LIARS AND LOANS: HOW DECEPTIVE ADVERTISERS USE GOOGLE

LiarsandLoans:HowDeceptiveAdvertisersUseGoogle

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TableofContents

1. ExecutiveSummary

2. GoogleProfitsFromFraudulentAdvertising

3. Google’sMarketinDeceptiveAdWords

4. TheDebtSettlementandCreditRepairIndustry

5. InDepth:We’refromtheGovernmentandWe’reHeretoHelp(NotReally)

6. InDepth:HarvestingYourPersonalFinancialData

7. InDepth:USMortgageBailout

8. LeadGeneratorsPoseasLoanModificationAdvertisers

9. Google’sResponsibility

10. ConclusionsandRecommendations


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1.ExecutiveSummaryGoogle has been a prominent beneficiary of the national home loan andforeclosurecrisisofthepasttwoyears.Thegiantsearchenginecompanyhasprofited by accepting deceptive advertising from fraudulent operators whofalsely promise unwary consumers that they can solve their mortgage andcreditproblems.

Fraud iswidespreadinthemortgagemodificationindustry,accordingtotheFederalTradeCommissionandinvestigationsbytheattorneysgeneralofNewYorkandotherstates.Yetmanyofthesecompaniespaythousandsofdollarsforprime advertising space on Google searches. While Google has a policyprohibiting deceptive advertising, that has not kept Google from acceptingmisleadingads.Indeed,Googlehasbecomeoneofthenation’slargestoutletsfordeceptiveadvertising.

Sofar,GoogleandothersearchenginesaregettingapassfromtheFTC,whichhas opted not to use its legal authority to seek injunctions against searchproviderswhorundeceptiveads.Instead,theagencyhasadoptedawhack‐a‐molestrategyofpursuingscurrilousforeclosureandcreditrelieffirmsonanindividualbasis.Asdetailed intheconclusionsandrecommendations in thisreport,theFTCneedstoadoptamoreeffectiveapproachtargetingGoogleandothersearchenginesthat supply theoxygentothesedeplorable fly‐by‐nightoutfits.

In a detailed review of Google’s advertising practices, ConsumerWatchdogfound that Google typically drops questionable advertisers onlyafter thesecompanies are sued by federal regulators. Even then, Google allows othercompaniestocontinuemakingsimilardeceptiveclaimsintheiradvertising.

Thehomeloanmodificationbusinessisanoffshootofthecreditrepairindustry,which also preys on consumers facing financial difficulty. Federal and stateregulators have found that the credit repair industry also is riddled with


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fraudulentpractices.Nevertheless,thesefirmsareanotherprofitablesourceofadvertisingrevenueforGoogle.

Some loan modification ads on Google falsely imply that the companies’financial products are endorsed by President Obama and the federalgovernmentorbynewsoutletssuchasCNNandUSAToday.Otheradsseektocollecthomeowners’financialinformationandsteerthemtocompanieswithquestionablelendingpractices.

Googlepridesitselfonitsmotto,“Don’tbeevil.”Butitsadvertisingpracticescallintoquestionwhethermisleadingadsaresuchaprofitablesourceofrevenuefor Google that the company has adopted lower standards and relaxed itsoversightforitsadvertisingbusiness.

Asthemarketleader,GooglesetsthestandardforInternetsearchcompanies.Itslaxityinpreventingfraudulentadvertisinghascreatedanenvironmentinwhich other search engine companies can feel safe in adopting the samequestionablepractices.

ConsumerWatchdogcallsonGoogletohaltallmisleadingadvertisingandtomakeamendsbydonatingrevenuefromtheseadstoassistconsumerswhohavebeenvictimizedby fraudulentmortgagemodification andcredit repaircompanies.


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2.GoogleProfitsFromFraudulentAdvertising

FormillionsofAmericanswhoarefacingforeclosure,thesearehardtimes.ForGoogle,suchfinancialmiseryisanopportunitytosellads.

OnGoogle'ssearchengine,typein'stopforeclosure','loanmodification,'oranyoneofadozenotherhousing‐distressrelatedtermsanduppopsaslewofadsfromcompaniespromisingtohelpyoumodifyyourmortgage,oftenforanup‐frontfeethatisnotinitiallydisclosed.

This is an industry plagued by fraud. More than 25 foreclosure rescuemarketershavebeensued fordeceptionby theFederalTradeCommission,which is conducting a major investigation of the industry called OperationStolenHope.

“Manyso‐calledforeclosurerescuecompaniesorforeclosureassistancefirmsclaimtheycanhelpyousaveyourhome.Somearebrazenenoughtoofferamoney‐back guarantee," the FTCwarns. "Unfortunately, oncemost of theseforeclosurefraudsterstakeyourmoney,youloseyourhome,too.”1

DuringtheprimarystudyperiodofSeptember10toSeptember30,2010,atleast20companiessellingforeclosurerescueor"mortgagemodification"werepayingGoogletoruntheiradvertisementsnexttoitssearchresults.Everytimesomeoneclicksonanad,Googlegetsafee,fromafewcentstoafewdollars.

ConsumerWatchdog researched each of these advertisers andmade thesefindings.

• Ten advertisers imply they are affiliatedwith the U.S. government orengageinotherpracticestheFTChaslabeleddeceptive,suchasclaimingtobenonprofit.

1http://www.ftc.gov/bcp/edu/microsites/moneymatters/your‐home‐foreclosure‐rescue‐scams.shtml


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• At least seven have been accused by consumers of fraud in Internetpostings.

