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FTC Sues for MMO Promises Used as Front-Ends for Upsells

by kindsvater
55 replies
A new FTC action against a couple dozen Internet marketers, with the complaint, can be found here: FTC Action Halts Allegedly Deceptive Own-Your-Own Website Business Opportunity

In sum, defendants promised to build websites that would make money raking in affiliate cash.

These website packages led to an expensive upsell where more effort was promised, and of course significantly more revenue.

A refund policy was in effect that defendants mostly honored for the initial purchase - but it didn't matter.

The FTC claimed most people buying the lead product did not make money, and there was little to no additional revenue gained from the expensive upsell.

The FTC filed its lawsuit under seal (ie, no one knew about it), and then without notice appeared in court to obtain an asset freeze, including a freeze on all their domains. Defendants were given 5 days to turn-over extremely detailed financial records to the FTC dating back to 2006.

There is, interestingly, an order disconnecting defendants from the Internet and requiring that all computers be unplugged.

Defendants' property was seized by the FTC and they are also barred from filing for bankruptcy.

As usual, having a corporation or LLC is not a liability shield. The corporations were quickly seized and given to a receiver, and all associated individuals were sued.

Each year the actions and requested orders by the FTC get more and more onerous. If the FTC comes knocking consider yourself completely wiped out, as if a tornado destroyed all your physical possessions and a hacker cleaned out your websites and bank accounts. It is unbelievably devastating.


Lessons and issues to consider:

- Are you make income claims?

- Are buyers making the promised money from your product (regardless of whether it is your fault or not)?

- If you have an upsell does it really provide value? Does the lead product provide value or is it an excuse for an upsell?

- Did you fall for the claim a Nevada corporation / LLC is a liability or asset shield?

- Do you believe issuing refunds will protect you from the FTC and making unsubstantiated promises?

- What proof do you have to substantiate the claims in your marketing?

.
#dozens #frontends #ftc #mmo #promises #sues #upsells
  • Profile picture of the author David Keith
    The breach of liberties and lack of due process these cases include these days is very troubling, but in my opinion, their intent should be welcomed by most honest marketers.

    Folks in the MMO niche better start preparing. This sort of stuff legal action is just the tip of the iceberg for similar cases to come relatively soon.

    The MMO niche has finally really made it on the FTC radar screen and that means you better take extra precautions to stay on the right side of the law. Messing around the grey areas of this stuff is likely going to put you on the wrong side of the law.

    The government is the one entity you really don't want to be enemies with.
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  • Profile picture of the author E. Brian Rose
    Lots of people will complain about this, and rightfully so, but most of those people will be the ones that have not taken any steps at all to cover their butts. They make income claims, without a hint of an earnings disclaimer in sight. They pay for testimonials, but do not disclose it anywhere on their site. They use affiliate links, but do not provide notice to their readers. These are all things that the government has told you to do, but most do not.

    Now, back to the case at hand. I have not read the complaint yet, but based on your summary, it is quite troubling.

    "MMO" is a terrible sweeping description of the kind of things lots of us market. I market courses that teach you how to do something. Does that make it a "make money online" product? What is the difference between selling a piece of software that automates your blog posts and buying quickbooks to automate your finances? Why is one MMO and the other perfectly ok? Is it because they sell one at Staples?

    If every course that teaches you to run a business, build a business, or grow a business is a target for the FTC, then every college in America should watch out.
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    • Profile picture of the author kindsvater
      A concept in this FTC action you may not have seen before is "relief defendants." These are people to whom money has been transferred.

      For instance: X commits fraud in Internet marketing. X gives some of the money to Y. X and Y are both named as defendants. X as a fraudster and Y as a "relief" defendant "with no legitimate claim to the money."

      The order freezing assets, etc., applies equally to "relief" defendants.

      Although I am speculating from the defendants names that the 'relief' defendants are family members, they could be JV partners or affiliates.

      In other words: if you profit from another person's fraud you could be the subject of a nasty FTC action and court order even if you were not personally involved in the fraud.

      --------

      Another interesting fact: an FTC investigator went through the sales process. Your next sale may be to the FTC.

      .
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      • Profile picture of the author Steve Wells
        Originally Posted by kindsvater View Post

        A concept in this FTC action you may not have seen before is "relief defendants." These are people to whom money has been transferred.

        For instance: X commits fraud in Internet marketing. X gives some of the money to Y. X and Y are both named as defendants. X as a fraudster and Y as a "relief" defendant "with no legitimate claim to the money."

        The order freezing assets, etc., applies equally to "relief" defendants.

        Although I am speculating from the defendants names that the 'relief' defendants are family members, they could be JV partners or affiliates.

        In other words: if you profit from another person's fraud you could be the subject of a nasty FTC action and court order even if you were not personally involved in the fraud.

        --------

        Another interesting fact: an FTC investigator went through the sales process. Your next sale may be to the FTC.

        .
        Defendants right or wrong, it still sounds like a classic case of a goverment entity acting as if its above the law. Kinda like the IRS.

        If only the public really knew about goverment entities, how and who formed them and to what purpose, they would be floored.

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    • Profile picture of the author Hesaidblissfully
      Originally Posted by E. Brian Rose View Post

      Lots of people will complain about this, and rightfully so, but most of those people will be the ones that have not taken any steps at all to cover their butts. They make income claims, without a hint of an earnings disclaimer in sight. They pay for testimonials, but do not disclose it anywhere on their site. They use affiliate links, but do not provide notice to their readers. These are all things that the government has told you to do, but most do not.

      Now, back to the case at hand. I have not read the complaint yet, but based on your summary, it is quite troubling.

      "MMO" is a terrible sweeping description of the kind of things lots of us market. I market courses that teach you how to do something. Does that make it a "make money online" product? What is the difference between selling a piece of software that automates your blog posts and buying quickbooks to automate your finances? Why is one MMO and the other perfectly ok? Is it because they sell one at Staples?

      If every course that teaches you to run a business, build a business, or grow a business is a target for the FTC, then every college in America should watch out.
      I think a big part of it is the claims the person makes in their marketing. The distinction to me is that there's a difference between selling "how to" information, and claiming that using said information will generate a specific result for the person who does it.

