The Federal Trade Commission (FCC) went to federal court yesterday and got a restraining order against Yahoo, MSN, AllTheWeb, and Altavista to prevent the search engines from allowing advertisers from using a government URL in sponsored search results.

Apparently certain advertisers were buying sponsored links on the search results pages appearing to lead to the US government’s official site for its new homeownership program which is at makinghomeaffordable.gov. However if you clicked on the sponsored links,  you were redirected to sites “purporting” (FTC’s word) to offer paid loan modification services. Others sought personally identifying and confidential information to sell to companies who offer refinancing.

Aside from the search engines allowing advertisers to cloak their URLs as a .gov website, the FTC did not identify specific offenders because “the defendants have cloaked their practices in the anonymity of the Internet.” The FTC is demanding the four search engines identify those who paid them to place the ads and to refuse to place paid ads containing active hyperlinks to .gov websites.

Interestingly to note that Google was not named in the FCC action, which tells me Google most likely denied the ads, as it is highly unlikely that the advertisers just chose to skip the largest search engine.