Table of Contents. 1. Executive Summary

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2 1. ExecutiveSummary TableofContents 2. GoogleProfitsFromFraudulentAdvertising 3. Google smarketindeceptiveadwords 4. TheDebtSettlementandCreditRepairIndustry 5. InDepth:We refromthegovernmentandwe reheretohelp(not Really) 6. InDepth:HarvestingYourPersonalFinancialData 7. InDepth:USMortgageBailout 8. LeadGeneratorsPoseasLoanModificationAdvertisers 9. Google sresponsibility 10. ConclusionsandRecommendations LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 2

3 1.ExecutiveSummary Google has been a prominent beneficiary of the national home loan and foreclosurecrisisofthepasttwoyears.thegiantsearchenginecompanyhas profited by accepting deceptive advertising from fraudulent operators who falsely promise unwary consumers that they can solve their mortgage and creditproblems. Fraudiswidespreadinthemortgagemodificationindustry,accordingtothe FederalTradeCommissionandinvestigationsbytheattorneysgeneralofNew Yorkandotherstates.Yetmanyofthesecompaniespaythousandsofdollarsfor prime advertising space on Google searches. While Google has a policy prohibiting deceptive advertising, that has not kept Google from accepting misleadingads.indeed,googlehasbecomeoneofthenation slargestoutletsfor deceptiveadvertising. Sofar,GoogleandothersearchenginesaregettingapassfromtheFTC,which has opted not to use its legal authority to seek injunctions against search providerswhorundeceptiveads.instead,theagencyhasadoptedawhack amolestrategyofpursuingscurrilousforeclosureandcreditrelieffirmsonan individualbasis.asdetailedintheconclusionsandrecommendationsin this report,theftcneedstoadoptamoreeffectiveapproachtargetinggoogleand othersearch enginesthat supply theoxygentothesedeplorablefly by night outfits. In a detailed review of Google s advertising practices, Consumer Watchdog found that Google typically drops questionable advertisers only after these companies are sued by federal regulators. Even then, Google allows other companiestocontinuemakingsimilardeceptiveclaimsintheiradvertising. Thehomeloanmodificationbusinessisanoffshootofthecreditrepairindustry, which also preys on consumers facing financial difficulty. Federal and state regulators have found that the credit repair industry also is riddled with LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 3

4 fraudulentpractices.nevertheless,thesefirmsareanotherprofitablesourceof advertisingrevenueforgoogle. Some loan modification ads on Google falsely imply that the companies financial products are endorsed by President Obama and the federal governmentorbynewsoutletssuchascnnandusatoday.otheradsseekto collecthomeowners financialinformationandsteerthemtocompanieswith questionablelendingpractices. Googlepridesitselfonitsmotto, Don tbeevil. Butitsadvertisingpracticescall intoquestionwhethermisleadingadsaresuchaprofitablesourceofrevenue for Google that the company has adopted lower standards and relaxed its oversightforitsadvertisingbusiness. Asthemarketleader,GooglesetsthestandardforInternetsearchcompanies. Itslaxityinpreventingfraudulentadvertisinghascreatedanenvironmentin which other search engine companies can feel safe in adopting the same questionablepractices. ConsumerWatchdogcallsonGoogletohaltallmisleadingadvertisingandto makeamendsbydonatingrevenuefromtheseadstoassistconsumerswho have been victimized by fraudulent mortgage modification and credit repair companies. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 4

5 2.GoogleProfitsFromFraudulentAdvertising FormillionsofAmericanswhoarefacingforeclosure,thesearehardtimes.For Google,suchfinancialmiseryisanopportunitytosellads. OnGoogle'ssearchengine,typein'stopforeclosure','loanmodification,'orany oneofadozenotherhousing distressrelatedtermsanduppopsaslewofads fromcompaniespromisingtohelpyoumodifyyourmortgage,oftenforanupfrontfeethatisnotinitiallydisclosed. This is an industry plagued by fraud. More than 25 foreclosure rescue marketers have been sued for deception by the Federal Trade Commission, which is conducting a major investigation of the industry called Operation StolenHope. Manyso calledforeclosurerescuecompaniesorforeclosureassistancefirms claimtheycanhelpyousaveyourhome.somearebrazenenoughtooffera money back guarantee," the FTC warns. "Unfortunately, once most of these foreclosurefraudsterstakeyourmoney,youloseyourhome,too. 1 DuringtheprimarystudyperiodofSeptember10toSeptember30,2010,at least20companiessellingforeclosurerescueor"mortgagemodification"were payinggoogletoruntheiradvertisementsnexttoitssearchresults.everytime someoneclicksonanad,googlegetsafee,fromafewcentstoafewdollars. Consumer Watchdog researched each of these advertisers and made these findings. Ten advertisers imply they are affiliated with the U.S. government or engageinotherpracticestheftchaslabeleddeceptive,suchasclaiming tobenonprofit. 1http:// home foreclosure rescue scams.shtml LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 5