      There are companies that sell business and marketing education that teach "how to" info and use case studies of results people have achieved, but they don't promise that the buyer will achieve the same results.

      It's like the difference between saying "Here's how to market your business using Facebook advertising." vs. "Here's how to use Facebook advertising to make $20,000 in a week".

      With the first, you're just claiming you'll teach them how to use Facebook advertising. With the second, you're claiming they'll get a specific result as a result of following the teaching.

      Even saying "Case Study: Here's how I made $20,000 in sales in a week using Facebook advertising" might be okay if you're not implying that other people can get the same result by following what you did.

      With software it's a little different, because the software either does what it says on the tin or it doesn't.
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      • Profile picture of the author Shadowflux
        Honestly, if what the article says is true then I would call it a scam too. I don't think most marketers are doing anything like what got these guys in trouble. People may sell products with rather unbelievable claims, and they should probably stop, but this is about more than a sales page.

        These guys were selling a product that claimed to make people a lot of money for about $100. They would then contact the buyer and basically convince them that the product wouldn't work unless they invest as much as $20,000 more. Customers didn't get what they were promised and when they complained the company in question shut down operations and started again under a new name.

        The fact that such large amounts of money were involved and that the people in question kept registering new LLCs is probably what triggered alarms for the FTC.

        This is much different from a sales page that says "You can make $5,000 a month with the secrets unveiled in this ebook."

        This isn't to say that marketers shouldn't use a bit more scrutiny and honesty in the way they sell their products and services. There are far too many products being sold which promise to make someone $5,000 without telling them that they will need to invest $4,500. There are also too many services promising substantial traffic increases without telling people that the traffic will be redirected foreign visitors who stay on the site less than 5 seconds.

        There is, however, a big difference between these examples and what is mentioned in the article. I don't think the FTC is going to be coming after someone selling an ebook. If you promise somebody something for $100, then, after they pay, tell them they need to give you $20,000 more and then close down your company and open it under a new name, that right there is a scam.
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  • Profile picture of the author SolidDigital
    I dont get all that....I see products claiming you can earn X per month with that product every day...I mean...its really the buyer who decides whether they want to buy or not.. Now if I write on my product "I earn $5000 per month with this system" Im automatically unde FTCs ass?
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  • Profile picture of the author Networking_now
    Originally Posted by kindsvater View Post


    Lessons and issues to consider:


    - If you have an upsell does it really provide value? Does the lead product provide value or is it an excuse for an upsell?

    .
    How do we have to change our Upsell models, so that we are clear from this law?

    what things do we have to change in our upsell model funnels, so that we don't go against this law ?
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  • Profile picture of the author mojojuju
    Yeah, don't do that..
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  • Profile picture of the author andreasup
    Originally Posted by kindsvater View Post

    A new FTC action against a couple dozen Internet marketers, with the complaint, can be found here: FTC Action Halts Allegedly Deceptive Own-Your-Own Website Business Opportunity

    The FTC filed its lawsuit under seal (ie, no one knew about it), and then without notice appeared in court to obtain an asset freeze, including a freeze on all their domains. Defendants were given 5 days to turn-over extremely detailed financial records to the FTC dating back to 2006.

    There is, interestingly, an order disconnecting defendants from the Internet and requiring that all computers be unplugged.

    Defendants' property was seized by the FTC and they are also barred from filing for bankruptcy.

    As usual, having a corporation or LLC is not a liability shield. The corporations were quickly seized and given to a receiver, and all associated individuals were sued.

    Each year the actions and requested orders by the FTC get more and more onerous. If the FTC comes knocking consider yourself completely wiped out, as if a tornado destroyed all your physical possessions and a hacker cleaned out your websites and bank accounts. It is unbelievably devastating.

    .
    Yes, indeed this is very onerous. It's chilling. Ironically, I had a friend who worked for the IRS and this FTC raid sounds a little like what happens in an IRS raid.

    Or is the FTC worse then the IRS.

    At least with the IRS you may have some legal ramifications but it sounds like with the FTC you have no recourse. Or am I reading this wrong?

    Thanks so much for posting. This is very important information to be aware of.
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    • Profile picture of the author moneymuze
      Originally Posted by andreasup View Post

      Yes, indeed this is very onerous. It's chilling. Ironically, I had a friend who worked for the IRS and this FTC raid sounds a little like what happens in an IRS raid.

      Or is the FTC worse then the IRS.

      At least with the IRS you may have some legal ramifications but it sounds like with the FTC you have no recourse. Or am I reading this wrong?

      Thanks so much for posting. This is very important information to be aware of.
      Sounds like there may have been some boiler room tactics going on here. A marketer will contract a telemarketing company to 'promote' their product for x amount of money and then the boiler room (telemarketing company) will go after every available cent that the victim has available for credit. All too often the victims are unaware they are being swindled until it is too late.
      The reason for the surprise attack is as follows. If these unscrupulous people had gotten wind that the were in the FTC cross hairs they would have closed up shop and moved on.
      If these people and companies were to abide by the rules the FTC has laid out there would be no reason to for them to be in the hot seat. I sincerely hope they are made example of and that the rest of em squirm like the bottom feeding maggots they are.
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  • Profile picture of the author cashtree
    Originally Posted by kindsvater View Post

    As usual, having a corporation or LLC is not a liability shield. The corporations were quickly seized and given to a receiver, and all associated individuals were sued.
    Uh that's the whole point of registering a LLC etc...is personal assets protection. Otherwise you might as well just sell stuff as a sole propteritary/DBA. The only way they could get at your personal assets is something called "piercing the corporate veil" which this doesn't sound like that'd fall under that, but apparently the FCC is immune from the law as is any and all US gov bodies.
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    • Profile picture of the author Mark Singletary
      Originally Posted by cashtree View Post

      Uh that's the whole point of registering a LLC etc...is personal assets protection. Otherwise you might as well just sell stuff as a sole propteritary/DBA. The only way they could get at your personal assets is something called "piercing the corporate veil" which this doesn't sound like that'd fall under that, but apparently the FCC is immune from the law as is any and all US gov bodies.
      I'm not a lawyer but I believe that fraud pierces the corporate veil, stomps up and down on its head, and then throws it in the garbage disposal.
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      • Profile picture of the author cashtree
        Originally Posted by Mark Singletary View Post

        I'm not a lawyer but I believe that fraud pierces the corporate veil, stomps up and down on its head, and then throws it in the garbage disposal.
        Maybe but it doesn't sound like these guys are even getting their day in court.

