The Salty Droid dropped a bombshell this week by publishing select portions of a private phone call between Andy Jenkins and Jeff Walker in which they say some things that are not especially flattering for their public image.

I guess it could be argued that “all PR is good PR,” but in this case I have my doubts. Here’s the recording, in case you’d like to hear it.

Andy Jenkins and Jeff Walker Riff About the
Video Boss Launch, Salty Droid and Ken McCarthy

In case you don’t have 7 minutes right now, or you’d rather not be exposed to the swearing, here are a few of the highlights:

Audio Highlight #1

• “The fact is, [Video Boss] is not a magic bullet, even though we’re going to position some of it that way.” -Andy Jenkins

My comment: Not a good idea to intentionally overhype your product or consciously deceive your customers. Even worse to admit to it on a recorded call.

Audio Highlight #2

• “I’m going to be relying on Syndicate to hit this thing really, really hard.” -Andy Jenkins

My comment: This call is from circa January 2010, so The Syndicate has been around at least since then.

Audio Highlight #3

• “The Droid I’m sure will go ballistic, but he’ll go ballistic no matter what you do. [...] He is like a little pimple on our butt. He has no reach, never will have any reach, will blow himself up. He’s non-existent. He’s less a threat to us than Mike Long was. Far less a threat to us than Ken McCarthy.” -Jeff Walker

My comment: Salty Droid has no reach? That was wishful thinking even in January 2010. (His current Alexa ranking is 18,303.) And is Ken McCarthy more dangerous than the Droid? Possibly. More on that in a minute.

Audio Highlight #4

• “Just think about this, like, with the Droid. He’s saying we’re evil because we’re charging a lot of money for our product. And that’s why we’re evil. Which is like the most ridiculous thing because it’s not like we’re like holding someone at gunpoint and saying ‘give us your money.’” -Jeff Walker

My comment: I don’t think Salty Droid’s crusade is based on charging high prices (although that may be part of it). I think it has far more to do with the anticompetitive behavior of The Syndicate, which is essentially an Internet marketing cartel — a “good ol’ boys club.”

Is Ken McCarthy More of a Threat Than Salty Droid?

During the call, Andy and Jeff mention Ken as an even greater threat than Salty Droid. This has prompted a lot of people to ask, “Who is Ken McCarthy? And what is his part in all this?”

In case you’ve never heard of Ken McCarthy before, he has been teaching Internet marketing since 1994, longer than just about anybody else online. He is also the creator of the System Seminar, an annual Internet marketing training event.

Many of today’s gurus got their first chance to speak on stage at the System Seminar. As Ken points out, “Some did good things with the opportunity. Some leveraged the exposure into criminal enterprises which I’ve had nothing to do with.”

It’s not always easy to judge a person’s character when you first meet them. Sometimes you may know a person for a few years and still not really know them. So as soon as Ken realized some of the shady things going on, he warned his subscribers. Here’s what Ken says in his own words:

1. I was one of the very first people to teach Internet marketing and thousands of people learned from me…

2. Including many of the people who became members of the Syndicate.

3. When I realized what they were up to I very publicly warned my students and customers to avoid them, thus earning the Syndicate’s undying enmity.

So why is Ken considered a threat? Probably because of his credibility and his reach. If he really wanted to, he could make life miserable for the Syndicate.

Even if he could, it’s probably not necessary. After all, for nearly two years now, the Salty Droid has been wearing the mantle of “Chief Internet Marketing Muckraker.” And since his most recent post…

The Gurus Are Now Distancing Themselves from… Themselves!

Regardless of whether or not Ken McCarthy is the bigger threat, Salty Droid’s most recent sleuthing seems to have caused the usual suspects quite a bit of consternation. In fact, at least two of them have now written blog posts trying to recast themselves as paragons of virtue.

• Mike Filsaime has published a post outlining his “best practices” that will now govern who he will (and will not) promote. (I find this post a little bit suspect since it seems to me that Mike has in the past repeatedly violated his own best practices.)

• Frank Kern has published a post challenging his subscribers to not buy any advice for a month. (According to one source, Frank then emailed his list to promote the Kajabi launch a few days later.)

Even Rich Schefren, who hasn’t promoted major launches the last couple years, felt compelled to send out an email to his list explaining why he no longer associates with the Syndicate.

But Here’s the Strangest Part…

Probably one of the weirdest parts of all this is that Mike Filsaime publicly said he would “address” Salty Droid and essentially set things straight. He stated this on his “best practices” post linked above. But then, for some strange reason, he had second thoughts and deleted all references to Salty Droid/Jason Jones.

For the record, here are two of the things Mike said publicly on his blog:

Jason Jones is a sad human being and I pitty him. And you for following him. I will deal with him soon. Jason Jones will finally hear from me. Now go run to his hate blog and warn him about me. I will expose him for the low life he his. Go now minion, go run to your powerful OZ. Jason Jones, you reading this. Get your costume on and make your post. It’s my turn. A sad human being will now be seen for what he is.

And in a separate place:

Minions of Jason Jones. I have spent the better part of the day talking to the 5% of you that are coming from his blog to try to spin this and trash me as you stated you would on his blog. We had good comments coming from people. All of a sudden a minion posted my blog on his blog and you are all coming here now to trash talk the same things you are saying there. As I said, this week I will address Jason and his hate confused followers.