• Three of the sites require consumers to buy Experian credit reportsbeforereceivingadviceorhelp.2

• OnesiteisaffiliatedwithalawyerwhosettledpriorfraudchargeswiththeFTC,whileanotherisrunbyamanwithaciviljudgmentrecordforspamming.

• At least five sites collectpersonal financial information and then referhomeowners elsewhere, a practice known as "lead generation" thatraisesprivacyanddeceptionconcerns.

• Fivesitesfalselyclaimtoassesstheeligibilityofconsumersforforeclosurereliefbyanalyzingtheirfinances.

• TwocarryfakeVeriSignsecuritylogos.3

Inaddition,twomortgagemodificationfirmsthatwereidentifiedbyConsumerWatchdog earlier in 2010 as Google advertisers were recently put out ofbusinessbytheFTC.

ManyofthesefirmsarebasedinCalifornia,oneofthestateshardesthitbythemortgagecrisis.TheepidemicoffraudinthisindustryledCaliforniain2009toenacttheMortgageForeclosureConsultantAct,whichprohibitstakingadvancefeesandrequiresmarketerstoregisterwiththestate.

Despite numerous publicwarnings by the FTC about deceptive foreclosurerescueadvertisers,thisstudyfoundthatGoogletypicallydropssuchadvertisersonlyaftertheyaresuedbytheFTC.OtherGoogleadvertisersmakingclaimsvirtually identical to the claims that the FTC says are fraudulent are stilladvertisingonGoogleasofthereleaseofthisreport(examplesbelow).

ThemortgagecrisisgeneratessubstantialadvertisingforGoogle. 2http://www.freemortgagemodification.org,freefedloanmod.com,andwww.loanmodme.org.3VeriSignlogosaresimpletoauthenticate.http://www.ehow.com/how_4797654_verify‐verisign‐certificate.html


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AccordingtoGoogle'sownanalyticaldata,therearemorethan74,000searchespermonthfortheterm"stopforeclosure"andthecurrent"costperclick"tobuythatsearchtermis$8.29.Inotherwords,advertisersmustpaythatamounttoGoogle every time a Google searcher clicks on their ad aimed at desperatehomeowners.

Google peddles its wares via a website, https://adwords.google.com, whichcontainsbothaKeywordTooltocheckspotpricesonthekeywordmarketandTrafficEstimatorsothatadbuyerscangaugewhatresultstheymightget.ThesefiguresshowthatGoogleroutinelysellsavarietyof“foreclosurerelief”searchterms,becausethehighpriceGooglequotesisamarketratebasedonsupplyanddemand:Advertisingkeywordsareauctionedtothehighestbidder.Atthecurrentaverageof31clicksperday,Google’sdataalsoshows,theestimatedcost of buying this search term and receiving a premiumposition near thesearchresultswouldbe$266aday.

IfjustthreeloanmodificationcompaniesadvertisewithGoogleat$266adayfortheterm"stopforeclosure,"Googlegrossesover$5,500aweek.Whilethatmay seem like a modest haul for a giant ad firm, advertisers buymultiplekeywordsandthereareatleast20mortgagemodificationadvertisersatanygiventime.

Inaddition,areviewofvariousmortgagemodificationsitesshowsthatGooglealsosellsadstotheindustrythroughitsAdSensedivision,includingonecalledtheFairHomeLoanBureau, "ESTABLISHEDTOPROTECT&DEFENDTHEAMERICAN PEOPLE from UNFAIR MORTGAGES" (www.fairhomeloan.org).The site is a typical example of howmortgage modifiers try to foster theimpression theyaresomesortofofficialornonprofitbodycreated toassistconsumersasopposedtoprofitingfromtheirwoes.

Googledoesnotdisclosehowmuchitmakesfromindividualadvertisersanditisdifficulttoreliablyestimateitsrevenuesfromanyparticularsetofkeywordswithoutaccesstointernalcompanydata.


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Google’s practice is troubling because the Federal Trade Commission hasrepeatedlywarnedthatmanymortgagemodificationservicesarenothingmorethan"insidiousfraud,"asChairmanJonLeibowitzputitin2009.4

Under the federal Lanham Act, newspapers, television networks and othercommunications mediums ‐‐ including Internet advertising firms – areresponsibleforthecontentofadstheypublishorair.Federallawalsoprohibitsadvertisersfromengagingin"unfairordeceptiveactsandpractices."

Google says it does not knowingly permit false claims by its advertisers,includingcompanies thathelpwithdebt settlement. “OurAdWordsContentPolicydoesnotpermitadsforsitesthatmakefalseclaims,andweinvestigateandremoveanyadsthatviolateourpolicies,”GooglespokesmanAaronSteinsaidrecently.5

Thisisnotanewposition.

"Whenwebecomeawareofdeceptiveads,wetakethemdown,"acompanyspokesmandeclaredin2006.6

YetGooglehasalsotacitlyacknowledgedcontinuingproblemsbymakingmorepolicychanges,suchasthisannouncement:

Miracle Cures

The AdWords policy relating to miracle cures and false health claims will be updated around the middle of July. The policy is changing to prohibit false medical claims and require advertisers to more clearly distinguish herbal supplements from prescription drugs. The change will affect all countries. After the new policy goes into effect, the relevant

4http://www.ftc.gov/opa/2009/09/loanmods.shtm5http://www.creditcards.com/credit‐card‐news/obama‐government‐debt‐bailout‐program‐scam‐1282.php6http://www.informationweek.com/news/internet/search/showArticle.jhtml?articleID=193105731


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policy description will be updated to reflect this change. (Posted on July 9)7

Whilesuchpolicystatementsareclearlywellintentioned,theybegthequestionofhowmucheffortGooglereallyhasputintoscreeningitsadvertisers.

