Monthly Archives: July 2013

FTC Summer 2013 Update: Eager To Catch Dastdardly Dogs

Summer 2013 FTC update
The Federal Trade Commission is acting like its got something to prove.

Maybe it’s because there’s a new chief commissioner, but lately, the FTC is behaving like a trust fund kid seeking his absent father’s approval. The nation’s consumer watchdog is not only knocking on Google’s door, again, but they’re also trolling work-at-home biz opps, robocall operations, debt collectors and “free offer” marketers. Plans are afoot to amend the Telemarketing rules, and word on the street is that another online marketing compliance sweep, a la the Acai berry dragnet in 2011, is on the way. So, if you do business online – especially if you use any of the marketing techniques below – it’s time to ensure you’re FTC compliant.

Work-at-home businesses banned from selling biz opps

Last year, new biz opp rules went into effect. Now, the FTC is on the hunt for operations violating those rules.

Recently, the commission targeted 20 companies peddling “webdev and hosting” work-at-home opportunities. After a thorough investigation, the FTC won 7 regulatory settlements. Censured companies were found to have:

  1. Misrepresented material facts in promoting their biz opp;
  2. Collected money illegally from buyers;
  3. Sold customers personal information outside of allowable parameters;
  4. Improperly disposed of customer information;
  5. Promised buyers assistance and “marketing expertise” but didn’t deliver on the promise.

As is common in FTC rulings, the responsible parties are forbidden from engaging in the same types of activities in the future. Individuals cited under the action are also prohibited from ever making money off the sale of consumers’ personal information – presumably even if it’s a legal operation.

Fines were levied in this instance, but suspended because the chastised parties didn’t have the money. The FTC swore, however, that if additional funds are discovered, the FTC will collect. It’s not an idle threat, either. Just recently, the FTC moved to claim family assets of people found in violation of FTC regulations.

Debt Collectors

Expert Global Solutions, a Plano, TX, debt collection agency with 32,000 employees and a $1.2 billion bottom line, got hit with the FTC hammer this summer. The debt collection behemoth must fork over $3.2 million for “harassing consumers.” It’s the largest FTC fine against a debt collector.

What got them in trouble? Expert Global called people several times a day – early in the morning, late in the evening and at work. According to records, even after debts were paid in full, members of the Expert Global team would keep calling names on their lists to determine if the debt still existed.

If you run an online debt collection operation, be on the lookout for snoops poking around your business. But most importantly, review your procedures to ensure you’re compliant. (Of course, you can get in touch with us if you’re not sure.)

Robocalls

The FTC is also keen to snuff out sketchy, pre-recorded robocalls. Last year, the commission conducted a crackdown, and A+ Financial Center got hit hard. A financial services company, A+ Financial used robocalls as a marketing technique. Presumably, thousands of people received calls, generated at A+ facilities, from “Rachel” at “Cardholder Services,” who wanted to talk about interest rate reductions for credit cards. If the call recipient agreed, A+ would collect an initial fee and promise to help reduce their credit card rates. The problem was that A+ would do little to nothing to help customers land lower rates or sustain long term savings.

In addition to the usual marketing prohibitions placed on FTC violators, A+ was slapped with a $9,238,155 judgment. Though much of the fine is suspended due to insufficient funds on the part of the perpetrators, the FTC is taking possession of a 2007 Mercedes Benz and two boats as a means of partially fulfilling the monetary fine.

New Amendments to Telemarketing Rules

New Telemarketing Consumer Fraud and Abuse Prevention Act rules are on the way. Passed in 1994, the law gives the Federal Trade Commission authority to enact programs that “prohibit deceptive telemarketing acts or practices.” As such, the commission is exercising its power by tightening regulations for both inbound and outbound telemarketers.

The Telemarketing Consumer Fraud and Abuse Prevention Act rule proposal changes prohibit inbound and outbound telemarketers from:

  1. Accepting or requesting “remotely created checks” (draft transactions from a checking accounts; digital payments to creditors; purchasing items via phone or online; compensation for insufficient funds; debt collectors fees to establish payment plans).
  2. Accepting remotely created payment orders, money transfers and cash re-load mechanisms as payment.

The draft amendments specifically mention curtailing “novel payment methods” — like using bank routing numbers to withdraw funds without authorization. Judging from available information, it also appears that the proposed new rules will address the use of VoIP technology to disguise a caller’s location.

