The FTC sued me out of business two years ago yesterday- here is my story

[bobsedge]

Originally Posted by lakshaybehl

Bob,

Yes, I kinda realize this world ain't a free world like the 'fourth age' of this world under the leadership of Lord Aragorn, lol.

It's never been this way.

However, just curious- can you do nothing at all if FTC decides they're after you? I mean sue them... without a million dollar retainer or something? Or maybe use press and media to present your case to the world?

Also, lets say you have 5 cos. and they go after one of them... then what happens to the other 4? Are they officially under the radar too?

You see. I have been thinking about moving to US for a long time, but recently I have developed a nomadic taste, so I am having second thoughts about that. Some of these things will help influence my decision. Rio is great in Feb., and Sydney in December. There isn't an Indian authority that can not be challenged (and defeated) in a court, and they don't generally go after companies that easily too. That's one thing I love aboout this place.

-Lakshay

Lakshay,

I could never have won. I'm a fighter, so it killed me to do the smart thing and not fight in this case.

I can just tell you the story I heard about Joe Sugarman. I heard this second hand, so I'm not sure it's 100 percent accurate, but the source is very good.

Joe Sugarman is a marketing guru from way back. The FTC came after him. He fought back hard. Among other things, he took out a full page ad in the NY Times essentially comparing the FTC to the Mafia.

From what I hear, they bit back hard and he walked away with literally just the shirt on his back.

I would not run scared. If you have honest intentions and stay away from "hot" industries (those on the regulatory radar) you should be ok.

My industry was "hot". I knew it for many years and that is why I was trying to get out.

That being said, I can't imagine that the US is the most business friendly country so if you have a choice...

[bobsedge]

Originally Posted by garwil200

The political environment, is what it is, at least until the next election, so I will just adjust, follow the rules, keep a low profile, and find better ways to sell online. Marketing rules are still the same online, just like offline. When writing an email or salesletter, I will follow the AIDA guidelines. Get their Attention with a headline, build up their Interest with a subheadline and opening paragraphs, built the Desire in the body of the letter, using short paragraphs and lots of bullets, and then give them the Action to take. It doesn't take a long sales letter to do that, when you eliminate the endorsements, and pages of income screen shots. I already believe they made the money, or I wouldn't be reading their sales letter.

I agree with your assessment for the most part but this is not a product of a political party.

My problems occurred under the Bush administration. The FTC has always been there but businesses don't notice until it hits their industry.

Here is the basic rule of them.

When Republicans are in charge, rules and laws generally favor big business.

When Dems are in charge, rules and lawyers generally favor consumers for the sake of lawyers.

[yourreviewer]

Originally Posted by TelegramSam

If a bureaucrat calls, just say "yes sir, how quickly do you want me to bend over".

Sam

LOL! Classic.

[Marian Berghes]

like Lakshay said about his country...its true in mine also, you can sue any entity in the country and win if you have the proper evidence and lawyers.

I'm planning on moving to the US in the future too and I'm not really scared of all that...to me its not a problem of IF I get sued its a problem of WHEN.

Thats just the way I see the things...no matter the industry there will always be some organization or some customers that will complain about everything and tell you that because of your "golf swing course my husband got athletes foot" and sht.

I saw that there are lawyers in the US specialized in how to build and organize your business so that WHEN the FTC or somebody sues you they can't go for everything you got. I don't know how effective they are, I just saw that Mike Filsaime (I think) said something about this stuff in one of his products.

[bobsedge]

Originally Posted by Marian Berghes

I saw that there are lawyers in the US specialized in how to build and organize your business so that WHEN the FTC or somebody sues you they can't go for everything you got. I don't know how effective they are, I just saw that Mike Filsaime (I think) said something about this stuff in one of his products.

I wouldn't trust that claim one bit.

They hang you upside down and shake the change out of your pockets. And if you hide funds overseas and don't disclose them, if and when they do find out you really have a problem

[raiko]

I agree with Bob. The political party in charge doesn't really make a difference. Most of those entities such as the FTC wield sufficient power that they can, many times, influence the administration more than the administration can influence them.

The current polarization of the political scene in the US right now is blinding many people to the fact that we are gradually losing our ability to live our lives the way we want to. It's somewhat sad that people should be afraid of their government but that's the way it's shaping up. Sure government authority is useful in many cases but when the average person starts to become wary or actually fear their own government then things have taken a turn for the worse.

[Charann Miller]

Bob,

I'm so sorry to hear your story and I'm still reeling from it. The fact that they could act so quickly is disturbing, they were basically judge, jury and executioner and unless you were an Amway with incredibly deep pockets then they're counting on the little guy to go quietly into the night.

Another thing that stood out in particular with regards to what you said was that their guidelines were vague for a reason, it suits their purposes because it leaves so much open to interpretation.

Thank you for coming on here and sharing your experiences, I can only imagine what yourself and your family have gone through.

[Don Schenk]

Bob, I am so sorry to hear about what happened to you. I can't imagine your pain and the emotional suffering that came with the process. Thank you for sharing a difficult story.

I remember reading something Joe Sugarman wrote after his run-in with the feds. As I recall, a major snow storm in Chicage knocked out power and caused the computers running his business to die - and lose data. Remember, we are talking computers from 35 years ago.

The lost data prevented him from fulfilling customers' orders within the 30 day zone, and the feds had a field day with it.

I may be wrong, but I thought he did not lose everything. The $100,000 number as a fine sticks in my head. Of course that would be equivalent to a million dollar fine today.

Even Mr. Kern "only" paid a $240K fine. Ouch!


:-Don

[bobsedge]

Originally Posted by Don Schenk

Bob, I am so sorry to hear about what happened to you. I can't imagine your pain and the emotional suffering that came with the process. Thank you for sharing a difficult story.

I remember reading something Joe Sugarman wrote after his run-in with the feds. As I recall, a major snow storm in Chicage knocked out power and caused the computers running his business to die - and lose data. Remember, we are talking computers from 35 years ago.

The lost data prevented him from fulfilling customers' orders within the 30 day zone, and the feds had a field day with it.

I may be wrong, but I thought he did not lose everything. The $100,000 number as a fine sticks in my head. Of course that would be equivalent to a million dollar fine today.

Even Mr. Kern "only" paid a $240K fine. Ouch!


:-Don

Don,

I'm not sure of the facts about Sugarman's story. I heard it from someone who knows him.

Actually, I wasn't fined at all. They usually only fine people to the extent of the money they have. So chances are that Sugarman and Kern were fined because that was the amount of money they had to pay.

The final settlement I reached did not include any admission of guilt and I agreed to a $7 million suspended judgment.

In the industry I was in, they were more interested in the grand standing of getting people out of the business so others would do so voluntarily.

[Steven Carl Kelly]

Thanks for your story, I'm sorry to hear about your loss and appreciate reading your experience, but I have a question:

Are you saying that theae allegations in the FTC action are completely and totally untrue?

The complaint alleges that consumers who call the defendants’ toll-free number are told that the defendants will obtain settlements that will substantially reduce their debt. The defendants allegedly promise to negotiate with creditors and begin making payments to them within several weeks after consumers join their program, and to provide personalized financial counseling. As noted in the complaint, consumers allegedly are told to set up a direct debit from their checking account for deposit into a bank account established by the defendants, who will debit their fees and pay creditors. They also are told to have no further contact with their creditors, and to stop paying them immediately, enabling the defendants to negotiate for them.

