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VERIFYing how lead generation impacts your privacy

If you've ever used a price comparison tool or been flooded by telemarketers, you can thank lead generation. It's legal but can be used for fraud and scams.
Credit: stokkete - stock.adobe.com

ST. PETERSBURG, Fla. — When it comes to finding a new insurance provider, you want to ensure you get the best coverage at a price that works for you.

Many people turn to online comparison tools, like QuoteWizard, to help find the best rates. But while getting a quote might seem easy, it’s not always as straightforward as it seems.

In many cases, entering your personal information on a third-party website in search of a deal can lead to an overwhelming number of calls and emails from companies hoping to win you over as a client.

You might even wonder how they got your number or how they knew you were shopping for insurance in the first place.

The answer? Lead generation.

Several VERIFY viewers have reached out asking if this practice is a scam. Let’s take a closer look.

THE QUESTION

Is lead generation illegal?

OUR SOURCES 

THE ANSWER

This is false.

No, lead generation itself isn’t illegal or fraudulent.

However, lead generation companies must follow FCC regulations to protect consumer privacy. Lead generation can become problematic if used for deceptive or fraudulent purposes, and we’ll address what those consequences look like at the end.

WHAT WE FOUND

Here’s a simplified breakdown of how lead generation typically works:

  • Step 1: The curious consumer enters their information into a website that promises to match them with the best insurance offers or provide a quote.
  • Step 2: That personal information, known as a “lead,” is collected and stored by the website.
  • Step 3: Companies then purchase these leads and contact consumers with the goal of turning them into clients.

Erich Kron, a security expert at KnowBe4, compares lead generation to a referral agency, but with one key difference: instead of matching consumers with providers, it matches companies with leads they can pursue.

“It can actually be beneficial because it can cut out organizations that, let's say, don't work in your area or don't do policies in your area or for your age range or all of those kinds of things,” Kron said. 

“Where it becomes a real challenge is when this information is shared with a whole bunch of groups, or sold to other groups, that may not have anything to do with...what you're looking for.”

Why lead generation can feel 'shady'

It’s easy to see why this process might raise concerns. Many consumers are simply looking for a good quote and don’t expect to be bombarded with calls and messages afterward.

In today’s world, unknown phone calls can signal a scam, so it’s understandable why someone would feel worried about how their information is being used or sold.

FCC rules to protect your privacy

The Federal Communications Commission (FCC) is the agency responsible for regulating lead generation practices and protecting consumers.

In December 2023, the agency updated its rules to address some common consumer complaints. One key update is aimed at reducing the flood of unwanted robocalls and robotexts.

“The new rules allow blocking of ‘red flagged’ robotexting numbers, codifies do-not-call rules of texting, and encourages an opt-in approach for delivering email-to-text messages,” the FCC said in a statement

Consent and transparency

Some of the most significant changes from the new FCC rules target consumer consent and transparency.

The new rules make it clear that comparison shopping websites and lead generators must get explicit, one-to-one consent from consumers before sending calls or texts.

Previously, lead generation websites could extend the consent they got from consumers to multiple telemarketers, which often resulted in unwanted communication. This update aims to cut down on those unsolicited contacts by forcing every company that reaches out to a lead to secure direct consent from the consumer first.

“It's going to give people a little bit more information about how [their personal information] is being used. It's not going to be able to be just thrown out there to everybody for whatever they want to do with it, and I think that's a great step in the right direction,” Kron said. 

These changes are set to take effect Jan. 27, 2025.

RELATED: Yes, there is an Oracle data privacy settlement

THE CONSEQUENCES FOR VIOLATING THE RULES

Violating lead generation rules can have serious criminal and civil consequences.

For example, in January 2024, a California-based lead generation company settled charges with the FCC after it was found to have tricked consumers into sharing their personal information through more than 50 websites. These sites promised mortgage refinancing services, but the leads were sold to telemarketers who then made illegal robocalls.

The company, Response Tree LLC, was banned from making robocalls and selling consumer data to telemarketers. This action highlights the risks of unregulated lead generation practices.

The Jen Shah case: A warning about fraud

In a high-profile example, Jen Shah, a former cast member of The Real Housewives of Salt Lake City, was arrested while filming season two of the show for her involvement in a large-scale fraud scheme related to her lead generation company. Shah’s role in the scam was revealed after a lengthy investigation.

In the episode, Shah was with her fellow cast members waiting to leave for a road trip. She was shown answering a phone call before saying she had to leave, claiming her husband was hospitalized. 

As the other women sat in the van, hoping Shah could still make the trip, several law enforcement agencies showed up and asked where Shah went. 

Those agencies included Homeland Security and the New York Police Department. She was arrested later that day.

Nearly two years after the incident, Shah was sentenced after pleading guilty to one count of conspiracy to commit wire fraud in connection with telemarketing. She was sentenced to six and a half years in federal prison.

Shah was found to have facilitated the sale of “leads” to telemarketers selling consumers fake business services, like website design and management, according to the U.S. Attorney’s Office in the Southern District of New York. Investigators said the operation targeted vulnerable people, many of whom were elderly or disabled.

This went on from as early as 2012 until her arrest in March 2021. 

“At Shah’s direction, victims were defrauded over and over again until they had nothing left,” officials said. “She and her co-conspirators persisted in their conduct until the victims’ bank accounts were empty, their credit cards were at their limits, and there was nothing more to take.” 

Dozens of other people were charged as co-conspirators and pled guilty to their roles in the scheme.

The case illustrates how lead generation can be exploited and used to commit fraud while underscoring the importance of vigilance when it comes to sharing personal information online.

RELATED: 'Real Housewives' star Jen Shah sentenced to 6 1/2 years in prison

HOW TO PROTECT YOURSELF

You can register your home or mobile phone for the National Do Not Call Registry through the Federal Trade Commission. 

If you believe you’ve received an illegal telemarking call, robocall or robotext, you can report it to the FCC here

You can find additional resources based on your mobile service or internet provider, your mobile phone and more here.

RELATED: No, health data from most period-tracking apps is not protected under HIPAA

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