Website Legal Compliance – FTC Accelerates Crackdown On Fake News Sites

We’ve all seen headlines in search results like this one – “XYZ Exposed: Miracle Diet or Scam”. And perhaps we actually believed there was objective reporting or unbiased commentary behind the headline. But after reading the web page, it was clear that the headline was just a clever way to catch your attention and lure you to a sales page with an aggressive sales pitch.

The Federal Trade Commission (FTC) has seen these headlines too, and the FTC doesn’t think they’re clever at all. In fact, the FTC believes they constitute deceptive and unfair trade practices, as indicated by the FTC’s accelerated crackdown on affiliates of a popular diet drink with aggressive weight loss claims.

Modus Operandi

The modus operandi of these sites was to start with attention grabbing headlines such as the one listed above and these additional ones – “News 6 News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health News.”

The sites presented what appeared to be a skeptical commentator who raises the question of whether the diet drink is really effective. The commentator appeared to be objective; however, after a few paragraphs the commentator would conclude that use of the diet drink would result in a 25-pound weight loss in 4 weeks – all this without changing diet or exercise according to the FTC.

The prices for the supplement ranged between $70 and $100.

The FTC’s Claims

When the FTC originally initiated law suits against these sites, Charles Harwood, Deputy Director of the FTC’s Bureau of Consumer Protection stated: “We are alleging that nearly everything about these Web sites is false and deceptive”. In addition, the FTC pointed out that the defendants aggressively promoted the deceptive ads by spending millions of dollars for placement on high volume websites resulting in millions of views by consumers and substantial sales.

Specifically, the FTC contended that the offending sites –

* failed to disclose their material relationships involving the payment of affiliate commissions with the merchants of the products;

* failed to produce independent tests to support the claims made prior to public dissemination;

* included a section of “consumer comments” that were completely fabricated;

* used infringing logos of reputable media outlets such as ABC, Fox News, CNN and Consumer Reports to give the false impression of credibility; and

* misappropriated the image of a French reporter for use on the sites.

The Settlements

The cases brought by the FTC were against six affiliates of the merchant that manufactured and supplied the weight loss supplement.

In the settlements, the defendants agreed that they will permanently cease their allegedly deceptive practice of using fake news websites. In addition, the settlements require that the defendants cease making deceptive claims about their other products, including work-at-home schemes and penny auctions which most of them promoted.

The big hammer in the settlements included fines in an aggregate amount which represented the affiliate commissions the defendants received through their fake news sites.

These settlement results clearly indicate that the FTC aggressively pursued every dollar they could under the circumstances (the final amounts left most of them with few real assets, if any):

* one defendant’s $2.5 million judgment was suspended when he pays $280,000 and records a $39,500 lien on his home;

* another defendant’s fine of $204,000 was suspended pending the payment of $13,000 plus the proceeds from the sale of a BMW automobile, and

* still another defendant was suspended pending the payment of almost $80,000 over a 3 year period.

Conclusion

The take-aways from these cases include –

* fake news sites are virtually guaranteed to get you sued by the FTC,

* ditto for fake testimonials or user comments,

* diet supplements of any kind are high on the FTC’s radar screen for regulatory scrutiny,

* the FTC is serious about enforcing its guidelines that affiliates are required to conspicuously disclose the fact that they are paid commissions for endorsements, and

* consistent with the FTC’s long-standing policy, advertising claims should be substantiated prior to public dissemination.

The FTC continues to make it absolutely clear that the days of the “Wild, Wild West” on the Internet, when it was open season on deceptive marketing practices, is clearly over for good.

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

Inside Legal Shield: A Critical 3rd Party Review

About Legal Shield

Legal Shield is a company founded in 1972 by entrepreneur and visionary, Harland Stonecipher. Mr. Stonecipher founded the company after being involved in a serious vehicle accident. Although he had car insurance to assist in his vehicle damage as well as health insurance to cover his hospital bills, he was completely unprepared for the legal expenses he quickly incurred.

Mr. Stonecipher quickly realized that although the United States has long had one of the world’s most advanced legal systems offering “justice for all”, often times that justice comes at quite a steep price that the average American unfortunately struggles to afford.

He decided to create a solution and thereby offer top legal services to Americans everywhere at a fraction of what those same services would normally cost. Pre-Paid Legal Services was born.

The company expanded quickly and was even listed on the New York Stock Exchange where it was a consistent top performer. In June of 2011, Stonecipher and his shareholders completed the sale and managerial transfer of the company to Midocean Partners, making it a privately held company for the first time in a long while.

The decision to re-brand and rename the company, Legal Shield, was officially announced at the company’s convention in Dallas, Texas on September 10, 2011. Legal Shield provides its services throughout the United States as well as in 4 Canadian provinces.

