April 26, 2011

IS RIPOFF REPORT A RIPOFF?

The internet plays an important part in all our lives these days and its impact seems to be increasing on an annual basis. And for the most part, the impact of the internet has been undeniably positive. The improvements in communications and information transfer have fundamentally changed our daily existence. Consumers are able to get what they want, when they want it, in a more efficient way than ever previously imagined. But is the internet a positive for all businesses? Has the freedom of information transfer and the lack of accountability produce negative results that unfairly impact certain companies?

To answer those important questions we took a close look at the company commonly known as Rip-Off Report which can be found at the website www.ripoffreport.com, but is actually owned by an Arizona Corporation called Xcentric Ventures, LLC and a man named Ed Magedson. Ripoff Report went online in late 1998 and has since grown into a vital player on the worldwide web. Millions of consumers flock to the website on a regular basis to view critical Reports allegedly written by other consumers. Most of the headlines of these Reports contain incendiary words like "scam" and "fraud" and the Reports then go on to state the alleged facts of the alleged consumers. The impact of Ripoff Report is greatly enhanced by its preferential treatment on Google searches. Obviously, Ripoff Report does an outstanding job of Search Engine Optimization, though there have been unsubstantiated allegations that Ripoff Report’s high search engine placement is less about SEO than it is about a close business relationship with elements within the Google corporate structure. Of course, none of that can be proven.

The positive impact of a popular website which shines a light on corporate fraud is obvious. Consumers benefit greatly from finding out the truth about disreputable businesses. However, how does an innocent business defend itself against disreputable consumers? Or more importantly, how does an innocent business defend itself from a competitor who hopes to benefit from "trashing the reputation" of that innocent company? Ripoff Report offers arbitration services where a company can reach a settlement with the disgruntled consumer, but if the consumer refuses or ignores the offer of arbitration, the company has no recourse other than to print their version of the story, known as a "rebuttal" on the Ripoff Report website. But the negative headline remains and Ripoff Report maintains an official policy that under NO circumstances will they ever remove an original Report…even if it is proven false!!! If you can somehow prove the original Report was false, they will often print a disclaimer alongside the headline stating that it’s been proven false but the original Report remains in perpetuity. And how does the disclaimer help you with a potential client who does a Google search on your company and does no further research because the first thing he reads at the top of his Google search is that your company is a scam!!!

We recently spoke to multiple businesses that are in this very position. No one wants their name used in an article like this because they afraid of retribution from the company that is purposefully lying about them and dragging their name through the mud. They are also worried about retribution from Ripoff Report itself which has proven overly litigious and has frequently sued their critics over even the most demonstrably true statements that were critical of Ripoff Report. So we will honor their desire to remain anonymous, but let’s examine just one of the many stories we came across involving companies that were being driven to the verge of financial ruin over false information posted on Ripoff Report.

Let’s call this company XYZ Corp. They have been in business less than two years and experienced remarkable growth over the first year or so of their existence. It appeared that they were a rising star within their industry and it headed for great things. But one day, negative publicity about them started to appear all over the internet, seemingly from disgruntled customers. After having only two resolved complaints to the Better Business Bureau in their first year in business, suddenly XYZ Corp. was the subject of dozens of complaints on the internet in a matter of less than one month, highlighted by an incendiary Report on Ripoff Report that claimed to be from a customer who paid several thousand dollars to XYZ Corp. and received nothing in return for their money.

At first, XYZ Corp. tried to treat these as legitimate complaints but could never find one customer who would post their name or company name so they could attempt to resolve the issue. Offers to arbitrate on Ripoff Report were ignored. XVZ Corp. could even produce ALL of their invoices proving that not one single customer had ever spent the exact amount of money being claimed on Ripoff Report, but that too did nothing to remove the original Report. The owners of the company offered rebuttals on the internet. They even got existing customers to act as references, agreeing to take phone calls from prospective customers to assure them that negative stuff on the internet was not true.

But no matter what XYZ Corp. did, they were unable to prevent that false information from coming up at or near the top of Google searches. And as a result, they saw a significant drop in their revenues. They were able to tie the negative posts to a competitor company which was orchestrating this disinformation campaign through anonymous posts made from fake customers all over the country. They even secured an affidavit from an employee of that competitor company confirming that these posts WERE made by the competitor company in an effort to intentionally smear XYZ Corp. and still they were left without an adequate remedy.

The conclusion of this situation is unknown as XYZ Corp’s battle to clear its good name continues in vain, but we wouldn’t want to bet on the prospect of them winning this battle. So as it turns out, even the most honest companies cannot adequately protect themselves if someone decides to defame them on the internet. Even the traditional remedy of the Federal and State Courts System offers ZERO in terms of help. Numerous companies have sued over this very situation and they always lose because of a 1996 law known as the Communications Decency Act which protects websites like Ripoff Report from civil liability for used-generated content. So essentially, Ripoff Report has no legal responsibility even if they KNOW the information is a lie! That may seem outrageous, but this is one of the unintended consequences of an improperly drafted piece of Federal Legislation like the 1996 Communications Decency Act.

So while it appears that sites like Ripoff Report actually benefit the general public, one could make a very strong argument that the overall impact of sites like this has been mainly negative. How many good companies have been driven out of business by an unscrupulous competitor? And who benefits when the good companies lose that business…the unscrupulous competitors! And if the only way to win this kind of battle is to "fight fire with fire" and engage in the same kind of slimy behavior towards the unscrupulous competitor, then the truth is even further hidden from the average consumer.

Ultimately, websites like Ripoff Report offer the promise of transparency for the average consumer. In theory, consumer participation without fear of retribution SHOULD be a good thing. But in practice, the model falls apart because of Ripoff Report’s inability, or more accurately their unwillingness, to monitor the truthfulness of the information posted on their website. It would be a bad enough system if the innocent were punished as equally as the guilty…that scenario would be grotesquely unfair. But the reality is even WORSE than that! The dishonest business benefits even more than the average business because they intentionally muddy the overall waters to hide their own individual malfeasance behind the fog of uncertainty.

So while websites like Ripoff Report offer the promise of transparency, they actually encourage dishonest behavior on the part of both consumers and businesses. The winners in this equation are NOT the consumers! As it turns out, the real winners are websites like Ripoff Report and internet businesses that specialize in Reputation Management.

Author:

Casey Dorgood

April 26th, 2011