The defendants allegedly often fail to contact each creditor as promised, and consumers often continue hearing from creditors about their debts. According to the complaint, in someinstances the defendants fail to negotiate settlements with all of consumers’ creditors and don’t pay them, resulting in wage garnishment or debt collection agency action. When consumers tell the defendants that they have received a creditor’s summons, they allegedly are told not to worry, that it is just a “scare tactic.” In some instances, the complaint states, creditors sue these consumers, who have to pay the cost of the creditors’ litigation.
The complaint alleges that, as a result of being in the defendants’ program, many consumers experience substantially increased debt because of late fees, finance charges, and overdraft charges, and suffer damage to their credit rating because of significant negative information such as late payments, charge-offs, collections, and garnishments, all of which may appear on their credit report for up to seven years.


If you don't mind, I would appreciate it if you would address the above complaints.

[seasoned]

bobsedge,

TWO things I don't understand.

1. You said that the first two stipulations to the court, that you denied here, are TRUE!
2. The Judgment says you played the same garbage I have seen almost every other "debt solution" firm, that I have seen, do.

If those two are true, the FTC was only doing its proper job!

I don't care WHAT your relationship is with a given bank. That doesn't mean you can guarantee, or even APPEAR to guarantee, a 60% reduction for anyone.

Steve

[bobsedge]

Originally Posted by Steven Carl Kelly

Thanks for your story, I'm sorry to hear about your loss and appreciate reading your experience, but I have a question:

Are you saying that theae allegations in the FTC action are completely and totally untrue?

The complaint alleges that consumers who call the defendants’ toll-free number are told that the defendants will obtain settlements that will substantially reduce their debt. The defendants allegedly promise to negotiate with creditors and begin making payments to them within several weeks after consumers join their program, and to provide personalized financial counseling. As noted in the complaint, consumers allegedly are told to set up a direct debit from their checking account for deposit into a bank account established by the defendants, who will debit their fees and pay creditors. They also are told to have no further contact with their creditors, and to stop paying them immediately, enabling the defendants to negotiate for them.

The defendants allegedly often fail to contact each creditor as promised, and consumers often continue hearing from creditors about their debts. According to the complaint, in someinstances the defendants fail to negotiate settlements with all of consumers’ creditors and don’t pay them, resulting in wage garnishment or debt collection agency action. When consumers tell the defendants that they have received a creditor’s summons, they allegedly are told not to worry, that it is just a “scare tactic.” In some instances, the complaint states, creditors sue these consumers, who have to pay the cost of the creditors’ litigation.
The complaint alleges that, as a result of being in the defendants’ program, many consumers experience substantially increased debt because of late fees, finance charges, and overdraft charges, and suffer damage to their credit rating because of significant negative information such as late payments, charge-offs, collections, and garnishments, all of which may appear on their credit report for up to seven years.


If you don't mind, I would appreciate it if you would address the above complaints.

Steven,

I'm not going to go into this whole thing, but there are truths and half truths. Most of it is not true, but some of it is true and just a characteristic of joining this type of program.

Debt settlement is likened to oncology. We dealt with the most severe financial situations and some people did not survive it.And even the ones it worked for, their situation often got worse before it got better.

These people could not make the payments to their creditors with or without this program. So of course, their balances were going to go up and they were going to be hit by fees. But when we settled, it didn't matter. And credit was not an issue because their credit was already bad.

But here is the important thing. Every person that joined our program knew the risks. We made sure of it by recording the confirmation call. We didn't trust counselors because they were either money or job motivated, so we had a check and balance.

This is the point of the whole issue and we should take heed as business people. I could never win. Take the new rules (and it was true two years ago as well). My people would say that we could settle debt for ____. But to combat an FTC complaint, it's not enough to say that results may vary. You need to be able to prove that what we say can be the expectations.

There are so many variables, what are the expectations? If people followed our lead and put up with the discomfort of the program, they got results. But if they didn't, the program didn't work. That's the problem. We can't control the actions of the customers and that predicates the expectations.

If I knew then what I know now, I wouldn't have allowed any claims to be made. We wouldn't have sold a thing because 1,000 other companies were making outrageous claims, but I wouldn't have done. And in the end, it still wouldn't have made a difference because they would have found something else.

[Steven Carl Kelly]

Originally Posted by seasoned

If those two are true, the FTC was only doing its proper job!

I have read the actual complain by the FTC:

http://www.ftc.gov/os/caselist/07230...tionscmplt.pdf

and there are a number of things therein that disturb me about the operation of this particular business. If any of these are true, then I would support the FTC's action. If every single one of these allegations are false, then this is a shameful abuse of power by the FTC.

Apparently, unless they're flat-out lying, they received numerous complaints about Bob's business, including some of his customers being the subject of lawsuits by their creditors. Again, if this is false, then this is a terrible miscarriage of justice. However, if true, then I can understand why the FTC would have taken action.

[bobsedge]

Originally Posted by seasoned

bobsedge,

TWO things I don't understand.

1. You said that the first two stipulations to the court, that you denied here, are TRUE!
2. The Judgment says you played the same garbage I have seen almost every other "debt solution" firm, that I have seen, do.

If those two are true, the FTC was only doing its proper job!

I don't care WHAT your relationship is with a given bank. That doesn't mean you can guarantee, or even APPEAR to guarantee, a 60% reduction for anyone.

Steve

I don't know what you are talking about. Who said I stipulated to anything. In the final settlement there was no admission or assumption of guilt.

In the settlement it just states the allegation, not any admission.

[Steven Carl Kelly]

Thanks for the response, Bob, I appreciate it. I'm also very familiar with how debt settlement companies work, I've consulted on Web strategies for several high-profile financial institutions here in the US and specifically with several other agencies involved in the area of credit and debt settlement.

[seasoned]

Originally Posted by Don Schenk

Bob, I am so sorry to hear about what happened to you. I can't imagine your pain and the emotional suffering that came with the process. Thank you for sharing a difficult story.

I remember reading something Joe Sugarman wrote after his run-in with the feds. As I recall, a major snow storm in Chicage knocked out power and caused the computers running his business to die - and lose data. Remember, we are talking computers from 35 years ago.

The lost data prevented him from fulfilling customers' orders within the 30 day zone, and the feds had a field day with it.

I may be wrong, but I thought he did not lose everything. The $100,000 number as a fine sticks in my head. Of course that would be equivalent to a million dollar fine today.

Even Mr. Kern "only" paid a $240K fine. Ouch!


:-Don

Kern BROKE THE LAW! The FTC was right in that case!

The JS&A deal, if what I heard was correct, was unfortunate. It is HARD to believe that he had NO backup strategy though! 35 years ago?!?!?!? Do you know how expensive ram was back then!?!?!? That was 1974(BTW I could SWEAR it was more like 1979!). Let's see! Assuming he had 10,000 customers(probably LOW), and that each one required 1K of memory(probably LOW), that is 10 MB of memory. If stored in ram, that would cost about $80,000, and the computer would be GIGANTIC. It would also be INCREDIBLY DUMB! So he would HAVE to use mass storage. GRANTED disk drives would cost a lot also, but STILL less than the memory. He could also have had 9 track tapes. The technology WAS there.