Legal Shield Service Summary

Legal Shield services are available on a month-to-month basis. Members have access to a multitude of service offerings that are tailored specifically to their needs. For $26 a month, one of the most popular plans the company offers members is called the Family Plan. It provides members with 5 main areas of coverage.

The first area of coverage is preventive legal services. Members receive access to premier law firms in their state for unlimited phone consultations. Members can have wills prepared for them as well as letters or phone calls written or placed on their behalf by the law firm.

The second area coverage is for motor vehicle incidents. Members can receive representation and consultation for moving traffic violations as well as for incidents of manslaughter, involuntary manslaughter, negligent homicide, and other vehicular homicide charges.

The third coverage area is trial defense. Members receive 75 hours of their law firm’s time for civil or criminal suit consultation and representation. Additional hours are available at a significant discount of the law firms’ regular hourly rate.

The fourth area is IRS audit coverage. Members have access to up to 50 hours of a tax attorney’s assistance in case they are audited by the IRS.
The fifth area of coverage provides members with a 25 % discount of the law firm’s regular hourly rate for legal issues that do not fall within the four areas of coverage.

Legal Shield also offers its members 24/7 access to an attorney should they be detained by police, be involved in a car accident, etc.

Another one of Legal Shields more popular services is its Identity Theft Shield. For a monthly fee this service provides continual monitoring of a member’s credit profile as well as full forensic restoration services in case their identity is compromised.

Compensation

Legal Shield markets its services through a diverse network of business affiliates known as independent associates. In order to enroll as an associate one must pay a one time fee of $249. The company provides marketing materials, support, and on going training.

Legal Shield pays advanced commissions on the sale of its membership plans.These upfront bonuses can be quite lucrative allowing associates to generate large commissions paid on a daily basis. Legal Shield associates also have the ability to recruit other associates to market the company’s services and recruit associates. Associates are able to earn commission overrides on the sales efforts of those within their own personal sales organisations.

The Missing Piece

The Legal Shield financial opportunity provides associates with a fantastic opportunity to build a lucrative home-based business and achieve financial independence. However, as with any business enterprise an associate’s chances of success are directly related to hard work and effort in order to achieve maximum results.

Although Legal Shield may sometimes provide its associates with potential customers or leads the reality is that the vast majority of an associate’s responsibility is to find new customers and sales associates on their own. This presents numerous challenges for any associate especially those who have not been able to grow a business beyond their friends and family members.

However, with the dramatic rise of the internet, Legal Shield associates can now equip themselves with dynamic new online marketing strategies and approaches that will help them grow a successful Legal Shield business without having to chase friends and family members around. Mastering online marketing strategies is a critical component to success in Legal Shield and for many associates it is the “missing piece” to achieving great success with this company.

Agent’s Commission – How Much Should A Seller Pay?

When selling a house – is it practical for you to have it done through a real estate agent? If you want it sold fast, then the most logical thing to do is have it listed through an agent. These professional experts have experiences that can expedite the sale. But some are wary about employing an agent because of the commission outlay, an amount which could be quite material.

How much commission does a house seller have to pay to his agent? This has been a perennial question asked by a seller? Maybe there had been no straightforward answer given to this. All that has been divulged is that the agent’s commission is a percentage of the total contract price of the property sold. And that the commission is paid upon culmination of the transaction.

The truth about commission- there is no standard and legal commission rate. In reality, the setting of a fixed commission by real estate agencies is prohibited. This could be the reason why the amount of commission is not clear. Each agency has its own rate.

Real estate agencies can actually charge any commission they would want. It all depends on the people, the seller for that matter – how much this seller is willing to share to his or her agent from the proceeds of the sale. The commission can be very high as there is no ceiling. What keeps it down and reasonable is competition. Even in this setting of commission – the economic law of supply and demand seems to penetrate. The presence of many agents keeps the price down.

The commission is internal arrangement between the agency and the agents. The company can set a maximum and minimum rate for the agents and the latter are allowed to negotiate the commission with the clients. If the agent is under a broker, the commission has to be shared between them. Upon listing of the property, the agent already has stipulated the percentage of commission to be set upon sale. If this agent wants to lower this percentage, he has first to seek approval from his supervising broker. This can be done as there really is no fixed commission rate and the arrangement of rate is just internal.

But then there is one restriction – the agent can never divulge to other real estate agents the amount of commission to be put on top of the selling price. And in the same manner, real estate companies are not supposed to expose to any agent outside of the company their implemented rate. The commission earned on the sale is a split between the listing company or broker and the agent. The sharing between them is again a matter of agreement in-between.

Whatever is the amount of commission, a seller should know that he or she can haggle with it. The rate of commission, in this stiff competition, is negotiable. The seller can always search for better deal which will mean less expense for him or her.