Jeff Paul, John Beck, & Other Infomercials Charged by FTC July 1

Yeah, I was reading about this ealier...

From the looks of it, Uncle Sam is looking to kick a little ass.

FTC Cracks Down on Scammers Trying to Take Advantage of the Economic Downturn

Can they also crack down on the spam Jeff Paul's organization sends to my blog?

Back on the topic. This sounds like what other Internet marketers we may know do too:

"The defendants allegedly made false and unsubstantiated claims about potential earnings for users of these systems. They used frequently aired infomercials to sell the systems for $39.95 and then contacted the purchasers via telemarketing to offer "personal coaching services," which cost several thousand dollars and purportedly would enhance their ability to earn money quickly and easily using the systems. In addition, all purchasers were signed up for continuity programs that cost an additional $39.95 per month, but which were not adequately disclosed to consumers. Some consumers also continued receiving unwanted sales calls after they told the defendants' telemarketers to stop calling."

Act properly and be upfront with your customers and don't make false claims and you won't have anything to worry about.

It's about time.

Jeff Paul has been scamming people... sitting at his kitchen table making $4000 a day sitting in his underwear... for years.

Best,

Bill Jeffels

About time the FTC did something about these scumbags, especially the nasty hidden rebill scammers like Google Tree and the grants. I see Angela Penbrook is finally getting shut down as well.

Smilin' Bob, on the other hand, why, that's just patriotic, helping all those poor guys salute again!

How soon they forget...

Free Chantal: Help us Free Chantal McCorkle, Wrongly Imprisoned for 24 Years

Its really bad, there is no need to rip people off.

The Sad part to me is that I met John Beck back in the days when few people knew who he was, and at that time was really doing deals.

I attended auctions with him and visited a collectors office where we proceeded to have deal after deal thrown in our lap.

He and about 3 other guys drove around the Dallas TX area in my old cadi taking pictures and talking with people.

He purchased several properties during the tour, and made arrangements to get about 25 lake front lots if he agreed to "Urge" the buyers to place homes on them.

Mark Riddle

I think many of these guys started out as fairly straight businessmen, but their greed got out of control.

I had a business transaction with Jeff Paul, when he was a financial planner and lived just few miles from me, in 1990.
This was long before he was 'famous'. He always impressed me as a decent fellow. I think his early courses on marketing were decent and sold in a reputable way.

However, these recent infomercials make other marketers look shady as well. ...too bad.

Here's Tommy Vu, who I think was able to avoid jail.

The major offense in the complaint seems to be a continuity plan without disclosure.



They probably could keep going if they didn't get greedy and hide the continuity. I'm sure they would still make plenty of money too.

While the FTC is going after big fish right now, they may or not be guilty of anything -- the FTC approach is smash and grab, and then go to court. Usually folks settle with them -- just like the IRS. That may be ok when you are dealing with folks with the resources to pay a "settlement" aka extortion, but plenty of small fry get hit along the way, and it can destroy someone whether they are guilty of anything or not.

The FTC should be protecting the public -- I am good with that. I am just concerned that they fail to distinguish innocent technical issues and malicious competitor complaints from intentional scams on the public.

As a retired attorney, I think the day is long past when folks on this forum can run their internet business without a good compliance attorney. The free-wheeling days of everyone starting business on the net to work at home in their undies is ending rapidly.

Your sites, offers, and products are a business and they need to be run like a business -- and the US government is your business partner regardless of whether you received bailout money, you just don't know it. Innocent or ignorant mistakes will still get you killed.

And NO...I will not recommend a good lawyer.

Glad there going after the scammers , putting poor people on auto re bill without disclosure is kinda immorally bankrupt IMO.

From the news release:

http://ftc.gov/opa/2009/07/shortchange.shtm

In addition to the hidden forced continuity unsubstantiated earnings claims is one of the main charges.

I watched a Jeff Paul commercial where a IM Goober we all know who speaks at a lot of big IM events.

This Goober was used as a testimonial on the Jeff Paul infomercial. He was saying how he made $500,000 over a weekend using Jeff's strategies.

The problem was that he did not mention that he was already a top IM Goober, that he had hundreds of thousands of clients already, that he had also been a top promoter in many online business opportunities and MLM for years and years...

The kicker? This Goober did not even use his full name on the infomercial. Instead they showed his name as First Name Last initial.

There was no mention that the results were not typical and that they were in no way related to taking Jeff's course nor anything that Jeff had done with this guy.

I was shocked to see him participating in such deceptive marketing as a testimonial since he was not really one of Jeff's students from his course and obviously was just doing it as a buddy favor and would not even use his full name. They were pretending he was just average Joe Blow and not an experienced IM goober.

