THE BIZOP NEWS

Baker's Delight Franchisee Forces National Investigation

2008-07-24T06:11:52Z

In Australia, there is a new impetus to review the franchise disclosure laws - this time from the agency which reviews securities.

Deanne de Leeuw, a former franchisee of Bakers Delight has succeeded in getting the franchise relationship looked at by Australia's Joint Standing Committee on Corporations and Financial Services.

This is an important shift in focus, moving the focus of franchise relations from a pre-purchase disclosure regime to a continuous disclosure regime.

A BATTLE between Bakers Delight and a former franchisee has resulted in a national inquiry into franchising.

The inquiry will be conducted by the Parliamentary Joint Standing Committee on Corporations and Financial Services.

Deanne de Leeuw from Nowra owned three Bakers Delight franchises in the area and after uncovering a major staff underpayment issue ended up in a lengthy, expensive and emotionally draining battle to have the system changed to protect franchisees.

Ms de Leeuw has been calling for a federal inquiry into franchising since last year.

Two State inquiries have since been completed, but the Federal Government, until now had shown no inclination to address their recommendations.

The reason why this is very important is that typically securities legislation involves a requirement of continuous disclosure -not just pre purchase disclosure.

This is a very important development in franchise regulation which bears watching.

When is a Mary Kay IB Consultant a Franchisee?

2008-07-23T23:38:30Z

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There are two discussions about the amount of inventory an Independent Business Consultant for Mary Kay needs to start their home business.

The first discussion about initial inventory is at Pink Truth and the second is at Franchise Pick.

Unfortunately, neither article explores the legal significance of having to buy a more than $500 of inventory in order to use the Mary Kay trademark and begin selling as an Independent Business Consultant.

The purpose of this article is to explain the legal significance of the initial purchase of inventory and the legal protection for a product distribution franchisee.

PRODUCT DISTRIBUTION FRANCHISES

The significance of the initial purchase price is that you may be buying a product distribution franchise, which has set of legal protections not found in a simple network marketing distributorship.

Most people immediately think of the business-format franchise, like Subway or MacDonalds, when they think of a franchise. While it is true, these are franchises, business-format franchises are not the only legal type of franchises.

Product distribution schemes which involve the right to sell goods that are trademarked may also turn out to be franchises. And, the purchase is entitled to full disclosure of material information before the purchase.

(One such product distribution franchise, which is also a network marketing scheme, is Tupperware, which up to around 2003 routinely filed its franchise disclosure documents with the registrants states.)

Simply put, if you pay more than $500 for the right to market items which have a trademark associated with it, and are offered significant assistance in the way that you market the goods, you may have bought a franchise.

One critical element of the definition of a product distribution franchise involves the initial fee: under $500, and you are not a product distribution franchise.

Since the IBC for Mary Kay is clearing buying a opportunity to selling goods with a trademark, it is critical to examine the initial purchase of inventory to determine whether the network marketing opportunity is a product distribution franchise.

PINK TRUTH ON INITIAL INVENTORY LEVELS: 5K PURCHASE

Tracy writes:

"The greed exhibited by directors and national sales directors in Mary Kay Cosmetics is insane.

How this company can continue to pretend to "enrich women's lives" is beyond me.

There is now an even bigger push than ever for recruiters to get consultants to buy the largest inventory packages in Mary Kay history.

$4,800 wholesale is being promoted as "not even a full store."

The reality is that Mary Kay "stores" should be smaller than ever. Technology has made it so that products can be received in 3 days from Mary Kay Inc.

Let the company warehouse the products, and only order them when absolutely needed. Plus, with the rapid changes in products, having smaller inventory should be a goal for all consultants and directors."

FRANCHISE PICK ON INVENTORY LEVELS

Sean Kelly writes Mary Kay inventory purchases:

"Also, at the time of recruitment, there are many stories of new consultants being required to but inventory.

Of course, this sounds perfectly legitimate - how else do you sell cosmetics if you don't have any stock?

However, there are a lot of reports of pushy directors who try and get their new recruits to but the largest package of stock ($4,800 worth) rather than the minimum $600 package.