“Free iPad” Schemes

Henry Nolan Kelly, an Internet marketer, was also hit by the FTC this month. Over time, Kelly sent out about 20 million text messages indicating the recipient was eligible for a free iPhone or iPad. However, Kelly never actually gave anybody a free anything. As such, the Federal Trade Commission fined the Apple product promiser a cool $60,950 “for running a large text message based scam.”

Since Henry doesn’t have the funds to pay the penalty, he is being forced to cooperate with the FTC in an effort to identify and catch other internet marketers using the same techniques as himself.

As you can see, the FTC is busy this summer – and the trend is expected to continue into the fall and winter. So, if you engage in online marketing of any kind, get in touch with an Internet advertising attorney and get a compliance audit. The amount it will cost to ensure you’re operating on the right side of the law is peanuts compared to what you could lose if you wind up in the FTC’s crosshairs.

TheDirty.com Ruling Could Significantly Change Cyber Libel Law

Will a recent ruling against TheDirty.com change the course of cyber libel law?
Will a recent ruling against TheDirty.com change the course of cyber libel law?

In 2009, an anonymous “source” posted scandalous stories about then Bengals cheerleader, Sarah Jones, on controversial website The Dirty (thedirty.com). Outraged, she sued the site for defamation. In 2010, Sarah Jones (also a high school teacher) got caught knocking boots with a 17-year-old student. So, the state sued her for “sex abuse.” Now in 2013, both lawsuits are over, Sarah and the student are engaged, and online defamation legal precedence may forever be changed thanks to this case.

Sarah Jones Defamation Lawsuit

Nik Richie owns, operates and curates TheDirty.com. A notorious “revenge” site, scorned individuals use the platform to exact retribution against adversaries. A place made for gossip hounds, TheDirty is riddled with slut shaming rages and expletive-filled rants. Oftentimes, Richie adds his own comments and opinions to posts.

About four years ago, someone plastered TheDirty with a scandalous story about Sarah Jones. The bad-mouther said Jones slept with every member of the Cincinnati Bengals, and also insinuated she was a walking STD incubator. Jones, who claimed to painstakingly preserve her good name, decided to sue TheDirty and Nik Richie for defamation.

Sarah Jones Criminal Lawsuit

A few months after Sarah Jones initiated her libel lawsuit against TheDirty, she found herself embroiled in a criminal case. You see, Ms. Jones, a high school English teacher, was accused of having sexy times with one of her male students.

To shorten a long story: first, Jones lied about sexing her student; then she fessed up, and spilled her guts on 20/20, Today and Dateline. In the end, Jones cut a plea deal with prosecutors and must adhere to probation restrictions for a few years. The cherry on top? She and the male student are now engaged – and according to the couple, their respective families couldn’t be happier.

Conflation of the Two Suits Caused A Hung Jury

Even though the cold-hard-facts of Jones’ criminal case had little to do with the facts of her defamation suit, it was difficult for the media to not conflate the two. After all, the “hot for the teacher” factor didn’t exactly instill confidence in her character. At face value, Sarah Jones’ story was hypocrisy gold – the type of fodder news outlets crave.

Perhaps understandably, the media barrage led to a mistrial in Jones’ first defamation trial. Member of the jury couldn’t separate the two legal actions, which ultimately led to a “spoiled pool.”

Earlier this month, however, a new defamation trial took place, and this time around, Sarah Jones caught a break – a break that could have a major effect on cyber libel lawsuits moving forward.

Re-trials Leads to Defamation Victory For Sarah Jones

Low and behold, after deliberations, the jury of Sarah’s second defamation trial came back with a decision in her favor. Twelve U.S. civilians felt the “facts” posted on TheDirty.com were “substantially false.” Moreover, the 8-women/2-men jury decided that site owner, Nik Richie, by publishing the stories about Jones, acted with reckless disregard for the truth – especially since he added a comment to the post. To compensate for her trashed reputation, which presumably resulted in a reversal of fortune for Jones, the Jury awarded $338,000 in damages.

Cyber Libel Verdict Leaves Some People Scratching Their Heads

When news broke of Jones’ victory, free speech watchers and Internet law experts questioned the verdict. Many folks felt the jury and judge failed to adequately apply established law – specifically Section 230 of the Communications Decency Act, which protects website operators from liability for user generated content.

Not everyone disagreed with the ruling, though. Several specialists weighed in, pointing out that since Nik Richie effectively edited and curated the website, thus making him personally liable for defamation.

