$450 Million Internet Scam Exposed

internet attorney online scam

Your Internet attorney can help you avoid this scam

I’d hate to be the Internet attorney defending this case. The U.S. Federal Trade Commission (FTC) has gone after Internet con artists who engaged in deceptive billing practices, used false celebrity endorsements, and a bunch of other misconduct.

The total haul from this scam is supposed to be around $450 million. Here’s how it worked…

You’d be offered a “free” or low-cost trial of some product. Celebrity names would be used to imply they had endorsed the product.

Of course, once you provided your credit card number to pay for the low cost item or for “shipping and handling,” chances are you’d be getting billed $80 or so each month in unauthorized charges too. And good luck trying to get a refund.

Speaking of refunds, when the FTC sued (PDF file) those involved with this scam, it asked the court to freeze assets so that the victims can at least get some partial compensation. We’ll see how much has already been spent or squirreled away where it can’t be touched.

Want to limit your exposure in these online continuity billing scams?

First, if it sounds too good to be true, it probably is. There’s no such thing as a free lunch. If you’re not paying for something on the front end, chances are you’ll be paying more on the back end.

Second, if you want to risk getting one of these “free” or low-cost items, consider using a pre-paid debit card that isn’t tied to a bank account. For example, pick up a $25 pre-paid Visa/MasterCard/Amex card at your local store so that when you order with it, you won’t be hit with large monthly continuity charges and other unauthorized bogus fees.

Of course, talk over your billing practices with your Internet attorney and merchant account provider too.

Best wishes,

-Mike the Internet attorney

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Membership: How to Avoid Internet Credit Card Billing Traps

forced-continuityIf you get caught up in the buying frenzy of the pre-launch segment of a big info product marketing launch, you may buy an Internet info product without realizing that at the same time you’re committing yourself to monthly recurring charges on your credit card or debit card for a monthly membership. Sometimes the continuity or microcontinuity program is the main product being sold. However, it is common for the membership to be a cleverly disguised “bonus” for the main product or a one-time-offer (OTO) to try the membership for 7 to 30 days for free or at low-cost. Regardless of the particular terms, the goal is to capture your credit card information with the authorization to charge you monthly recurring charges beginning after X number of days.

To be clear, there’s absolutely nothing wrong with doing this if the Internet marketer (1) clearly discloses the continuity program’s price and terms,  (2) offers you something of value, and (3) makes it easy for you to cancel your subscription at any time. The good marketers do this. The sleazy marketers go out of their way to pump out trash using hidden or forced continuity and then make it impossible for you to cancel your membership as they continue to bill you.

What should you do? Research complaints about Internet marketers online before buying from them during a big launch. If there is a past history of fraudulent or deceptive billing practices, don’t buy from them. Ignore the occasional nutcase rant you’ll find from someone who is jealous of a particular marketer’s success. Instead, look for patterns of customer service – good and bad – before determining whether you want to enter into a potentially long-term financial commitment involving thousands of dollars of your money.

You should be able to quickly identify those who operate scams misusing Jeff Walker’s product launch formula.

But what should you do if you’re still on the fence after doing your due diligence?

Example: You really want to buy “Village Idiot Facebook Riches” that’s about to be launched but it includes a continuity program. You’ve done your due diligence by researching the village idiot “guru” who is offering the program but the reviews are mixed as to whether the particular marketer provides true customer service or bills deceptively.

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Possible Solution: Get a pre-paid Visa or Mastercard gift debit card with just enough funds on it to make the initial purchase and perhaps a month of continuity billing. If you like what you see with the continuity/membership, you can either replenish the card with sufficient funds to cover monthly billing or provide the marketer with information for one of your regular credit or debit cards to cover ongoing payments. If you dislike the continuity, you’ve limited your exposure with the gift card. The dishonest Internet marketer who refuses to cancel your subscription shouldn’t be able to bill the gift card beyond the amount on it. In other words, you’ve taken control of the ability to cancel the continuity rather than begging for it to be done by someone who won’t honor their commitments to you as a customer.

Hat tip: Tony Blake

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