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'Fakeosphere' latest Web trap for consumers

This blog-like service is really an ad for a Web sales company.
This blog-like service is really an ad for a Web sales company.

Click on a weight-loss, work-at-home or acai berry ad and you're likely to land on what looks like a blog or discussion board. Regular folks appear to be debating the merits of the product – you might even see some contrary opinions. But in the end, the bloggers and their readers always win over the skeptics and persuade them to buy the product from a convenient nearby link.

Welcome to the "fakeosphere." Internet marketing veteran and analyst Jay Weintraub says fake blogs – or flogs – fake news sites and manufactured testimonials are the fastest-growing segment of Internet advertising. He thinks it's a $500 million-a-year industry – and he compares it to the explosive growth of spam a decade ago.

"I don't think people realize how big this has become, and how quickly," said Weintraub, adding that a popular top flog campaign can generate 10,000 daily sales.

That growth might be quickly stunted, however, with recent word from the Federal Trade Commission that fake testimonials from consumers – including fake blogs -- violate federal advertising laws. Weintraub thinks a crackdown may be coming. Already, the state of Illinois has sued a series of Internet marketers for allegedly fraudulent social marketing campaigns.

How does the fakeosphere work? Here's one example tracked by msnbc.com.

Starting in September, visitors to many newspaper Web sites in the Northeast were confronted by an unexpected pop-up ad.  A Web site named WebAnswersPro.com interrupted their surfing, displaying what seemed to be an open debate about a get-rich-quick product named the Google Wealth Connection. The entry began with a question from an apparently curious user about the service's claims that participants were earning up to $4,800 a month. An apparently spirited conversation followed, with some posters questioning the service while others shared their personal success stories. One attractive poster even claimed the site helped her pay for college.

"You've convinced me! I just ordered my Google Wealth Connection kit. I will report back with the results later," concluded user marie09.

WebAnswersPro.com, which displays comments like a typical blog, mimics question-and-answer services like Yahoo Answers. Its creators went to great lengths to make it appear like any other Web discussion service -- there's even an advertisement for Dish Network alongside.  That ad, however, is not linked to anything.  In fact there is only one active link on the site, and there's only one question answered on the service. All roads lead to the Google Wealth Connection.

While individual posts on WebAnswersPro appear to be from random Internet users, repeat visits to the site suggest the conversation is manufactured: After one month, marie09 has failed to report her success or failure to the group. In fact, the conversations remain identical, except for one element: the time and date stamps had been updated to make it appear as if the discussion is only 24 hours old.

Nevertheless, the technique is apparently successful in generating traffic.  WebAnswersPro went from essentially zero traffic to hundreds of thousands of daily visitors within a single month, according to Quantcast.com, an Internet metrics service.

Following the link on WebAnswersPro brings users to a site named SimplePaycheck.com, where visitors are invited to sign up for a $60-per-month service called MyMoneyPlan that offers tips on search engine marketing.

E-mails sent to SimplePayCheck.com drew no response and calls to the customer service telephone number on the site went unanswered.

Google, in a statement provided to msnbc.com, said it was "not affiliated" with the site and has discussed abuse of its brand name with various federal agencies. The firm has also posted advice for consumers on its blog.

Google is hardly alone, however. Nearly all major media firms and many popular TV stars – NBC, CNN, Oprah Winfrey, Rachel Ray, to name a few -- have seen their names and logos plastered all over the fakeosphere.

FTC investigating

Last week, as part of its new guidelines aimed at blogs and Web advertisers, the Federal Trade Commission issued a warning about the use of fake customer discussions. The agency's advertising bureau chief, Mary Engle, would not discuss WebAnswersPro or any other specific advertisement, but she told msnbc.com that the agency has "non-public investigations under way" in the area.

The Internet has spawned hundreds of new advertising forms, giving the FTC a regulatory headache.  One person's clever viral marketing campaign might be another's unfair and deceptive advertising practice.  Employees pretending to be satisfied customers on blogs is illegal; but what about free coupons that go to independent bloggers who genuinely like a product and say so on their Web site?

The new guidelines generated controversy among vocal bloggers, who feel it might unfairly curtail their still-evolving business models.

But Engle says there's not much vagary around the use of fictional conversations presented as the Web chatter of real consumers.

"Advertising always has to be clear that it's advertising," she said.  "An ad disguised as a blog, or a blog where companies get people to pose as satisfied customers and write reviews, both are deceptive."

Further, she said, the FTC's endorsement guidelines require that any claims made by happy customers must represent "honest opinions and beliefs," and must be verifiable.

Earlier this year, msnbc.com's Herb Weisbaum reported on several alleged scams involving online money-making schemes.

Fake blogs have a long and unsavory past. Back in 2005, an advertising group called Commercial Alert asked the FTC to open an investigation into the practice. (PDF)

In 2006, a free-lance writer and a professional photographer traveled the country in an RV, writing a blog called "Wal-Marting Across America" that painted the retail chain in glowing terms.  The firm was embarrassed when bloggers reported that Walmart helped subsidize the trip. 

