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Bait-and-Switch SEO Technology Exploits Trademarks and Violates Fair Trade Law

A Taiwanese shopping platform and its affiliate were found responsible for using the controversial “bait and switch” search technology and fined NT$2 million and NT$800,000 by the Fair Trade Commission (FTC) for violating Section 25 of the Fair Trade Act (Resolution No. Federal Trade Commission 111019 and 111020).

Search Engine Optimization (SEO) is often used in online marketing to increase exposure in web searches and drive traffic to specific websites or web pages. Frequently used SEO techniques include optimizing content and keywords, and increasing page loading speed. Search engine optimization (SEO) is different from keyword ads; Although the latter is also intended to increase traffic, it is a service provided by the search engine companies themselves. Whereas, when it comes to SEO, experts not affiliated with search engine companies use their understanding of search engine algorithms to make certain content bring more exposure to search engine users through organic searches.

Under Article 25 of Taiwan’s Fair Trade Act “no enterprise … shall have any manifestly deceptive or unfair conduct that would affect the trading system.” The Federal Trade Commission (FTC) has determined in several decisions that a purchaser of keyword ads is in violation of Section 25 if the term purchased is a competitor’s business name, because ads that appear in keyword searches “take a free ride on the competitor’s business efforts, impairing the competitor’s business efforts, impairing The order of market transactions whose cornerstone is competition for price, quality and other efficiencies.” (For example, FTC Resolution 109056 and FTC Resolution 110075).

When SEO marketing intersects with fair trade law, legal issues can arise as SEOs use a variety of techniques with varying degrees of legal risk. 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 particular web page even though it is not related to the content the user is searching for.

In the case under consideration, once the online shopping platform system realizes that the visitor was searching for a brand whose products were not listed on the platform, it will create a marketing copy page that includes the brand, despite the fact that no brand items were offered for sale. Thus, when third-party search engines crawl the content of the platform, they will recognize the brand on that copy page. Thus, when search engine users search for that brand, the platform will appear in the search results and they will click on it. As a result, platform visits and traffic will increase.

This behavior was found to be in violation of Section 25 of the Fair Trade Act. The Federal Trade Commission (FTC) has confirmed that using SEO bait and switch technology, the platform misled consumers into visiting its website in order to increase web traffic. Visitors directed to the platform can then compare (and possibly even buy) similar products from other brands offered on the platform, thus harming the business of the originally searched brand. As the Federal Trade Commission news alert explained, “This is misleading consumers to ‘shop in the wrong market’.”

The committee stressed that although the platform did not directly exploit a third-party brand through keyword advertising, its behavior nevertheless created unfair competition with companies selling goods of these brands. This was because normal consumer searches and purchases for these goods were disrupted and diverted. The platform has announced that it will appeal the decision, down to the IP and commercial court if necessary, so it is worth pursuing this case.

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