When it came to Mobile Money Code’s “system,” money was mobile all right. It traveled in a one-way direction from consumers to the pockets of the principals behind the get-rich-quick venture. That’s what the FTC alleged in a lawsuit filed against an international network of defendants. The FTC says they used affiliate marketing to promise that people would earn “60k a month on 100% autopilot,” but the typical consumer never got off the runway. In addition to the FTC’s ongoing concern with misleading earning claims, the just-announced proposed settlements serve as a timely reminder to conduct a pre-flight CAN-SPAM check before your company sends commercial email.
Mobile Money Code claimed that by using their “secret” code, “beginners and normal people just like you” could pull in “$4,000 a day using their cell phones.” In addition to making claims themselves, the defendants had a legion of affiliate marketers acting on their behalf, sending email to lure consumers into purported money-making ventures. The defendants typically used third-party affiliate networks – middlemen who match up sellers and affiliate marketers – to drive traffic to defendants’ sites. Once people visited, the defendants made it hard for them to leave. The FTC says the defendants aimed a barrage of high-pressure pop-ups at consumers until some of them eventually cried “Uncle!”
If the initial spam messages resulted in sales, the money was divvied up among the companies, the network, and the affiliate. Who drew the short straw? Consumers who shelled out cash for the “secret code” and often paid much more for the defendants’ dizzying array of upsells and add-ons. All they got was generic software and readily available information about making mobile websites – hardly the “money-making machine” they’d been promised. What about the defendants’ “60-Day, Hassle-Free, 100% Money Back Guarantee”? According to the FTC, for many consumers who tried to get a refund, the only thing they were guaranteed was a hassle.
The FTC challenged the defendants’ earnings claims as false or unsubstantiated, alleged that they misrepresented the nature of what they were selling, and charged that they didn’t live up to their guarantee. The complaint also alleged multiple violations of the CAN-SPAM Act.
Under the terms of the proposed settlements, Ronnie Montano, Hyong Su Kim (also known as Jimmy Kim), Martin Schranz, and related corporate defendants are out of the money-making software business. For how long? For the rest of their lives. The orders also put protections in place related to other product representations, the use of affiliate marketing, and CAN-SPAM compliance. Based on their financial condition, the $7 million judgment will be partially suspended when they turn over a total of $698,500.
Here are tips other companies can take from the settlement.
Affiliate marketing is a two-way compliance street. Companies have an obligation to keep tabs on what affiliate networks and affiliate marketers are doing on their behalf. And members of the affiliate ecosystem are unwise to look the other way at deceptive claims or questionable practices. The settlement in this case mandates that the defendants implement monitoring procedures – a wise check for anyone in the affiliate industry.
Conduct a CAN-SPAM recap. The FTC says the defendants violated the CAN-SPAM Act by using deceptive header and subject lines, failing to identify email as an ad, failing to include a valid physical address, and failing to give recipients a way to opt out of future messages. But that’s not all the law requires of companies that use commercial email. Read CAN-SPAM Act: A Compliance Guide for Business for a refresher. The scope of the statue is broad. Both the company that presses SEND and the company on whose behalf it’s working may be held legally responsible for CAN-SPAM violations.
Your IN box may not be the best source for income information. Do you run a small business or have employees who want to supplement their salary after hours? In either case, the only “secret” to making money at home is that there are no secrets. Be suspicious when easy-money offers arrive via email. Even when they appear to be personalized, it’s likely thousands of others received the same message. Furthermore, consider the detailed way that reputable companies describe their products. Contrast that with the smoke-and-mirrors double-talk about “secrets” and “systems” that financial scammers often use. If it’s not 100% clear what they’re trying to sell you, it could be that there’s no there there.