        "The FTC filed its lawsuit under seal (ie, no one knew about it)"
        "and then without notice appeared in court to obtain an asset freeze, including a freeze on all their domains"

        like what is that?
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      • Profile picture of the author onSubie
        Originally Posted by Mark Singletary View Post

        I'm not a lawyer but I believe that fraud pierces the corporate veil, stomps up and down on its head, and then throws it in the garbage disposal.

        Yes, you can see how the government runs right through those LLC's in Wall Street scandals...

        :rolleyes:

        Mahlon
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    • Profile picture of the author BIG Mike
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      • Profile picture of the author Colin Palfrey
        Originally Posted by Shadowflux View Post

        Seizing all of this stuff almost creates a snapshot of the "business" in action, like walking into a late night robbery and taking a Polaroid. The defendants are still innocent until proven guilty and if, for some reason, they are found not-guilty their assets are likely to be returned (although I can't say how long that would take).
        Originally Posted by BIG Mike View Post

        Seizing evidence in a suspected crime without notice isn't illegal...and happens all over the world. There is a process that's followed - the suspect isn't included in it for obvious reasons until the point of seizure, when the warrant is served.
        I understand what you are saying but there is no need to seize the business as evidence. The evidence is largely online and as such can simply be copied for a legal case to be presented. The copy could not be altered and would serve as evidence. This is conjunction with an audit should be all they need. Even a surprise audit is more justified than what they have done. Whether these people are found innocent or guilty, their punishment (the destruction of their businesses, brands and name) has already been carried out.

        This certainly doesn't happen throughout the world. Some places may decide to adopt a similar approach in the future, but currently in the online world, I know of no other agency like the FTC.
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        • Profile picture of the author BIG Mike
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          • Profile picture of the author sbucciarel
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            Originally Posted by BIG Mike View Post

            In Europe it happens in all countries - even here in Greece, the police routinely seize everything to do with a business or personal assets in the case of individuals.

            Recently, a former Defense Minister was arrest for bribery. They've not only seized his assets both on and offshore, but they've also arrested his wife and adult daughter as "Relief Defendants".

            When it comes to electronic crimes, the original equipment is always seized rather than copied.
            It's not a lot different than exercising a search warrant for a suspect's house and seizing their computer, records, and anything else that is deemed evidence and this happens in most crimes (like murder, etc.), not just online crimes.
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            • Profile picture of the author Colin Palfrey
              Originally Posted by sbucciarel View Post

              It's not a lot different than exercising a search warrant for a suspect's house and seizing their computer, records, and anything else that is deemed evidence and this happens in most crimes (like murder, etc.), not just online crimes.
              The difference is one of civil or criminal law. While they can do what you suggest in a dispute that falls under criminal law, this would fall under civil law here or in the UK. Proof of bribery or murder is not the same as allegations of potentially fraudulent marketing practices.

              I suppose none of this matters anyway as the FTC aren't going to care about right and wrong or what I or anyone else think, just what they can get away with. And worrying about what they can do today is irrelevant as they will just grant themselves more power in the future.
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        • Profile picture of the author Shadowflux
          Originally Posted by Colin Palfrey View Post

          I understand what you are saying but there is no need to seize the business as evidence. The evidence is largely online and as such can simply be copied for a legal case to be presented. The copy could not be altered and would serve as evidence. This is conjunction with an audit should be all they need. Even a surprise audit is more justified than what they have done. Whether these people are found innocent or guilty, their punishment (the destruction of their businesses, brands and name) has already been carried out.

          This certainly doesn't happen throughout the world. Some places may decide to adopt a similar approach in the future, but currently in the online world, I know of no other agency like the FTC.
          Normally I might agree with you but in this case the "business" was just a front for illegal activities and not a reputable or legitimate business. It's also important to remember that, legally, a corporation is an entity just like you and I. When a corporation commits a crime then they take that entity into custody.

          If the owner of a hardware store gets arrested for drug possession then his store is likely going to be ok. If he gets arrested for using his hardware store to launder money then the store and all of its assets are going to be seized.
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          • Profile picture of the author jasonthewebmaster
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            The Government is simply trying to control the internet. They have never had the authority before to regulate content on the internet in general (other than the extremes that are illegal)

            Now they are simply going after the "bad guys" online to cement their authority.

            First it was the file sharing guys - or at least the ones they can reach that are not from some communist country hehe.

            Now it's the MMO crowd - what with recent policy updates and now arrests.

            Personally i think it's bull**** for them to say "If you are going to claim income, you must put this disclaimer." - but then when you put it, still arrest you because the claim didn't pan out for the customers?

            Excuse me then what is the point of putting a disclaimer? THE CUSTOMER SHOULD KNOW THAT MOST OF THEM PROBABLY WONT MAKE ANY MONEY - THAT IS WHY YOU HAVE A DISCLAIMER.

            ...and who's fault is that anyway? **** man when you buy a burger at burger king and it taste's bad and doesn't make you full... DOES THE FTC COME AND SUE THEM STEAL THEIR BUSINESS AND ALL THEIR BANK ACCOUNTS BECAUSE THEIR ADVERTISING PROMISES TO TASTE GOOD AND MAKE YOU FULL????!?!??!

            **** NO THEY DONT SUE BURGER KING FOR THAT THEN WHY SHOULD THEY SUE YOU DAMNIT ITS THE SAME FREAKING THINGG!!!

            So really the only option is not to make any claims at all. In fact, I think soon the trend in IM will be to downplay your product, in fact have reverse hype.. maybe stick a couple bad reviews on your site or something?