To top it off this particular IM Goober is a lawyer.


And yes though the forum changes the word... goober is pretty accurate description ;-)

I'm not surprised considering all the complaints I've seen about these guys.

An interesting reason to use prepaid Visa and Mastercard gift cards . . . unexpected forced continuity!

And just think, there are congressmen/women who would like to do away with them! (Your tax dollars at work.)

This is really interesting. FTC has been cracking down on a lot of stuff. I remember just the other day reading about a women who was going to be charged some insane fine for illegally downloading music. It was like 80 thousand per song or something.

But I'm glad they are cracking down on scams, they really just give the rest of us who run legitimate businesses a bad name.

Wow - if they take Jeff's "Shortcut to Internet Millions" commercial off the air what will happen to 30% of our late night television? It's amazing how many times that comes on every night - it sometimes airs on 5 channels simultaniously!

I for one applaud the crackdown, scam artists like this give legitimate marketers a bad name. With the current economic crisis more people are turning to the Internet to make money and if their chosen introduction is Jeff's "Shortcut to Internet Millions" crap they are in for a rude (and expensive) surprise.

I won't miss Jeff's commercials. I will, however, miss his two co-hosts... perhaps they can get a job with Smiling Bob on the Enzyte commercials!

Bill

I checked out Jeff's website. He's got nothing on there that says that it gets billed monthly when you order. The only thing he has on there is *you will be billed $39.95 after the first month. You may cancel at any time." I'm no attorney but I don't think that's going to cut it as a disclosure.

Ok, now I found it on YouTube. Yeah, I've seen it. I clearly remember the AMPLE CLEAVAGE but I never remembered the product.

Give me Tom Vu's commercials any day:

"Don't listen to your friends. They're losers!"
"Do you think these girls like me? NO, they like my money!"

Classic.

Since we are on the topic of forced continuity...

I am consulting on and helping set up the ecommerce automation and upsell funnel for a major new health supplement company that will be doing high volume.

They are in the diet industry and the initial offer is a trial offer so its forced continuity.

The platform that my company developed lets the business owner choose whether or not to display a cancel link inside the customer's billing management account. Much like paypal we designed this to give the customer control.

However, we also know that some companies want to make it more difficult for you to cancel... not impossible just a little inconvenient like requiring you to call into their customer service line to request to cancel.

Business owners know that people just put it off because they don't want to go through the hassle of a simple call to customer service even though its clear to the consumer they are being charged and all it takes to cancel is a call.

For this reason we let the business decide if they want to display the cancel link. Our system makes it easy for the client to update billing info and it makes it easy for them to cancel with a one click cancel option should the publisher decide to make that visible in the billing info update are for the customer.

We have to make this optional because we know that companies want control over when, where, and how a customer cancels a subscription.

I suggested to the owner of the company that he try a strategy that I believe could increase conversions...

But it also may increase cancellations.

That strategy is to create a small screen capture video explaining that its easy to cancel and that they can cancel at any time without having to call customer service by simply logging in and clicking the cancel link.

That video can then be put on the order page to increase customer confidence and put them in control and to be more aware of the continuity part of the offer.

This video could also be used on a customer service faq page and eliminate most billing customer service calls (except for refunds) automating the billing and billing management process. Additionally the client could update their cc info in the same place if they needed to and our system reminds them several times to update a CC if it fails on rebill.

Our system integrates with the fulfillment house and the fulfillment house also handles returns and will manually cancel subscriptions and process a refund on a return by logging into the CMS in our system.

He is hesitant to try my strategy because he wants to go with the more traditional call to cancel route so he will likely be hiding the cancel link and instead offering a call in number for customer service... there is always a chance though that he might try it or split test it.

I would really like people to try out this strategy more in many industries. Give the control to the client, boost confidence, and reduce overhead because of eliminating the majority of billing customer service automating as much of the entire operation as well.

This is no little operation either. The last company he built did 24m a month and the goal is 8m monthly 1000 orders daily with this one all of which will be run through our platform.

Many of our online digital content publishers use this great feature to automate and eliminate any billing and cancellation customer service but no one yet has tested the "don't worry you don't have to call customer service to cancel or manage your billing info. We make it easy for you." video as a conversion rate boosting tool.

I think its worth a test since in this environment given the economy, prevelance of scams, and reality that most everyone hesitates on subscriptions due to this very reason.

Why not change the norm and have a more open and customer confidence oriented way of managing billing and cancellations.

We developed it for this very reason.

