Inside Google

Google has a policy of prohibiting deceptive advertising, such as those placed by mortgage fraudsters, however one group says the giant search engine company doesn’t typically ban misleading ads from a questionable advertiser until after a company is sued by federal regulators. The nonprofit is calling for the company whose name has become a verb to be more proactive.

Consumer Watchdog has complained in a Feb. 8 letter to the Federal Trade Commission that Google and other search engines have not only been profiting by accepting deceptive advertising from fraudulent operators, but have also essentially been an accomplice in crime and should be made to stop “its harmful behavior.”

The issue at hand is that outfits that falsely promise unwary consumers that they can solve their mortgage and credit problems have cost individual consumers thousands of dollars, and sometimes even their homes, while Google allegedly has been raking in the bucks from these deceptive advertisers that pay thousands of dollars for prime advertising space on Google searches.

CW is attacking Google because it is a market leader and thus, its “laxity in preventing fraudulent advertising has created an environment in which other search engine companies can feel safe in adopting the same questionable practices,” the Washington D.C.-based consumer advocacy group states in a 37-page PDF report it released yesterday.

To make amends, Google should donate revenue it has made from these ads to programs that assist consumers who have been victimized by both mortgage modification and credit repair agencies that are fraudulent, CW wrote in “Liars and Loans: How Deceptive Advertisers Use Google.”

To see some of the ads in question, all one has to do is type in “stop foreclosure,” “loan modification,” or one of a dozen other housing-distress related terms and up should pop a slew of ads from companies promising to help modify mortgages.

Just more than 25 of such foreclosure rescue marketers have been sued for deception by the FTC, which is conducting a major investigation under “Operation Stolen Hope.”

These ads typically have paid an upfront fee for that placement, such as around $250 per day to appear when there’s a search for the term “stop foreclosure.” In addition, every time someone clicks on an ad, Google gets a fee that ranges from a few cents to a few dollars.

For example, the “cost per click” to buy the term “stop foreclosure,” reportedly costs $8.29. That means advertisers pay Google that amount every time a searcher clicks on that ad. Google’s analytical data at the time of CW’s research shows that people search that terms more than 74,000 times per month.

But Google defends itself. “Our AdWords Content Policy does not permit ads for sites that make false claims,” said Google spokesman Aaron Stein, “We investigate and remove any ads that violate our policies.”

“Google’s willingness to accept such obviously deceptive advertising is the problem,” John M. Simpson, director of Consumer Watchdog’s Inside Google Project, said in a letter to FTC Chairman Jon Leibowitz. “The company must take a proactive role in preventing deceptive ads that prey on vulnerable consumers.”

The report made five recommendations, four directed at steps it wants to see Google take and the final one that the FTC should do:

Screen advertisers. Google should be more diligent in screening advertising in areas such as mortgage modification and credit repair where fraud is known to be a serious problem. If the company finds that screening ads is not feasible, it should ban all advertising in areas where regulatory agencies have shown that fraudulent advertising is endemic.

Post public service ads. Where fraud is a known problem but legitimate firms also operate, Google should use its advertising techniques to post public service ads that counter deceptive ads. For example, if a loan modification ad refers to the federal government, a Google-sponsored disclosure statement should appear prominently alongside to warn consumers that they should be wary of mortgage lenders using such terms.

Set better standards. Google should initiate and help set industrywide standards to prevent fraudulent advertising on the Internet.

Donate to non-profits. Google should donate revenue it has received from questionable financial advertising to non-profit groups that help consumers with credit problems, including homeowners seeking to avoid foreclosure.

Seek injunctions. The Federal Trade Commission should begin using its legal authority under the Lanham Act to seek injunctions against search providers who accept large inventories of advertising from firms they have reason to believe are engaged in deceptive practices.
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Sheree R. Curry, who often uses Google to search mortgage terms, is a three-time award-winning journalist who has covered real estate for six years. During her 20-year career, her articles have appeared regularly in the Wall Street Journal, TV Week, and Fortune. She’s been writing for AOL Real Estate since 2009 from a Minneapolis-area rental. She seeks a book publisher — or at least a lender who’ll give a reasonable mortgage rate to a self-employed mom.