A Texas-based internet marketing company has filed a federal lawsuit seeking $3.5 million from a Connecticut competitor that it claimed engaged in fraudulent advertising.
In its lawsuit filed Wednesday in U.S. District Court in Hartford, Adscend Media claims it has lost millions in ad revenue resulting from a targeted attack by Norwalk-based DoGood Media. Adscend claims the attacks left several of its websites blacklisted, a move that has significantly cut its revenue.
At the crux of the lawsuit is what Adscend called an inadvertent programming error made by an employee. As a result, people using mobile devices to view content on one of its three video platforms were shown advertisements multiple times instead of the licensed video that was supposed to follow.
Adscend discovered the error on LootUp.tv and immediately corrected it, according to the lawsuit.
Adscend operates in a marketing space where internet users watch licensed videos along with an advertisement, and earn a small reward for watching the content.
The lawsuit claims DoGood Media and Eric Farrell, its account manager, took advantage of the error by creating a video titled “A Look at Adscend Media’s Deceptive Ad Monetization System.” The lawsuit claims the video accused Adscend of hacking and cheating the system to “defraud advertisers.”
The video was sent to Adscend’s advertising partners earlier this month, according to the lawsuit. Soon afterward, advertising partner SpotX informed Adscend that all of its websites and applications were being blacklisted, cutting of a source of revenue.
On Jan. 18, Adscend learned ad verification service WhiteOps blacklisted its three primary domains used to host its video platform, further reducing revenue, according to the lawsuit.
The lawsuit includes claims for defamation per se, defamation, intentional interference with prospective economic advantages, and unfair trade practices.
In addition to the $3.5 million in monetary damages, Adscend wants the video removed from YouTube, and is asking that the court require DoGood to send written communications to each business forwarded the video. Adscend also wants punitive damages and attorney fees.
No one from DoGood immediately responded to a request for comment Thursday.
Adscend is represented by Mark Rosenberg and Joel Rosner, of Tarter Krinsky & Drogin in New York City.
“Adscend filed this case to protect its business and reputation,” Rosenberg said. “It has been severely damaged by the conduct of the defendant as alleged in the complaint.”
The case is scheduled to be heard in front of U.S. District Judge Michael Shea.