I just read through the FTC's complaint, all 38 pages of it. (I've never claimed to be sane.) It is fascinating. The scripts for all three defendants' infomercials are in there.

I was wondering why the FTC went after these three marketers all together in one complaint rather than individually. It seems the common thread is a company called Mentoring of America, LLC. This is the company selling the coaching and requiring the hidden, forced continuity.

The main complaints center around...
1- unsubstantiated claims in the infomercials,
2- forced continuity while not telling consumers about it before the consumers
give their credit card details.
3- the outrageously expensive coaching $195 to almost $15,000 - while telling consumers they can easily earn back the cost of coaching in a few months.

There would be a "Help Desk" toll-free phone number in with each defendant's initial sales package that would actually lead the confused consumer to a coaching telemarketer when someone would call for help.

The FTC complaint filed with the courts says, "Hundreds of thousands of consumers throughout the United States have purchased the John Beck system, paying approximately $92,000,000, including continuity plan charges."

And it also says, "Since January 2004, consumers have paid approximately $175,000,000 for personal coaching services for the John Beck system."

Wow!

I know a particular IMer who offers a coaching system after getting would-be newcomers into a continuation. He has "qualifier" sales people call to see if the person paying into the continuity would have money to put into coaching. He then has "closers" call the customer and try to sell a coaching system that ranges from about $3,000 to as much as $9,000.

It looks like a similar type of system.

:-Don

I don't know about the practices of these people because I have not had any personal dealings with them, but when it comes to the FTC, guilt or innocence really doesn't matter. When they are out to make a point about a particular industry (in this case the biz op industry), they find the biggest fish and fry them. They are in it for the headlines and are pretty lazy, so infomercials make people a perfect target because there is a ton of exposure. The infomercial almost writes the complaint for them.

As for beating the FTC, it doesn't happen. To my knowledge the last company to defeat the FTC in court is Amway in 1979. You need a minimum of $1 million in legal fees to start.

Now what these guys need to hope is that the postal inspector doesn't want in on the case. The FTC are pussy cats compared to the postal service. They rip you a new one in federal criminal court and they are hard to beat.

There is a lesson here that we should all take notice of. When it comes to FTC enforcement, it is all about substantiating claims. They will kill you if you can't back up your claims and your testimonials better be real. We should all run our business as though someone is watching because you never know, someone may be.

The FTC doesn't really care about corporate structure. They will pierce any corporate veil.

I honestly do not believe that there is a tipping point in these type of cases. They target an industry and then decide who will be made an example of. They want someone that can make headlines and has deep enough pockets so they, their lawyers, and forensic accountants can take fees. The irony is that there is rarely much money left to go back to the customers.

I predict that they will hit the IM industry and take down someone large within two years. They went after Jeff Paul as part of the biz-op industry, but the investigation of him could likely open their eyes to the IM industry.

I have learned the hard way to deal with undiscloused forced contunity. I use a debit card that I use just for untried or dubious offers. That way if its some type of fraud I just cancel that card and have a new one issued.
This card has very little money in it and I transfer money to it as needed. Since its not used for regular transactions canceling the card creates nor problems. Since the money in it is minimal any loss is also limited.

This is all very interesting. I ended up buying a dog food ebook the other day and after i had made my purchase was told that I was now a member of their dog club which meant that instead of being charged so many dollars a month i got it a few dollars cheaper.

colleen

Wow - that sucks. Thank for the links. I have to keep up with the world around me...

js

My only question is - what took so long? There are many in this realm that have been pushing the legal line and crossing it for many years without consequence. Too many people have offered feeble, brazen justifications for their fraudulent money making schemes for far too long. Much of what has been heralded as great marketing in portions of this forum is simply fraud.

I hope this crackdown is only the beginning. I also hope the offenders get more than a slap on the wrist and their bank accounts are drained to fumes. Unfortunately, something tells me these guys will find God, offer fake apologies (maybe even shed a few tears for effect) and be back working some other angle under the guise of helping people in the near future.

Unfortunately, you are never cleared of all charged by the FTC. The settlements all read the same. There is no admission or assumption of guilt, but the terms of the settlement usually destroy lives and businesses.

That being said, I am sure that is some cases the FTC is justified in their actions. The problem is that they are lazy and sloppy and act on industries instead of businesses. They will trump up charges that are full of lies and half-truths and they really go for blood.

They always settle, but the settlements vary depending on the size of the businesses. When they go after very large businesses, the settlement just involves money and they never go after the owners. When they go after the relatively small businesses (the Joe Sugarman's) the business and the person are left in shambles.