6 At least seven have been accused by consumers of fraud in Internet postings. Three of the sites require consumers to buy Experian credit reports beforereceivingadviceorhelp. 2 Onesiteisaffiliatedwithalawyerwhosettledpriorfraudchargeswith theftc,whileanotherisrunbyamanwithaciviljudgmentrecordfor spamming. At least five sites collect personal financial information and then refer homeowners elsewhere, a practice known as "lead generation" that raisesprivacyanddeceptionconcerns. Fivesitesfalselyclaimtoassesstheeligibilityofconsumersforforeclosure reliefbyanalyzingtheirfinances. TwocarryfakeVeriSignsecuritylogos. 3 Inaddition,twomortgagemodificationfirmsthatwereidentifiedbyConsumer Watchdog earlier in 2010 as Google advertisers were recently put out of businessbytheftc. ManyofthesefirmsarebasedinCalifornia,oneofthestateshardesthitbythe mortgagecrisis.theepidemicoffraudinthisindustryledcaliforniain2009to enactthemortgageforeclosureconsultantact,whichprohibitstakingadvance feesandrequiresmarketerstoregisterwiththestate. Despite numerous public warnings by the FTC about deceptive foreclosure rescueadvertisers,thisstudyfoundthatgoogletypicallydropssuchadvertisers onlyaftertheyaresuedbytheftc.othergoogleadvertisersmakingclaims virtually identical to the claims that the FTC says are fraudulent are still advertisingongoogleasofthereleaseofthisreport(examplesbelow). ThemortgagecrisisgeneratessubstantialadvertisingforGoogle. 2http:// 3VeriSignlogosaresimpletoauthenticate. verisigncertificate.html LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 6

7 AccordingtoGoogle'sownanalyticaldata,therearemorethan74,000searches permonthfortheterm"stopforeclosure"andthecurrent"costperclick"tobuy thatsearchtermis$8.29.inotherwords,advertisersmustpaythatamountto Google every time a Google searcher clicks on their ad aimed at desperate homeowners. Google peddles its wares via a website, which containsbothakeywordtooltocheckspotpricesonthekeywordmarketand TrafficEstimatorsothatadbuyerscangaugewhatresultstheymightget.These figuresshowthatgoogleroutinelysellsavarietyof foreclosurerelief search terms,becausethehighpricegooglequotesisamarketratebasedonsupply anddemand:advertisingkeywordsareauctionedtothehighestbidder.atthe currentaverageof31clicksperday,google sdataalsoshows,theestimated cost of buying this search term and receiving a premium position near the searchresultswouldbe$266aday. IfjustthreeloanmodificationcompaniesadvertisewithGoogleat$266aday fortheterm"stopforeclosure,"googlegrossesover$5,500aweek.whilethat may seem like a modest haul for a giant ad firm, advertisers buy multiple keywordsandthereareatleast20mortgagemodificationadvertisersatany giventime. Inaddition,areviewofvariousmortgagemodificationsitesshowsthatGoogle alsosellsadstotheindustrythroughitsadsensedivision,includingonecalled the Fair Home Loan Bureau,"ESTABLISHED TO PROTECT& DEFEND THE AMERICAN PEOPLE from UNFAIR MORTGAGES" ( The site is a typical example of how mortgage modifiers try to foster the impression they are some sort of official or nonprofit body created to assist consumersasopposedtoprofitingfromtheirwoes. Googledoesnotdisclosehowmuchitmakesfromindividualadvertisersandit isdifficulttoreliablyestimateitsrevenuesfromanyparticularsetofkeywords withoutaccesstointernalcompanydata. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 7

8 Google s practice is troubling because the Federal Trade Commission has repeatedlywarnedthatmanymortgagemodificationservicesarenothingmore than"insidiousfraud,"aschairmanjonleibowitzputitin Under the federal Lanham Act, newspapers, television networks and other communications mediums including Internet advertising firms are responsibleforthecontentofadstheypublishorair.federallawalsoprohibits advertisersfromengagingin"unfairordeceptiveactsandpractices." Google says it does not knowingly permit false claims by its advertisers, including companies that help with debt settlement. Our AdWords Content Policydoesnotpermitadsforsitesthatmakefalseclaims,andweinvestigate andremoveanyadsthatviolateourpolicies, GooglespokesmanAaronStein saidrecently. 5 Thisisnotanewposition. "Whenwebecomeawareofdeceptiveads,wetakethemdown,"acompany spokesmandeclaredin YetGooglehasalsotacitlyacknowledgedcontinuingproblemsbymakingmore policychanges,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:// 5http:// card news/obama government debt bailout program scam 1282.php 6http:// LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 8

