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Deceptive Trade Practices

Deceptive trade practices, including deceptive marketing and false earnings claims.

Internet Lawyer: Federal Trade Commission and Deceptive Trade Practices

By Internet Lawyer

federal trade commission deceptive trade practices lincolnGetting in trouble with the Federal Trade Commission with your online business can be easy if you don’t listen to your Internet lawyer. Just deceive your clients into buying something that isn’t as described. Internet marketers do this all the time with info products. They take something that might have a small benefit to purchasers and then engage in deceptive trade practices by advertising the product as having benefits that don’t really exist.

Because the Federal Trade Commission has responsibilities that include protecting consumers from false and deceptive claims, marketing your products and services with misleading promises about the results to be delivered is a recipe for legal trouble. Even if you avoid an FTC investigation or lawsuit, you can still end up getting nailed by your state attorney general’s consumer protection division. Consulting with an Internet lawyer before engaging in questionable marketing practices can save you both time and money.

By now, you’re probably wondering about the ugly car pic in this post. I took it this morning in Tampa on my way to the airport after a 2-day mastermind event. As you can see, the Lincoln has been modified to look like a more expensive car (probably an Excalibur). But would you really be fooled into thinking it wasn’t an ugly modified Lincoln? That’s the same impression left with most prospects who discover deceptive claims made in your sales content.

Appalled, they run from your offer in disgust if you’re lucky. Some might choose to file a Federal Trade Commission complaint too. It just isn’t worth it to lie or deceive. Sell the benefits of your products and services but don’t misrepresent them. Of course, if you have questions about a specific legal issue, consult with your Internet lawyer.

Don’t Let the FTC Destroy Your Internet Business

By Internet Lawyer

This can’t be said too often. Be honest when running your business.

Having sound business practices consistent with the Golden Rule may just keep you out of trouble with the U.S. Federal Trade Commission (FTC).

Why is this important? How much do you value your business and your freedom? Let’s look at some new examples of those who allegedly played fast and loose with deceptive trade practices.

BlueHippo Will Pay Up to $5,000,000 to settle charges.

ValueClick Settles With FTC for $2,900,000.

Founder of Berkeley Premium Nutraceuticals faces up to 20 years in prison plus forfeiture of tens of millions of dollars.Here are some things that you can do to minimize your risks.

Clearly disclose the terms of sale to your clients. No fine print legalese to take away what you gave in the big bold letters of the sales pitch.

If there’s a continuity program, don’t hide it, and make it easy to opt-out.

If there’s a refund policy (particularly where required by law), obey it. In fact, go the extra mile to make things right.

If there’s a guarantee, honor it. No hassle. No questions asked.

If it is going to take 4 days to ship, tell the client it will take 7-10 days and let the client be pleasantly surprised when it arrives early. If you can’t ship on time, offer a prompt refund.

Remember that happy clients don’t file complaints with the FTC or your state attorney general’s consumer protection office.

Comcast ISP File Sharing Traffic Discrimination – Should the Government Interfere?

By Internet Lawyer

The Federal Communications Commission (FCC) is investigating charges that Comcast has discriminated against file-sharing traffic on the Internet by restricting the Internet Service Provider’s subscribers sharing of files using peer-to-peer (P2P) and BitTorrent.

The issue really should not be about the ability of an ISP to discriminate between users. I’m actually a proponent of multi-tiered pricing structures controlled by the marketplace instead of regulated by the government. What is at stake is deceptive trade practices, i.e. charging Internet subscribers for services that are not provided because usage is limited behind-the-scenes without full disclosure.

If your cell phone company offered unlimited nights and weekends for a flat monthly rate but secretly impaired your rights to make such calls, you’d be justifiably ticked off because of the misrepresentations that induced you to use that particular company for the unlimited calls. Similarly, an ISP does not have the right to make material misrepresentations as to the nature of the services it provides to its Internet subscribers.

If Comcast is found to have engaged in such practices, unfortunately, the fines and penalties will be passed onto consumers in the form of higher fees in the future. The better route from the beginning would have been to have instituted a multi-tiered system where fees for usage are determined by the bandwidth used with full disclosure of the terms and conditions of the tiered structure.

Is that asking too much? What do you think?

Earnings Disclaimers – Why Internet Marketers Need Them

By Internet Lawyer

To often, you read business opportunity sales letters online that promise that you can get rich quick. They typically claim that the person selling the product or service made six or seven figures in 30 days or less. More often than not, these claims are misleading at best and outright lies at worst.

Here’s an example.

Johnny Six-Figure is a one-hit wonder posterboy. He’s touted as an Internet expert after making over a hundred grand in just days as a newbie. What isn’t told is that (a) Johnny had a bunch of big name marketers who e-mailed to the hundreds of thousands prospects on their lists to pitch his product or (b) that the affiliate commissions paid to these marketers and other costs took the bulk of the money Johnny claims to have made. Since Johnny hasn’t repeated the process, let alone do it on a monthly basis, sales letters pitching Johnny’s product and methodology without making key disclosures or disclaimers are in fact misleading you.

Why is this important?

The U.S. Federal Trade Commission (FTC) and the states’ attorneys general want to shut down fraudulent and deceptive trade practices online. They want consumers to receive fair and full disclosure of all material facts necessary to making an informed buying decision.

What does that mean to you?

If you’re pitching a biz opp for yourself or as an affiliate, you should discuss with your business lawyer whether an earnings disclaimer should be posted on your website. A good earnings disclaimer can provide some legal protection by making it clear that your clients will not necessarily become the next Johnny Six-Figure.

You can learn more by getting your free FTC legal guide and by talking with your business attorney.

Beware of Invention Promotion Companies

By Internet Lawyer

This scam preys on small business owners looking to protect an invention. The so-called “promotion company” will charge a hefty fee to “evaluate” the invention. The results of the evaluation pretty much hinge on the ability to pay, i.e. if you pay the fee, the company will say that your invention is wonderful with plenty of potential.

Of course, this leads to additional scams. One variation is to charge a large amount of money to get legal protection (patent, copyright, trademark, etc.). Or you could be offered a bogus marketing plan that will take more money from your wallet. If you happen to have a truly worthwhile invention, expect the company to push you to sign over your rights to it for little or no money.

This week, the U.S. Federal Trade Commission (FTC) filed a civil contempt action against four people and eight businesses for alleged deceptive trade practices that include some of the misconduct that I’ve described here.

What this means is that the defendants were already nailed in court but continued to operate.

If you’ve got an invention or other intellectual property to protect, use a reputable business attorney if you don’t know how to do the work yourself.

Hat tip to ConsumerAffairs.com