Steve

[Steven Carl Kelly]

BTW:

If the story above about Sugarman is accurate (I have no idea) then he surely was a seriously bad businessman who clearly didn't care one bit about his customers. That's my opinion, anyhow.

[seasoned]

Originally Posted by bobsedge

I don't know what you are talking about. Who said I stipulated to anything. In the final settlement there was no admission or assumption of guilt.

In the settlement it just states the allegation, not any admission.

OH, I thought you were the defendant. What I was referring to was page 2 of the order which said you agreed to it.

Steve

[Steven Carl Kelly]

BTW, I found this article on the Sugarman situation:

Joe Sugarman: Free Enterprise Hero?

Sounds like Sugarman is truly an expert marketer. He took the FTC's $75,000 action against him and leveraged the average man's disdain for big government into a marketing campaign that earned him perhaps many times the amount of the fine.

[bobsedge]

I think I have been fairly transparent here. Was my company perfect? No. We were imperfect an an imperfect industry. And when we were growing very rapidly, I'm sure we made a ton of mistakes. But we also put in safeguards as quickly as we could to correct them. And I know this for sure. Not one day did I ever wake up and say today I'm going to screw people.

Any complaint by the FTC or any other agency will be one sided. They are not going to be even handed so believe what you want.

There was an agenda here and we were unlucky enough to come up as the target. It could have been 1,000 other companies in that industry alone,but for the reasons I mentioned, we came up. It is what it is.

[bobsedge]

Originally Posted by Steven Carl Kelly

BTW, I found this article on the Sugarman situation:

Joe Sugarman: Free Enterprise Hero?

Sounds like Sugarman is truly an expert marketer. He took the FTC's $75,000 action against him and leveraged the average man's disdain for big government into a marketing campaign that earned him perhaps many times the amount of the fine.

From what I understand, the end result was not that great for him.

[Steven Carl Kelly]

Originally Posted by bobsedge

From what I understand, the end result was not that great for him.

I'm not familiar with the whole story, but I'll take a deeper look. To be honest, if he did actually fail to ship customer orders within the required 30 days, there's really no acceptable excuse, particularly if he blamed computers for it.

[bobsedge]

Originally Posted by Steven Carl Kelly

I'm not familiar with the whole story, but I'll take a deeper look. To be honest, if he did actually fail to ship customer orders within the required 30 days, there's really no acceptable excuse, particularly if he blamed computers for it.

I don't know the inside story as to what happened, but do you really think the FTC goes after every business that misses a shipping deadline?

There has to be some reasonableness here.

I'm sure you jaw walked before. How would you feel if you were ticketed? Sure, jay walking is technically against the law, but is anyone ever prosecuted for it?

The rational is, perhaps we did break the letter of the law but did it warrant the slap?

I can't judge that.

[seasoned]

Originally Posted by Steven Carl Kelly

I'm not familiar with the whole story, but I'll take a deeper look. To be honest, if he did actually fail to ship customer orders within the required 30 days, there's really no acceptable excuse, particularly if he blamed computers for it.

As I recall, companies TYPICALLY said things like "please allow 4-6 weeks for delivery", but that was not actually REQUIRED. I think the laws were CHANGED because of JS&A! NOW you HAVE to state that there may be a delay and, if it is further delayed, you must give the customer the option to back out of the deal.

ALSO, as I recall, he said he had NO ACCESS to the customer list. I think it may even have been that he had no access to the hardware.

Well, that gives everyone MORE reason to have offline backups.

Steve

[Steven Carl Kelly]

Originally Posted by bobsedge

I don't know the inside story as to what happened, but do you really think the FTC goes after every business that misses a shipping deadline?

Of course not, they don't have the resources. But if Sugarman did, then he deserves to have action taken against him.

Originally Posted by bobsedge

I'm sure you jaw walked before. How would you feel if you were ticketed? Sure, jay walking is technically against the law, but is anyone ever prosecuted for it?

I watch the TV show "Speeders" so, judging by the people on that show, I'd be considered the exception and not the norm. If I were ticketed for jaywalking I wouldn't like it, but I certainly would recognize that I broke the law and deserved the punishment.

I've gotten a speeding ticket before. Hundreds of others were speeding and didn't get pulled over but I did. I deserved the ticket -- the fact that many others got away without one is completely irrelevant.

Originally Posted by bobsedge

The rational is, perhaps we did break the letter of the law but did it warrant the slap?

I can't judge that.

Hard to say. But if you admit you broke the law, then I guess while it may seem unfair from your POV, it still may have been warranted.

[bobsedge]

Steve,

In that last quote I actually meant to say "he" (referring to Joe Sugarman) not "we". I don't admit that I broke the law.

[SuperSand]

Hi Bob,

You are one of the members that involve directly with this matter. I feel sorry for you and hope the very best of your upcoming business and anything you do in future.

Just want to clarify something - I got this email form one of the top marketer, i thank him for the information given to me and other subscribers too.

They did mentioned something on how to make it works with FTC rules and how we can get out from it.

Here is the email that I get from them:

" Hi nizam,

As you may of heard the FTC has released some new guidelines which
will affect all affiliates working online.

We got many questions about this recent change so we decided to
give you all the facts and answer all your questions in this
newsletter.

What’s the short version of what the FTC changes are?
—————————————————–
The U.S. Federal Trade Commission released their new guidelines on
10/05/2009. You’ll find the complete guidelines at
FTC Publishes Final Guides Governing Endorsements, Testimonials.

It’s a long read, so let’s see if we can summarize the main points
for you quickly:

1) If you have a relationship with someone whose product you’re
endorsing (which also means promoting), you must disclose that
relationship. That means you have to say explicitly if you got a
free copy of the product and/or any payment for your endorsement.

2) If you use testimonials to sell a product (yours or someone
else’s), you can’t use testimonials that give specific results
without also telling readers/viewers what the typical results are.

They’ll fine you $11,000 per violation.

There are more details in the guidelines, which we strongly
recommend that you read, but those are the key points. And by the
way, we’re not lawyers, so by all means get true legal advice from
a lawyer as you’re figuring out how you’ll respond to the new
regulations.

Frankly, some parts of the new guidelines are vague. The FTC says
they did that somewhat on purpose, and they’ll handle things on a
case by case basis.

That makes it more difficult to know how to comply in certain
situations, because it’s hard to figure out how the guidelines
apply, but that’s the way it is.

That means there are plenty of unresolved questions, too…and we
won’t know the answers until the FTC starts enforcing the
regulations.

The FTC has said that the guidelines are really meant to clarify
things for bloggers and for corporations, but it’s easy to see how
they could go after just about any marketer due to the vague
language.

When do the new rules take effect?
———————————-
They go into effect on December 01, 2009.

They were approved by a unanimous vote (4-0), so there’s no chance
they won’t go into effect on the scheduled date. This is just
something we’ll all have to live with, whether we like it or not.

What about for marketers with businesses outside the U.S.?
———————————————————-
If you’re outside the U.S. and you’re not selling to people inside
the U.S., you’re not affected at all.

But really, how many web businesses never sell to people in the
U.S.? Not many. It’s safer to assume that folks in the States will
buy your stuff, and that you should follow the FTC guidelines.

What does this mean for testimonials on a sales page?
—————————————————–
We know you’ve seen testimonials on sales pages that say things
like, “I made $14,576 in 20 minutes with just the tip on page
12!!!” Those are likely to disappear.