9 policy description will be updated to reflect this change. (Posted on July 9) 7 Whilesuchpolicystatementsareclearlywellintentioned,theybegthequestion ofhowmucheffortgooglereallyhasputintoscreeningitsadvertisers. "ReadGoogle'svoluminousAdwordsContentPolicy,andyou'dthinkGoogleis awfullytoughonbadads,"wrotebenedelman,aprofessoratharvardbusiness School, in a 2006 study. "If your company sells illegal drugs, makes fake documents,orhelpscustomerscheatdrugtests,youcan'tadvertiseatgoogle. Googlealsoprohibitsadsforfireworks,gambling,miraclecures,prostitution, radardetectors,andweapons.whatkindofscamcouldgetthroughruleslike these?" Yet Edelman went on to identify a large number of Google advertisers who don'tmeetthesestandards: "Asitturnsout,lotsofpay per clickadvertiserspushandexceedthelimitsof ethical and legal advertising like selling products that are actually free, or promising their services are completely free when they actually carry substantialrecurringcharges." 8 As Edelman notes, the Lanham Act specifically provides for injunctive relief againstpublisherssuchasgooglefordistributingfalseadvertising. AreviewofGoogle'sowndatabasesshowsthatadvertiserswhobuydubious keywordssearchesaresomeofgoogle'sbestcustomers.asdetailedbelow,the highpricesforvariouskeywordsandthesubstantialcostestimatesprovidedby Googleareindicativethatcertaindubiousadtermsareinhighdemand. As Edelman first noted, this reveals an unsettling fact: Google has quietly become one of the country s biggest purveyors of obviously questionable 7http://adwords.google.com/support/aw/bin/static.py?hl=en&page=release_notes.cs 8http:// scams/#resp LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 9

10 advertising,fromfakeviagrato free softwarethatisn tactuallyfree.once,such merchantspeddledtheirwaresinthebacksofoffbeatmagazines,onlatenight localtv,andinothermarginalmediums.nowtheprocessismuchsimpler. TheFederalTradeCommission,whichregulatesadvertising,requiresthatall adsbetruthful,thatadvertisershaveevidencetobackuptheirclaimsandthat adsarenotunfair,accordingtotheftc sbureauofconsumerprotection. 9 Anadvertisementisconsidereddeceptiveifitcontainsinformationthatislikely tomisleadconsumerswhoareactingreasonably.anadcanalsobedeemed deceptive if it omits information that would be important to a consumer in makingadecisiontobuyaproduct.anadisconsideredtobeunfairifitcauses orislikelytocausesubstantialconsumerinjurythatisnotoutweighedbythe benefittoconsumers. Importantly,adscanbedeceptivebasedsolelyon"implied"claimsratherthan explicitones.soifanadvertiserimpliesthatitissomehowaffiliatedwiththe government,thatcanconstitutedeceptionundera1952appealscourtruling againstacreditcollectionfirmcallingitselfthenationalservicebureau.theftc cited the case last year in litigation against the website MakingHomeAffordable.gov, which allegedly "enticed consumers into providingfinancialinformationwhichdefendantthensoldascustomerleadsto marketersofmortgagereliefservices." TheFTClooksattheadfromthepointofviewofthe reasonableconsumer the typical person looking at the ad, according to the Bureau of Consumer Protection. Ratherthanfocusingoncertainwords,theFTClooksattheadin context words, phrases, and pictures to determine what it conveys to consumers. TheFTCalsolooksatwhethermaterialinformationisomittedfromthead.An advertiserisrequiredtohaveproofofitsclaimsbeforerunninganad. Beforea 9http://business.ftc.gov/documents/bus35 advertising faqs guide small business LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 10

11 companyrunsanad,it hasto have a"reasonable basis"fortheclaims, the bureausays. A reasonablebasis meansobjectiveevidencethatsupportsthe claim.thekindofevidencedependsontheclaim.ataminimum,anadvertiser musthavethelevelofevidencethatitsaysithas. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 11

12 3.Google smarketindeceptiveadwords Google's practice of selling prime advertising space to dubious loanmodificationmarketersisextensive.throughdozensofsearchesfromvarious geographiclocationsoveraperiodofmonths,consumerwatchdogidentified morethan20paidadvertisersofsuchservicesoperatingthroughhundredsof individualwebsites.wethenanalyzedafewofthesitesandfiguredoutwhois behindafewofthem thoughmanyofthesponsorsgotoconsiderablelengths tohidetheiridentities,evenastheydelveintoyours. Googleoperatesathrivingmarketforsearchtermsrelatedtoloanmodification throughitsadwordsservice,whichgeneratesmorethan90%ofthecompany s revenues.accordingtogoogle sownadwordstrafficestimator 10,theterm loan modification is currently getting an average of 301,000 searches per monthongoogle. Anothersystem,theSearch basedkeywordtool,showsthetopsearchesusing loanmodification. Thisdata(seenextpage)reveals theenormousdemandfrom homeowners caughtupinthemortgagecrisis,whogoontheinternetseekingawayoutof theiragonizingpredicaments. 10https://adwords.google.com/o/Targeting/Explorer? u= & c= &idearequesttype =KEYWORD_IDEAS#search.none LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 12

