You've seen the bogus pitches from a variety of online promoters before.
Win a free iPod!
Get a free Xbox!
Step right up for your Chili's gift card, gratis!
You know better than to believe in those phantom freebies, of course. The asterisk hog-ties you to a purchase -- sometimes several purchases -- if you want to claim your "free" prize.
Well, the Federal Trade Commission probably never got that free PS3 it was promised, so now it's out for blood. ValueClick
ValueClick claims this is the first time it has heard from the FTC on the matter, but it should have seen this coming. Last month, RBC Capital Markets analyst Jordan Rohan took the company to task for this very practice, warning that earnings could be hit as a result of tighter regulatory scrutiny of deceptive marketing campaigns.
ValueClick isn't toast, however. Rohan indicates that just a third of the company's business is derived from generating online leads. Yet ValueClick may have to do a bit of soul searching to come up clean in the future. At the very least, this could be the beginning of the end for some of the WebClients-owned sites like PinkPhone4Free.com, which feast on collecting contact information from unsuspecting applicants who are unlikely to ever jump through enough hoops to receive their diamond-studded cell phones.
In the past, the "free" brands were the ones lashing out at ValueClick on the basis of trademark infringement. The company's WebClients arm settled a lawsuit with Wal-Mart
The inquiry is bad. So why did the stock open 9% higher this morning? Well, the timing of the inquiry couldn't have come at a better time for ValueClick. The filing comes just as digital marketing peer aQuantive
So on an FTC move that could cast a dark cloud over interactive-marketing specialists like Aptimus
So here's my shady promotional pitch for ValueClick today:
Free Bearish Reprieve!*
*Thank Mr. Softy today, but be prepared to possibly pay later.
Longtime Fool contributor Rick Munarriz sees the irony in search specialists searching for smaller search stars. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. He does not own shares in any of the companies in this story. The Fool has a disclosure policy.