Posts Tagged ‘FTC’

On March 15, 2011, the FTC reported that it entered into the first settlement agreement under the new FTC Guidelines prohibiting fake reviews. Essentially, the Guidelines provide that when someone posts a positive review of a service or product and that person is either connected to the seller receives some sort of compensation for the positive review, the “material connection” between the reviewer and the seller of the product or service must be disclosed. In this case, Legacy Learning, a company which provides guitar lessons on DVDs, had an affiliate review program which compensated bloggers and other online publishers for posting positive reviews about its program. The company agreed to pay a $250,000 penalty for its actions.

I wonder if the FTC is monitoring amazon.com. I was just reading recently about an author who was artificially inflating his sales ratings by buying his own book and posting fake positive reviews. Not only is this morally reprehensible, but it also violates the “new” FTC Guidelines which went into effect in December 2009. I wonder how many businesses engage in this conduct – posting fake reviews on sites like angieslist.com and urbanspoon.com?

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In FTC v. Trudeau No. 10-1383 (7th Cir. order Feb. 19, 2010)., Judge Gettleman held Trudeau (a writer and infomercial fixture) in contempt and tried to sentence him to 90 days in jail because . . . wait for it . . . the Judge received emails supporting Trudeau. The Judge held Trudeau in CRIMINAL contempt, which is a serious matter, because Trudeau’s business website posted the Judge’s email address and urged customers to tell the Judge how Trudeau’s weight loss book had improved their lives. (This is the same Judge that entered a $37.6 million dollar fine against Trudeau and barred him from making infomercials for 3 years in 2007. Needless to say, that judgment was thrown out by the Court of Appeals.) Part of the Judge’s rational for criminal instead of civil contempt was that the barrage of emails interfered with his Blackberry. He also felt that Trudeau was trying to get around his order preventing the introduction of additional evidence by having people email their satisfaction with Trudeau’s books to the Judge. I guess positive customer testimonials are a security issue for the Judge. Maybe he was concerned that a bunch of satisfied customers would storm the courthouse looking for more information.

There are a number of interesting issues that the Judge’s actions in this hearing bring up. First, the Judge indicates on record that his email address was private and implies that Trudeau’s ability to obtain it was due to some illicit activity, however, his email address is listed right on the court’s website at http://www.ilnd.uscourts.gov/judge/GETTLEMAN/rwgpage.htm. Second, he goes on about how the problem with the emails was that they did not relate to the Weight Loss Cures book at issue in this case but the Natural Cures book. (Wow – how terrifying – the customers got their books mixed up.) Third, he characterized Trudeau’s actions as “attacking me as I sit here.” (Receiving emails containing positive comments about a book is somehow threatening to the Judge? Maybe if he put his Blackberry away while he was in court, he’d feel safer.) Fourth, the Judge’s office informed Trudeau’s attorney at 4:00 PM the day before the hearing that he needed to be in the Court at 10:00 AM the following morning but refused to tell him why. (This sounds even more juvenile than the previous statements).

At the morning hearing the Judge demanded that Trudeau apologize, retract his request, label it a “mistake,” and that if Trudeau did not show up at 1:00 PM that he would send the Marshalls out to get him. At the 1:00 PM hearing, Trudeau’s attorney, with Trudeau present, informed the Judge that he had Trudeau do everything that the Judge requested at the 10:00 AM hearing. Despite complying with the Judge’s demands, Gettleman requires Trudeau to surrender his passport, post a $50,000 bond, and stay within the court’s jurisdiction. The Judge also repeatedly states throughout both the morning and afternoon hearings that he believes jail time is appropriate. The Judge then seems to try to egg the FTC on to prosecute Trudeau for contempt as well, but the FTC attorney present politely informs the Judge that he does not have the authority to criminally prosecute a contempt proceeding. Despite that, the Judge orders the FTC to file a response. (Does the Judge really think this is the FTC’s role here?) If you want to read the transcript, see http://www.citmedialaw.org/sites/citmedialaw.org/files/trudeaucontempttranscript.pdf.

I am concerned about this type of seemingly retaliatory action by a Judge. It seems to me that the proper course of action would be for Gettleman to recuse himself and allow someone who is less emotionally invested in the case to take over. I will be following this case to see what the Court of Appeals has to say about this criminal contempt order. To read the brief written for the Court of Appeals go to http://media.ktradionetwork.com/media/Brief_and_short_appendix.pdf.

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