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A Ralph Nader watchdog group is complaining to federal authorities that search engines shouldn't mix paid and unpaid content in online search results without pointing out the difference to unsuspecting Web surfers.

Commercial Alert is asking the Federal Trade Commission to investigate what it calls deceptive advertising practices by Alta Vista, AOL Time Warner, Ask Jeeves's Direct Hit Technologies, iWon, LookSmart, Microsoft, and Terra Lycos.

"The problem is when they insert advertising within their editorial content without telling us the ads are ads, it becomes deceptive advertising," says Gary Ruskin, Commercial Alert executive director. "They omit key information that the ad is an ad."

Why is that important? According to Ruskin, it's because "of the role that search engines play in the quest for learning and knowledge."

"We don't want hucksters to be able to skew results and the public not know about it," he says.

Defendants Deny Merit

Most of the named companies won't comment on the complaint, but a spokesperson for LookSmart strongly defends her organization's business practices.

"Quite honestly, we don't think it's a big deal. Obviously the FTC has not contacted us in regards to any search products and services," says Kathryn Shantz, director of corporate communications for LookSmart. "We actually believe Mr. Ruskin's allegations are without merit."

Microsoft will not comment directly about the complaint, but a representative says the growth of his company's service and user satisfaction with the search engine results speaks for itself.

Search engine companies regularly feature paid advertising on their sites. But the practice of selling "paid inclusion," in which a company gets better placement in a search because it pays a fee, is a fairly new wrinkle. It's gaining momentum partly as a new means to boost revenue following the dot-com crash, according to Commercial Alert.

The FTC doesn't comment on any of the complaint letters it receives unless a decision is made to take action.

"The commission will take a look at it and at the allegations in the letter and make a determination as to whether it was something we would pursue," says Brenda Mack of the FTC's Office of Public Affairs. Complaints to the commission do not carry a required timeline for a response.

"We get letters of complaint all the time from consumers, groups, other companies," says Mack. "We are constantly encouraging people to send letters of complaint to us when they think there is some type of wrongdoing or fraud being perpetrated."

Ads in Disguise?

The complaint from Commercial Alert alleges that the use of "paid inclusion" by these companies makes search results "look like information from an objective database selected by an objective algorithm. But really they are paid ads in disguise."

The group compares the practice, which has apparently grown since the dot-com crash, with television infomercials parading as independent programming.

(Scarlet Pruitt of IDG News Service contributed to this report.)

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