Online advertiser ValueClick was hit with a record $2.9 million fine March 17 for deceptive online advertising and failing to properly secure consumers' sensitive financial data.
The fine is the single largest ever levied for a violation of the 2003 CAN-SPAM Act, according to the Federal Trade Commission.
ValueClick neither admitted nor denied the charges but said it would pay the fine to settle the FTC complaints. The company took a $2.9 million charge against fourth-quarter earnings to reflect the fine.
The FTC complaint claims ValueClick subsidiary Hi-Speed Media failed to clearly and conspicuously disclose the actual costs and obligations to consumers of clicking on "free" offers. Hi-Speed Media used e-mail, banner ads and pop-ups to drive consumers to its Web sites.
The e-mails and online ads claimed that consumers were eligible for a number of free gifts, including laptops, iPods and high-value gift cards, when, in fact, ValueClick's Web sites led consumers "through a maze of expensive and burdensome third-party offers," according to the complaint.
The FTC also said ValueClick and its subsidiaries published online privacy policies claiming they encrypted customer information, but either failed to encrypt the information at all or used a nonstandard and insecure form of encryption.
In addition to the record fine, ValueClick agreed to clearly and conspicuously disclose the costs and obligations consumers incur in order to receive the products it touts as free. The settlement bars future violations of the CAN-SPAM Act and claims about the security of the consumer information collected at ValueClick's e-commerce Web sites.
In February, ValueClick said the FTC complaint was based solely on the past practices of Hi-Speed Media.