Bait-and-switch SEO technique exploits brands and violates Fair Trade Act

A Taiwanese shopping platform and its affiliate company have been found liable for using the controversial ‘bait-and-switch’ search technique and fined NT$2 million and NT$800,000 respectively by the Fair Trade Commission (FTC) for violating Article 25 of the Fair Trade Act (FTC decision numbers 111019 and 111020). 

Search engine optimisation (SEO) is often used in internet marketing to increase exposure in web searches and drive traffic to websites or specific webpages. Frequently used SEO techniques include content and keyword optimisation, and increasing the page load speed. SEO differs from keyword advertising; although the latter is also aimed at increasing traffic, it is a service offered by search engines companies themselves. Whereas, when it comes to SEO, experts who are not affiliated with the search engine companies utilise their understanding of search engine algorithms to make specific content achieve more exposure to search engine users through organic searches.

Under Article 25 of Taiwan’s Fair Trade Act “no enterprise shall… have any deceptive or obviously unfair conduct that is able to affect trading order”. The FTC has held in several decisions that a buyer of keyword advertising is in violation of Article 25 if the purchased term is a competitor’s business name, because the ads that appear on the keyword searches “are taking a free ride on the competitor’s business efforts, thus impairing market transaction order whose cornerstone is competition on price, quality, and other efficacies.” (eg, FTC decision 109056 and FTC decision 110075).

When SEO marketing crosses paths with the Fair Trade Act, legal issues can arise as SEO uses a variety of techniques with different degrees of legal risks. However, it can be said with certainty that the SEO technique known as bait-and-switch has a higher risk of violating Article 25 than others. This involves persuading search engine users to click through to a given webpage even though it is unrelated to the content for which the user is searching.

In the case at hand, once the online shopping platform’s system recognised that a visitor was searching for a brand whose products were not listed on the platform, it would generate a marketing copy page embedding the brand, despite the fact that brand’s items were not being offered for sale. Consequently, when third-party search engines crawled the platform’s content, they would recognise the brand in this copy page. And so, when search engine users searched for that brand, the platform would appear in the search results and they would click through. As a result, the platform’s visits and traffic would increase.

This conduct was found to violate Article 25 of the Fair Trade Act. The FTC held that by using this SEO bait-and-switch technique, the platform misled consumers into visiting its website in order to increase its web traffic. Visitors directed to the platform might then compare (and possibly even purchase) similar products from other brands offered on the platform, damaging the business of the originally searched-for brand. As the FTC news alert put it, “this is tantamount to misleading consumers to ‘shop at the wrong bazaar’”.

The commission stressed that, although the platform did not directly exploit a third-party brand through keyword advertising, its conduct nonetheless created unfair competition with businesses selling the goods of such brands. This was because consumers’ normal search and purchase processes for these goods were disrupted and diverted. The platform has announced that it will appeal the decision, all the way up to the IP and Commercial Court if necessary, so it is worth keeping track of this case.