What is needed is a true non-political consumer protection agency that has no agenda and looks to get rid of the bad guys instead of an agency that cleans up industries because they are inconvenient or problematic to another established industry.

Just a quick question.

How does this FTC case with Jeff Paul and the rest differ than say some IM gurus?

What are they doing to not be attacked by the FTC? Earnings Disclaimer?

The IM industry has simply just not hit the radar yet. But it will and then a high profile IM'er or two or three will be taken down. And they don't have a chance because they break every rule in the FTC book.

Some of these spots were so over the top they were virtually BEGGING for an action like this... Incredibly poor decision making from people who should know better.

But it will inevitably happen again... once a certain critical mass takes hold with a DRTV spot, deeply discounted and per inquiry avails have a way of making danger seem smart. We're seeing the same money-intoxicant at work in the CPA world...

Funny how that parallels, isn't it? Oversold/deceptive offer, per action customer acquisition model, scale happens.

My takeaway from reading the complaint: It's not a very good time to be a phone room in the back-end coaching business. Not when you behave like some of those reckless idiots in some of those operations behave.

THAT is what sunk these guys, not their woeful boobs and biz opp spots. A spot like that doesn't generate the complaints and the heat. It's the assclown hammering the FTC investigator with a hard close for $10k on tape... yep, that'll do it.

There's no plausible excuse for what some of these guys do, I've heard the tapes (no, not THESE tapes).

Brian

It would be my opinion that if you are going to have a business model of a continuity program, paid monthly membership, that it would be wise to send out an invoice two weeks ahead of time to the member to remind them that they will be remitting a payment in two weeks.

Then send another one a week before, then one on the day the payment is due. That way there is no way that there is any mis-understanding between the parties involved.

I think however, that the best way is, if the customer wants to remain a member and continue to receive the benifits or products, you should send out the reminder invoices and then he or she should have to remit payment manually and not have an auto payment setup.

Just my opinion
Dan

More government - of any sort - is always a bad answer to any problem.

More people get taken advantage of because they naively assume that the government can protect them from con artists than could possibly be ripped off if most of these alphabetically titled government bureaucracies never existed and people knew from the get go that big brother would never be there to protect them.

One possible good use of these alphabet agencies might now be to take the customer lists from the businesses listed in this FTC action and hand it over to the FEC and local voter registration boards so we can have those people removed from the voter rolls.

I used to sell coaching programs out of an office in Kansas City for many of these info gurus.

Got sick of it after about 2 months - didn't like how they were ripping people off. They sell shitty coaching programs that really don't teach people much, and some get hit for 2k - others for 15k - and there's not much difference in the coaching for the price variation.

It's a bad deal. Our parent office in Utah was selling over 100k in coaching every week.

What comes around - goes around.

From the sounds of what these people were doing I am glad the FTC stepped in. And in the case of Jeff Paul, I wonder what took them so long.

Yeah, these on tv infomercials are subject to investigation on a regular basis it just takes a few complaints to get the ball rolling for an investigation, they will probably be in litigation for years and have to pay a fine.

These Infomercials are great examples of what not to do. Sooner or later the FTC start
looking deep into your business practices.

Seen an infomercial where two big breasted(one blonde one dark haired)women were sitting on a couch lol the blond was like. "Like oh my gawad I just made a sale" I dam near pissed my pants laughing lmaoooooooo.

I forget which infomercial it was for but they dont play it anymore but it was hilarious.

I read somewhere today (sorry can't remember where I read it) that the FTC is no longer chasing people, they are simply handing over the claims marketers make in their advertising to the IRS and letting them deal with it...

Tax evasion is a serious thing and far worse that the FTC jumpin' on ya. At least that's what I've seen from the history of the IRS.

Mike Hill

Infomercials ALL make money, what they sell most often does not. This form of selling is now moving to local main-stream brick and morter companies.

Enterpryzman

I made money with John Alexander's system [before TV I paid $997] and I could have made money with John Becks. I was just impatient. It takes 6 mouths to a year to get total control of the houses. Just like people buy Guru's products an WSOs and don't do anything the same goes for "the good TV products" But on TV you have 1000 times more people failing. And the Feds hate Biz Opps.

I made as much as 56k in one month following what Brad Richdale course. You don't have to buy all the upsells though... that's what you have to watch out for.

I've bought lots of TV products [non Biz Opp] that have been great... and very few are weak.

Jeff Paul always seem too be a honest marketer to me.
I been following him for a long time now.
When i still don't think he is a bad guy just one who made
the wrong choice.
When i seen his informical the big mistake he makes is by
guaranteeing someone will make money. Which is a big NO NO.

But overall i don't think he is some bad guy.