            Say "this product won't make you a dime.. but it will take hours to use! Now read this horrible review from a lady who paid too much..."

            Thanks FTC.. i will really increase sales doing that!

            What about all the bull**** commercials on TV that are such BS??

            Like the one with the car that jumps 4 stories over a canyon... or the one where the baby can talk.. why doesn't the FTC sue them for false claims!?!?!

            The truth is folks, the FTC is simply going after us to make us an example and integrate their control over the internet so they can dominate the NEW ECONOMY - the NEW MARKET and the NEW FREE WORLD - the internet.

            You see the Internet is something bigger then even you and me could possibly imagine. You have no idea how far this thing will go. They want to dominate it just like we do. Although from a different perspective. The US Government wants to control it. Like they try to control the rest of the world.
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            • Profile picture of the author sbucciarel
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              Originally Posted by jasonthewebmaster View Post

              ...and who's fault is that anyway? **** man when you buy a burger at burger king and it taste's bad and doesn't make you full... DOES THE FTC COME AND SUE THEM STEAL THEIR BUSINESS AND ALL THEIR BANK ACCOUNTS BECAUSE THEIR ADVERTISING PROMISES TO TASTE GOOD AND MAKE YOU FULL????!?!??!
              Do customers lose thousands of dollars, their life savings, etc. when they eat a bad burger? Nope.
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          • Profile picture of the author jasonthewebmaster
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            Originally Posted by Shadowflux View Post

            Normally I might agree with you but in this case the "business" was just a front for illegal activities and not a reputable or legitimate business. It's also important to remember that, legally, a corporation is an entity just like you and I. When a corporation commits a crime then they take that entity into custody.

            If the owner of a hardware store gets arrested for drug possession then his store is likely going to be ok. If he gets arrested for using his hardware store to launder money then the store and all of its assets are going to be seized.

            It should not be a crime though... thats the freaking problem!!

            How is the business just a "front"?? So these marketers were really drug dealers or money launderers or something?

            Listen man when McDonalds makes a new chicken sandwich and their commercial promises it tastes good but you try it and it does not taste good - did they commit a crime?? Should they be sued? Of course not you twit - and neither should a marketer! Damn this is common sense.
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    • Profile picture of the author kindsvater
      Originally Posted by cashtree View Post

      Uh that's the whole point of registering a LLC etc...is personal assets protection. Otherwise you might as well just sell stuff as a sole propteritary/DBA. The only way they could get at your personal assets is something called "piercing the corporate veil" which this doesn't sound like that'd fall under that, but apparently the FCC is immune from the law as is any and all US gov bodies.
      This is not correct and the issue has nothing to do with piercing the corporate veil. It is also not an FTC issue. For instance, when my office files lawsuits they are typically against the corporation AND the individuals.

      If, as a sole proprietor, you commit fraud then obviously you are individually liable.

      If you commit the same fraud, but have incorporated, then you are still individually liable because of your personal actions. Your corporation is also liable because you are acting on behalf of the corp.

      A corporation / LLC only provides liability protection for events you are not personally involved in. Thus, Bill Gates as an owner of Microsoft is not personally liable if employee Joe Blow sexually harasses someone in the office. (But Joe Blow is liable, and so is Microsoft, Inc.)

      "Piercing the corporate veil" is a different concept and would mean imposing liability against Bill Gates because Microsoft, Inc., is a sham and he controls the company, owns all the assets, etc.

      .
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      • Profile picture of the author RichBeck
        An interesting conversation.... Being a staunch Conservative, I am against the government infringing on "personal" rights and believe strongly in due process....

        However, in these cases, there is little else that be can be done... You cannot file a lawsuit and give these people months to hide their money and assets... That helps no one.

        I'd much rather have the FTC "force" businesses to be "honest" than allow them to bilk people of their hard earned cash... Which has been happening for many, many years... It makes people think twice... Or three times... Before making income claims.. That is a very good thing...

        God Bless,

        Rich
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        • Profile picture of the author Michael Oksa
          Originally Posted by RichBeck View Post

          An interesting conversation.... Being a staunch Conservative, I am against the government infringing on "personal" rights and believe strongly in due process....

          However, in these cases, there is little else that be can be done... You cannot file a lawsuit and give these people months to hide their money and assets... That helps no one.

          I'd much rather have the FTC "force" business to be "honest" than allow them to bilk people of their hard earned cash... Which has been happening for many, many years.. It makes people think twice... Or three times... Before making income claims.. That is a very good thing...

          God Bless,

          Rich
          In theory, that would be great. In reality, the big problems start when a central authority starts changing the definition of "honest". What if they suddenly deem all vitamins, pet food, and insurance plans as "dishonest"?

          No law, no bureaucracy, nor government commission can force dishonest people into being honest, but it can punish honest people in an effort to crack down on the dishonest.

          I think it's good that these guys were stopped, but we need to pay close attention to how it was handled. I can understand the FTC's justification for a lot of what they did, but some of it should give every law-abiding citizen the chills.

          Most people would agree that they stopped some bad people from cheating others out of their money, but what happens when the FTC starts widening its net? More and more "bad" people will be shut down, but then the lines will become increasingly blurred and "good" people will be affected.

          All the best,
          Michael
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      • Profile picture of the author fluffythewondercat
        There's plenty of information online about the scams run by these people. I found complaints going back to 2007 and I didn't even look very hard. In all probability it's been going on much longer than that.

        After the initial website sell, some people claim they were told they would have to buy "advertising" (traffic) from the defendants. Said traffic turned out to be bots and as we all know, bots don't have wallets so they can't buy stuff through your affiliate links.

        It appears some victim or victims tried to get major retailers involved and that may be who finally brought it to the attention of the FTC.

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  • Profile picture of the author ejunkie
    Frankly, it is a good thing.

    The industry would be better off.

    Advertising & marketing is all about claims. If traditional or mainstream advertisers or marketers make some fraudulent or unverified claims... the law takes its own course.

    Why should it be any different for internet marketers?

    For too long shady internet marketers have had their unbridled run. Finally, things are shaking up for them.

