4:45 PM ET Tue, 14 Nov 2017 | 01:13:19Three days ago, the U.S. Federal Trade Commission (FTC) issued a cease and desist letter to FiveM Technologies Inc. (NYSE:5M), alleging the company used “unreasonable” advertising techniques to deceive consumers about its services.
The FTC said in a statement that the company also violated the Digital Advertising Alliance’s (DAA) rules for using deceptive advertising.
“This practice is in violation of the Digital Ad Exchange Act, which requires that a business advertise goods and services only when consumers are specifically asked,” the FTC said.
FiveM, for its part, responded by saying that it is “committed to the protection of consumers, and we are reviewing the letter and the FTC’s complaint.”
The FTC, which is an independent federal agency, has jurisdiction over the complaints brought against businesses that fail to comply with the law.
It is also an authority in the courts to enforce consumer protection laws, including the Fair Credit Reporting Act.
In its cease and seek order, the FTC cited “the lack of any substantive and convincing evidence” that FiveM misled consumers.
“There is no basis to conclude that the advertisement does not mislead consumers and the claims made are not supported by facts,” the order said.
In a statement, FiveM acknowledged that it had misled consumers about the effectiveness of its services and that it has taken steps to improve the advertising.
But the company’s statement also said that it “takes every measure necessary to protect its customers.”
The FTC’s letter also alleged that Fivem’s use of the “Soft Serve” advertising technique to create false impressions of the effectiveness and quality of its service, as well as misleading the public about the number of times a customer was able to successfully complete a five-minute task, resulted in “the substantial likelihood that consumers would be misled or that their information would be misused.”
In addition, the order alleged that “fiveM has failed to disclose its data collection practices to its customers, including data regarding the type of service performed, the amount of time the service is performed, and how often the customer completed the service.”
FiveM also said it has made other improvements to its advertising and marketing practices, including “additional privacy and data protection controls to better protect customers from unauthorized use of their personal information.”