"ReadGoogle'svoluminousAdwordsContentPolicy,andyou'dthinkGoogleisawfullytoughonbadads,"wroteBenEdelman,aprofessoratHarvardBusinessSchool, in a 2006 study. "If your company sells illegal drugs, makes fakedocuments,orhelpscustomerscheatdrugtests,youcan'tadvertiseatGoogle.Googlealsoprohibitsadsforfireworks,gambling,miraclecures,prostitution,radardetectors,andweapons.Whatkindofscamcouldgetthroughruleslikethese?"

YetEdelmanwenton to identifya largenumberofGoogle advertiserswhodon'tmeetthesestandards:

"Asitturnsout,lotsofpay‐per‐clickadvertiserspushandexceedthelimitsofethical and legal advertising ‐‐ like sellingproducts that are actually free, orpromising their services are ‘completely free’ when they actually carrysubstantialrecurringcharges."8

AsEdelmannotes, theLanhamAct specificallyprovides for injunctive reliefagainstpublisherssuchasGooglefordistributingfalseadvertising.

AreviewofGoogle'sowndatabasesshowsthatadvertiserswhobuydubiouskeywordssearchesaresomeofGoogle'sbestcustomers.Asdetailedbelow,thehighpricesforvariouskeywordsandthesubstantialcostestimatesprovidedbyGoogleareindicativethatcertaindubiousadtermsareinhighdemand.

As Edelman first noted, this reveals an unsettling fact: Google has quietlybecome one of the country’s biggest purveyors of obviously questionable 7http://adwords.google.com/support/aw/bin/static.py?hl=en&page=release_notes.cs8http://www.benedelman.org/ppc‐scams/#resp


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advertising,fromfakeViagrato“free”softwarethatisn’tactuallyfree.Once,suchmerchantspeddledtheirwaresinthebacksofoffbeatmagazines,onlatenightlocalTV,andinothermarginalmediums.Nowtheprocessismuchsimpler.

TheFederalTradeCommission,whichregulatesadvertising,requiresthatalladsbetruthful,thatadvertisershaveevidencetobackuptheirclaimsandthatadsarenotunfair,accordingtotheFTC’sBureauofConsumerProtection.9

Anadvertisementisconsidereddeceptiveifitcontainsinformationthatislikelytomisleadconsumerswhoareactingreasonably.Anadcanalsobedeemeddeceptive if it omits information thatwouldbe important to a consumer inmakingadecisiontobuyaproduct.Anadisconsideredtobeunfairifitcausesorislikelytocausesubstantialconsumerinjurythatisnotoutweighedbythebenefittoconsumers.

Importantly,adscanbedeceptivebasedsolelyon"implied"claimsratherthanexplicitones.Soifanadvertiserimpliesthatit issomehowaffiliatedwiththegovernment,thatcanconstitutedeceptionundera1952AppealsCourtrulingagainstacreditcollectionfirmcallingitselftheNationalServiceBureau.TheFTCcited the case last year in litigation against the websiteMakingHomeAffordable.gov, which allegedly "enticed consumers intoprovidingfinancialinformationwhichdefendantthensoldascustomerleadstomarketersofmortgagereliefservices."

“TheFTClooksattheadfromthepointofviewofthe‘reasonableconsumer’‐the typical person looking at the ad,” according to theBureauofConsumerProtection.“Ratherthanfocusingoncertainwords,theFTClooksattheadincontext ‐ words, phrases, and pictures ‐ to determine what it conveys toconsumers.”

TheFTCalsolooksatwhethermaterialinformationisomittedfromthead.Anadvertiserisrequiredtohaveproofofitsclaimsbeforerunninganad.“Beforea 9http://business.ftc.gov/documents/bus35‐advertising‐faqs‐guide‐small‐business


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companyrunsanad, ithastohavea"reasonablebasis" fortheclaims,” thebureausays.“A‘reasonablebasis’meansobjectiveevidencethatsupportstheclaim.Thekindofevidencedependsontheclaim.Ataminimum,anadvertisermusthavethelevelofevidencethatitsaysithas.”


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3.Google’sMarketinDeceptiveAdWords

Google's practice of selling prime advertising space to dubious loan‐modificationmarketersisextensive.Throughdozensofsearchesfromvariousgeographiclocationsoveraperiodofmonths,ConsumerWatchdogidentifiedmorethan20paidadvertisersofsuchservicesoperatingthroughhundredsofindividualwebsites.Wethenanalyzedafewofthesitesandfiguredoutwhoisbehindafewofthem‐‐thoughmanyofthesponsorsgotoconsiderablelengthstohidetheiridentities,evenastheydelveintoyours.

GoogleoperatesathrivingmarketforsearchtermsrelatedtoloanmodificationthroughitsAdWordsservice,whichgeneratesmorethan90%ofthecompany’srevenues.According toGoogle’sownAdWordsTrafficEstimator10, the term“loanmodification” is currently getting an average of 301,000 searches permonthonGoogle.

Anothersystem,theSearch‐basedKeywordTool,showsthetopsearchesusing“loanmodification.”

Thisdata (seenextpage)reveals theenormousdemandfromhomeownerscaughtupinthemortgagecrisis,whogoontheInternetseekingawayoutoftheiragonizingpredicaments.