13 16PopularLoanModificationSearchKeywordsAuctionedByGoogle Global Monthly Keyword Searches modification loanmodifications loanmodification loanmodificationloan modificationloan modificationofloan modificationofaloan badcreditloanmortgage badcreditrefinance mortgagemodification modificationmortgage mortgageforeclosure homemodification mortgageadvice mortgagehelp loanhelp Thefrequencyofsuchsearchesisanindicatorofthehighdemandforthese services,whichofcourseisinkeepingwiththeeconomicclimate. One of the most popular search terms is stop foreclosure, which gets an estimated74,000searchespermonth.duringearlyoctober2010,thesearch resultfor stopforeclosure lookedlikethis(seenextpage): LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 13

14 Themostprominentresultshere(thirdbeneaththesearchbox)includeasite called ObamaHelpForeclosure.com, whichsolicitscallstoatoll freenumber, (877) Thatnumberis usedbyalosangeleslawyernamedalan Jurick,whoin2000enteredintoa$500,000settlementinfederalcourtwiththe FederalTradeCommissionregardingallegationsoftelemarketingfraud. Whenwecalledthenumber,weidentifiedourselvesasaconsumergroupand asked for more information about Obama Foreclosure Help. A person identifyinghimselfasa HUDCounselor named BillGimbel concededthat ObamaForeclosureHelpisn tactuallyaffiliatedwithpresidentobamaorany other part of the U.S. government. But the group will lead you in the right direction, promisedgimbel. AnothermajorGoogleadvertiserwhowasbuyingkeywordssuchas mortgage modification during the initial months of this study in spring 2010 was LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 14

15 namedjamesrambadt.injune2010,theftcsuedrambadtinfederalcourtfor fraud,allegingthatheillegally represented,directlyorindirectly,expresslyor byimplication,that[hiscompanies]aretheunitedstatesgovernment. Rambadt,ConsumerWatchdog sinvestigationfound,isactuallyasophisticated harvesterofconsumerpersonalfinancialinformation,whichhe thensellsto thirdparties.adetailedaccountofourinvestigationintorambadt sactivitiesis insection5. AnotherGoogleadvertiseriswww.stopforeclosurequick.org,whichclaimstobe anonprofitassociatedwith"oneofthelargestnon profitorganizationsinthe UnitedStates,"anoutfitcalledtheNationalHope Foundation.However,IRS records do not show a registered 501 C3 charity by that name. A company spokesman, Mike Lucas, insisted the group is registered with the IRS but declinedtoprovideanyproofsuchasaregistrationnumber. stopforeclosurequick.org also says it is affiliated with a firm called Home SolutionsofNorthAmerica,whichinturnsaysitispartofanonprofitcalled Financial Hope for America. According to a consumer blogger named Steve Rhode, "it appears that Financial Hope for America is a front for Certified FinancialProtectionGroup,afor profitcompany,andthewebsiteforfinancial HopeforAmericaisunderthecontrolof3MMarketingandMikeWayman," 11 a Californiabusinessman.Lastyear,Waymanwasthesubjectofa$7,000court judgment for defrauding a California consumer seeking a mortgage modification http://getoutofdebt.org/19332/non profit debt settlement financial hope for america who are theyreally 12http:// procedure judges/ html LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 15

16 ResultsofGoogleSearchfor"LoanModification,"April2010 ConsumerWatchdoghasnotbeenabletolocateanyevidencetobackupthe claimthatfinancialhopeforamericaisalegitimatenonprofit. Another dubious Google advertiser is which promises "Guaranteed Affordable Payments!" According to the FTC, it is impossible for a loan modification company to guarantee a more affordable loanpayment.thesitealsoclaimsthat"thegovernmentispracticallypaying thebanktokeepyouinyourhome,"anotherstatementthatiseitherawild exaggerationoranoutrightlie.yetanotherwhopper: inmanycases,principal will be reduced." The site invites troubled homeowners to provide personal financialinformation. Copyright notices state that the site was created by Custom Internet Lead Solutions Inc., a Florida firm that designs various marketing ploys targeting consumersinfinancialdistress. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 16

17 As seen on the following page, Custom Internet Lead Solutions promises internet marketing firms that it will help them make big money targeting consumers. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 17