Flogs: The 'missing link'

The "flog" technique has largely been abandoned by larger firms, but it found strong footing early this year among former spammers and other niche Web marketers, according to Weintraub, the Internet marketer.

“It turned out to be the missing link for a lot of them,” he said.  So-called performance click marketing, which requires consumers to click through an advertisement and spend money, has notoriously low success rates.  Surprisingly, inserting an extra step into the process – fake testimonials and blogs – dramatically improves conversion, he said.

"Fifteen years people have been trying to market online, this proved to be key," he said. "The biggest difference is that somebody realized that blogging as a medium had seeped into consciousness and become like TV news, had become a trusted source. The average person doesn't realize blogging can be easily manipulated."

The fakeosphere, however, has begun to attract attention from regulators and big brands.  In August, Illinois Attorney General Lisa Madigan sued three firms selling acai berries in connection with a weight-loss advertisement.  Two are accused of fraud – tricking consumers with free trial offers that turn out to be costly -- while the third is accused of false advertising and false endorsements through a social networking campaign.

 Madigan's office teamed up in the investigation with Oprah Winfrey's Harpo Productions, which also filed a series of lawsuits – many alleging that the berry ads implied that the daytime TV star endorsed their product.

"We must hold these Internet scammers accountable for their role in a seedy marketing game that steers unsuspecting consumers to online schemes," Madigan said. "We also need to send a clear message to other marketers and networks in the business of designing misleading, traffic enticing schemes."   

Why it works

If it seems like fakeosphere ads appear all over the Web – even on news sites like msnbc.com – that's because they do. Individual media companies don't do business directly with acai berry retailers and the like. Instead, advertising networks like AdBlade, AdSonar, Pulse360 – which supplies ads for many popular Web sites, including msnbc.com -- and others make arrangements with hundreds of Web sites to fill unsold ad space with what are sometimes called "remnant" ads. The complicated arrangements often make quality control difficult, allowing firms that place deceptive ads to fly under the radar for weeks or even months.

"We object to 'fakeosphere' or similarly deceptive ads appearing on our site," said Kyoo Kim, msnbc.com's vice president for sales. "When we see such ads, or they are called to our attention, we contact the ad networks distributing them, which have been responsive in taking them down.  Both we and the ad networks have a vested interest in stopping the proliferation of ads that undermine the value of legitimate messages from legitimate companies."

A slump in Internet advertising has also played a role in the fakeosphere explosion, Weintraub said, as the level of unsold ad inventory has grown and prices have dropped.

Some have likened the fakeosphere to "advertorial" campaigns – special sections that look like editorial content, but are created by advertisers -- that are now familiar in local newspapers. These sections must be labeled as ads, and cannot contain false claims or fake endorsements.

Some ads in the fakeosphere look exactly like advertorial content and include clear labels. But others include dozens of manufactured testimonials or comments from imaginary blog posters. Many such sites include disclaimers in an apparent attempt to stay on the right side of the law.

"This Web site, and any page on the Web site, is based loosely off a true story, but has been modified in multiple ways, including but not limited to: the story, the photos and the comments," says one site. "Thus, this blog, and any page on this Web site, are not to be taken literally or as a non-fiction story,"

It's unclear if such disclaimers are enough to avoid the FTC's ire; the agency won't comment on individual advertisements, but in general, such disclaimers must be deemed "clear and conspicuous" by the agency.

Weintraub thinks there' s no way such disclaimers, which often appear in light grey type at the bottom of page, will ward off federal investigators.

"They are a ridiculously lame attempt to get marketers out of trouble," he said.

Ultimately, he's worried that Web marketers who aggressively push fake blogs and fake sites will ruin what could be an effective and creative advertising arena.  With clearer disclaimers and real testimonials, Web landing pages could become the infomercials of the Internet, perhaps spawning a digital-age Billy Mays.  Instead, they are quickly gaining a reputation as the seediest side of the Web, he said.

"At a time when people are really trying to save their money they are leveraging trust and abusing trust," he said. "They have killed the golden goose before they can even lay an egg … potentially killed off this new form of advertising."

Red Tape Wrestling Tips

Sticks and stones can break bones, but words never cost money.  Fake comments, by themselves, are no big deal, other than the fact that they cheapen legitimate Web comment threads like those that appear on the Red Tape Chronicles.  The real worry for any consumer is that clicking on such an ad may entice someone to fork over a credit card number to an unsavory company.  The end game for most of these sites – no matter what they sell – is to persuade a consumer to sign up for a "free" trial of a product, then make it incredibly difficult to cancel before the trial period ends.   A similar technique, Engle warns, is to offer a free product and charge a Web user a token shipping and handling fee, just to get the consumers' bank account information. Larger charges soon follow.

"Consumers need to be very wary of these offers, and of giving away their credit or debit card numbers" Engle said.  Anyone who feels they've been cheated should report the Web site at FCC.gov or 1-877-FTC-HELP.

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