Presumably, this is because they then earn a much bigger commission cheque?"

FTC STAFF ADVISORY ON INITIAL PURCHASE PRICE

The initial starter kit for a Mary Kay IBC, I believe, is less than $50. Which clearly would rule out Mary Kay IBC being a product distribution franchise.

Or would it?

The critical legal concept is this: is a Mary Kay IBC required to buy more than $500 of inventory, calculated at bone fide wholesale prices to start her IBC?

The FTC Staff Advisory Opinion 95-10 addresses this issue in relationship to vending machines:

"The Minimum Payment Requirement does not include payments to the franchisor which are not required (either by express obligation or practical necessity) to obtain the franchise or begin operation of the outlet.

If the franchisee pays the franchisors for goods or services which are simply "optional," such payments are not included in the [minimum payment] provision.

43 Fed. Reg. at 59703.

The question remains, however, whether any additional machine purchases are really "optional."

Such determinations are fact-specific. Commission staff will make its own determination, based upon the particular facts, whether the investor is obligated to purchase additional machines or must do so as a practical necessity."

So if Tracy and Sean are correct about the practical necessity about buying more than $500 of inventory, then many Mary Kay IBCs have bought a product distribution franchise.

As such, the Mary Kay IBC, and many other IBCs, would be entitled to the protection of the FTC Franchise Rule.

Our next post will explain the significance of the this legal protection.

Subway Continues to Expand

2008-07-23T10:59:22Z

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Jim Coen, over at Franchising in New England, writes about the expansion of Subway, in contrast to Starbucks contraction:

"Don Fertman, director-development for the sandwich shops, said there's now about one Subway for every 13,800 people in the U.S., although some markets, such as Philadelphia and Boston, are "under-served."

He said he thinks Subway can take the ratio to one restaurant for every 12,000 people in the U.S. while revving up growth overseas, where it now has 8,000 outlets.

A major factor helping Subway sprawl is its low overhead.

The shops don't need room for large kitchens, so there are outlets in hospitals, appliance stores, a smelting plant and even a church where the pastor wanted to provide job training for neighborhood kids.

Subway is also the largest chain within Wal-Mart."

And now for the opposing view, from forlorn Subway blogger at BMM:

"As you might guess, I am dealing with gross encroachment.

I have successfully fought off three previous attempts, but have recently lost the battle over a proposed Walmart site. I

will spare you the rest of the particulars since, the fact is, I am aware that I signed an agreement, and thus understand that, on my single issue at least, I appear to have no further recourse.

I am embarrassed as I realize, for perhaps the first time, exactly what my franchise agreement is all about.

I thought it was about me going into business. I understood, of course, when I signed the Franchise Agreement that there was the possibility of competition from within, but I was not deterred by it.

Probably the biggest reason is that I took the statement with "a grain of salt." I had faith in my practices, and the term "compete" did not connote negativity for me.

Further, despite the warning, the likelihood of DAI [Doctor's Associates Inc., which is the corporate name of the Subway sandwich chain] seeking to compete with me seemed almost absurd.

Logic dictated that DAI needed my business to succeed as much as I did--so why would they compete with me?"

Why indeed?

Bad Advice about If Your Identity Is Stolen

2008-07-23T10:23:56Z

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Tom Fragala has a nice little piece about bad advice regarding identity theft, at his blog Identity Theft.

Apparently, Tom could not get his post accepted at Consumerist, and so posted it at his website.

In the spirit of helping, I am going to pass it on. (What is Consumerist thinking?)

"First and foremost, to attempt to create a 5 step list for all identity theft will never, ever work.

Because the correct procedures for recovering from existing credit card fraud, or new credit card fraud, or ATM/debit card fraud, or other types of fraud are all very different.

I'll address the specific steps in the blog post that are inappropriate here. [For a person who had a credit card stolen.]

Tom goes on to point out that a) putting on a fraud alert is irrelevant, b) filing a complaint with the FTC is pointless because the FTC lacks jurisdiction or money to investigate identity theft, and c) contacting the police is equally dumb.

