commission.The FTC accused Expand Inc., which does business as Gigats.com, with claiming that it was screening job applicants for employers when it was really generating leads to sell to educational institutions.
The defendants have agreed to a court order, agreeing not to make such statements or transfer consumer information to third parties, according to the FTC. They will also pay $360,000 in lieu of a suspended $90.2 million judgment. The court still has to accept it.
Here’s how the scheme worked, according to the complaint filed by the FTC with the U.S. District Court for the Middle District of Florida.
First, the defendants told consumers that they would take their job applications and pre-screen them for employers.
However, Gigats was “not authorized by the prospective employers to collect applications, screen applicants, or interview them for those jobs,” the FTC complaint states. “Defendants do not pass along any information to the prospective employers about consumers who believe they have applied for the advertised position.”
The phone scripts used in some cases were clearly designed to generate information (“I’m an Employment Specialist here. My job today is just to ask you a few questions to determine if the position you applied for is going to be a good match for you.” But every word in them is false, if you believe the FTC.
What’s surprising is that Gigsats didn’t use these live calls to squeeze money out of consumers as far as I can tell: All they did was collect information. In some instances, they performed “warm transfers,” turning the person right over to a sales rep at a post-secondary school or career training program,” the FTC claims.
Consumers were also allegedly referred to an online program called SaleMaker, designed to lead people along and garner even more data. “Defendants misrepresent that by submitting their information on gigats.com or participating in the purported interview, consumers have applied or are applying for an open job position,” the FTC continues.
The defendants got from $22 to $125 for each qualified lead. “Defendants are not paid by the prospective employers; rather, their revenue comes primarily from selling consumers’ contact information as leads to educational institutions and others,” the FTC alleges.
There’s no indication in the complaint that the schools were bona fide educational institutions, so-called for-profit colleges or out-and-out frauds. At those prices, Gigats had to come up with an enormous number of leads.
The Gigats web site carries this proviso with a job as warehouse assistant at Energy Placement, Inc: “After registering you will be able to apply for this job directly on Energy Placement, Inc.’s site. Future job matches may be sent from Gigats approved job partners.” It’s not known if that will satisfy the FTC.
The site also offers contact preferences, including this one:
“I would like to be contacted by email, phone, and/or text at my cell number (listed above) using automated technology by Gigats or education partner Degree Search which may be provided my contact information for the sole purpose of discussing my education opportunities. My consent is not a requirement of any purchase. Message and data rates may apply. To unsubscribe at any time
We’ll see if the tweaks required by the FTC will clog the lead-generation process.
What’s the takeaway here? Possibly that you shouldn’t rent your leads out until they become customers. Or, at the least, don’t try anything like this. If the FTC charges are correct, Gigats violated all four principles in Aimia’s TACT guidelines (Transparency, Added Value, Control and Trust), to name only one set of privacy principles. Such rules are observed in some form by most reputable companies.