Facebook, Washington state sue alleged ad scammer

IDG News Service - Washington's attorney general announced two new lawsuits against Adscend Media, a company that allegedly earns $20 million a year using a Facebook scam.

It was a complicated scam that Facebook has blocked, executives from the company said during a press conference in Seattle. Facebook users would see a link to a provocative video recommended by a friend on Facebook. A user would click on the video link and see a pop-up that might ask the user to verify that he or she is over age 13. By clicking on the verification box, the user would unknowingly share the video on his or her Facebook page.

After clicking the box, another pop-up would appear taking the user to an advertiser site that might ask the person to supply personal information or purchase an item like a phone ringtone.

"Every time a user links to one of these advertiser sites, Adscend is paid a commission by the advertiser," said Paula Selis, assistant attorney general in Washington.

The attorneys said that advertisers didn't necessarily know that Adscend was using these methods to drive traffic to their advertisements. The advertiser might be a large company working with a number of online advertising companies like Adscend, paying them for the traffic they generate to their ads, said Washington Attorney General Rob McKenna. "What happens is an advertiser doesn't know every place the ads are being placed," he said.

Facebook alleges that Adscend was earning more than $1 million a month, said Craig Clark, Facebook's lead litigation counsel. He declined to say how long the activity went on.

Facebook said that a browser vulnerability that allowed the exploit has been fixed so users shouldn't continue to see the scam.

Neither Facebook nor the state attorney general's office asked Adscend to stop the activity before they filed the lawsuit. When asked why, Selis said: "There's no specific reason. They are big, they are pernicious, they have been doing this for a while and they know they are violating the law."

Adscend, which is based in Delaware, could not immediately be reached for comment.

In addition to the attorney general's suit in the U.S. District Court for the Western District of Washington, Facebook also filed a lawsuit against the company in the U.S. District Court for the Northern District of California, charging that Adscend violated Facebook's terms of use and a U.S. anti-spam law.

Nancy Gohring covers mobile phones and cloud computing for The IDG News Service. Follow Nancy on Twitter at @idgnancy. Nancy's e-mail address is Nancy_Gohring@idg.com