18 Thefirm'sothersitesincludeFreeDebtSettlement.org,whichpromises"Settle yourdebtswithjustoneclickofthemouse."accordingtocorporaterecordsin Florida, CILS was incorporated by Justin B. Michaels of Tampa, Fl., a major spammer who was sued for fraud by Microsoft Corp. in2003. According to federal court filings, Michaels and his company Neoburst illegally harvested addressesfromhotmail"tosendunauthorizedandunsolicitedbulk advertisements." In August 2004, Microsoft obtained a permanent injunction and default judgment against Michaels, who never bothered to mountadefense. SowhoisMichaelssellinghishotmortgagemodificationleadsto? Asmallnoticeinsidethefreeloanmodinfo.net"privacypolicy"disclosesthatthe information"willbeusedtoevaluateyourmortgageforaloanmodificationby themortgagemitigationlawgrouponly."themmlgwasoriginallybasedjust acrosstownfrommichaelsinst.petersburg,andhasnowmovedtomaricopa, Ariz. Its original incorporators include former Illinois businessman Patrick Drury,whoin2006wasnamedinaregulatoryorderbystatebankingofficials forimpropermortgagemarketing.consumershavepostedcomplaintsalleging thatmmlgcollectedthousandsofdollarsinfeesfromthembutandfailedto modifytheirmortgages. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 18

19 4.TheDebtSettlementandCreditRepairIndustry Mortgagemodificationisanoutgrowthofthelargercreditrepairsector,which sells hope to consumers in financial distress. Many companies that sell mortgage modification also offer to help consumers repair their bad credit records.inyearsofinvestigationsandlawsuits,theftcandstateregulators haveshownthatthecreditrepairindustryisriddledwithfraudulentpractices includingfalsepromisestofixbadrecords. CreditrepairadsareanotheroneofGoogle'sproductlines,withanestimated 368,000searchesfor"creditrepair"permonthandarelativelysteep$6.60costper click for the best advertising position.an advertiser who wants the full number of daily clicks, estimated at 211, will get a daily bill from Google of $1,429.Evenmorestaggeringisthevalueofthesearchterm"badcredit,"which gets an amazing 1.83 million searches a month. An advertiser who wants a premiumspottoharvestalloftheestimated2,114clicksadaywouldhaveto paygoogleamind boggling$16,259 daily. TheFTCwarnsconsumersawayfromcreditrepairservicesthatclaimtheycan fixbadcreditscores."don tbelievetheseclaims:they reverylikelysignsofa scam,"theftcstates.agencyattorneyshave"neverseenalegitimatecredit repairoperationmakingthoseclaims." AndyetasamplingofGoogleadvertisersshowscompaniespromising:"Geta 720CreditScore,"and"100%GuaranteedPermanentResults." Whileit stemptingtomakelightofsuchdubiousadvertisersasabyproductof Google s size, a recent report underscores that Google s customer base is surprisinglyshortonbigbrandedadvertisersandappearstorelyonsmaller firms selling individually targeted products. According to a recent article in AdvertisingAgebasedonaleakedinternalGoogledocument,thecompanygets comparativelylittleofitsrevenuefromlargewell knowncompanieslikeapple LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 19

20 orfordmotorco.thecompany'stoptenadvertisers"collectivelyaccountedfor just5%ofgoogle'su.s.revenue"injune2010,adagereportedonsept.6. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 20

21 5.InDepth:We refromthegovernment(notreally)andwe reheretohelp (Notreally) ManyoftheadvertisementsonGoogleleadtositesthatdisplaylogosand/or text designed to lead a consumer to believe that government agencies and mediaendorsements were connected tothe advertisement, sometimes with disclaimersintinyprintdenyingsuchconnections. OneoccupantoftheprimespotatthetopoftheGooglesearchresultspagehas beenobamafederalloanmodification.org,ablatantlydeceptivesitethatwenta stepfurtherbyusingthe".org"addresssuffixtotrickconsumersintothinking it'sanonprofit. Inanotherblatantdeception,ObamaFed'ssiteboastedthat"asseenon"CNN, FoxNews,andUSAToday completewiththeirlogos. OnlyifyouhappenedtopullupObamaFed'sprivacypolicywouldyougetthis disclaimerinsix pointtypeattheverybottom: * AsSeenOn refersonlyto government and/or federal loan modification information discussed on the variousnewschannels.thetrademarksincludedonthispagearepropertyof theirrespectiveowners,whohaveofferednoendorsementofthiswebsite." 13 13http:// LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 21

22 WhileObamaFedisnolongeralivesite,Google'stopadvertisersnowinclude theverysimilarwww.loanmodificationdepartment.us,whichlookslikethis: TheFTCtermformarketinglikethisis deceptiveadvertising. Inacasefiled lastyearinfederalcourtincalifornia,theftcsuedanoutfitcalledthefederal LoanModificationLawCenterLLPanditsownerspartlyonthegroundsthat they "have represented to consumers, expressly or by implication, that Defendants are part of, affiliated with, or endorsed by the United States government or one or more federal government programs." Making such claimsis"falseandmisleadingandconstitutesadeceptiveactorpractice." (Seehttp:// LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 22

