Industry News

State of Colorado and FTC Sue Russ Dalbey

May 26th, 2011  |  Published in Industry News

On May 26th the State of Colorado and the FTC have filed against Russell T. Dalbey, his Company, and two of his partners.

Details of the case (Original Posting)

Plaintiffs: Federal Trade Commission and State of Colorado
Defendants: Russell T. Dalbey, DEI, LLLP, Dalbey Education Institute, LLC, IPME, LLLP, Catherine L. Dalbey and Marsha Kellogg
Case Number: 1:2011cv01396
Filed: May 26, 2011
Court: Colorado District Court
Office: Denver Office
County: Boulder
Presiding Judge: Christine M. Arguello
Nature of Suit: Other Statutes – Other Statutory Actions
Cause: 15:0053 Federal Trade Commission Act
Jurisdiction: U.S. Government Plaintiff
Jury Demanded By: None

Russ Dalbey is a popular work from home business guru who sells his materials online and via late night infomercials.  His product “Winning in the Cash Flow Business” is a how-to course that teaches people how to start a note buying business.

The course has been on the market for many years now and in that time has apparently amassed enough complaints from customers for the FTC to go after the company.

The cause for the suit falls under the Federal Trade Commission Act which empowers the commission to:

(a) prevent unfair methods of competition, and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; (c) prescribe trade regulation rules defining with specificity acts or practices that are unfair or deceptive, and establishing requirements designed to prevent such acts or practices; (d) conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce; and (e) make reports and legislative recommendations to Congress.” – FTC

Under the Federal Trade Commission Act:

  • Advertising must be truthful and non-deceptive;
  • Advertisers must have evidence to back up their claims; and
  • Advertisements cannot be unfair.

A detailed breakdown of the FTC’s process of ad reviews can be found in their Advertising FAQ’s page. Ultimately, when deciding if a company is running unlawful ads the FTC considers the case from the perspective of a “reasonable customer.”  They are looking to see if the ads are deliberately misleading, injurious to the consumer, or have unsubstantiated product claims.

What’s interesting about the FTC is that

Even though the FTC is considered to be a law enforcement agency it lacks punitive authority. It cannot punish violators but it can issue cease and desist orders and argue cases in federal and administrative courts.   If an FTC ruling—such as a cease and desist order—is ignored, however, the FTC can seek civil penalties in federal court and seek compensation for those harmed by the unfair or deceptive practice. The real function of the FTC is not to punish but rather to prevent those abuses to federal trade regulations and laws.” – Reference for Business

Dalbey Education customers should keep an eye on the outcome of this case to see if they might be eligible for monetary compensation.

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Google Steps up to the Plate with
Pacific Web Works Lawsuit

December 9th, 2009  |  Published in Industry News

Yesterday in an official Google Blog Post, Fighting fraud online: taking “Google Money” scammers to court, Google has announced that it’s taking action.  In a move that many have deemed long overdue Google has filed suit against Pacific Web Works, one of the leading perpetrators of the infamous Google Biz Kits.

The plaintiff has cited a litany of charges in a civil action including: trademark infringement, dilution, unfair competition, cyber piracy, state law trademark dilution, common law trademark infringement, violation of the Utah Consumer Sales Practices Act, and violation of the Utah Unfair Competition Act.

Google’s primary complaint is that PWW was if not explicitly then implicitly leading folks to believe that Google Inc had endorsed their product.  This claim is sustained by the many direct complaints Google has received from unsatisfied customers demanding refunds and assistance.

It is because PWW customers cannot differentiate between PWW and Google that they have claims to a trademark infringement case.

What are the Repercussions of this Case?

No matter what verdict is reached there has been a clear message sent, between this suit and the already in progress case launched by the FTC against Google Money Tree, it’s clear that there is less and less tolerance for these scams.

However, this does not mean that scammers across the net will go down without a fight.  After scanning through the court documents I came across an appalling tidbit.  Google claims that it contacted Pacific Web Works to warn them of their trademark infringement.

If that is the case, and I don’t see why Google wouldn’t have done that, then it means that PWW blatantly disregarded a clear warning.  They either thought they’ve been too clever in covering their tracks or that Google was bluffing.

This really should give you a glimpse into the minds of these people, facing threats from one of the largest technology firms in the world and knowing that similar operations have already been sued they still persisted.

The only plausible explanation is pure greed, based on traffic and conversion statistics these Google kit operations were making a killing.  And the only way I can see PWW disregarding Google’s plea while knowing that they could be sued at any time is because the money was just too damn good.

What Does it all Mean?

This might be the end of the Google Biz Kit but by all means it is not the end of this scummy business model.  As long as it’s making money these people will continue to release negative option kits (You sign up for a trial and are billed a monthly fee).

What you should watch out for now is websites that look similar but have different names.  For instance, something like The Internet Profit House is a perfect example; same exact setup that PWW was using except they left out Google’s trademarked logo and name.

As for PWW it’s unlikely the company will survive the lawsuit, with Google claiming,

…As a result of Defendants’ aforesaid conduct, Google has suffered substantial damages, as well as the continuing loss of the goodwill and reputation established by Google in its marks. This continuing loss of goodwill cannot be properly calculated and thus constitutes irreparable harm and an injury for which Google has no adequate remedy at law.

It’s clear that they’re out for blood and the only downside is that by the time any class action lawsuit may come around there won’t be anything left to payback.

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