10https://adwords.google.com/o/Targeting/Explorer?__u=1000000000&__c=1000000000&ideaRequestType=KEYWORD_IDEAS#search.none


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16PopularLoanModificationSearchKeywordsAuctionedByGoogle

Keyword

GlobalMonthlySearches

modification 1220000loanmodifications 368000loanmodification 301000loanmodificationloan 301000modificationloan 301000modificationofloan 301000modificationofaloan 301000badcreditloanmortgage 74000badcreditrefinance 74000mortgagemodification 60500modificationmortgage 60500mortgageforeclosure 60500homemodification 49500mortgageadvice 49500mortgagehelp 49500loanhelp 40500

Thefrequencyofsuchsearchesisan indicatorof thehighdemandfortheseservices,whichofcourseisinkeepingwiththeeconomicclimate.

One of themost popular search terms is “stop foreclosure,”which gets anestimated74,000searchespermonth.DuringearlyOctober2010,thesearchresultfor“stopforeclosure”lookedlikethis(seenextpage):


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Themostprominentresultshere(thirdbeneaththesearchbox)includeasitecalled“ObamaHelpForeclosure.com,”whichsolicitscallstoatoll‐freenumber,(877)909‐7144.Thatnumber isusedbyaLosAngeles lawyernamedAlanJurick,whoin2000enteredintoa$500,000settlementinfederalcourtwiththeFederalTradeCommissionregardingallegationsoftelemarketingfraud.

Whenwecalledthenumber,weidentifiedourselvesasaconsumergroupandasked for more information about “Obama Foreclosure Help.” A personidentifyinghimselfasa“HUDCounselor”named“BillGimbel”concededthatObamaForeclosureHelpisn’tactuallyaffiliatedwithPresidentObamaoranyotherpart of theU.S. government.But the groupwill “leadyou in the rightdirection,”promisedGimbel.

AnothermajorGoogleadvertiserwhowasbuyingkeywordssuchas“mortgagemodification” during the initial months of this study in spring 2010 was


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www.fedmortgageloans.com,whichwascreatedbyaCaliforniabusinessmannamedJamesRambadt.InJune2010,theFTCsuedRambadtinfederalcourtforfraud,allegingthatheillegally“represented,directlyorindirectly,expresslyorbyimplication,that[hiscompanies]aretheUnitedStatesGovernment.”Rambadt,ConsumerWatchdog’sinvestigationfound,isactuallyasophisticatedharvesterofconsumerpersonal financial information,whichhe thensells tothirdparties.AdetailedaccountofourinvestigationintoRambadt’sactivitiesisinSection5.AnotherGoogleadvertiseriswww.stopforeclosurequick.org,whichclaimstobeanonprofitassociatedwith"oneofthelargestnon‐profitorganizationsintheUnitedStates,"anoutfitcalledtheNationalHopeFoundation. However, IRSrecordsdonot showa registered501C3charityby thatname.Acompanyspokesman, Mike Lucas, insisted the group is registered with the IRS butdeclinedtoprovideanyproofsuchasaregistrationnumber.stopforeclosurequick.org also says it is affiliated with a firm called HomeSolutionsofNorthAmerica,whichinturnsaysitispartofanonprofitcalledFinancialHope forAmerica.According to a consumerbloggernamedSteveRhode, "it appears that Financial Hope for America is a front for CertifiedFinancialProtectionGroup,afor‐profitcompany,andthewebsiteforFinancialHopeforAmericaisunderthecontrolof3MMarketingandMikeWayman,"11aCaliforniabusinessman.Lastyear,Waymanwasthesubjectofa$7,000courtjudgment for defrauding a California consumer seeking a mortgagemodification.12

11http://getoutofdebt.org/19332/non‐profit‐debt‐settlement‐financial‐hope‐for‐america‐who‐are‐they‐really12http://www.allbusiness.com/legal/trial‐procedure‐judges/13379472‐1.html


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ResultsofGoogleSearchfor"LoanModification,"April2010

ConsumerWatchdoghasnotbeenabletolocateanyevidencetobackuptheclaimthatFinancialHopeforAmericaisalegitimatenonprofit.Another dubious Google advertiser is www.freeloanmodinfo.net, whichpromises "Guaranteed Affordable Payments!" According to the FTC, it isimpossible fora loanmodificationcompany toguaranteeamore affordableloanpayment.Thesitealsoclaimsthat"TheGovernmentisPracticallyPayingtheBanktoKeepYouinYourHome,"anotherstatementthatiseitherawildexaggerationoranoutrightlie.Yetanotherwhopper:“inmanycases,principalwillbe reduced."Thesite invites troubledhomeowners toprovidepersonalfinancialinformation.

Copyright notices state that the site was created by Custom Internet LeadSolutions Inc., a Florida firm that designs variousmarketing ploys targetingconsumersinfinancialdistress.


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As seen on the following page, Custom Internet Lead Solutions promisesinternet marketing firms that it will help themmake big money targetingconsumers.


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Thefirm'sothersitesincludeFreeDebtSettlement.org,whichpromises"Settleyourdebtswithjustoneclickofthemouse."AccordingtocorporaterecordsinFlorida, CILSwas incorporated by Justin B.Michaels of Tampa, Fl., amajorspammerwhowassued for fraudbyMicrosoftCorp. in2003.According tofederal court filings,Michaels and his companyNeoburst illegally harvestedemailaddressesfromHotmail"tosendunauthorizedandunsolicitedbulke‐mail advertisements." In August 2004, Microsoft obtained a permanentinjunction and default judgment against Michaels, who never bothered tomountadefense.

