• by Wendy Davis  @wendyndavis, January 17, 2008

The Attorney General of Florida has extracted $1 million from lead-generation firm World Avenue USA to settle a lawsuit charging it with baiting consumers into signing up for paid services by offering "free" merchandise.

The agreement, signed this week, marks at least the second major resolution of an investigation by the Florida attorney general's office into the use of the word "free" in ads. Last November, AzoogleAds agreed to pay $1 million to settle charges that it tricked consumers into signing up for subscription services with offers of "free" ringtones.

World Avenue, headquartered in Sunrise, Fla., also agreed that online ads offering "free" TV sets, computers and other goods will "clearly and conspicuously" state that items are only free to consumers who fulfill other conditions, such as participating in a program. The settlement says that "Free Xbox with completion of offer," is an example of acceptable language.

World Avenue President Dale Baker said the company has been revising its Web sites and is mostly in compliance. "We went through and made the changes," he said. "We're very happy with the settlement."

The company uses banner ads and e-mail to drive people to 125 sites like MyChoiceRewards.com and ProductOpinionPanel.com, where they are invited to sign up for offerings such as $500 Visa gift cards and iPods.

The Florida attorney general's office is actively investigating a number of companies--including Think Partnership, Intermark Media, Media Breakaway, Traffix, W31 and VeriSign's m-Qube--for their ad practices. Assistant Attorney General Michael Palecki said that the state is also investigating Web publishers who run misleading ads. "We have several Web sites on our radar screen that have been running false and misleading ads for some time," Palecki toldOnlineMediaDaily last month. "We are going after everybody in the industry, from those who provide the content to those who market the content--which are the affiliate networks--to the carriers," he said.

On the national level, the Federal Trade Commission also is investigating the lead-generation practices of ValueClick and other companies. Last November, the FTC and performance marketing company Adteractive settled charges stemming from its use of the word "free" in ads.