    Good news for real ethical entrepreneurs who bring value to the marketplace and to the consumer.

    A setback for snake oil peddlers.

    Good riddance, actually.
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    • Profile picture of the author hmartin90
      Originally Posted by ejunkie View Post

      Frankly, it is a good thing.

      The industry would be better off.

      Advertising & marketing is all about claims. If traditional or mainstream advertisers or marketers make some fraudulent or unverified claims... the law takes its own course.

      Why should it be any different for internet marketers?

      For too long shady internet marketers have had their unbridled run. Finally, things are shaking up for them.

      Good news for real ethical entrepreneurs who bring value to the marketplace and to the consumer.

      A setback for snake oil peddlers.

      Good riddance, actually.
      I agree to a certain degree. But when articles come out, like "Scamworld", that lump us all together, it is hard to swallow. I want to see people who try to bilk others out of their money pay as much as the next, but when we are demonized for doing things that traditional marketing companies do ALL the time it is just irritating. A giant company collects an e-mail list and they are driving business, we do it and we're trying to fool our buyers
      I think, though, that staying away from the MMO niche might be the best for the moment. I am thinking about putting one of my sites under construction for a while till some of this stuff blows over. I am just the affiliate, but obviously that doesn't matter anymore:confused: I think MMO tools is the way to go. They don't generally make income claims and are just software to make your like easier.
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      • Profile picture of the author Mark Singletary
        Originally Posted by hmartin90 View Post

        But when articles come out, like "Scamworld", that lump us all together, it is hard to swallow. I want to see people who try to bilk others out of their money pay as much as the next, but when we are demonized for doing things that traditional marketing companies do ALL the time it is just irritating. A giant company collects an e-mail list and they are driving business, we do it and we're trying to fool our buyers
        Amazon, Microsoft, Yahoo, Dell, Franklin Covey, and even people in the "money business" like Dave Ramsey have NEVER (that I am aware of):

        1. Bombarded me with offers instead of what was promised - content, tips, etc. or bombard me with stuff I didn't sign up for and wouldn't want besides the freebie.
        2. Shared my email address.
        3. Forgot almost daily to put in a link the right way.
        4. Said things like "this is the best x on Monday" about product Y and the same thing about product Z on Friday.
        5. Have server "crashes" every launch.
        6. Lie about the limited availability (even though sometimes they do extend offers they make it all clear).
        7. "Good friends" with every Tom, Dick, and Harry who will sign up for their affiliate program.
        8. Make it where I can't leave a site when I want to leave it.
        9. Faked domain name registration info to get around Google.
        10. Made it impossible to contact them.
        11. Made outrageous income claims that are not true, and will not work no matter how much work is done.
        12. Ask me how much I have on my CC and the price automagically adjusts accordingly.
        On and on and on.

        Every one of those is the "norm" in the MMO arena and every one is illegal, immoral, unethical, or fraudulent in my opinion.

        There are good guys sure but for the most part the broad strokes fit. Look in your email or the WSO section for verification. Then compare tactics with real companies.

        Mark
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        • Profile picture of the author Michael Oksa
          Originally Posted by Mark Singletary View Post

          Amazon, Microsoft, Yahoo, Dell, Franklin Covey, and even people in the "money business" like Dave Ramsey have NEVER (that I am aware of):

          1. Bombarded me with offers instead of what was promised - content, tips, etc. or bombard me with stuff I didn't sign up for and wouldn't want besides the freebie.
          2. Shared my email address.
          3. Forgot almost daily to put in a link the right way.
          4. Said things like "this is the best x on Monday" about product Y and the same thing about product Z on Friday.
          5. Have server "crashes" every launch.
          6. Lie about the limited availability (even though sometimes they do extend offers they make it all clear).
          7. "Good friends" with every Tom, Dick, and Harry who will sign up for their affiliate program.
          8. Make it where I can't leave a site when I want to leave it.
          9. Faked domain name registration info to get around Google.
          10. Made it impossible to contact them.
          11. Made outrageous income claims that are not true, and will not work no matter how much work is done.
          12. Ask me how much I have on my CC and the price automagically adjusts accordingly.
          On and on and on.

          Every one of those is the "norm" in the MMO arena and every one is illegal, immoral, unethical, or fraudulent in my opinion.

          There are good guys sure but for the most part the broad strokes fit. Look in your email or the WSO section for verification. Then compare tactics with real companies.

          Mark
          Just because you think it's true, doesn't make it true. It happens, yes, but it is NOT the "norm".

          The "broad strokes" do not fit the way you claim. You, my friend, are suffering from a severe case of confirmation bias. If you start looking for the opposite, you will find it.

          Also, some of the things on your list ARE done by "real" companies. If you think they don't share your personal information, then you are mistaken. In fact, it could be argued that real companies are worse on this account because they will share a lot more, detailed information (name, address, income level, age, telephone number, etc.), whereas online companies typically only get your first name and e-mail address.

          The majority of people selling stuff online, including the MMO niche, are honest and doing their best to earn a living.

          All the best,
          Michael
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        • Profile picture of the author hmartin90
          Originally Posted by Mark Singletary View Post

          Amazon, Microsoft, Yahoo, Dell, Franklin Covey, and even people in the "money business" like Dave Ramsey have NEVER (that I am aware of):

          1. Bombarded me with offers instead of what was promised - content, tips, etc. or bombard me with stuff I didn't sign up for and wouldn't want besides the freebie.
          2. Shared my email address.
          3. Forgot almost daily to put in a link the right way.
          4. Said things like "this is the best x on Monday" about product Y and the same thing about product Z on Friday.
          5. Have server "crashes" every launch.
          6. Lie about the limited availability (even though sometimes they do extend offers they make it all clear).
          7. "Good friends" with every Tom, Dick, and Harry who will sign up for their affiliate program.
          8. Make it where I can't leave a site when I want to leave it.
          9. Faked domain name registration info to get around Google.
          10. Made it impossible to contact them.
          11. Made outrageous income claims that are not true, and will not work no matter how much work is done.
          12. Ask me how much I have on my CC and the price automagically adjusts accordingly.
          On and on and on.