SowhoisMichaelssellinghishotmortgagemodificationleadsto?

Asmallnoticeinsidethefreeloanmodinfo.net"privacypolicy"disclosesthattheinformation"willbeusedtoevaluateyourmortgageforaloanmodificationbytheMortgageMitigationLawGrouponly."TheMMLGwasoriginallybasedjustacrosstownfromMichaelsinSt.Petersburg,andhasnowmovedtoMaricopa,Ariz. Its original incorporators include former Illinois businessman PatrickDrury,whoin2006wasnamedinaregulatoryorderbystatebankingofficialsforimpropermortgagemarketing.ConsumershavepostedcomplaintsallegingthatMMLGcollectedthousandsofdollarsinfeesfromthembutandfailedtomodifytheirmortgages.


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4.TheDebtSettlementandCreditRepairIndustry

Mortgagemodificationisanoutgrowthofthelargercreditrepairsector,whichsells hope to consumers in financial distress. Many companies that sellmortgagemodification also offer to help consumers repair their bad creditrecords. Inyearsof investigationsand lawsuits, theFTCandstateregulatorshaveshownthatthecreditrepairindustryisriddledwithfraudulentpracticesincludingfalsepromisestofixbadrecords.

CreditrepairadsareanotheroneofGoogle'sproductlines,withanestimated368,000searchesfor"creditrepair"permonthandarelativelysteep$6.60cost‐per‐click for thebest advertisingposition.An advertiserwhowants the fullnumberofdaily clicks, estimated at211,willgetadailybill fromGoogleof$1,429.Evenmorestaggeringisthevalueofthesearchterm"badcredit,"whichgetsanamazing1.83million searches amonth.An advertiserwhowantsapremiumspottoharvestalloftheestimated2,114clicksadaywouldhavetopayGoogleamind‐boggling$16,259‐‐daily.

TheFTCwarnsconsumersawayfromcreditrepairservicesthatclaimtheycanfixbadcreditscores."Don’tbelievetheseclaims:they’reverylikelysignsofascam," theFTCstates.Agencyattorneyshave"neverseena legitimatecreditrepairoperationmakingthoseclaims."

AndyetasamplingofGoogleadvertisersshowscompaniespromising:"Geta720CreditScore,"and"100%GuaranteedPermanentResults."

Whileit’stemptingtomakelightofsuchdubiousadvertisersasabyproductofGoogle’s size, a recent report underscores that Google’s customer base issurprisinglyshortonbigbrandedadvertisersandappearstorelyonsmallerfirms selling individually‐targetedproducts. According to a recent article inAdvertisingAgebasedonaleakedinternalGoogledocument,thecompanygetscomparativelylittleofitsrevenuefromlargewell‐knowncompanieslikeApple


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orFordMotorCo.Thecompany'stoptenadvertisers"collectivelyaccountedforjust5%ofGoogle'sU.S.revenue"inJune2010,AdAgereportedonSept.6.


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5.InDepth:We’refromtheGovernment(Notreally)andWe’reHeretoHelp(Notreally)

ManyoftheadvertisementsonGoogleleadtositesthatdisplaylogosand/ortext designed to lead a consumer to believe that government agencies andmediaendorsementswereconnected totheadvertisement, sometimeswithdisclaimersintinyprintdenyingsuchconnections.

OneoccupantoftheprimespotatthetopoftheGooglesearchresultspagehasbeenObamaFederalLoanModification.org,ablatantlydeceptivesitethatwentastepfurtherbyusingthe".org"addresssuffixtotrickconsumersintothinkingit'sanonprofit.

Inanotherblatantdeception,ObamaFed'ssiteboastedthat"asseenon"CNN,FoxNews,andUSAToday‐‐completewiththeirlogos.

OnlyifyouhappenedtopullupObamaFed'sprivacypolicywouldyougetthisdisclaimerinsix‐pointtypeattheverybottom:“*‘AsSeenOn’refersonlytogovernment and/or federal loanmodification information discussed on thevariousnewschannels.Thetrademarksincludedonthispagearepropertyoftheirrespectiveowners,whohaveofferednoendorsementofthiswebsite."13

13http://www.obamafederalloanmodification.org/privacy_policy.php


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WhileObamaFedisnolongeralivesite,Google'stopadvertisersnowincludetheverysimilarwww.LoanModificationDepartment.US,whichlookslikethis:

TheFTCtermformarketinglikethisis“deceptiveadvertising.”InacasefiledlastyearinfederalcourtinCalifornia,theFTCsuedanoutfitcalledtheFederalLoanModificationLawCenterLLPanditsownerspartlyonthegroundsthatthey "have represented to consumers, expressly or by implication, thatDefendants are part of, affiliated with, or endorsed by the United Statesgovernment or one or more federal government programs." Making suchclaimsis"falseandmisleadingandconstitutesadeceptiveactorpractice."(Seehttp://www.ftc.gov/os/caselist/0923070/090626fedloancmpt.pdf)


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As pictured, President Obama, CNN and CNBC all appear to approve ofwww.2010obamaloanmodification.com,andthecopyscreams,“Wecansaveyourhome!Calltoday!”Butinthesmallerprint,thisattorney‐createdsitebacksoff,stating:“Thiswebsiteisattorneyadvertisingandbasicdescriptionsoftheservicesweprovide.Itisdesignedtoprovideyouwithgeneralandintroductoryinformationonly.”