23 As pictured, President Obama, CNN and CNBC all appear to approve of Wecansave yourhome!calltoday! Butinthesmallerprint,thisattorney createdsitebacks off,stating: Thiswebsiteisattorneyadvertisingandbasicdescriptionsofthe servicesweprovide.itisdesignedtoprovideyouwithgeneralandintroductory informationonly. The Oceanside, California firm behind the ad,1st American Law Center, has attractedcomplaintsonripoffreportandpissedconsumer.com.thesandiego Better Business Bureau gave 1 st American a D rating for 14 complaints (resolved)and3complaints(unresolved)sincethebusinessincorporatedin April AcomplaintonRipoffReportmaynotbeproofthatacompanyistrulyatfault. ButyoucanprotectyourselfbystartingoutwiththeUSgovernmentsponsored services that are available. MakingHomeAffordable.gov a US government site, warns Beware of ForeclosureRescueScams HelpIsFree! andpointsconsumerstoadatabase of HUD approved housing counseling agencies at where local help can be found. Assistance is also available at Hope Now which warns Beware of scams. Counseling is alwaysfreethroughthissite.call HOPE. 14http:// diego/business reviews/loan modification/1st american law center inc inoceanside ca / LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 23

24 6.InDepth:HarvestingYourPersonalFinancialData Google also makes money off another group of companies that prey upon distressedhomeowners.thesefirmsoperateinthegreymarketforpersonal informationaboutdistressedhomeowners,runningwebsitesthatspecializein procuringsuchdata. Untilrecently,oneofGoogle'sbiggermortgage modificationadvertiserswasa vastgroupofcompaniesandwebsitesaffiliatedwithasimivalleybusinessman named James Rambadt. One of Rambadt's vehicles, called 123 Creator, has registered hundreds of credit distress counseling websites, while Rambadt himself has incorporated scads of companies from Notarize 2 U to Sex See Lingerie. Rambadt is also the administrative contact for a site called which paid top dollar to advertise on Google abovethesearchresults,asshownhere(highlightingadded). Thesite,whichisdrapedinreferencestothefederalgovernment,wasusedto collectpersonalfinancialinformationandthendirectcallerstoacompanyin Utahsellingloanmodifications. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 24

25 Internet registrationrecordsshow that on two 123 Creator nameservers. Other sites on the 123 Creator nameservers include isverysimilartofedmortgageloans, andwww.modifyhomedebt.com. Atwww.FEDMortgageLoans.com,homeownerswereinstructedto Filloutthe Form to the Right and answer the Three Questions, and find out instantaneously if your Mortgage is Eligible for the Obama Federal Loan ModificationProgram. Underneaththeinstructionsisanofficial lookinggraphicof1600pennsylvania Avenuereading: THEWHITEHOUSE WASHINGTON There are also small logos for the Department of Housing and Urban DevelopmentandtheTreasuryDepartmentatthebottomofthepage. Whenyouputinyourcurrentmortgagepayment,yourloanamount,andthe nameofyourbank,thesitegivesyouaheartycongratulation,asseenonthe nextpage. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 25

26 Notethefakegovernmentlogosatthebottomcorners.Whenthehomeowner callsthe800numberandprovidesthepinnumber,thecallistransferredtoan entirelydifferentcompanybasedontheinformationthatwasprovided.when ConsumerWatchdogtriedit,asalesmancameonthelineandidentifiedhimself LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 26

27 as an employee of Fortified Financial, a small company in Utah that was incorporatedin2004(seehttp:// The salesman said Fortified doesn t own the FEDMortgageLoans website, whichisactuallyownedby anadvertisingcompany, hesaid. Therearequitea fewsitesoutthere, heobserved. Rambadt has some familiarity with financial distress, having filed for bankruptcyin2002.there'salsoalong,depressingtalefeaturingrambadtthat waspostedonthewebafewyearsagobyasmallbusinessmanwhobought someusedequipmentfromacompanywhererambadtwasvicepresident(see aligner.com/universal.htm). It'simportanttounderstandthatGoogleadvertiserssuchas123Creatordonot hideoutdeepinthebehemoth'spaidsearchresults.rather,123creatorhas paidtopdollartoperchintheupperleftpartofthegooglesearchpage,directly abovethetopmostsearchresults.thispositioning,whichgooglehighlightswith anoff whitebackground,isauctionedoffbygoogletothehighestbidder. Corporate records show that Mr. Rambadt is an officer of a company called Dominant Leads, which is based in the Simi Valley neighborhood of Agoura Hills.ThewebsiteforDominantLeadsboaststhatithas thenewestandmost innovativeleadsonthemarket. Amongthemany products offeredbydominantleadsisto Havereal time Internetdebtsettlementleadscallingyou! The site explains: How it Works: We use marketing campaigns that target peopleinquiringonlinetorelievetheirdebt.theconsumerthenfillsoutthe formonlineandwecaptureandqualifytheirinformation.iftheinformation matches your required filters, the consumer is called immediately. The call prompts the consumer to opt in if interested by pressing 1. Then the consumeristransferreddirectlytoyou. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 27