          Every one of those is the "norm" in the MMO arena and every one is illegal, immoral, unethical, or fraudulent in my opinion.

          There are good guys sure but for the most part the broad strokes fit. Look in your email or the WSO section for verification. Then compare tactics with real companies.

          Mark
          I'm not saying the article is wrong about some affiliate marketers, especially in the MMO niche. The point is, they lumped ALL affiliate marketers in the same ilk. That is not the best journalism or attitude to take. Amazon doesn't make millions off of its affiliates because they, or their affiliates are scammers. We are being lumped in no matter what. It was hard enough shaking off some of the negative perceptions of IM, now it is getting even harder. Who is doing a PR campaign for the honest folk?
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        • Profile picture of the author Jeff Hampton
          Originally Posted by Mark Singletary View Post


          ...
          5. Have server "crashes" every launch.
          ...


          Every one of those is the "norm" in the MMO arena and every one is illegal, immoral, unethical, or fraudulent in my opinion.
          Under which of these categories do you classify server crashes? Do you honestly think people do this on purpose? I see this accusation all the time in WSO threads, and it astounds me that people actually believe that this is intentional. Why would anyone do that?

          Is twitter committing fraud or some unethical act every time I see the fail whale? Surely they do that on purpose...
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          • Profile picture of the author Mark Singletary
            Originally Posted by Jeff Hampton View Post

            Under which of these categories do you classify server crashes? Do you honestly think people do this on purpose? I see this accusation all the time in WSO threads, and it astounds me that people actually believe that this is intentional. Why would anyone do that?

            Is twitter committing fraud or some unethical act every time I see the fail whale? Surely they do that on purpose...
            I'm basing my comments on materials I've seen teaching people how to do massive launches. The materials say that you need to have a reason to send an update email such as overloaded server.

            Personally I think that some launches do overload the servers or more accurately exceed bandwidth but the great majority do not. I think whether there is a server isssue or not, there will be a reason to send out an update email and saying the server crashed looks better than "just another reminder to please buy my stuff today."

            Here I'm talking product launches only -not downtime that Twitter or Facebook or Google may have.

            Mark
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  • Profile picture of the author sbucciarel
    Banned
    What normally launches the FTC investigations is tons of customers complaining about being bilked for thousands of dollars by companies like these. Your average ebook seller won't come into this category.

    Likening MMO "courses" with wild income claims to college courses is sort of ridiculous. I've yet to see wild income claims, false promises, fake testimonials, deceptive marketing in Business Accounting 101 or Marketing 101 classes or any college course for that matter.

    These people offered a business model and then they offered "free" marketing help. That "free" marketing help turned out to be offering them advertising spots for up to $20,000, and told them they could expect to make thousands monthly from this advertising.

    They did not make thousands monthly and are now out the original purchase price, plus thousands of dollars in advertising fees. Of course they're going to complain to the FTC, State Attorney Generals, and anyone who will listen, and they should.

    It was interesting to see the part about the "relief' defendants. Two of them were obviously relatives since they had the same last name as the defendants, but one was a company name and could easily have been an affiliate.

    Be careful who you promote or you could end up being a "relief" defendant.
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    • Profile picture of the author Mark Singletary
      Originally Posted by sbucciarel View Post

      What normally launches the FTC investigations is tons of customers complaining about being bilked for thousands of dollars by companies like these. Your average ebook seller won't come into this category.
      Let's don't forget the now famous IM guru (average at the time) who was selling ebooks (similar to what is sold here) for $40 or so before we lead people to believe that scamming/fraud on a smaller scale won't show on their radar.

      I believe that you don't believe that but others may take what you say the wrong way.

      Mark
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      • Profile picture of the author sbucciarel
        Banned
        Originally Posted by Mark Singletary View Post

        Let's don't forget the now famous IM guru (average at the time) who was selling ebooks (similar to what is sold here) for $40 or so before we lead people to believe that scamming/fraud/ on a smaller scale won't show on their radar.

        I believe that you don't believe that but others may take what you say the wrong way.

        Mark
        Yeah ... I see what you mean. I think scamming and fraud of any kind could always end up on their radar. I wasn't thinking about scamming and fraud .. I was thinking about the average ebook seller who sells great information that is worth the small amount they are selling it for and generally, their customers are happy.

        But the wise thing to do, and I've been slow about adding disclaimers to my sites ... is to get those legal docs in place and above all ....
        provide exactly what you say you are going to provide and personally, I would not use income claims.
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    • Profile picture of the author Matida
      Originally Posted by sbucciarel View Post


      It was interesting to see the part about the "relief' defendants. Two of them were obviously relatives since they had the same last name as the defendants, but one was a company name and could easily have been an affiliate.

      Be careful who you promote or you could end up being a "relief" defendant.
      I was thinking exactlt the same thing.
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  • Profile picture of the author Colin Palfrey
    Is that even legal in the US then? It would seem to me that "Due process," has been reduced to, "What we say because we are bigger." The start and end of all legal disputes should be both sides being able to put their side of the case to a court, before anyone starts to seize anything. Otherwise it is just theft, regardless of whether it is a government agency doing it.

    I had been thinking of moving my new company to the US but I'm discouraged by the second-class-citizen status that it appears internet marketers are receiving. I'm not saying these people shouldn't be prosecuted, just that I'd like to see their case tried in court before their businesses are closed down and their names tarnished. Is this happen to all businesses or just online ones?

    I'm not into selling dreams myself, so this doesn't directly impact me. However, I think it is worth watching the treatment of the industry at large, before placing my head in an ever tightening noose.
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    • Profile picture of the author sbucciarel
      Banned
      Originally Posted by Colin Palfrey View Post

      Is that even legal in the US then? It would seem to me that "Due process," has been reduced to, "What we say because we are bigger." The start and end of all legal disputes should be both sides being able to put their side of the case to a court, before anyone starts to seize anything. Otherwise it is just theft, regardless of whether it is a government agency doing it.