Will The Sarah Jones Defamation Ruling Against TheDirty Change The Trajectory Of Online Defamation Cases?

The First Amendment of the Constitution ensures defendant-friendly defamation laws in the U.S. And up until now, victims of “revenge porn” websites have had little recourse against people looking to shame them online. For not only is it difficult to prosecute someone for posting a “birthday suit pic” or voicing an opinion about another person’s virtue, but the CDA has also made it difficult for people to go after the operators of these lascivious sites.

Lawyers for TheDirty.com intend to appeal, citing the Communications Decency Act and previous case law. Who knows, if this case goes all the way to the top court, the Sarah Jones defamation case may inspire a new federal Internet law addressing issues specific to revenge porn websites.

Guess we’ll just have to watch, wait and see.

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Doctor Defamation Case Study: Brain Surgeon v. TV Station

doctor defamation of charachterA Texas brain surgeon may finally be granted the defamation trial he has been pursuing for nearly a decade. If he wins, media conglomerate, Viacom, could end up coughing up a whole lot of dough in this doctor defamation lawsuit.

Doctor Sues TV Station For Defamation

In 2004, Byron Neely’s life seemed to be going well. A brain surgeon with a thriving practice, ostensibly, Neely’s situation could be characterized as impressive. That all changed, however, when CBS affiliate KEYE-TV ran a 7-minute investigative report about the good doctor.

Accusations Levied In The KEYE-TV Report That Prompted The Doctor Defamation Lawsuit

In the piece, reporter Nanci Wilson highlighted Paul Jetton’s and Wei Wu’s patient experiences with Neely. According to the report, after Jetton went under Neely’s knife, Jetton allegedly had to undergo 12 corrective surgeries as a result of Neely’s work. More tragically, Wei Wu, another patient, was told by Neely that he had life threatening cancer. Presumably to escape a painful, slow death, Wu committed suicide. The medical examiner who performed Wu’s autopsy, however, said Mr. Wu was cancer free. Wei Wu’s wife brought a malpractice lawsuit against Neely on behalf of her son, but it was thrown out over procedural errors.

In addition to the patients unsettling stories, Wilson’s investigative report touched on probation restrictions the Texas Medical Board imposed on Neely. Namely, the board cited the doctor for self-prescribing medication. Talk also swirled about Neely’s alleged “hand tremor” problem.

TV Shaming Leads To Decline of Medical Practice

A damning excoriation indeed, after the KEYE-TV piece aired, Neely’s practice went into a tailspin. Clients cancelled, the practice crumbled, and eventually the bank foreclosed on Neely’s home. Presumably in an attempt to salvage his career and life, Neely filed a defamation lawsuit against Viacom – the parent company of KEYE-TV — and Nanci Wilson, the reporter.

Trial & Appellate Courts Rule Against Doctor, Supreme Court Gives Him The Green Light

Unfortunately for Neely and fortunately for Viacom, the trial court and appellate court ruled in favor of the defendants. Earlier this month, however, the Texas Supreme Court reversed the decisions in a 5-3-1 vote. Justice Eva Guzman, writing for the majority, explained, “We agree with Neely that a person of ordinary intelligence could conclude the gist of the broadcast was that Neely was disciplined for operating on patients while using dangerous drugs or controlled substances.” Since Neely provided an affidavit that he had “never performed surgeries while impaired by drugs,” the majority of the  bench ruled “that there is a fact issue regarding the truth or falsity of the gist that Neely was disciplined for operating on patients while taking or using dangerous drugs or controlled substances.” As such, Neely was essentially given the green light for a trial.

However, not all the justices agreed with the majority decision.

Chiming in for the 3 dissenting justices, Chief Justice Wallace Jefferson wrote, “If the news report is damning, it is because it contains substantial truth. The doctor performed brain surgeries during a time he was ingesting seven narcotics, eight other medications and alcohol. He suffered hand tremors during the period he operated on patients’ brains.” In other words, since supreme courts deal with questions of fact, the three dissenting judges did not see grounds for substantial misrepresentation of the case facts. Or as Chief Justice Jefferson explained, “Here, the literal truth is as caustic as the gist, and the gist reasonably depicts literal truth.”

Are you a doctor in need of a defamation attorney? Get in touch with Kelly Warner Law to begin the conversation.