28 InJune,theFTCsuedRambadtinfederalcourtinWashington,DC.,allegingthat hismortgagewebsitesfalselypresentedthemselvesasaffiliatedwiththeu.s. government,thatthesitestrickedconsumersintohandingoverinformationby falsely telling them they were eligible for a government program, and lying abouttheexistenceofgovernmentdebtreliefprograms. WhattheFTCcomplaintdoesnotshowisthatRambadtwasakingpininthe marketforexploitingconsumerfinancialwoe,internetrecordsshow,withat least 236 websites related to credit repair, debt relief, and mortgage modification.theftccomplaintandsupportingdocumentsalsodonotmake cleartheextentofgoogle'sroleinfacilitatingthisallegedfraud.withoutgoogle's cooperation, it's not possible to know how many of Rambadt's sites were Googlecustomers. TherelationshipbetweenGoogleandtheloanlead generationindustryraises seriouslegalandpolicyissues.suchactivitiescouldqualifyasillegal pretexting gatheringpersonalfinancialinformationunderfalsepretenses.variousstate andfederalstatutesprohibitthispractice.asapolicymatter,therelationship between the search engine companies and lead generating firms results in large scale exchanges of personal financial data in completely unregulated conditions. This exchange could easily evolve into a new black market for personaldatausedtocommitfinancialcrimesagainstindividualsandfinancial institutions. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 28

29 7.InDepth:USMortgageBailout Among the sites which surfaced in the CW investigation was which appeared near the top of the page on GooglesearchresultsasapaidadvertiserinasearchperformedonMarch9of lastyear. USMortgageBailoutengagedinseveralmisleadingpractices,includingclaiming tobe fullylicensed initsgooglead.butthecompanywhichsponsoredthesite, K2 Capital Management Inc. of La Jolla, was cited by the California Attorney General in August 2009, for failing to register with the state as a loan modificationcompany. 15 USMortgageBailout was one of several sites that displayed a logo for the National Loan Modification Association of America Whiletheassociationisdesignedtolooklikeanonprofit,ConsumerReports revealedthatitwasactuallyaffiliatedwithsubprimelenders http://ag.ca.gov/cms_attachments/press/pdfs/n1780_registry_list.pdf 16http://blog.consumerwebwatch.org/2009/04/affordable_hope_nlmaa_homestar.html LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 29

30 AroundthattimeitwascitedbytheCaliforniaAG,USMortgageBailoutabruptly closedshopandpostedanoticeonitswebsitesayingithadceasedoperations due to circumstances beyond our control. However, numerous angry consumers have complained that it did not refund their fees, which often amountedtothousandsofdollars. K2wassetupbyK2CapitalManagementInc.ofLaJolla,Calif.in2009,according tothecaliforniadepartmentofcorporations.thefirmhasbeenthesubjectof numerousconsumercomplaints.alargegroupofangryconsumerswhoclaim thefirmtooktheirmoneybutofferednohelpwithmortgagemodificationshave banded together to investigate K2 and tell their sad stories here mortgage bailout scam complaint reviewor praise. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 30

31 InresponsetoinquiriesfromConsumerWatchdog,manyoftheseconsumers said that they found the site via Google searches. While several did not rememberexactlyhowthatprocessunfolded,it salmostcertainthattheywere drawn by thepaidadvertisementsratherthananorganic search trafficto USMortgageBailout.comwouldnevermerititsappearanceinthefirstseveral pagesoforganicsearchresults. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 31

32 8.LeadGeneratorsPoseasLoanModificationAdvertisers Many companies that generate leads to sell to other companies collect informationbyadvertisingongoogle.asamplingoftheseadvertiserscanbe found by searching on Google for "loan modification leads." Usually, these companiessellpersonalfinancialinformationaboutconsumerstowhomever wishestobuyit. It is legal to sell personal financial data as long as the information has been providedwillingly.however,theftchasbroughtcasesagainstcompaniesthat allegedlyusedeceptivepracticestogetthisinformation,thenfailtosecurethe dataonceit'sinhand. OneloanmodificationleadssellerthatadvertiseswithGoogleistheWisdom Companies LLC of Hermosa Beach, Calif., which says it can use consumer personal financial information "for any legal purpose, including selling or transferring such information at any time to third parties for any legally permissiblepurchase." WisdomCos.wasthesubjectofaJune9,2009ceaseanddesistorderbythe Massachusetts Commissioner of Banks for "not operating honestly, fairly, soundlyandefficientlyinthepublicinterest." During the study Wisdom Cos. was running an ad on Google for loanmodificationleads.com,whichclaimsthat1,000mortgagemodificationleads willproduce$170,000ingrossprofit. These leads are harvested through Wisdom sites such as Loan Modification Connection, which asks consumers to provide private financial information including income. While Wisdom Cos. doesn't list its prices, quotes from competitorsindicatethatpricesrunfrom$5to$20percustomer. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 32

