Last week, the FTC entered into a settlement with LendEDU, a lead generation website that compares and ranks student loan and other financial products, and three of its officers. According to the FTC, LendEDU heavily promoted its website to consumers as offering “objective,” “accurate,” and “unbiased” product information, when, instead, it offered higher rankings and ratings to companies that paid for placement — a practice known as “pay-to-play.” The FTC uncovered multiple emails between LendEDU’s employees and advertisers demonstrating the advertiser’s ranking was clearly based on the amount it paid LendEDU per click.
The FTC also alleged that company employees, family members, friends, associates or others affiliated with LendEDU posted fake positive reviews of the company’s website on third-party platforms. The FTC described the extent of the fake reviews, noting that 90% of the company’s reviews on the website, trustpilot.com, were created by a person affiliated with the company.
The settlement prohibits the company from misrepresenting the objectivity of its ratings and the influence of compensation on its rankings, mandates clear and conspicuous disclosures of the influence of compensation on its ranking and whether any reviewer is affiliated with the company, and orders it to pay $350,000.
In a concurring statement, Commissioner Rebecca Slaughter stressed that addressing “purportedly neutral rankings and recommendations that actually reflect paid product placement” was of high importance to the FTC. She further warned companies that engage in this practice to “take heed.”
The settlement is no surprise as the case brings together two issues high on the FTC’s radar: student loan debt relief and fake reviews. Commissioner Slaughter’s statement indicates that “pay-to-play” is also high on the FTC’s 2020 priority list.