In my recent blog post describing the 7 online business trends to watch for in 2011, I noted as an Internet Lawyer that there are three federal government agencies (FCC, FDA & FTC) that would be cracking down on the Internet.Yesterday, it got more interesting. The U.S. Federal Trade Commission (FTC) filed a suit against 10 people, 10 corporations, and 51 shell companies for their website business practices. If you want an example of how to not run your online business, read the complaint in this lawsuit. Here’s a link to the 81-page Internet lawsuit complaint.
Here are the 10 individuals named as defendants:
1. Jeremy Johnson
2. Duane Fielding
3. Andy Johnson
4. Loyd Johnston
5. Scott Leavitt
6. Scott Muir
7. Bryce Payne
8. Kevin Pilon
9. Ryan Riddle
10. Terrason Spinks
Here’s a list of the 10 corporate defendants:
1. I Works Inc.
2. Anthon Holdings Corp.
3. Cloud Nine Marketing Inc.
4. CPA Upsell Inc.
5. Elite Debit Inc.
6. Employee Plus Inc.
7. Internet Economy Inc.
8. Market Funding Solutions Inc.
9. Network Agenda LLC
10. Success Marketing Inc.
Here’s the names of the 51 shell companies named as defendants:
1. Big Bucks Pro Inc.
2. Blue Net Progress Inc.
3. Blue Streak Processing Inc.
4. Bolt Marketing Inc.
5. Bottom Dollar Inc. doing business as BadCustomer.com
6. Bumble Marketing Inc.
7. Business First Inc.
8. Business Loan Success Inc.
9. Cold Bay Media Inc.
10. Costnet Discounts Inc.
11. CS Processing Inc.
12. Cutting Edge Processing Inc.
13. Diamond J. Media Inc.
14. Ebusiness First Inc.
15. Ebusiness Success Inc.
16. Ecom Success Inc.
17. Excess Net Success Inc.
18. Fiscal Fidelity Inc.
19. Fitness Processing Inc.
20. Funding Search Success Inc.
21. Funding Success Inc.
22. GG Processing Inc.
23. GGL Rewards Inc.
24. Highlight Marketing Inc.
25. Hooper Processing Inc.
26. Internet Business Source Inc.
27. Internet Fitness Inc.
28. Jet Processing Inc.
29. JRB Media Inc.
30. Lifestyles For Fitness Inc.
31. Mist Marketing Inc.
32. Money Harvest Inc.
33. Monroe Processing Inc.
34. Net Business Success Inc.
35. Net Commerce Inc.
36. Net Discounts Inc.
37. Net Fit Trends Inc.
38. Optimum Assistance Inc.
39. Power Processing Inc.
40. Premier Performance Inc.
41. Pro Internet Services Inc.
42. Razor Processing Inc.
43. Rebate Deals Inc.
44. Revive Marketing Inc.
45. Simcor Marketing Inc.
46. Summit Processing Inc.
47. The Net Success Inc.
48. Tranfirst Inc.
49. Tran Voyage Inc.
50. Unlimited Processing Inc.
51. Xcel Processing Inc.
The websites tended to focus on getting government grants, health claims, and “make money” products. As your Internet lawyer can tell you, these are high-risk areas in which to do business online because they receive extra scrutiny by consumer protection agencies.
What’s clear from the lawsuit is the FTC is not going to tolerate deceptive continuity billing practices, including “free trial” offers that aren’t, unauthorized charges, etc. The FTC claims that fake articles and review sites were used to promote the memberships.
If just 10% of the allegations made by the FTC are true, these guys really crossed the line to a place no website owner should go.
How can you avoid the same fate with your online business? First, clear what you’re doing with your Internet lawyer before posting something questionable on your website.
Whether you’re running a membership site or not, you’ll want to clearly disclose pricing and all other key terms of your offers and have an easy-to-follow returns/refund policy.
If you’re running a membership site, you’ll want to have a membership site agreement in place that describes in plain English the key terms of what your members get when they join. This type of agreement also protects what you own. Your Internet lawyer can draft one that meets your needs.
To your online success!
-Mike the Internet lawyer