Contact your credit card company immediately and dispute the charges, is Tom's advice.

Yup, but why does the Consumerist think that Tom doesn't know what he is talking about?

Is ACN a Pyramid Scam?

2008-07-23T01:22:30Z

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At the scam.com forum, there is considerable debate about whether ACN is a pyramid scam.

One poster cites, in support of his theory that ACN is an illegal pyramid scam, two Government announcements, one from Australia and the other from the Canadian Competition Bureau.

In the Australian Federal Court,

"On 15 November 2004 the ACCC instituted proceedings against Australian Communications Network Pty Ltd, a seller of telecommunications services, for alleged breaches of the pyramid selling scheme provisions of the Act.

On 23 March 2005 Justice Selway found that ACN participated in, promoted and induced or attempted to induce persons to take part in a pyramid selling scheme in contravention of section 65AAC of the Act, and that Mr Martin Paech, an ACN director, aided and abetted and was knowingly concerned in those contraventions.
The court also found that Mr Keith Janke and Mr Jonathon Gibbs, two ACN Independent Representatives, were knowingly concerned in and aided and abetted the contraventions, and Gibbschade Pty Ltd participated in the pyramid selling scheme, and attempted to induce other persons to participate in the scheme, in contravention of the Act."

And according to the Competition Bureau,

"The Competition Bureau alleges that ACN Canada, as it is known, and its participants, through its web sites and at public meetings, recruited new participants by exaggerating income expectations without disclosing the income of a typical participant. Under the Competition Act, it is illegal to make reference to earnings in a multi-level marketing plan without disclosing a typical participant's income. In addition, operators of a multi-level marketing plan must ensure that any income representation made by a participant in the plan includes disclosure of a typical participant's income."

There is a significant problem with relying on these two cases: the Australian Federal Court's decision was overturned, and the Competition Bureau's case did not survive the preliminary hearing. For the latter, you would have had to gone to Corey Lewis's website, a Manitoba Lawyer, to find this information out as it does not appear on the Competition Bureau's website.

I think that these decisions are probably correct, the deception in most modern MLM's relate to the level of average compensation, the number of drop-outs, and the losses that those drop-outs on average have sustained, concepts related to earnings claims. The usual criminal definition of a pyramid should by applied to concepts like Skybiz.

Notwithstanding that these cases no longer can be relied upon, a number of independent consumer watch sites continue to rely upon these two cases to show that ACN is a pyramid scam. For example, over at mlmwatchdog.com there is a report purporting to show that ACN is a pyramid scam - but it has not been updated to reflect the status of these two competition cases.

Does this mean that I think ACN is not employing deceptive marketing practices? Well, this commentator certainly believes that ACN is employing deceptive marketing practices.

But, my own view is that a proper analysis of ACN's marketing practices should start with the proposed 26 new deceptive marketing practices, proposed by the FTC in April, 2006.

Tell me what you think.

Fraud News for Tuesday

2008-07-23T00:41:52Z

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I had observed in numerous posting that the 12Daily Pro scam was likely a money laundering scheme - $200 million from Indonesia ended up in the US via illegal money transmitters using the internet.

The money transmitter in the 12Daily Pro was Stormpay.

12Daily Pro was prosecuted as mere pyramid scheme by the FBI.

Now, Ed Dickson, writing at his blog Fraud, Phishing and Financial Misdeeds reports about E-Gold:

"The three principal executives of E-Gold Limited have pleaded guilty in a case brought against them by the Department of Justice.

The three executives in question, Dr. Douglas Jackson, principal director of E-Gold and CEO of Gold & Silver Reserve Incorporated, and two of his senior directors (Barry Downey and Reid Jackson) pleaded guilty to conspiring to engage in money laundering and operating an unlicensed money transmitting business.

The corporations involved (E-Gold and Silver Reserve) face a fine of $3.7 million and have already agreed to pay a judgment of $1.75 million.

Jackson faces up to 20 years in prison and a fine of $500,000 and Downey and Reid face a maximum of 5 years in prison and a $25,000 fine."

