ValueClick Faces Another Lawsuit Over Promises Of 'Free' Merchandise

Currently under investigation by the Federal Trade Commission for its use of the word "free" in Web ads, ValueClick is also facing a new lawsuit in federal court.

In the case, which was quietly filed last month, Cleveland Heights, Ohio resident Dan Cheyfitz alleged he received "voluminous" e-mails from ValueClick falsely promising "free" items "which were, in fact, not free."

Specifically, Cheyfitz accused ValueClick and its subsidiaries of violating a provision of Ohio's consumer protection law by promising "free" goods without also prominently stating that consumers first had to make a purchase or otherwise participate in an offer before they were eligible for the free merchandise.

"None of the email received by plaintiff and from defendants clearly and conspicuously set out the 'terms and conditions' of receiving the 'free' items at the outset of the offer," charges the complaint.

Ohio's consumer protection law requires that disclaimers about free merchandise must be printed in a font at least half as big as the word free and in "close conjunction" to the term.

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ValueClick general counsel Scott Barlow said he expects the company will be able to resolve this case quickly. "We don't consider this a material lawsuit," he said.

This lawsuit comes as ValueClick is facing an FTC probe for Can-Spam violations stemming from e-mail ads that appeared to offer Web users free iPods and the like, but actually required them to make a purchase or participate in a program to receive the merchandise. ValueClick has said it expects to settle those charges by the end of March, but hasn't yet announced a resolution.

The FTC has reached agreements with two other online ad companies--Adteractive and Member Source Media--in similar cases. In each, the company agreed that ads offering free merchandise would also include disclaimers, in the same color and font size as the word "free," informing people that they might have to make a purchase or participate in a program to qualify for the goods.

In the Ohio lawsuit, Cheyfitz isn't alleging that he made any purchases, but charges that the ads caused him to waste time clicking through to other Web pages to learn the details of the offer, according to his lawyer, Joseph Compoli, Jr. of Cleveland. Compoli, who has previously sued marketers for sending junk faxes, is seeking class-action status for this case against ValueClick.

Cheyfitz is seeking damages of up to $1,500 per e-mail, on the theory that the "free" merchandise promoted was worth around $500 and that Ohio provides for consumers to recover up to three times their damages. Using that formula, he's seeking a total of up to $75,000 for himself and $4.9 million for the class, assuming the court certifies one. Alternatively, he's seeking up to $200 per violation--an amount set by Ohio's consumer protection statute.

ValueClick filed an answer in which it denied most of the allegations or said it didn't have enough information to address them.

The company has recently faced at least two other similar lawsuits brought by residents of Ohio, which is known for having tough consumer protection laws. Both of those cases were resolved last year with confidential settlement.

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