Inside Google

Public Interest Group First Revealed Scam Ads On Google in February Report

SANTA MONICA, CA – Consumer Watchdog today called on Google to donate the tainted revenue it received from deceptive ads preying on vulnerable homeowners to non-profit groups that help consumers with credit problems, including homeowners seeking to avoid foreclosure. The mortgage modification scams were first revealed in a Consumer Watchdog report last February.

The nonpartisan, nonprofit Consumer Watchdog said Google should donate the money after the Office of the Inspector General for the Troubled Asset Relief Program (SIGTARP) announced that it has shut down 85 online mortgage modification scams. SIGTARP said that in cooperation with an ongoing criminal investigation the Internet giant had suspended advertising relationships with 500 Internet advertisers.

Consumer Watchdog first revealed the extent of the deceptive, predatory ads in a report, “Liars and Loans: How Deceptive Advertisers Use Google” issued last

February. Read the report here: http://www.consumerwatchdog.org/resources/liarsandloansplus021011.pdf

“Google should never have published these ads, but its executives turned a blind eye to these fraudsters for far too long because of the substantial revenue such advertising generates,” said John M. Simpson, director of Consumer Watchdog’s Privacy Project. “The company cannot be allowed to benefit from these ill-gotten gains. Google must donate the money to aid homeowners who were victimized because of its callous quest for profits.”

A spokesman for SIGTARP declined to say why Google cooperated with the criminal investigation. He said the investigation is ongoing and would not discuss what happens next.

“Google’s willingness to accept such obviously deceptive advertising is the problem,” Simpson said. “The company must take a proactive role in preventing deceptive ads that prey on vulnerable consumers.”

Consumer Watchdog’s “Liars and Loans” report made five recommendations last February:

— 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.

— 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.

— Google should initiate and help set industry-wide standards to prevent fraudulent advertising on the Internet.

— 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.

— 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.

SIGTARP investigates fraud, waste and abuse in connection with TARP. To report suspected illicit activity involving TARP, call the SIGTARP Hotline: 877-744-2009

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