Federal Trade Commission and Predatory Payment Practices

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Like other businesses, Internet marketers get into Federal Trade Commission (FTC) trouble when their payment terms aren’t idiot-proof. When in doubt, assume your consumer has a fourth grade education and barely understands how to order and pay for a meal at a fast food restaurant.

If your buyer thinks, mistakenly or not, that he paid too much for your value combo, he suddenly becomes smart enough to file a complaint with the FTC.

To be sure, there are unfair, deceptive, and fraudulent online payment practices, but commonly complaints arise because of buyer’s remorse (second thoughts about what was just purchased) or because the buyer didn’t fully understand the transaction.

Here are some typical payment complaints to the Federal Trade Commission.

* Goods or services were purchased via the Internet but were not delivered as promised.

* Vendor refused to honor a money-back guarantee.

* Multiple credit card billings were made for a single item.

* Hidden fees were built into the sale.

* Subscription services couldn’t be canceled and the automated billing continued. FTC inquiries into your financial dealings can include issuing a CID for your bank records. For example, BlueHippo Funding, LLC provides credit for purchases of computers and other equipment. On December 13, 2005, the FTC denied BlueHippo’s request to exclude its bank records from examination in an investigation.

In another case, on November 21, 2006, the FTC obtained a court order against a group selling Internet Service Provider (ISP) and web design services. The order permanently barred the defendants from making misrepresentations when selling, prohibited the defendants from billing consumers without first obtaining their consent – which they must record – and provided strict rules they must follow to ensure that consumers the defendants call were protected from fraud and deception. Finally, the order established a program through which defrauded consumers could obtain refunds.

Don’t let your business be subjected to a Federal Trade Commission investigation or lawsuit because of alleged financial misconduct.

Communicate. Communicate. Communicate. Excellent client service should resolve most buyer’s remorse issues and full disclosure of payment terms and conditions, including any limitations on money-back guarantees, will go a long way to taking care of other dissatisfied clients.

The Two Deadly Internet Marketing Sins

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Few things you can do raise red flags with the FTC like (a) unfair, deceptive, or fraudulent advertising and (b) predatory payment practices.

Unfair, Deceptive or Fraudulent Advertising

This type of advertising includes making unsupported claims about your product or service, and misleading endorsements and testimonials.

Unsubstantiated Claims.

Health and diet products are particular targets of both the FTC and the U.S. Food and Drug Administration (FDA). In fact, the FTC announced on January 4, 2007, that it had nailed four weight loss companies (Xenadrine EFX, CortiSlim, TrimSpa, and One-A-Day WeightSmart) for making unsubstantiated claims about their products.

“You won’t find weight loss in a bottle of pills that claims it has the latest scientific breakthrough or miracle ingredient,” said FTC Chairman Deborah Platt Majoras. “Paying for fad science is a good way to lose cash, not pounds.”

It is easy to understand that you don’t make claims that your product causes weight loss unless you have scientific proof to back it up.

Even if you would never lie, your affiliate marketers can paint a bulls-eye on your forehead by making false claims on your behalf.

The FTC doesn’t want false “miracle” cures being sold. It doesn’t care whether or not you are personally making the misrepresentations. The goal is to protect the consumer. If it takes shutting you down to prevent your affiliates from lying to the public, then so be it.