"To anyone familiar with crime on the Internet, allegations of criminals using, or manipulating E-Gold (or other services like these) are nothing new. E-Gold gives their customers the ability to transfer the value of gold, electronically. To transfer E-Gold -- which has a cash value -- all anyone needs is an e-mail address, account number and password."

Read the Ed's article, he is an expert on illegal wire transfers.

Judge Roy Bean shoots back at the Obama crowd about Penny Pritzker

"The PR machines and political supporters are busy, scrounging the net and blogs for anything that might be detrimental to a political candidate or a powerful Squaliforme.

Take the first published comment to the previous post. Then take the blog the author points to for what it's worth - they're firing blanks.

Let's dissect this flimsy public-relations exercise:

Claim 1: "Penny Pritzker had no ownership in Superior. She did not profit or receive compensation, except minimal directors' fees. She and her extended family lost a great deal of money from this investment."

OK, let's see just how that works - "[she] and her extended family lost a great deal of money from this investment," yet Penny Pritzker allegedly had "no ownership inSuperior"??? Unfortunately, the author of this fluff piece misses the dichotomy, especially when claim 2 is made:

"She and her extended family agreed to pay the largest amount in the history of U.S.banking to the federal government: $460 million although they owned just 50% of the bank."

You can't have it both ways - the Pritzkers either did or didn't own 50% of the bank and Penny is, after all, part of that "extended family" that "lost a great deal of money from this investment." If we are supposed to be concerned that they, as half owner, paid while the other half didn't, that was their decision."

Hard to argue this with this logic. Sounds like Pritzkers will be on Judge Roy Bean's target list for a while.

Stop the Franchisor Madness

2008-07-22T10:22:54Z

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Here is a description, from BMM, of the perfectly wrong franchise system:

"Assumptions:

1. The franchisor thinks the franchisees are stupid and can't walk and talk at the same time.

2.The franchisor has only one sole-source supplier.

3.The franchisor holds lease.

The scenario:

Most franchisees are failing and those that are making money are being disenfranchised for minor infractions.

And, since the franchisor holds the lease, the franchisees are turning in the keys to the franchisor (and thus getting the store for free).

The franchisor just started a second corporation just to accumulate these stores.

I suspect he will then sell them as a franchise and thus the second corp. is making a small mint."

Suppose this scenario is true. How could you find clues about it reading the UFOC or FDD?

Well, there are 4 clues.

First, read the item 20 disclosure. How many locations have changed hands? If over 10%, you probably have a big problem.

Remember, in item 20 disclosure you are looking at the total amount of transfers over each year, and dividing by the number of open locations. Over 10% is a huge warnings sign.

Second, you can easily tell by reading the franchise agreement whether you will be on the lease as a tenant or subtenant. Generally, you want to be the head tenant - you have no advantage being a subtenant, and many disadvantages.

If your franchisor balks, then try to get your attorney to negotiate a conditional assignment: you are the head tenant, but if you default on your franchise agreement, the lease is assigned to the franchisor. Otherwise, walk.

The trouble with being a subtenant is that the franchisor can threaten a default on the franchise agreement, which because of the cross-default clause is a default of lease - then they lock you out.

Very bad negotiating corner to be in - don't do it.

Third, look at pacer, the litigation disclosure and the amount paid for legal fees in the franchisor's financial statements. What does it show -an aggressive franchisor intent on using its bargaining power to churn stores?

Fourth, do an extensive corporate search on all the entities and officers of the franchisor. In the US, most corporate searches can be done for free. But take the time to research every officer and every state - you can learn wonders this way if you take the time.

Judge Roy Bean - Hang'em High

2008-07-22T07:16:43Z

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Judge Roy Bean is on a roll about the mortgage fraud and those who enabled it:

"Well Squaliforme champion Phil Gramm's mouth finally did him in, which should improve McCain's chances of being elected this fall.

In a typical 'let them eat cake' moment, the Godfather of predatory lending and bank deregulation spoke a partial truth - but it wasn't well crafted enough and revealed the mind-set that permeates the Washington lobby culture.