It used to be perfectly acceptable to cherry-pick great results
like that and cover yourself with a simple disclaimer like this:

“These results aren’t typical.” Not anymore.

The guidelines say, “advertisements that feature a consumer and
convey his or her experience with a product or service as typical
when that is not the case will be required to clearly disclose the
results that consumers can generally expect.”

That means if you’re going to mention specific results in
testimonials, you have to tell people what the typical results are.

We all know what the typical results are for most information
products… people buy them and do nothing with them. That means
it’s nearly impossible for you to quantify a “typical” result. If
you don’t know what results at least a statistically significant
sample of buyers got, you can say what’s typical!

All of that means (get ready for it) you simply can’t use
results-based testimonials. Period. Unless you want to risk an
$11,000 fine each time you get caught.

You can still use testimonials where people say they love your
product, or like you a lot, or generally think you’re swell. Those
tend not to be powerful selling tools, but they pass muster.

But that’s not all the guidelines mean.

You also have to disclose if your friends wrote your testimonials.

Again, will you get caught if you don’t? Probably not, but it’s a
risk. Honesty is the best way not to get in trouble.

The best advice is not to depend on testimonials to sell your
product. Make your offer good enough to sell on its own.

In a way, this is bad for new marketers, because it can be tough to
come up with a good offer. But it’s also good, because you don’t
have to worry as much about getting testimonials!

What does this mean for affiliate marketing?
——————————————–
It’s actually simpler for affiliates than for product sellers.

If you’re an affiliate, you have to disclose that you’re getting
paid when people buy through your affiliate link.

Yes, that means you need to tell people that your ClickBank link is
indeed a ClickBank link, even if you’ve made it prettier by saying

“yoursite dot com/productx” or whatever.

There are two ways to do this. The first way is to include a
general statement on your site (maybe in your privacy policy),
something like this:

“Links on this site for product reviews are affiliate links. I get
paid a commission when you buy a product after clicking on one of
those links.”

The second way is to be explicit about each link. You might say
something like, “I get paid a commission when you buy through this
link.”

Do both approaches cover you legally? Hard to say, and the FTC
hasn’t cleared that up yet. So do whichever one you think is safer.

Finally, as an affiliate be VERY careful about using the
promotional email templates product sellers give you.

Those emails often contain claims about results, and the new FTC
guidelines frown on that unless you tell people what the typical
results are.

The new FTC guidelines don’t specifically talk about email
marketing, but odds are good this will be considered covered as
well (hey, it’s selling). So when in doubt, leave it out.

So what should I do?
——————–
First and foremost, you’ll want to get some genuine legal advice,
especially if you have a big site and/or a large mailing list.

Don’t just take our word for this stuff.

If you’re an affiliate marketer, get busy adding disclosures to the
sites you use to promote products. That includes blogs and review
pages/sites. At a minimum:

1) Add a general disclosure to your site saying that your
promotional links are affiliate links, and that you get paid when
people buy through those links

2) If you offer an free items (front-end sign-up enticements or
bonuses), make sure you tell people that any affiliate links in
those items are getting you paid

Beyond that, it’s up to you. When in doubt, disclose more
information than you think you need to. It doesn’t pay to get on
the wrong side of the FTC.

If you’re a product marketer, you’ll probably have more work to do.

Here’s a very brief (and probably incomplete) checklist:

1) Start scrubbing your results-based testimonials from your sales
pages. If you actually CAN quantify typical/average results, go
ahead and do that, but most people won’t be able to. In fact,
during the comment period on the rules, some folks brought that up
with the FTC, specifically for weight loss products…and the FTC
promptly ignored it.

2) Modify your affiliate email templates (and other things, like
solo ads) to remove any results claims.

3) Contact your affiliates to tell them you did that, and to give
them new stuff they can use instead.

4) Scrub your products of any results claims as well, unless
they’re your personal results and you include ALL of your results
(results for every single trial of your free traffic strategy, for
example).

5) If you use any testimonials from people you gave a free copy of
your product to, say so.

Bottom line, disclose, disclose, disclose. Did we mention disclose?

In the end, these new guidelines aren’t the death of Internet
marketing, or of affiliate marketing. And if you sell a product on
the web, you aren’t out of business.

That said, if you don’t want to risk racking up some eye-popping
fines, please take some reasonable steps to comply with the new
guidelines as soon as you can… and as completely as you can,
given that they’re a little vague at the moment.

We all have to make changes, unless we just got lucky and were
completely untouched by the new guidelines. That’s probably rare.

So make the changes you need to make and get used to the new world.

And look on the bright side. The new guidelines are going to make
it harder for people to sell with hype and false promises. Those
kind of fraudulent sellers hurt everybody by giving Internet
marketing a bad name.

The marketers who can pass muster and sell well even when being
completely honest can still make a killing."
----------------------------------------

Bob, what do you think of that?

I think some of the information given will helps us especially for internet marketers that live outside USA.

Cheers,

Nizam

[HeySal]

This is precisely the kind of thing that I was trying to stress in the thread that I had the link to the pdf in. There are no hard and fast rules. You can be judged so arbitrarily that it doesn't matter what you try to comply with - there are loops that allow them to get you if they want you. No black and white can and can'ts.

I also pointed out the fines - $11,000 isn't "we're going after the big boys". It's the little guys that they can take down real easy. Would a major company even blink at an $11,000 fine? Some of them don't do much more than shrug if you give them six figures.

Also - as far as industry. We have the CODEX alimeterus going into effect n January, so that is any business in alternative health that is at risk. That's my niche even if in only an offhanded way. I'm ripping my testimonials off my salespages then going to go over them with a fine-toothed comb. I have a background in ethnolinguistics that covers a lot of linguistic fields so I can counter any semantics based arguments and I have a feeling that many arguments will turn completely semantics - another area where there aren't many experts that know where black and white stops and grey begins - and one they will use. Trust me on that one.

bobsedge - congratulations on keeping your home. There are over 200 laws on the books now that allow the government to walk in and take every darned thing you own. You got very lucky.

[bobsedge]

Nizam,

I'm not a lawyer and I'm not an expert on the new rules, but the advice looks pretty sound.

But here is my guess as to what is going to happen.

Ninety percent of marketers won't change a think. Out of the ten percent that change their practices, most will revert back to the old ways when they see that most people are not abiding by them and its costing them business.

Then the FTC will hammer someone in the industry and scare some people out of the industry entirely and many others will really start abiding.

Me personally, I will abide by these rules. I will try to find a way of putting a positive spin on it.

I believe the claims and testimonials have gotten ridiculous. They are so wild that I'm not sure they mean anything anyway. It makes it really tough on new people who don't have those testimonials in their pocket and feel compelled to either make them up or buy them.

Maybe to a certain extent this will level the playing field.

[Black Hat Cat]

Originally Posted by seasoned

Kern BROKE THE LAW! The FTC was right in that case!

Steve

Did he really?

http://masscontrolsite.com/blog/?p=57

[seasoned]

Originally Posted by Black Hat Cat

Did he really?

http://masscontrolsite.com/blog/?p=57

YEP! He said that you could make x USD, by simply copying, etc...., and the FTC figured that that was IMPOSSIBLE! I read the FTC description of the case. Maybe frank is talking about a further aspect, because BOTH had to do with "Instant Internet Empires". That very name implies the problem.

