Reports emerged sometime ago that Azoogle and other CPA networks were being investigated for the possibility of fraud as it relates to various tactics used to promote ringtones. For example, there were questions around the idea of affiliates promoting offers for “free ringtones” when in fact the ringtones weren’t free since a monthly membership fee or similar payment structure was required to download a ringtone.

I will let you read the settlement arrangement for yourself (see below), but a financial settlement of this size, in general, suggests either (1) avoidance of prolonged or expensive litigation, regardless of guilt or (2) guilt based on the facts.

I guess there is also a hope through settlement that it won’t reach the news but others have already started the news train that is likely to follow.

If you read the press release carefully you’ll see that on the one hand Azoogle made a settlement, but on the other hand they are being praised for providing considerable assistance to the Florida Attorney General to help protect consumers from “fraudulent” online marketing practices - that’s definitely one way of making bad news seem not so bad!

It appears that the original story was posted on Digital Point, but has since been taken down (again, it’s my guess that Azoogle doesn’t want this news to spread?????).

However, here is a link to the actual press release posted on the website of the Attorney General of Florida (and former republican Congressman) Bill McCollum and here is basically what it says:

“TALLAHASSEE, FL – Attorney General Bill McCollum today unveiled a sophisticated team to combat internet-related fraud and simultaneously announced the first agreement reached by the newly-created CyberFraud Task Force. The task force, which takes action against companies who defraud consumers online, is part of the Attorney General’s efforts to make the internet safer for Florida consumers. Housed in the Attorney General’s Economic Crimes Division, the task force today reached a $1 million agreement with internet marketer Azoogle (Azoogleads US Inc.), a New York company that creates and manages internet marketing of cell phone products.”

“Consumers in Florida and throughout the nation have long been victimized by internet marketing that promises one thing and delivers another,” said Attorney General McCollum. “This task force will be instrumental in identifying problematic trends in the industry and working towards solutions that will hold the industry and its players responsible for their practices and provide remedies for our citizens.”

Today’s agreement, which will serve as a model for the way cell phone content will be marketed online, resulted from an investigation conducted by the CyberFraud Task Force into the marketing of ringtones and other cell phone products. Investigators determined that consumers, usually children or teenagers who were responding to “free” cell phone ringtone offers, were often enrolled into subscription plans without their knowledge or consent. The fees for the plans were then billed to consumers’ cell phone bills. The cooperative agreement will require the true cost of ringtones to be clearly and conspicuously disclosed on all internet ads and order forms.

In working with Attorney General McCollum’s Office to resolve concerns about its marketing practices, Azoogle has already provided and will continue to provide substantial cooperation and assistance to the CyberFraud Task Force as the working group endeavors to reform the industry….”

For the remainder of the release CLICK HERE.

To read the actual agreement between Florida’s CyberFraud Task Force and Azoogle CLICK HERE.

By the way - it’s my guess that Azoogle did the right thing here.

The truth is that the US ringtone industry of six-months ago and the ringtone industry of today has changed considerably. I have no idea exactly what Azoogle or Azoogle affiliates were doing that could have led to this settlement, but I do not that many CPA and Affiliate Networks were likely using similar practices.

The affiliate ringtone industry continues to mature and as the state attorneys general and the feds get involved I believe there will continue to be a shake out.

This is a smart move by Azoogle to put this behind them. I bet other CPA Networks will have to follow or face stiff legal bills and bad press.

This entry was posted on Thursday, November 8th, 2007 at 7:38 pm and is filed under Uncategorized, affiliate marketing, azoogle, ringtones, Digital Point. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.