Chinese Citizen Suing U.S. For Defamation Over Snowden

The Edward Snowden scandal sparked an international defamation lawsuit.
The Edward Snowden scandal sparked an international defamation lawsuit.

A litigation-happy Chinese national is suing Edward Snowden and the United States. Chan Yuk-lun  — who has sued both Japan and the Chinese Electoral Affairs Commission in the past –is now claiming that infamous whistleblower, Edward Snowden, in conjunction with the U.S., defamed China by exposing the PRISM cyber-spying program.

Saying Snowden Was A Spy Hurt China Irrevocably?

Chan Yuk-lun stated in a Chinese High Court that reports of Edward Snowden spying for China constitute defamation. He maintains that stories of Hong Kong’s compromised internet security are responsible for the country’s recent stock market fall. According to Yuk-lun, the reports have caused people to lose confidence in Hong Kong’s market, and since he is a citizen, the defamation of China has harmed him directly.

Yuk-lun insists that Edward Snowdens’ presence in China has brought nothing but negative effects to the country. The outraged defamation plaintiff also feels strongly that Dick Cheney’s and Congressman Mike Rogers’s Chinese Spy assertions have made matters worse.

Chan Yuk-lan: The Patriot Act May Be Legal in the United States, But It Ain’t In China!

Chan Yuk-lun says the United States surveillance of other countries is not legal and constitutes “tort” and “theft” under Chinese libel and slander rules. He believes that even though the United States can legally use surveillance on its’ own soil, these laws do not apply overseas. He is demanding monetary compensation, a public apology and reimbursement of legal fees.

His writ states: “The plaintiff has reasons to believe that some people intentionally or unintentionally connive in their speeches and conduct of personnel under them to impact China’s politics and economic strength.”

The Harm Allegedly Plaguing China Thanks To This “Egregious Act” of International Defamation

In most defamation cases, the plaintiff must prove damage – even under Chinese defamation law. In this case, Chan Yuk-lun argues that the safety of doing business online has been compromised, thereby hindering commerce in Hong Kong and China, which ultimately results in financial harm to him, personally.

“Although the US government boasts that there are stringent mechanisms in place to ensure that private information intercepted will not be used in areas other than for purposes of anti-terrorism,” Yuk-lun opined, “such oral guarantees indeed cannot put people’s minds at ease.”

Yeah. Something tells us this defamation suit will end at the hands of a judge fairly soon. But hey, it just goes to show that sticking your nose in international online politics could result in international legal actions. So, if you plan to indulge in any digital exposing – it’s probably a good idea to have a cyber-libel lawyer on your side.

Google Escapes European Online Privacy Law Blow

Google Privacy PolicyIt looks like Google escaped the legal guillotine in Europe. Recently, an EU judicial official sided with the tech behemoth with regards to personal data in Google’s index. That said, the announcement made clear that U.S.-based businesses with an online presence are bound to stricter EU Internet privacy standards.

For years, Google has been fighting an online privacy legal battle across the pond. Since the European Data Protection Directive addresses online privacy rights more aggressively than United States law, the tech company has dealt with their fair share of litigation in the UK, France, Ireland and Spain – to name a few.

The latest legal scrimmage involves the presence of “personal information” in Google’s massive database. Specifically, it raises the question of whether or not Google has the right to keep sensitive personal information indexed. For example, a man in Spain launched a formal complaint stating Google should remove information about his home foreclosure that was published, per law, on the website of a Spanish newspaper.

Specifically, it raises the question of whether or not Google had the right to keep sensitive personal information indexed.

But it looks like Advocate General Niilo Jaaskinen, advisor to European Union Court, recommended that Google does not have to delete personal information content from their search index. Jaaskinen’s reasoning was twofold:

  1. European Union law does not require operators to remove 3rd party content. As such, Google is free from blame when it comes to the presence of personal information indexed in their system.
  2. Since algorithms do not differentiate between public and personal data, it unreasonable to expect Google to identify and censor sensitive personal information.

Official judgment in the case is expected before the end of the year. But if you look at the history of the governing body, they usually do what the general advocates suggest. As such, Google can safely assume that they will emerge victorious in this online privacy legal battle.

Just because Google won this round, however, does not mean U.S.-based businesses are free from adhering to stricter European online privacy laws. If you conduct business on the Internet, your safest bet is following standards outlined in the UK Cookie law for visitors from the European Union.

If you want to make sure your online business efforts are in compliance with international Internet law standards, contact Kelly Warner Law.