Gramm will have to go back and suffer in his role at UBS.

Now the Obama campaign needs to step up to the plate and dump Penny Pritzker - legendary former owner of the sup-prime predatory lending squaliforme Superior Bank.

Pritzker and Dworman (the owners) are still handing out multi-million dollar payments every year to the FDIC (part of the deal where no one had to admit any wrongdoing at Superior)."

One of the benefits of blogging is the variety of ideas that you are forced to confront and make a judgment about -even in your own niche field.

Judge Roy Bean is a blogger who I follow because he/she writes about:

"The ocean of the world's financial services industry is home to some of the most dangerous predators and the fraudsters who thrive on the damage they do.
The lender's and servicer's power over consumers is unchecked and strengthening as they continue to dominate the legislative agenda and thumb their noses at regulators.

This blog is dedicated to bringing the facts about these companies and the others who prey on their victims to the public."

Ten years ago, such a declaration would have a) never been read, b) been dismissed as mere ranting by most who read, and c) never could make difference.

Now, as ideas move up the chain from F list to C list and eventually, sometimes, gains the attention of an A list blogger, we have a different type of public oversight.

Do I know that Judge Roy Bean is right? Nope, but he/she writes with enough precision that I will follow the ideas and publish them to a larger audience.

And perhaps some blogger, with more traffic, or a combination of us with the same amount of traffic, will be able to publicize interesting ideas that would have gone missing, even 5 years ago.

From a Veteran Dunking Donuts

2008-07-21T22:39:57Z

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Over at BMM, an anonymous poster writes about being in the employee of an evil franchisor, possibly Dunkin Donuts:

"The job of the loss prevention department was to nail as many franchisees as possible for technical breaches of the franchise agreement, terminate them, and bring in as much "restitution" as possible.

There was a target to be met for how much "restitution" was brought in. It was in the millions of dollars.

There were typically over 100 open investigations at any one time. They spared no effort and no expense.

Your eyes would pop if you saw the lengths they went through to get you.

If they could make a halfway decent case against you then you were cooked and they would absolutely rake you over the coals without mercy."

I have difficulties with these types of stories.

Who knows why this poster has made these allegations, without a link to anything that might be evidence of bad faith.

Shouldn't a franchisor be zealous in protecting the brand?

Yes, of course, a zealot may be go overboard. But we need some evidence, and not mere allegations.

The poster could simply be an unhappy employee looking to make waves, it could be someone looking to slag DD, it could be a franchisee in litigation.

These types of postings simply add nothing of quality.

Perhaps the poster is right: but, how would we know?

Piracy and Silver Bars

2008-07-21T12:51:31Z

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The Economist has an interesting take on the grey market, putting in a plug for pirates:

"In other industries, piracy can help to open up new markets.

Take software, for instance. Microsoft's Windows operating system is used on 90% of PCs in China, but most copies are pirated.

Officially, the software giant has taken a firm line against piracy. But unofficially, it admits that tolerating piracy of its products has given it huge market share and will boost revenues in the long term, because users stick with Microsoft's products when they go legit.

Clamping down too hard on pirates may also encourage people to switch to free, open-source alternatives.

"It's easier for our software to compete with Linux when there's piracy than when there's not," Microsoft's chairman, Bill Gates, told Fortune magazine last year."

Uh, this would be the same monopolist that installs almost a root kit on new PC's to determine whether you are genuine or not?

But, this question about borrowing the authority from name brands, absconding with rent in economic terms, is really quite fascinating.

It is squarely in the field of fraud as parody of rationality - so I guess I better think about it!

Sneaky Franchise Lawyer Tricks Part III

2008-07-21T10:50:03Z

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This is the third Sneaky Franchise Lawyer trick, and I promise you that it is a doozy!

The first Sneaky Franchise Lawyer Trick was the general observation that a lot of good questions may not be answered in the UFOC or FDD.

"So what is the significance of good questions that are not the in FDD or UFOC?
Well, the usual integration/waiver clause in a franchise agreement will block you from being able to rely upon the answers you received to questions that were not in the FDD or UFOC.