33 AlengthyprivacypolicypagedisclosesthatLoanModificationConnectionisn't actuallyinthebusinessofmodifyingloansbutisrather"anon lineconsumer service that introduces persons such as yourself to certain of our business affiliateswhohaveexpressedageneralwillingnesstoreviewyourinformation anddetermineiftheyarewillingtoprovideyouwiththeservicesorproducts thatpromptedyoutovisitoursite." Wisdom also sells leads for credit repair, debt and tax problems. Like many otherfirmsinthemortgagemodificationindustry,wisdomwasheavilyinto promotingmortgagesthroughinternetadvertisinguntilthemarkettankedin Theonlineleadgenerationindustry,whileobscure,isbigenoughtohaveits own annual conference in Las Vegas. (See "Online Led Gen, as its known, is a rarely examined part of the financialservicesindustry:therearebigbucksforthosemarketers whocanidentifyanonlineuser sinterestinamortgageorloan.often unwittingly, information that consumers provide on credit card applications, in surveys, contests and other registrations becomes personaldatathatcanbesoldtoledgenbrokers.marketersspent $1.7billionfordigitalleadgenerationadvertisinglastyear." 17 17http:// dollars LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 33

34 9.Google sresponsibility ShouldGooglebepolicingthecontentofitsadvertisers?Theanswerisclearly yes. While Google takes the legal position that it has limited responsibility for policing advertiser content, in practice the company regulates advertiser contentallthetime.indeed,googlehasawholelistofadvertisingpoliciesfor AdWordsthatlimitorprohibitadsfortypesofproductsoractivities.Online pharmacies,fireworks,and solicitationoffunds arerestricted,asare images ofabortedfetuses, gruesomelanguage, thesaleofhardalcoholandliquor, orwebsitesthat promoteunrealisticclaimsorpromises. Forthewholelistsee =guidelines.cs&answer=69581&adtype=text&country=us. Inaddition,Googlehasconcededinrecentlegalcasesthatithasaresponsibility nottopermitadvertisingthatitknowsisdeceptiveorfraudulent.mostnotably, thisoccurredinarecentcaseinvirginia,wheregoogleintroducedextensive evidence about these efforts including the fact that it employsa Trust and SafetyManager 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 loan modification companies. Yahoo and Bing engage in similar practices. But Google sacceptanceofthismisleadingadvertisingissurprisingforacompany thatpridesitselfonbeingbenevolent.astheall powerfulmarketleader,google shouldbesettingapositivestandardforitsindustry. Google andthe other search engineproviderscan hardlyclaim they haven t beenwarnedabouttheunethicalpracticesofthesemarketers.inadditionto somehigh profilelawsuits,theftcisintheprocessofwritingnewrulesthat 18RosettaStoneLtd.v.GoogleInc.,1:09cv736,EasternDistrictofVirginia. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 34

35 makeitevenclearerthatdeceptiveloanmodificationadsareunacceptableand illegal.seehttp:// ThefirstdraftoftheseruleswaspublishedonJune1,2009. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 35

36 10.ConclusionsAndRecommendations Googlehasprofitedsignificantlyfromfraudulentadvertisingintheconsumer financialsector,despitenumerousgovernmentwarningsandcompanypolicies againsttheacceptanceofmisleadingads. Googleshouldtakeimmediatestepstopurgemisleadingmortgageandcredit repairadsfromitssearchenginesanddonatetocharityallrevenueitreceived fromquestionablesources. TheFederalTradeCommission,foritspart,shouldbemoreaggressiveintaking actionagainstsearchproviderswhorundeceptiveads. Herearefivespecificrecommendations: 1) Googleshouldbemorediligentinscreeningadvertisinginareassuchas mortgage modification and credit repair where fraud is known to be a seriousproblem.ifthecompanyfindsthatscreeningadsisnotfeasible,it shouldbanalladvertisinginareaswhereregulatoryagencieshaveshown thatfraudulentadvertisingisendemic. 2) Wherefraudisaknownproblembutlegitimatefirmsalsooperate,Google shoulduseitsadvertisingtechniquestopostpublicserviceadsthatcounter deceptiveads.forexample,ifaloanmodificationadreferstothefederal government, a Google sponsored disclosure statement should appear prominently alongside to warn consumers that they should be wary of mortgagelendersusingsuchterms. 3) Google should initiate and help set industry wide standards to prevent fraudulentadvertisingontheinternet. 4) Googleshoulddonaterevenueithasreceivedfromquestionablefinancial advertisingtonon profitgroupsthathelpconsumerswithcreditproblems, includinghomeownersseekingtoavoidforeclosure. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 36

37 5) TheFederalTradeCommissionshouldbeginusingitslegalauthorityunder thelanhamacttoseekinjunctionsagainstsearchproviderswhoaccept largeinventoriesofadvertisingfromfirmstheyhavereasontobelieveare engagedindeceptivepractices. LiarsandLoans:HowDeceptiveAdvertisersUseGoogle 37