Internet Attorney: Federal Trade Commission and Fake Testimonials

In addition to the new Federal Trade Commission guidelines (effective Dec. 1, 2009) that limit what you can do with endorsements and testimonials, there have been a lot of questions to me as an Internet attorney about other government agencies that can pursue you for deceptive practices.

Here’s a link to an example of a company that the State of New York’s Attorney General pursued for posting fake testimonials online. The company settled last year by paying $300,000 in penalties and costs.

Not something you’d want to get caught doing.

Best wishes,

-Mike the Internet attorney

P.S. If you want to learn more about creating testimonials based on the new FTC guidelines, you’ll want to check out the special report I co-authored with case studies expert Karl Barndt.

Kevin Trudeau: Back to Jail? (Yes – see update)

For the Internet marketers running for the hills because of the crackdown by the Federal Trade Commission (FTC) on deceptive marketing practices, the saga of Kevin Trudeau is scarier than that of Perry Belcher. Trudeau made the stupid mistake of telling his cult followers to e-mail the judge handling his case.

The response? Trudeau faces sentencing for criminal contempt, has had to post $50K bail, and surrender his passport. Regardless of how sentencing goes, Kevin Trudeau risks financial ruin. The only question is whether he will be able to hide enough assets from the government.

The cynic in me believes that like a cockroach in an nuclear blast, Trudeau will find a way to survive. Wouldn’t surprise me in the least to see him find religion and bilk the same gullible people out of money using his new-found belief in the “Secret” or the Great Green Arkleseizure.

Yet you have to wonder how well Trudeau would have done over the long term if he had actually bent the rules but not broken them. What if he had delivered value to customers without lies or misrepresentations? Was the time he already spent in prison worth it? How about the reputation as a fraud and convicted felon?

Some would say that Trudeau’s brushes with the law aren’t relevant to Internet marketing.

Oh really? Note that the new FTC guidelines don’t distinguish between online marketing and infomercials.

Hat tip: Mitch Lipka

February 19, 2010 Update – The judge sentenced Trudeau to 30 days in jail for contempt. Trudeau also forfeits his $50,000 bond but will be appealing the judge’s decision. Go figure. It remains to be seen how much Trudeau will be ordered to pay in the underlying lawsuit.

Hat tip: Reuters

FTC FAQs: December 1 Deadline

ftc-federal-trade-commissionI’ve been getting many questions about the new FTC guidelines that
are changing the way that you can market online.

To save you time, here’s the Frequently Asked Questions (FAQs).

Q: When did the guidelines go into effect?

A: December 1, 2009.

Q: Will I have to fix my website because of the new guidelines?

A: If (1) you’re based in the U.S., or (2) you live outside the
United States but sell to U.S. customers, you’re probably going to
have to make some changes to reduce your legal risks.

Q: Is it serious?

A: It’s bad enough that some big info product gurus are retiring
because they don’t want the FTC to come after them under the new
guidelines. Their business models were based on doing things that
can get you into a lot of trouble now.

Q: How much trouble?

A: Depends. Could get away with something. Could get a nasty FTC
letter telling you to stop. Could also get sued, have your assets
frozen, pay a big settlement, and even be barred from online
marketing in the future.

Q: What’s the solution?

A: Ideally, you’d want your Internet lawyer to help you fix things
to reduce risk. If you can’t afford that (typically 4 figures per site),
at least read the new guidelines at ftc.gov and the complimentary
special reports you’ll find on this blog.