You simply cannot rely upon information not provided to you in the UFOC unless your attorney amends the standard franchise agreement."

You ask a bunch of good questions, get some answers, make your decision upon these answers -later you find out that you signed an agreement that said since the answers to these questions were not in the UFOC or FDD, then you are deemed at law not to have relied upon them. Oops!

The secnd sneaky franchise lawyer trick had to do with representations about earnings.

Everyone wants to know how much money you can make buying a franchise. This information, if disclosed, is in Item 19 in the UFOC or FDD.

But, if you find material information outside of the franchise disclosure document, you generally cannot rely upon it.

The current head of the FTC tripped up on this trick:

"If I were buying a franchise, regardless of whether Item 19 data [financial information] were provided, I would obtain information about sales, costs, and profits by meeting and talking at length with a number of current franchisees, and would encourage all prospective franchisees to do that."

The problem with this is that when you sign the franchise agreement, you "agree" that you haven't relied upon anything not in the UFOC or FDD.

So all your hard work would be for naught.

The third trick is even more devious. You sign a franchise agreement, which prohibits you from having a jury trial, unless applicable law prevents you from waiving your constitutional right to a jury trial. And your state law does prevents you from waiving a jury trial.

So you are golden, eh? Jury trial is a given.

Oops no.

As some MBE franchisees found out. In US Federal Court, the right to a trial is governed by Federal and not State law. So in the franchise contract which you signed, which waived your right to a jury trial unless applicable law prevented the waiver, the words "applicable law" referred to federal and not state law.

Now that is tricky!

Unhappy Subway Franchisee

2008-07-21T09:51:51Z

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Interesting letter to Bob Purvin, the Chair of the AAFD, posted at BMM:

"I am a multi-unit Subway franchisee, writing to you with hope that you will kindly offer me some common insight.
I have been in the dark.
I'm certain I'm not the first who has been at your door step.
As you might guess, I am dealing with gross encroachment.
I have successfully fought off three previous attempts, but have recently lost the battle over a proposed Walmart site.
I will spare you the rest of the particulars since, the fact is, I am aware that I signed an agreement, and thus understand that, on my single issue at least, I appear to have no further recourse."

The multi unit owner goes to note that

"The Franchise agreement points out risk of competition, even from within, but it does not point out the certainty of such relative to its goal of indefinite, aggressive growth. In doing so, DAI has, in my opinion deceived, not some, but all of us.
From the outside, one would look at Subway's growth over the years as impressive, and as a sign of success--certainly a sound investment. It is not until one is on the inside, until after one is invested, however, that one can truly grasp the gross manner in which Subway has multiplied and intends to continue doing so."

Again, this points out the value of a sophisticated franchise attorney - someone who will do more than read the contract back at you.

Subway's aggressive expansion is well known. Their litigation style is also well known.

If you are going to be an multi unit operator, then you had better get some amendments to your franchise deal - otherwise you are going to get run out of town.

If you can afford a number of units, then you can afford proper legal representation. (I will also bet the this franchisor has cross-default clauses.)

Sunday Counterfeit News

2008-07-21T00:52:25Z

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Interesting recommendation about a law book discussing the legality of the grey market, over at Jed's Gray Blog:

"Finding good books on the parallel market is not an easy task.

Despite its long and prominent history in US and European legal practice, the parallel market is usually relegated by most writers to a chapter regarding diversion of goods.

It is therefore a treat to find an entire treatise devoted to the parallel market.

The fact that it is both readable and intelligent is a plus."

Read the whole article.

Interesting analysis of a recent Canadian counterfeit case, at Trade Mark Blog,

"Since the defendants' conduct was "clearly knowing, planned and deliberate" and they also attempted to "deliberately conceal or cover up their activities", punitive and exemplary damages were also awarded.

The defendants W. Lee Corporation, Ngan and Tran were jointly and severally liable for a total sum of $100,000.00 in punitive and exemplary damages.

Since W. Lee was the principal of the enterprise and was responsible for the importation and distribution of the counterfeit merchandise, she was solely liable for $200,000.00 in punitive damages."