If others were claiming to be him, etc.... He would have a criminal case against them, and could have the FTC investigate THEM! Anyway, I have only aluded to this for years, and never even mentioned names. I am simply saying the FTC had a case. THIS is one of the incidents that got people to be serious about disclaimers.

Steve

[JakeDaly]

Originally Posted by bobsedge

The only thing I walked out with was 1000 books I had just published and they gave me a hard time about that as well.

All of the U.S. government agencies are willing to manipulate, cheat & steal but if you say anything about free speech they go running.

[seasoned]

Originally Posted by JakeDaly

All of the U.S. government agencies are willing to manipulate, cheat & steal but if you say anything about free speech they go running.

If you think a claim of free speech will cause them to just stop and run away, MAN are you WRONG!

[mikemcmillan]

Originally Posted by bgmacaw

Time to whip out the Rand again...

"Economic power is exercised by means of a positive, by offering men a reward, an incentive, a payment, a value; political power is exercised by means of a negative, by the threat of punishment, injury, imprisonment, destruction. The businessman's tool is values; the bureaucrat's tool is fear."

Anyone on this forum who reads Ayn Rand titles such as Capitalism: The Unknown Ideal, or especially Atlas Shrugged is a personal hero of mine.

For those who say that capitalism in America is evil--they are wrong, true capitalism has never been tried--the government wouldn't allow it to happen. It would destroy their nanny state grip on the economy.

bgmacaw, objectivist thinkers praise John Galt or Dagny Taggart. Me--I'll settle for reincarnation as a Ragnar Danneskjöldest figure. He's da real man!

Anyway, interesting post--it made me think.

[bobsedge]

Nathan,

These cases look interesting. They all occurred after my case commenced so I wouldn't have come across them in the few days I had to decide my path.

I'm glad I didn't have to make that decision because I still would not like to play the odds.

[mprey]

Sorry to hear that Bob. It makes me wonder why affiliates are generally not thinking about moving offshore. It seems like that would make things so much easier...

[pcpupil]

Thanks for the post and honesty.I know of a person,that had his own company years ago.Not a long time,but ago.
Now this was by the IRS,but since there was something mentioned in this post ill say and see what a few of you think.
He repported what he earned.The IRS said different.So they sent out these 2-3 guys,people to look at his house,cars,assets,whatever.
When they got there,looked t his house and,cars,ect,they filled out some paper work after looking at one another.And left.He recieved a letter in the mail saying there basiclly was a mistake and to forget about it.
The reason was they thought,he didnt have anything they wanted.And trust me,if he was padding anything,and had illions,he sure as h##l didnt show it.
Maybe he had his boat or other items in his kids name at there house,ect.
But,bottom line,they quit.Left him alone.
Like said in this post,keep it low,honest,ect,and youll prpbably be fine.
Wonder if i could start my own BBB.
Maybe IM.Would they leave me alone then?
Mat

[Paul Schlegel]

Originally Posted by bobsedge

These latest rule changes have triggered a number of threads on this forum over the past week or so.

I've been reading as many as possible and I feel compelled to step in and offer my unique perspective. As you can imagine, it's not easy doing this but I feel there have been many fallacies and misconceptions with regards to the FTC and how they act.

I also think I can help provide some insight on how to avoid problems.

On October 11, 2007 I was forced to stipulate away my 12 year old company and turn it over to receivers for the FTC.

I started the company in 1995 with $5,000 and built it into a $6 million a year business within five years.

The business was in the debt settlement industry. I think I was one of the founding fathers along with a few companies in California. In 1998, a bank thought so much of our model that they invested $600,000 in us and became a minority owner.

Because of our relationship with the bank, we were able to institute certain procedures that no one else could.

For those of you not familiar with debt settlement, it is tough. You are dealing with consumers on the brink of bankruptcy and in many cases, emotionally wrecked.

After Bush took over in 2000, the government and its agencies started to become very pro-bank and started changing rules and laws to protect the banks. A few years later, a wave of actions against debt resolution firms were started mainly by regulatory agencies, AG's, and the FTC.

The industry became very tough because of competition and the economic climate leading to a surge of businesses entering the industry, some of them with not the best of intentions.

Let me hit some key points and I hope these help:

Fallacy #1: The FTC investigates for bad guys. I only wish this were true. Here is the way they work. They first decide on an industry then they find a company. They are not good investigators so if it's an industry not in their face (like in infomercials) they will turn to the Better Business Bureau (BBB) for recommendations. This is where I made my biggest mistake. For years, I had battled the BBB. I even sued them at one point (only to have it thrown out because they are exempt from lawsuit-another story).

Finally, the BBB tired of me and through my company under the bus. In 12 years we touched 40,000 households and had 25 complaints on record at the time. You do the math. At that was in a difficult industry. Giving you perspective, every major bank has thousands of complaints.

If I would have left the BBB alone I would still be in business today. I was not on tv or radio nor was I kicking but on the internet. The BBB was my only connection to the FTC.

But a better lesson is to avoid registered complaints whenever possible. If you do that, you will likely stay off the radar.

Other than the complaints, we had no other major lawsuits and no one ever accused us of fraud or stealing their money. The FTC even thanked the BBB for their help in the complaint.

Fallacy #2: The FTC will send you a warning to stop before they act. Well, here is the way it went down for me and every other business I know of that has gone through this. On October 1, 2007 it was business as usual. I was served on October 2. We were done on October 11. There was no warning.

Fallacy #3: If you are sued and you are honest the truth will come out in court. Well, there is no court. It is my nature to fight and that was my intent. The three claims they made were bogus. We were able to nullify any customer complaint because we taped every customer we signed up to make sure they understood the program.

I contacted a Madison Ave. FTC law firm that specialized in these things and hired them at $750/hr. When I mentioned fighting, they said sure, that will be a $1 million retainer. I was forced to plan my surrender.

In searching Google I found that only one company took the FTC to court and won, Amway. So the bottom line is that if you are sued by the FTC you are toast.

Fallacy #4: If you follow the rules you are safe. The truth is, they find the company they want to target first then they find ways you broke the rules. The FTC guidelines are vague for a reason. They want to have a broad brush in going after people. We put in all kind of safeguards in place to try to ensure consumer integrity. I'm sure we could have done better. But I know we were better than 90 percent of the businesses in the industry.

I'll tell you. I have not seen one long sales letter that wouldn't be torn apart by the FTC, Every single one would be in trouble. I'm not saying you're doing anything wrong, but they would twist your words to fit their needs. If you are targeted they will justify the reason.

Fallacy #5: The FTC's motives are to protect the consumer. This is only partially true. Everything they do is under the guise of protecting the consumers but there is a political agenda. But what the FTC is really after is publicity. They like press. I'm sure they will say it's because it acts as a deterrent, but I don't know. So you have a better chance of getting sued if you live in proximity of a metropolitan media area than if you live in the boon docks.

Here is the bottom line though. You probably have very little to worry about. The action taken against me was not as unpredictable as I first thought it was. I was in an industry that was targeted and I got on the radar of their watch dog, the BBB.

As for IMers, if you follow some basic guidelines, you will be fine.