TheOceanside,California firmbehind thead,1stAmericanLawCenter,hasattractedcomplaintsonRipoffReportandpissedconsumer.com.TheSanDiegoBetter Business Bureau gave 1st American a D rating for 14 complaints(resolved)and3complaints(unresolved)sincethebusiness incorporated inApril2009.14

AcomplaintonRipoffReportmaynotbeproofthatacompanyistrulyatfault.ButyoucanprotectyourselfbystartingoutwiththeUSgovernmentsponsoredservices that are available. MakingHomeAffordable.govhttp://makinghomeaffordable.gov/ aUSgovernment site,warns “BewareofForeclosureRescueScams‐HelpIsFree!”andpointsconsumerstoadatabaseof HUD‐approved housing counseling agencies athttp://www.hud.gov/offices/hsg/sfh/hcc/fc/where local help canbe found.Assistance is also available at Hope Now https://www.hopenow.com/http://www.995.hope.org, which warns “Beware of scams. Counseling isalwaysfreethroughthissite.Call888‐995‐HOPE.”

14http://www.bbb.org/san‐diego/business‐reviews/loan‐modification/1st‐american‐law‐center‐inc‐in‐oceanside‐ca‐171994531/


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6.InDepth:HarvestingYourPersonalFinancialData

Google alsomakesmoney off another group of companies that prey upondistressedhomeowners.Thesefirmsoperateinthegreymarketforpersonalinformationaboutdistressedhomeowners,runningwebsitesthatspecializeinprocuringsuchdata.

Untilrecently,oneofGoogle'sbiggermortgage‐modificationadvertiserswasavastgroupofcompaniesandwebsitesaffiliatedwithaSimiValleybusinessmannamed James Rambadt. One of Rambadt's vehicles, called 123 Creator, hasregistered hundreds of credit‐distress counseling websites, while Rambadthimself has incorporated scads of companies fromNotarize 2U to Sex SeeLingerie. Rambadt is also the administrative contact for a site calledwww.fedmortgageloans.com, which paid top dollar to advertise on Googleabovethesearchresults,asshownhere(highlightingadded).

Thesite,whichisdrapedinreferencestothefederalgovernment,wasusedtocollectpersonalfinancialinformationandthendirectcallerstoacompanyinUtahsellingloanmodifications.


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Internet registrationrecordsshowthatwww.fedmortgageloans.comrunsontwo123Creatornameservers.Other sites on the123Creatornameserversincludewww.fedcreditrelief.com,which isverysimilarto fedmortgage loans,andwww.modifyhomedebt.com.

Atwww.FEDMortgageLoans.com,homeownerswereinstructedto“FillouttheForm to the Right and answer the Three Questions, and find outinstantaneously if your Mortgage is Eligible for the Obama Federal LoanModificationProgram.”

Underneaththeinstructionsisanofficial‐lookinggraphicof1600PennsylvaniaAvenuereading:

THEWHITEHOUSEWASHINGTON

There are also small logos for the Department of Housing and UrbanDevelopmentandtheTreasuryDepartmentatthebottomofthepage.

Whenyouputinyourcurrentmortgagepayment,yourloanamount,andthenameofyourbank,thesitegivesyouaheartycongratulation,asseenonthenextpage.


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Notethefakegovernmentlogosatthebottomcorners.Whenthehomeownercallsthe800numberandprovidesthePINnumber,thecallistransferredtoanentirelydifferentcompanybasedontheinformationthatwasprovided.WhenConsumerWatchdogtriedit,asalesmancameonthelineandidentifiedhimself


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as an employee of Fortified Financial, a small company in Utah that wasincorporatedin2004(seehttp://www.fortifiedfinancial.com/about.i).

The salesman said Fortified doesn’t own the FEDMortgageLoans website,whichisactuallyownedby“anadvertisingcompany,”hesaid.“Therearequiteafewsitesoutthere,”heobserved.

Rambadt has some familiarity with financial distress, having filed forbankruptcyin2002.There'salsoalong,depressingtalefeaturingRambadtthatwaspostedonthewebafewyearsagobyasmallbusinessmanwhoboughtsomeusedequipmentfromacompanywhereRambadtwasvicepresident(seehttp://www.ts‐aligner.com/universal.htm).

It'simportanttounderstandthatGoogleadvertiserssuchas123Creatordonothideoutdeepinthebehemoth'spaidsearchresults.Rather,123CreatorhaspaidtopdollartoperchintheupperleftpartoftheGooglesearchpage,directlyabovethetopmostsearchresults.Thispositioning,whichGooglehighlightswithanoff‐whitebackground,isauctionedoffbyGoogletothehighestbidder.

Corporate recordsshowthatMr.Rambadt isanofficerofa companycalledDominantLeads,which isbased in the SimiValleyneighborhoodofAgouraHills.ThewebsiteforDominantLeadsboaststhatithas“thenewestandmostinnovativeleadsonthemarket.”

Amongthemany“products”offeredbyDominantLeadsisto“Havereal‐timeInternetdebtsettlementleadscallingyou!”

The site explains: “How itWorks:We usemarketing campaigns that targetpeopleinquiringonlinetorelievetheirdebt.Theconsumerthenfillsout theformonlineandwecaptureandqualifytheirinformation.If theinformationmatches your required filters, the consumer is called immediately. The callprompts the consumer to opt‐in if interested by pressing “1”. Then theconsumeristransferreddirectlytoyou.”