So far the tally against the counterfeiters is $1,000,000 and counting.

What I wonder is if a counterfeit luxury brand is a better buy than a real but crappy Chinese alternative, because the alternative contains lead for example, is it really a valuable social policy to whack the legitimate grey market?

Finally, from the counterfeit mortgage department, Judge Roy Bean writes:

"I see in news reports that there is great consternation on the hill over the financial industry.
Sorry, but you're more than a decade late.

You had your chance.

You've been told over and over again that the house of cards was just that. You were content to ignore and even take advantage of the situation.

The people you turned into multi-millionaires were more than happy to help keep you in office all these years while the rest of us have been taken advantage of.

Ordinary people funded the whole sordid mess with usurious interest rates and shockingly egregious fees and charges that created jobs and incomes for millions of ancillary company employees.

The mutation sucked billions of dollars from people who thought they were supposed to own a home and did little more than lure them into paying more in interest than any other part of their budget."

Saturday Morning Fraud News

2008-07-19T10:38:04Z

Image by -syko- via Flickr

Tracy Coenen has a nice round-up of all the bloggers who are rallying to the support those posting critical remarks about Shop to Earn.

"It all started a few weeks ago when blogger Everyday Finance wrote a post about the ShopToEarn and ShopToEarth program. He highlighted both positives and negatives that he found with their MLM program. It wasn't long before he got a cease and desist email from Gerry Nehra (former attorney for mlm giant Amway), threatening legal action if he didn't take down his negative comments about the company.
I then wrote my own critique of the mlm program, and got my own cease and desist email. The original blogger modified the posts on his blog that made Shop To Earn so mad, but that wasn't good enough. Gerald Nehra then demanded he take down his site within 24 hours.

And the blogosphere is rallying to stop this kind of bullying. Bloggers are entitled to express their opinions, whether or not MLMs like ShopToEarn want them to or not."

Roger Parloff, writing at his blog at Fortune, notes the difficulty that eBay is having with complying with the terms of the injunction.

"On the French eBay site, ebay.fr, the same searches (using both 'perfume' and 'parfum') produces 0 results for each of the brands - so some blocking must be happening. However, at the bottom of those same search results pages, there's a box with links to eBay boutiques outside France (US, UK and Canada, mainly, but I also saw Spain) that offer perfumes by the three [sic] producers for auction."
In response to Peter's observations, an eBay spokeswoman says: "At this stage our comment still remains the same as earlier, which is we are actively working towards finding an effective solution."

I would have thought that the Court would have suspended its order for 30 days to allow eBay to come up with an effective solution. You should read all of Roger's article because he sets out all the different lawsuits involved.

Finally, some sense on the economic front from the Onion who reports:

"A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.
"What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future," said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. "We are in a crisis, and that crisis demands an unviable short-term solution."

Google committed Fraud?

2008-07-18T23:31:40Z

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A class action lawsuit in California has sued Google for:

"for fraud, business code violations, and unjust enrichment, claims arising from the company's alleged sale of low-quality ads.
In the parlance of online marketing, "low-quality ads" refers not to shrill infomercials but to ads that generate a poor response or show a poor conversion rate due to problems with placement, audience targeting, or related factors."

Thomas Claburn, Information Week

Hard to understand this lawsuit.

Did the plaintiff know how to opt out of the Google Adsense for Domains?

"AdSense® for domains allows domain name registrars and large domain name holders to unlock the value in their parked page inventory.
AdSense for domains delivers targeted, conceptually related advertisements to parked domain pages by using Google's semantic technology to analyze and understand the meaning of the domain names.

Our program uses ads from the Google AdWords™ network, which is comprised of thousands of advertisers worldwide and is growing larger everyday.

Google AdSense for domains targets web sites in over 25 languages, and has fully localized segmentation technology in over 10 languages."

Supposing that this is a disclosure case, what damages did the class suffer? Can the class prove damages without inquiring about what the individual knew about the program, what reliance they put on it, and what they would have done otherwise.

It might be very hard to prove a class theory of damages on the misrepresentation claim.