      I had been thinking of moving my new company to the US but I'm discouraged by the second-class-citizen status that it appears internet marketers are receiving. I'm not saying these people shouldn't be prosecuted, just that I'd like to see their case tried in court before their businesses are closed down and their names tarnished. Is this happen to all businesses or just online ones?

      I'm not into selling dreams myself, so this doesn't directly impact me. However, I think it is worth watching the treatment of the industry at large, before placing my head in an ever tightening noose.
      I actually agree that while the FTC's action is just the beginning and there will be a court case, the seizing of assets before a determination of guilty has been found is power that the government shouldn't have. But I also understand that if the Attorney Generals and FTC is flooded with reports of victims losing their life savings, something should be done to prevent any more victims from losing money. These court cases can take years to come to court.
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      • Profile picture of the author Shadowflux
        I'm no legal expert but I think that, in cases like these, the business assets and the money are all part of the evidence. Since this isn't a physical crime, like a murder or robbery, it's the computers, money, accounting books and everything else that makes up the evidence.

        If they didn't seize everything right away, in a case like this, you can bet that the guilty parties would spend a good amount of time hiding whatever money they can.

        Seizing all of this stuff almost creates a snapshot of the "business" in action, like walking into a late night robbery and taking a Polaroid. The defendants are still innocent until proven guilty and if, for some reason, they are found not-guilty their assets are likely to be returned (although I can't say how long that would take).
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    • Profile picture of the author Rus Sells
      Due process doesn't explicitly cover business entities, it covers people.

      Originally Posted by Colin Palfrey View Post

      Is that even legal in the US then? It would seem to me that "Due process," has been reduced to, "What we say because we are bigger." The start and end of all legal disputes should be both sides being able to put their side of the case to a court, before anyone starts to seize anything. Otherwise it is just theft, regardless of whether it is a government agency doing it.

      I had been thinking of moving my new company to the US but I'm discouraged by the second-class-citizen status that it appears internet marketers are receiving. I'm not saying these people shouldn't be prosecuted, just that I'd like to see their case tried in court before their businesses are closed down and their names tarnished. Is this happen to all businesses or just online ones?

      I'm not into selling dreams myself, so this doesn't directly impact me. However, I think it is worth watching the treatment of the industry at large, before placing my head in an ever tightening noose.
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  • Profile picture of the author Mark Singletary
    As far as seizing first and figuring it out later, they take guns, knives, and other weapons first so as to avoid more danger to innocents. I guess they see the computer, website, etc. as the "weapons" involved in a crime. And just like you can hide a gun, you can start covering your online tracks.
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    • Profile picture of the author sbucciarel
      Banned
      Originally Posted by Mark Singletary View Post

      As far as seizing first and figuring it out later, they take guns, knives, and other weapons first so as to avoid more danger to innocents. I guess they see the computer, website, etc. as the "weapons" involved in a crime. And just like you can hide a gun, you can start covering your online tracks.
      That's funny ... I was just thinking the same thing. The FTC filed a restraining order, which is temporary. It is not uncommon for victims of abuse to file the same kind of restraining order in the hopes that it will keep the predators at bay and keep them safe. This is the same type of thing.
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  • Profile picture of the author Tim Franklin
    Great Thread, not just because its something that we all need to Pay attention to but because not only is there NOT going to be due process but in the very near future you will have to not only back up your claims, with (scientifically provable) evidence, but the product itself will have to be a genuinely Viable, product capable of actually doing what you claim that it can do.

    If you say that your product can deliver 40 percent higher clicks and 10 percent higher sales you had better be able to prove that.

    The obvious issue here is not what your saying but how your saying it, that means that the age of sales hype and cleverly worded sales copy, is about to change radically.

    Imagine some of the Marketers out there having to be honest about what they are doing.

    Here is a sample notice.

    (Buying this product does not guarantee that you will make any money at all)
    (98 percent of consumers who buy this product will fail at successfully marketing this product)
    Imagine having a notice like that included in sales copy.

    The thing here is simple and I have been saying this for years, people do not fail products, Products fail people, it really is that simple.
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  • Profile picture of the author mosthost
    Some of the comments on this thread are so naive they border on the comical. Check out the FTC and their Truth in Advertising guidelines.
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    • Profile picture of the author jasonthewebmaster
      Banned
      Originally Posted by mosthost View Post

      Some of the comments on this thread are so naive they border on the comical. Check out the FTC and their Truth in Advertising guidelines.

      OK cool they have guidelines.... but how is that a "law"?

      So who put the FTC in charge anyway?

      Anyone? Anyone?

      Anyone at all remember voting for this?

      This is a FREE COUNTRY yall - and you better start standing up and acting like it or you will realize your free country was stolen from you in the middle of the night.

      Just because some GOVERNMENT POLITICIAN creates a BUREAUCRATIC ORGANIZATION using OUR TAX DOLLARS and without ASKING US FOR PERMISSION and the purpose of the organization is to ARREST COMPANIES WHO ARE NOT FOLLOWING THEIR GUIDELINES..

      .. then GUESS WHAT!! YOUR ELECTED OFFICIAL NO LONGER REPRESENTS YOU BUT THE GOVERNMENT'S BEST INTERESTS.

      Honestly I tell you that if the people of this country take a vote and say it should be "illegal to lie in advertising" then LETS MAKE IT A LAW AND I WILL QUIT GRIPING and let's stick to it - no matter what market you are in OR WHAT COMPANY YOU ARE!!! Then a LOT of companies would have to change their marketing IMMEDIATELY.

      But if you are going to use our tax dollars to MAKE BULL**** LAWS THAT ARE NOT REAL LAWS THEN SELECTIVELY CHOOSE WHEN AND WHERE TO ENFORCE IT THEN ITS OBVIOUS YOU ARE ONLY DOING IT TO TRY AND GAIN MORE POWER.
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  • Profile picture of the author Rus Sells
    Um because Burger King isn't asking 20k for a burger.