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InJune,theFTCsuedRambadtinfederalcourtinWashington,DC.,allegingthathismortgagewebsitesfalselypresentedthemselvesasaffiliatedwiththeU.S.government,thatthesitestrickedconsumersintohandingoverinformationbyfalsely telling them theywere eligible for a governmentprogram, and lyingabouttheexistenceofgovernmentdebtreliefprograms.

WhattheFTCcomplaintdoesnotshowisthatRambadtwasakingpininthemarketforexploitingconsumerfinancialwoe,Internetrecordsshow,withatleast 236 websites related to credit repair, debt relief, and mortgagemodification.TheFTCcomplaintandsupportingdocumentsalsodonotmakecleartheextentofGoogle'sroleinfacilitatingthisallegedfraud.WithoutGoogle'scooperation, it's not possible to know howmany of Rambadt's sites wereGooglecustomers.

TherelationshipbetweenGoogleandtheloanlead‐generationindustryraisesseriouslegalandpolicyissues.Suchactivitiescouldqualifyasillegal“pretexting”–gatheringpersonalfinancialinformationunderfalsepretenses.Variousstateandfederalstatutesprohibitthispractice.Asapolicymatter,therelationshipbetween the search engine companies and lead‐generating firms results inlarge‐scale exchanges of personal financial data in completely unregulatedconditions. This exchange could easily evolve into a new blackmarket forpersonaldatausedtocommitfinancialcrimesagainstindividualsandfinancialinstitutions.


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7.InDepth:USMortgageBailout

Among the sites which surfaced in the CW investigation waswww.usmortgagebailout.com, which appeared near the top of the page onGooglesearchresultsasapaidadvertiserinasearchperformedonMarch9oflastyear.

USMortgageBailoutengagedinseveralmisleadingpractices,includingclaimingtobe“fullylicensed”initsGooglead.Butthecompanywhichsponsoredthesite,K2CapitalManagement Inc.ofLa Jolla,wascitedby theCaliforniaAttorneyGeneral in August 2009, for failing to register with the state as a loanmodificationcompany.15

USMortgageBailout was one of several sites that displayed a logo for theNational Loan Modification Association of America http://www.nlmaa.org/Whiletheassociationisdesignedtolooklikeanonprofit,ConsumerReportsrevealedthatitwasactuallyaffiliatedwithsubprimelenders.16

15http://ag.ca.gov/cms_attachments/press/pdfs/n1780_registry_list.pdf16http://blog.consumerwebwatch.org/2009/04/affordable_hope_nlmaa_homestar.html


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AroundthattimeitwascitedbytheCaliforniaAG,USMortgageBailoutabruptlyclosedshopandpostedanoticeonitswebsitesayingithadceasedoperations“due to circumstances beyond our control.” However, numerous angryconsumers have complained that it did not refund their fees, which oftenamountedtothousandsofdollars.

K2wassetupbyK2CapitalManagementInc.ofLaJolla,Calif.in2009,accordingtotheCaliforniaDepartmentofCorporations.Thefirmhasbeenthesubjectofnumerousconsumercomplaints.Alargegroupofangryconsumerswhoclaimthefirmtooktheirmoneybutofferednohelpwithmortgagemodificationshavebanded together to investigate K2 and tell their sad stories herehttp://getoutofdebt.org/19149/us‐mortgage‐bailout‐scam‐complaint‐review‐or‐praise.


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InresponsetoinquiriesfromConsumerWatchdog,manyoftheseconsumerssaid that they found the site via Google searches. While several did notrememberexactlyhowthatprocessunfolded,it’salmostcertainthattheyweredrawnby thepaidadvertisementsratherthananorganic search–traffic toUSMortgageBailout.comwouldnevermerititsappearanceinthefirstseveralpagesoforganicsearchresults.


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8.LeadGeneratorsPoseasLoanModificationAdvertisers

Many companies that generate “leads” to sell to other companies collectinformationbyadvertisingonGoogle.Asamplingoftheseadvertiserscanbefound by searching on Google for "loan modification leads." Usually, thesecompaniessellpersonalfinancialinformationaboutconsumerstowhomeverwishestobuyit.

It is legal to sellpersonal financialdataas longas the informationhasbeenprovidedwillingly.However,theFTChasbroughtcasesagainstcompaniesthatallegedlyusedeceptivepracticestogetthisinformation,thenfailtosecurethedataonceit'sinhand.

OneloanmodificationleadssellerthatadvertiseswithGoogleistheWisdomCompanies LLC of Hermosa Beach, Calif., which says it can use consumerpersonal financial information "for any legal purpose, including selling ortransferring such information at any time to third parties for any legallypermissiblepurchase."

WisdomCos.wasthesubjectofaJune9,2009ceaseanddesistorderbytheMassachusetts Commissioner of Banks for "not operating honestly, fairly,soundlyandefficientlyinthepublicinterest."

During the study Wisdom Cos. was running an ad on Google forloanmodificationleads.com,whichclaimsthat1,000mortgagemodificationleadswillproduce$170,000ingrossprofit.

These leadsareharvested throughWisdomsites such asLoanModificationConnection, which asks consumers to provide private financial informationincluding income. While Wisdom Cos. doesn't list its prices, quotes fromcompetitorsindicatethatpricesrunfrom$5to$20percustomer.