1. Keep hype to a minimum. Don't go crazy with claims. It's really not that necessary anyway. Don't worry about these new rules so much because they are redundant anyway. As you are writing copy just ask yourself along the way if you can substantiate what you are saying if asked to. Just follow truth in marketing guidelines.

2. Stay away from targeted products. If I were you, I would stay away from selling Acai Berry for one. There already has been some rumblings there and the FTC loves to go after health related products. You can easily be caught up in the wrath if you are not careful. Before you start pitching a product Google the category to see if there are any waves of discontent.

3. Make upset customers go away. Be very generous with refunds. It's really not worth the fight and you never know who you are pissing off.

4. Take the limelight for what it's worth. There is a price to pay for becoming a guru, and that is exposure. Let's be honest, was Jeff Paul's infomercial any different than the many sales letters floating around out there. I don't think so. He made a decision to expose himself to scrutiny. I'm not saying don't do it, but understand the risks.

I hope this helps someone because I really don't wish the ordeal my family and I had to go through on anyone. It's been two years and I'm just now starting to emerge from the wreckage.

Bob

These are some great points and I think are worth addressing further. Having talked to FTC attorneys and one investigator directly about one of their recent Operation Shortchange cases you bring up some interesting observations worth paying attention to.

*Re: Fallacy #1 - I'm not sure about some of this, but the observation that the investigators are not very good certainly seems to fit my opinion from my conversations and experience with the investigator I spoke with there was - the investigator was NOT very good. There was often data he could not find that most members of this forum would be able to find within minutes.

As annoying as it may be for the reasons pointed out about the strange and ethically paradoxical nature of the BBB already discussed, staying on the right side of the BBB is probably a good idea.

Staying on the right side of your local AG is also key as many cases that hit the FTC originally start at the AG level. And while I'm not convinced that the FTC is a corrupt organization, I think it's been clearly demonstrated that AGs can be quite prone to corruption or at least contamination due to campaign contributions in deciding what actions they pursue. Not, I am NOT saying to contribute to your local AG, however if they pursue your business but are obviously ignorning a real trouble business that may be what's going on and you may be able to use that to your advantage.

You can see a great example of this here:
A story of fraud, drugs, waterboarding and the call-center companies that gave Attorney General Mark Shurtleff $187,500 in 2008

I've run across a similar example which I can't recall at this point.

*Re: Fallacy #2: The FTC will send you a warning.

Certainly the FTC has been known to give companies "clean up periods", but don't count on it. Think about it logically, if they believe they have a case against you they are NOT going to want to tip you off and potentially lose access to evidence that they could collect.

So it really goes back to staying off the complaint radar.

*Re: Fallacy #3: The truth will come out in court...

Whether it's ONE case that the FTC has lost or a few, the FTC typically only proceeds with cases it thinks it can win. Whether they can win for some of the nefarious reasons presented or because they actually have a winnable case, I think its safe to say that if the FTC files against you, you are probably toast.

What really stinks in my opinion is that the actual criminals and organized crime stay out of reach:

1. Because they are so much harder to investigate (see Fallacy #1)
2. Because the FTC has limited resources (unlike what some people seem to bizarrely believe about FTC and Federal Law Enforcement funding in General).

*Re: Fallacy #4: "they find the company they want to target first then they find ways you broke the rules"

That statement doesn't really seem to true if you just randomly sample some of the FTC cases. While they transparently go after certain industries - after all they actually NAME their operations after the the industries they go after - a lot of the companies they go after are driven by the volume of complaints...it definitely seems like yours may have been an exception if you only had 25 comlaints, though.

*Re: Fallacy #5: "The FTC's motives are to protect the consumer. This is only partially true. Everything they do is under the guise of protecting the consumers but there is a political agenda. But what the FTC is really after is publicity. They like press. I'm sure they will say it's because it acts as a deterrent, but I don't know. So you have a better chance of getting sued if you live in proximity of a metropolitan media area than if you live in the boon docks."

Not sure about this one. They definitely want higher exposure/impact cases, but I think that's more about the litigators chance of getting a case approved for prosecution.

[St Croix]

This actually raises some interesting questions for the whole "move offshore" thing and the benefits overseas people may have. There are more than two sides to the coin too.

For example, I am in Australia, but if my sites are hosted on Hostgator etc. then am I selling affiliate products from American soil to Americans? Yes. Could I be done? Not sure, but maybe a take down notice could be sent to hostgator and I could lose my web sites...

-Or- the FTC will go straight to the product vendor and sting them with the fine as they hadn't properly vetted their affiliates and false/non disclosed claims were being made about their product.

Now if this happens, let's look at what will probably happen to cross-shore affiliate marketing....

I'm an American with a Clickbank product to sell. My policy is no longer to accept non US affiliates as there is no skin off their nose if they don't comply with FTC regulations - increasing the risk that the FTC will come straight to me when one of them royally screws up. At least my US affiliates will be more inclined to comply as it's their asses on the line as well.

So it could potentially be a lose-lose for those of us overseas.

[mywebstory]

I am sorry to hear this all, there must be some thing better for you in it. some lesson or future planning. Pray to one God , who helps all

[TristanPerry]

Sounds absolutely awful.

I'm glad I'm a British citizen (especially after, as a host, also hearing of some cases where the FBI have raided an entire datacentre and kept power to all servers off for many hours), although I am fully aware that such companies will try to bully their way outside of their jurisdiction, too.

Sorry to hear this.

[TelegramSam]

Originally Posted by TristanPerry

Sounds absolutely awful.

I'm glad I'm a British citizen...

Don't sit too comfortably. The EU is working on this right now too.

[SuperSand]

Yes Bob, That's sound logical to what is happening right now... i do believe not many marketers will change their think and business style... Until somebody get ripped by FTC.

Thank you to Andrew X and Steven Lee Jones for their great information to us.

Well Bob - Life's go on... Good Luck.

Originally Posted by bobsedge

Nizam,

I'm not a lawyer and I'm not an expert on the new rules, but the advice looks pretty sound.

But here is my guess as to what is going to happen.

Ninety percent of marketers won't change a think. Out of the ten percent that change their practices, most will revert back to the old ways when they see that most people are not abiding by them and its costing them business.

Then the FTC will hammer someone in the industry and scare some people out of the industry entirely and many others will really start abiding.

Me personally, I will abide by these rules. I will try to find a way of putting a positive spin on it.

I believe the claims and testimonials have gotten ridiculous. They are so wild that I'm not sure they mean anything anyway. It makes it really tough on new people who don't have those testimonials in their pocket and feel compelled to either make them up or buy them.

Maybe to a certain extent this will level the playing field.

Originally Posted by SuperSand

Hi Bob,

You are one of the members that involve directly with this matter. I feel sorry for you and hope the very best of your upcoming business and anything you do in future.

Just want to clarify something - I got this email form one of the top marketer, i thank him for the information given to me and other subscribers too.

They did mentioned something on how to make it works with FTC rules and how we can get out from it.

Here is the email that I get from them:

" Hi nizam,

As you may of heard the FTC has released some new guidelines which
will affect all affiliates working online.

We got many questions about this recent change so we decided to
give you all the facts and answer all your questions in this
newsletter.

What’s the short version of what the FTC changes are?
—————————————————–
The U.S. Federal Trade Commission released their new guidelines on
10/05/2009. You’ll find the complete guidelines at
FTC Publishes Final Guides Governing Endorsements, Testimonials.

