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CHIPS Articles: FTC shuts down phony military recruiting websites

FTC shuts down phony military recruiting websites
By CHIPS Magazine - September 7, 2018
The operators of copycat websites army.com and navyenlist.com have agreed to settle Federal Trade Commission charges that they targeted people seeking to join the U.S. Armed Forces and made false claiming to be affiliated with the military to generate sales leads for post-secondary schools, according to a news release from the FTC.

According to the FTC’s complaint, which was filed by the Department of Justice (DOJ), on behalf of the Commission, the defendants have used copycat military recruitment websites since at least 2010. Some of the websites, such as army.com and armyenlist.com, appeared to be official recruiting websites affiliated with the U.S. military.

The websites persuaded potential military recruits to submit personal information by disguising their websites and advertisements as official recruiting channels and representing that the information will be used solely for recruiting purposes and will not be shared with anyone else, according to the FTC.

Instead, the FTC charged that the defendants sold the information as marketing leads to post-secondary schools for $15 to $40 per lead.

In addition, people who submitted their information allegedly received follow-up phone calls from telemarketers who continued the misrepresentations by posing as members of the military, hyping specific schools, and giving consumers the false impression that the U.S. military actually endorsed these schools by advertising the schools on their websites.

Lead Generation

This action is part of the FTC’s effort to combat government imposter schemes, the most frequent type of fraud complaint from military consumers in the FTC's Consumer Sentinel database. It also builds on the agency’s work in the area of lead generation, including its examination of the various players involved.

Lead generation has been around for a long time; merchants and advertisers have long sought to identify individual consumers they deem as receptive to a sales pitch. The speed and power of the internet have made online lead generation fast and prolific across the marketplace, connecting consumers who are interested in goods or services with the retailers and providers who offer them. But lead generators often operate behind the scenes in complex ways that can mask their presence so that consumers and many businesses may know little about what they do and how they do it, the FTC explained.

Lead aggregators are marketing firms that act as middlemen between clients and affiliates. They negotiate a fixed price per lead with their client and then contract with third parties at lower prices to generate the leads. Many of these aggregators also generate leads, too.

As the nation’s consumer protection agency, FTC has broad jurisdiction over lead generators, whether they are generating leads for a lender, an educational institution, or a company offering goods or services. Using this authority, the agency has brought law enforcement actions against unscrupulous actors in the lead generation industry. For example, the FTC has sued lead generators that lured consumers with promises of extremely low fixed-rate mortgages or free refinancing, but then sold consumers’ information to entities that did not actually offer these deals.

In another case, FTC sued payday loan lead generators that sold consumers’ sensitive bank account information to non-lenders who simply debited charges directly from consumers’ accounts without prior authorization.

Multiple Charges and Penalties

The defendants, including the Alabama-based companies Sunkey Publishing, Inc. and Fanmail.com, LLC, have agreed to relinquish army.com, armyenlist.com and other domain names, and to stop the practices that they allegedly used to deceive consumers.

The FTC charged the defendants with violating the FTC Act and the FTC’s Telemarketing Sales Rule (TSR). The agency also alleged that they violated the Do Not Call provisions of the TSR by placing hundreds of thousands of illegal telemarketing calls to phone numbers on the National Do Not Call Registry and by failing to pay required fees.

The two proposed orders settling the FTC’s charges require the defendants to turn over to the FTC websites used to deceive consumers, including army.com and armyenlist.com. Turnover of these websites partially satisfies the civil penalty judgments of $11.1 million against Sunkey and $1 million against Fanmail. The judgments are otherwise suspended due to defendants’ inability to pay; however, if the defendants are later found to have misrepresented their financial condition to the FTC, the full amount of the penalty would become due.

The proposed orders also ban the defendants from misrepresenting a military affiliation, the endorsement of particular schools by the military, or the extent to which they share consumers’ personal information. They require the defendants to disclose that their sites are not official recruiting websites of the U.S. military, to solicit consumers’ acknowledgement of that fact, and to get permission to disclose consumer information collected in connection with lead generation for any purpose.

The defendants also must notify the companies that bought consumer data from the defendants of the FTC’s allegations and instruct the companies to stop using the data.

The FTC cautions that before you fill out forms or applications on a website, find out more about who is actually requesting your information and for what purpose by doing an online search for the site owner with words like “complaint” or “review.”

If you think you have received a call from a government imposter, report it to the FTC at FTC.gov/complaint.

If you’re interested in information on U.S. military recruitment, please visit this site from the Department of Defense for more information.

Fake website impersonating U.S. Army official recruiting website. The defendants, including the Alabama-based companies Sunkey Publishing, Inc. and Fanmail.com, LLC, have agreed to relinquish army.com, armyenlist.com and other domain names, and to stop the practices that they allegedly used to deceive consumers.
Fake website impersonating U.S. Army official recruiting website. The defendants, including the Alabama-based companies Sunkey Publishing, Inc. and Fanmail.com, LLC, have agreed to relinquish army.com, armyenlist.com and other domain names, and to stop the practices that they allegedly used to deceive consumers.
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