    ...and who's fault is that anyway? **** man when you buy a burger at burger king and it taste's bad and doesn't make you full... DOES THE FTC COME AND SUE THEM STEAL THEIR BUSINESS AND ALL THEIR BANK ACCOUNTS BECAUSE THEIR ADVERTISING PROMISES TO TASTE GOOD AND MAKE YOU FULL????!?!??!

    **** NO THEY DONT SUE BURGER KING FOR THAT THEN WHY SHOULD THEY SUE YOU DAMNIT ITS THE SAME FREAKING THINGG!!!
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  • Profile picture of the author Thomas Michal
    If you're going to make income claims and REALLY want to cover your back just make it a motivational negative. So something like:

    "Obviously we cannot guarantee you these types of results because we don't know your work ethic and dedication to success, so if you are lazy and unmotivated you probably shouldn't buy this."

    Almost all people that are interested at the time will think to themselves "well I'm not a lazy worthless person" and they will want to prove it to themselves.
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    • Profile picture of the author mosthost
      Originally Posted by Thomas Michal View Post

      If you're going to make income claims and REALLY want to cover your back just make it a motivational negative. So something like:

      "Obviously we cannot guarantee you these types of results because we don't know your work ethic and dedication to success, so if you are lazy and unmotivated you probably shouldn't buy this."

      Almost all people that are interested at the time will think to themselves "well I'm not a lazy worthless person" and they will want to prove it to themselves.
      Like the Beach Body 'Insanity Workouts.' They aren't promising you a rose garden.
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  • Profile picture of the author Lori Kelly
    Personally, I do think that making claims of how much money someone can make is misleading. I don't have a lot of knowledge about the MMO market but from what I have seen, there are many people claiming a certain amount of money can be made from a product or a service.

    If I was in the MMO niche, I'd be real careful about what I was using for advertising.

    It is disturbing the FTC files the lawsuit under seal. Why? Maybe to keep the defendants from moving their assets. I don't know.

    The FTC and in fact ANY LAWYER can go to court without you knowing about it and seize your assets. They call it ex-parte and ask the court to do certain things. You'll know about it when you go to your bank and realize your accounts are frozen.

    If you are not aware of corporations, LLCs - Nevada or otherwise - that were sued EX PARTE and assets frozen, take sometime and search the Eighth Judicial District Court records in Clark County, Nevada and get the information on your own. It can and does happen all the time.

    You are naive if you think your corporation or LLC will protect you against lawsuits. Do something wrong or even allegedly wrong and you'll find yourself hiring a lawyer to defend yourself and that, in and of itself, will cost you a small fortune.
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    • Profile picture of the author Shadowflux
      I think one thing people are forgetting is that it isn't so much how these people advertized but what it was that they were advertizing. If you're selling an actual, legitimate product then you don't fall into the same category as the defendants in this case. If you're selling a product or service which delivers what it promises then you aren't in the same category.

      The problem wasn't that these guys promised to make people a lot of money, it's that they weren't selling a legitimate product and were misrepresenting that product in their sales pitch.

      You could say things like "You'll only make money with Product X if you work hard" in your sales copy but if Product X itself is a scam then you're in trouble. There is nothing you can say in your copy, short of saying "This is a scam", that will protect you from the FTC if you're defrauding people.

      I would even go so far as to suggest that if your copy says "You will make some money, I can't promise how much." and you can prove that every customer has made even $1 using your product then you're ok.

      Sure, maybe we need to change the way we sell things in order to adapt to a changing market. That, however, has nothing to do with people who are outright defrauding their customers.
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  • Profile picture of the author ejunkie
    Things are going to be extremely interesting for internet marketers as well as online copywriters.

    Although i do share the concerns of those who think,

    1. It is unfair to have painted all internet marketers with the same brush
    2. That government (worldwide actually) are trying to control the free nature of the web

    But having said that, the sad part of the story is also that unethical marketers have indeed taken over the MMO market. That is not to say there are no ethical MMO marketers. There are many... but may be not as many as we would like to believe.

    Things have gotten to such a point that even newbies crank up claims (emulating 'experienced' marketers or gurus) that will simply not cut ice with existing laws. Things cannot be this way for long.

    We had it coming.

    I said interesting in the opening line because a true marketer will see opportunities in this mess... and will not look at it as a setback.

    But yes... i am all against stereotyping & government control. Especially government control with all the sweeping powers it has.

    But all in all... i am looking forward to a much better internet marketing environment in the future... and genuine customer satisfaction based on genuine value.
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    • Profile picture of the author sbucciarel
      Banned
      Originally Posted by ejunkie View Post

      Things are going to be extremely interesting for internet marketers as well as online copywriters.

      Although i do share the concerns of those who think,

      1. It is unfair to have painted all internet marketers with the same brush
      2. That government (worldwide actually) are trying to control the free nature of the web

      But having said that, the sad part of the story is also that unethical marketers have indeed taken over the MMO market. That is not to say there are no ethical MMO marketers. There are many... but may be not as many as we would like to believe.

      The things has gotten to such a point that even newbies crank up claims (emulating 'experienced' marketers or gurus) that will simply not cut ice with existing laws. Things cannot be this way for long.

      We had it coming.
      None of this stuff is new to the Internet. There have been scams and fraud as long as there has been an Internet. This thread reminded me of the good old Usenet days when we had the infamous Green Card Lottery spammer and the likes of David Rhodes of the infamous Make Money Fast Chain Letter fraud. Allegedly, the FBI got David Rhodes and put his butt in jail and to meet parole conditions, he had to do an anti-chain letter website ... all this resulted in a lot of extremely funny spam parodies, one of my favorites being Make Big Money Fast.

      None of this is new. The more things change, the more they stay the same.
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  • Profile picture of the author YoungAndOpulent
    Banned
    I'm glad to see this happening because a certain class of marketers have preyed on the desperate and uninformed for way too long. It's funny how people talk this "the government is invading our free space on the Internet" nonsense when this is nothing more than putting a fraudster out of business.
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  • Profile picture of the author dc_publius
    There is nothing legal (or ethical) about deceptive marketing.

    Every last one of these sorts of offers is on very shaky grounds, which is why the big guys get sued all the time by the FTC - and loose big every time.
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