It’s a long read, so let’s see if we can summarize the main points
for you quickly:

1) If you have a relationship with someone whose product you’re
endorsing (which also means promoting), you must disclose that
relationship. That means you have to say explicitly if you got a
free copy of the product and/or any payment for your endorsement.

2) If you use testimonials to sell a product (yours or someone
else’s), you can’t use testimonials that give specific results
without also telling readers/viewers what the typical results are.

They’ll fine you $11,000 per violation.

There are more details in the guidelines, which we strongly
recommend that you read, but those are the key points. And by the
way, we’re not lawyers, so by all means get true legal advice from
a lawyer as you’re figuring out how you’ll respond to the new
regulations.

Frankly, some parts of the new guidelines are vague. The FTC says
they did that somewhat on purpose, and they’ll handle things on a
case by case basis.

That makes it more difficult to know how to comply in certain
situations, because it’s hard to figure out how the guidelines
apply, but that’s the way it is.

That means there are plenty of unresolved questions, too…and we
won’t know the answers until the FTC starts enforcing the
regulations.

The FTC has said that the guidelines are really meant to clarify
things for bloggers and for corporations, but it’s easy to see how
they could go after just about any marketer due to the vague
language.

When do the new rules take effect?
———————————-
They go into effect on December 01, 2009.

They were approved by a unanimous vote (4-0), so there’s no chance
they won’t go into effect on the scheduled date. This is just
something we’ll all have to live with, whether we like it or not.

What about for marketers with businesses outside the U.S.?
———————————————————-
If you’re outside the U.S. and you’re not selling to people inside
the U.S., you’re not affected at all.

But really, how many web businesses never sell to people in the
U.S.? Not many. It’s safer to assume that folks in the States will
buy your stuff, and that you should follow the FTC guidelines.

What does this mean for testimonials on a sales page?
—————————————————–
We know you’ve seen testimonials on sales pages that say things
like, “I made $14,576 in 20 minutes with just the tip on page
12!!!” Those are likely to disappear.

It used to be perfectly acceptable to cherry-pick great results
like that and cover yourself with a simple disclaimer like this:

“These results aren’t typical.” Not anymore.

The guidelines say, “advertisements that feature a consumer and
convey his or her experience with a product or service as typical
when that is not the case will be required to clearly disclose the
results that consumers can generally expect.”

That means if you’re going to mention specific results in
testimonials, you have to tell people what the typical results are.

We all know what the typical results are for most information
products… people buy them and do nothing with them. That means
it’s nearly impossible for you to quantify a “typical” result. If
you don’t know what results at least a statistically significant
sample of buyers got, you can say what’s typical!

All of that means (get ready for it) you simply can’t use
results-based testimonials. Period. Unless you want to risk an
$11,000 fine each time you get caught.

You can still use testimonials where people say they love your
product, or like you a lot, or generally think you’re swell. Those
tend not to be powerful selling tools, but they pass muster.

But that’s not all the guidelines mean.

You also have to disclose if your friends wrote your testimonials.

Again, will you get caught if you don’t? Probably not, but it’s a
risk. Honesty is the best way not to get in trouble.

The best advice is not to depend on testimonials to sell your
product. Make your offer good enough to sell on its own.

In a way, this is bad for new marketers, because it can be tough to
come up with a good offer. But it’s also good, because you don’t
have to worry as much about getting testimonials!

What does this mean for affiliate marketing?
——————————————–
It’s actually simpler for affiliates than for product sellers.

If you’re an affiliate, you have to disclose that you’re getting
paid when people buy through your affiliate link.

Yes, that means you need to tell people that your ClickBank link is
indeed a ClickBank link, even if you’ve made it prettier by saying

“yoursite dot com/productx” or whatever.

There are two ways to do this. The first way is to include a
general statement on your site (maybe in your privacy policy),
something like this:

“Links on this site for product reviews are affiliate links. I get
paid a commission when you buy a product after clicking on one of
those links.”

The second way is to be explicit about each link. You might say
something like, “I get paid a commission when you buy through this
link.”

Do both approaches cover you legally? Hard to say, and the FTC
hasn’t cleared that up yet. So do whichever one you think is safer.

Finally, as an affiliate be VERY careful about using the
promotional email templates product sellers give you.

Those emails often contain claims about results, and the new FTC
guidelines frown on that unless you tell people what the typical
results are.

The new FTC guidelines don’t specifically talk about email
marketing, but odds are good this will be considered covered as
well (hey, it’s selling). So when in doubt, leave it out.

So what should I do?
——————–
First and foremost, you’ll want to get some genuine legal advice,
especially if you have a big site and/or a large mailing list.

Don’t just take our word for this stuff.

If you’re an affiliate marketer, get busy adding disclosures to the
sites you use to promote products. That includes blogs and review
pages/sites. At a minimum:

1) Add a general disclosure to your site saying that your
promotional links are affiliate links, and that you get paid when
people buy through those links

2) If you offer an free items (front-end sign-up enticements or
bonuses), make sure you tell people that any affiliate links in
those items are getting you paid

Beyond that, it’s up to you. When in doubt, disclose more
information than you think you need to. It doesn’t pay to get on
the wrong side of the FTC.

If you’re a product marketer, you’ll probably have more work to do.

Here’s a very brief (and probably incomplete) checklist:

1) Start scrubbing your results-based testimonials from your sales
pages. If you actually CAN quantify typical/average results, go
ahead and do that, but most people won’t be able to. In fact,
during the comment period on the rules, some folks brought that up
with the FTC, specifically for weight loss products…and the FTC
promptly ignored it.

2) Modify your affiliate email templates (and other things, like
solo ads) to remove any results claims.

3) Contact your affiliates to tell them you did that, and to give
them new stuff they can use instead.

4) Scrub your products of any results claims as well, unless
they’re your personal results and you include ALL of your results
(results for every single trial of your free traffic strategy, for
example).

5) If you use any testimonials from people you gave a free copy of
your product to, say so.

Bottom line, disclose, disclose, disclose. Did we mention disclose?

In the end, these new guidelines aren’t the death of Internet
marketing, or of affiliate marketing. And if you sell a product on
the web, you aren’t out of business.

That said, if you don’t want to risk racking up some eye-popping
fines, please take some reasonable steps to comply with the new
guidelines as soon as you can… and as completely as you can,
given that they’re a little vague at the moment.

We all have to make changes, unless we just got lucky and were
completely untouched by the new guidelines. That’s probably rare.

So make the changes you need to make and get used to the new world.

And look on the bright side. The new guidelines are going to make
it harder for people to sell with hype and false promises. Those
kind of fraudulent sellers hurt everybody by giving Internet
marketing a bad name.

The marketers who can pass muster and sell well even when being
completely honest can still make a killing."
----------------------------------------

Bob, what do you think of that?

I think some of the information given will helps us especially for internet marketers that live outside USA.

Cheers,

Nizam

[chickenlittle]

Originally Posted by TelegramSam

Don't sit too comfortably. The EU is working on this right now too.

I'm UK based, but my market is worldwide including the US. I plan to make sure I comply with the FTC regulations, and the UK ASA regulations.

TelegramSam, do you know what other regulations are coming in for the UK/EU?

[Steven Wagenheim]

Wow...what an amazing thread. I don't even know where to begin.