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AlengthyprivacypolicypagedisclosesthatLoanModificationConnectionisn'tactuallyinthebusinessofmodifyingloansbutisrather"anon‐lineconsumerservice that introduces persons such as yourself to certain of our businessaffiliateswhohaveexpressedageneralwillingnesstoreviewyourinformationanddetermineiftheyarewillingtoprovideyouwiththeservicesorproductsthatpromptedyoutovisitourSite."

Wisdomalsosells leads forcredit repair,debtand taxproblems.Likemanyother firms inthemortgagemodification industry,Wisdomwasheavily intopromotingmortgagesthroughInternetadvertisinguntilthemarkettankedin2008.

Theonlineleadgenerationindustry,whileobscure,isbigenoughtohave itsown annual conference in Las Vegas. (Seehttp://www.leadscon.com)AccordingtotheCenterforDigitalDemocracy:

"Online Led Gen, as its known, is a rarely examined part of thefinancialservices industry: therearebigbucks forthosemarketerswhocanidentifyanonlineuser’sinterestinamortgageorloan.Oftenunwittingly, information that consumers provide on credit cardapplications, in surveys, contests and other registrations becomespersonaldatathatcanbesoldtoLedGenbrokers.Marketersspent$1.7billionfordigitalleadgenerationadvertisinglastyear."17

17http://www.democraticmedia.org/digital‐dollars


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9.Google’sResponsibility

ShouldGooglebepolicingthecontentofitsadvertisers?Theanswerisclearlyyes.

While Google takes the legal position that it has limited responsibility forpolicing advertiser content, in practice the company regulates advertisercontentallthetime.Indeed,GooglehasawholelistofadvertisingpoliciesforAdWordsthat limitorprohibitads fortypesofproductsoractivities.Onlinepharmacies,fireworks,and“solicitationoffunds”arerestricted,asare“imagesofabortedfetuses,”“gruesomelanguage,”“thesaleofhardalcoholandliquor,”orwebsitesthat“promoteunrealisticclaimsorpromises.”Forthewholelistseehttp://adwords.google.com/support/aw/bin/static.py?hl=en&topic=all&page=guidelines.cs&answer=69581&adtype=text&country=US.

Inaddition,Googlehasconcededinrecentlegalcasesthatithasaresponsibilitynottopermitadvertisingthatitknowsisdeceptiveorfraudulent.Mostnotably,thisoccurredinarecentcaseinVirginia,whereGoogleintroducedextensiveevidence about these efforts including the fact that it employsa “Trust andSafetyManager”namedCoryLouiewhosejobitisto“addressthesourceofrisk,fraud and abuse issues on a wide range of Google products and services,includingthedistributionofcounterfeitgoods.”18

Google is not alone in selling ads to deceptive marketers and sleazy loanmodification companies. Yahoo and Bing engage in similar practices. ButGoogle’sacceptanceofthismisleadingadvertisingissurprisingforacompanythatpridesitselfonbeingbenevolent.Astheall‐powerfulmarketleader,Googleshouldbesettingapositivestandardforitsindustry.

Googleandtheothersearchengineproviderscanhardlyclaim theyhaven’tbeenwarnedabouttheunethicalpracticesofthesemarketers.Inadditiontosomehigh‐profilelawsuits,theFTCisintheprocessofwritingnewrulesthat

18RosettaStoneLtd.v.GoogleInc.,1:09cv736,EasternDistrictofVirginia.


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makeitevenclearerthatdeceptiveloanmodificationadsareunacceptableandillegal.Seehttp://www.ftc.gov/os/2010/02/100204marsfrn.pdf.

ThefirstdraftoftheseruleswaspublishedonJune1,2009.


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10.ConclusionsAndRecommendations

Googlehasprofitedsignificantlyfromfraudulentadvertisingintheconsumerfinancialsector,despitenumerousgovernmentwarningsandcompanypoliciesagainsttheacceptanceofmisleadingads.

Googleshouldtakeimmediatestepstopurgemisleadingmortgageandcreditrepairadsfromitssearchenginesanddonatetocharityallrevenueitreceivedfromquestionablesources.

TheFederalTradeCommission,foritspart,shouldbemoreaggressiveintakingactionagainstsearchproviderswhorundeceptiveads.

Herearefivespecificrecommendations:

1) Googleshouldbemorediligentinscreeningadvertisinginareassuchasmortgagemodification and credit repairwhere fraud is known to be aseriousproblem.Ifthecompanyfindsthatscreeningadsisnotfeasible,itshouldbanalladvertisinginareaswhereregulatoryagencieshaveshownthatfraudulentadvertisingisendemic.

2) Wherefraudisaknownproblembutlegitimatefirmsalsooperate,Googleshoulduseitsadvertisingtechniquestopostpublicserviceadsthatcounterdeceptiveads.Forexample,ifaloanmodificationadreferstothefederalgovernment, a Google‐sponsored disclosure statement should appearprominently alongside towarn consumers that they shouldbewaryofmortgagelendersusingsuchterms.

3) Google should initiate and help set industry‐wide standards to preventfraudulentadvertisingontheInternet.

4) Googleshoulddonaterevenueithasreceivedfromquestionablefinancialadvertisingtonon‐profitgroupsthathelpconsumerswithcreditproblems,includinghomeownersseekingtoavoidforeclosure.


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5) TheFederalTradeCommissionshouldbeginusingitslegalauthorityundertheLanhamActtoseekinjunctionsagainstsearchproviderswhoacceptlargeinventoriesofadvertisingfromfirmstheyhavereasontobelieveareengagedindeceptivepractices.

LIARS AND LOANS: HOW DECEPTIVE ADVERTISERS USE GOOGLE

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