Bob, first of all, I am sorry about what happened to you. Right or wrong, it's
not something I'd wish on anyone unless they were an outright thief.

Having said that, your business model was a damn risky one to begin with,
something I personally wouldn't tackle unless my life depended on it. My
point is, what happened to you is probably not the typical worry that
somebody who is selling ebooks on how to learn Chinese has to worry
about. Some businesses, because of their low profile, will probably be able
to get away with more...not that I am condoning lying. I'm just saying that
the FTC is less likely to come after Joe Blow who is selling alternative
heating for your home through solar panels than somebody who is selling
debt relief.

You made a good suggestion...don't mess with the BBB. Hell, don't tangle
with anybody. The more noise you make, the more they will look at you.
Flying under the radar is not a bad thing. Will you maybe make less money?
Probably...but you'll end up in less trouble too.

As others have said, nobody really knows how this is going to play out,
so we're just going to have to wait and see.

My personal advice to anyone is simple.

If you think something you're going to put on your blog or sales page
MIGHT get you in trouble...don't put it there.

It's really THAT simple.

[scrofford]

I used to be proud to be an American...I served in the military and vowed to defend her. Now I am disgusted with just about EVERY PART of our government. We are not free...I believe that its going to get worse also. They want to control EVERY aspect of our lives. I have no trust in our system or our government. As soon as I can I will be leaving this country.

[bobsedge]

Originally Posted by Steven Wagenheim

Wow...what an amazing thread. I don't even know where to begin.

Bob, first of all, I am sorry about what happened to you. Right or wrong, it's
not something I'd wish on anyone unless they were an outright thief.

Having said that, your business model was a damn risky one to begin with,
something I personally wouldn't tackle unless my life depended on it. My
point is, what happened to you is probably not the typical worry that
somebody who is selling ebooks on how to learn Chinese has to worry
about. Some businesses, because of their low profile, will probably be able
to get away with more...not that I am condoning lying. I'm just saying that
the FTC is less likely to come after Joe Blow who is selling alternative
heating for your home through solar panels than somebody who is selling
debt relief.

You made a good suggestion...don't mess with the BBB. Hell, don't tangle
with anybody. The more noise you make, the more they will look at you.
Flying under the radar is not a bad thing. Will you maybe make less money?
Probably...but you'll end up in less trouble too.

As others have said, nobody really knows how this is going to play out,
so we're just going to have to wait and see.

My personal advice to anyone is simple.

If you think something you're going to put on your blog or sales page
MIGHT get you in trouble...don't put it there.

It's really THAT simple.

Steven,

In retrospect, it was a risky business model but it wasn't when I started out. Remember, a bank even invested in my business.

What made it risky were the players that followed me into the business. People looking to make the quick buck and knowing they were pushing the envelope to do so, but not caring.

Think about what I just said.

Is this the same internet marketing arena that you first entered?

I've been in this space a few years and I would say the product launch hype is ten times worse than it was when I started.

I have not seen a sales letter on a big product launch that the FTC would not be able to rip apart in seconds. It has gotten really bad.

The point is, most marketers have nothing to worry about. But I can definitely see a time when the FTC comes after a BIG guru just to make a point and takes down the JV partners with him. It would be too easy. And believe me when I say that they are not shy about throwing everyone and everything into the soup.

I don't want to scare anyone but it is fair to point out that it's not enough for you to keep a low profile. You also need to ask whether the people in your upline are also keeping a low profile.

Now in my case, we had affiliates and they were not touched other than their clients were also caught up in this.

I can't predict what is going to happen but I do suggest to everyone to let that little voice come out and play and ask the right questions. Don't assume.

[Robyn8243]

Originally Posted by NathanFalkner

For fun, and out of some degree of boredom,
one of my roommates typed "FTC loses" into
Google to see what might show up.

My guess, after reading this thread, was that
there would be no results.

How could there be?

The FTC never loses.

Well, except for that Amway case that was
cited earlier in this thread.

So okay, there might be 1 result.

But when my roommate IM'ed me a link to the
search results, I was surprised by what I saw.

Here are the raw search results:

Google

And here are a few cases that jumped out from
the first few pages of results:

Realtors Win, FTC Loses Multilist Case | ABA Journal - Law News Now

Stunner: FTC Loses Affiliate Marketing Case

FTC loses case against Dutchman Enterprises LLC — Autoblog Green

Maybe there are more cases like this? It would
be interesting to see what percentage of cases
that go to trial are actually won by the FTC.

Clearly, a lot of individuals and companies
choose the path of least resistance and settle
-- and I'm inclined to agree that path makes
sense in many instances where the defendants
objectively don't have strong cases or where a
variety of factors make pursuing litigation too
burdensome (emotionally, financially, etc).

But I think that we as a community might need
to re-think the notion that the FTC never loses
cases, or that the entire U.S. judicial system is
rigged to ensure that the FTC never loses, and
that 100% of all defendants targeted by the FTC
are guaranteed to lose if they choose to fight
in court. I truly am curious what the FTC's win
rate is in cases adjudicated in a court.

I wonder how much money had to be spent in order to get these wins. The cost of litigation is so high especially when it is you against the government. Add to that the fact that your assets can be tied up and unavailable to you during the process, and it is hardly a level playing field.

The financial costs of litigation are only a tiny part of the equation. Litigation, especially when it it is you versus the government, takes a huge emotional toll on you and your family. More so, when as others have noted, the government is also looking for publicity. People love to gossip and most people assume that if the government is coming after you, you must be guilty.

Throw in the reality that you can be 100% right and still lose in Court, and it is no wonder that most people eventually give in to the tyranny. The reality for most targets is that the cost of battle is too high.

Most people have no clue just how brutal the FTC, IRS or any other government entity can be, with little or no regard to the actual facts, until it happens to someone you know.

Thanks for sharing your experiences Bob. I sincerely hope things continue to improve for you and your family. You have opened the eyes of many people with this post.

Robyn

[JD Nunes]

Man Bob, that's crazy. I really feel for you. Personally I think any entity that claims authority over someone is inevitably going to abuse that power - it's just human nature, as they would say. I didn't bother to see if this was covered, but could you say exactly what it was that the FTC sued you over?

[bobsedge]

Originally Posted by NathanFalkner

Bob -- just wondering. Did your home ever get raided
as part of the FTC investigation process to search for
assets that could be used to provide consumer redress?

Also, assuming your banking (and related) assets were
"frozen" upon filing of their initial lawsuit, how were you
able to pay for legal representation?

Thanks again for being willing to talk about this a little
and to provide an insight into the real-world events that
surround someone and their company being targeted by
the FTC -- it's really thought provoking.

Ok, here is the way it goes down.

My home nor my office were raided. We were simply served with a forest worth of paperwork and given two days to answer to an order requesting that assets be frozen and a receivership put in place.

We received an extension of one week. On the last day we negotiated to consent to the order.

We were able to pay a retainer prior to the asset freeze.

Generally, an FTC action is not criminal, though it can be. I actually know another business in my industry that was raided. The FTC and FBI actually leased office space in his building for six months so they can keep an eye on the business.

I really believe that the FTC realized they made a mistake in coming after us. Not because they thought we were innocent, but because they realized we didn't have the assets they normally like to capture. Based on what I could tell, their investigation began at least 18 months prior to that fateful day.

I think later on they realized that we weren't bad people, but they never say "my bad" and go away.