Then, on the night of October 5, 2010, Mike revised his blog post and all mentions of Jason Jones mysteriously vanished into cyberspace. Even Google cache can’t find them (although they are still reproduced in the comments on Salty’s blog). Here’s what SD wrote:

The Gnome just deleted all his references to “Jason Jones” and turned off commenting. [...] I’ll still be expecting that big expose Gnome :: I wouldn’t want you to disappoint all your fans :: you rockstar you.

So is Mike’s rebuttal still on its way? Who knows. At the very least, it appears it will be delayed. (UPDATE: I stand corrected. Mike has responded, just not on his own blog. He has responded on Mike Young’s blog: 8 Things You Should Know About Mike Filsaime)

Anyway… What do you think? Is the Salty Droid a real threat to The Syndicate? Or, as Walker puts it, is the Droid simply a “little pimple on [their] butt”? Leave a comment to add your two cents.

-Ryan M. HealySimilar Posts:

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Are Internet marketing “gurus” just a den of thieves? And is Internet marketing itself now on life support as a result of their unethical business practices?

The reason I ask these questions is because recent events have forced me to ask them.

Internet marketing “gurus” are being called out left and right, new advertising rules are going into effect, people’s merchant accounts are being terminated without notice — it’s probably the biggest shake-up to hit Internet marketing since the first big “Google slap.”

Let’s take a look at some of the “recent events” I’m talking about:

Event #1: Perry Belcher “Retires”

Here’s the short version: Perry Belcher sold fraudulent health supplements through his company called Selmedica. When it was discovered he was committing fraud, authorities seized Belcher’s assets, auctioned off his home, cars, and other possessions, and gave him a 10-year probation.

In what appears to be an attempt to side-step the terms of his probation, Belcher partnered with Ryan Deiss to promote products on the Internet again. “Get Money from Google,” “Social Media Blueprint,” and other programs followed.

But after much dogged persistence by Salty Droid, Perry Belcher pulled the plug on all his online businesses, deleted his Twitter account, and announced his “retirement” from Internet marketing. (Or, more accurately, forced retirement.)

Event #2: Eric Graham Fails to Deliver

Eric Graham is known as the Conversion Doctor. He helps people improve the conversion rates of their web sites. In the past, I’ve been impressed with Eric, and even went to an event in Denver specifically to meet him. (That’s where I got the picture at right.)

Anyway, I was surprised to learn that over the last year or two that Eric has continued to make big promises, but — according to the testimony of multiple customers — has not delivered fully on those promises. Worse, he has denied refunds and not honored his own guarantee, which he features prominently in his sales process.

I wouldn’t even have been aware of these issues had not Fred Black written in detail about his own unsatisfactory experiences with Eric Graham. I respect Fred and his work, so I take this issue fairly seriously.

Turns out, Fred is not the only one who’s spoken out against Eric Graham. There seems to be a pattern of negligence. “By the mouth of two or three witnesses every fact may be confirmed.”

Event #3: StomperNet Descends into Chaos

Ken McCarthy (an Internet marketer who has my utmost respect, by the way) introduced Brad Fallon to the Internet marketing community back when I still had a job.

I bought the first “Stomping the Search Engines” program, listened to it in my car, and used what I had learned to build a site that’s been cranking out $20 to $70 a month for more than five years now. The methods described in the program worked for me, so I thought highly of Brad — at first.

Well, Brad went on to partner with Andy Jenkins and formed StomperNet. They did a big launch, claimed to make millions — and from the outside, everything looked peachy.

Here’s what I found interesting: With the exception of giving Brad Fallon his initial credibility, I don’t think Ken McCarthy ever promoted him again. I had always wondered why.

Now I don’t wonder so much.

Andy Jenkins (no saint himself) ended up suing Brad Fallon. They haven’t paid affiliates from the first StomperNet launch. And now Brad has sued his own wife (Jennifer Fallon) over ownership of their wedding favors business. (Oh, they’re getting divorced, too. No surprise there I guess.)

And just so you know I’m not making this stuff up, you can read all about the StomperNet shenanigans on Salty Droid, links to legal docs included. (Warning: Strong language.)

Event #4: New FTC Rules Go into Effect

On December 1, 2009, new FTC rules went into effect. As you may know, these new rules were a backlash caused by “flogs” — fake blogs — being created and multiplied by certain Internet marketers.

The new rules say that if you feature testimonials that include specific results, then you must also prominently describe what “typical” results are. Disclaimers like “Results not typical” are no longer sufficient.

For an in-depth review of the rules, what they mean, and how you should respond, I recommend listening to the Easy FTC Compliance Seminar posted on Robert Skrob’s blog. (There’s also a handy PDF download in case you prefer to read.)

Event #5: Visa & MasterCard Crack Down on Merchants

On January 14, 2010, I received notification from PowerPay (my merchant account provider) that Visa and MasterCard is cracking down on what they consider “brand damaging” business practices.

Behind the scenes, Visa and MasterCard provided merchant account providers with a master list of “worst offenders.” Merchant account providers were told to immediately terminate the merchant accounts of these worst offenders — or face $100,000 fines per infraction.

As you can imagine, faced with $100,000 fines, merchant account providers acted swiftly. And a client notified me on January 16 that the merchant accounts of four major Internet marketers had been terminated. (It’s probably no surprise that three of the four have been targeted by Salty Droid.)

What Does It All Mean?

First of all, let me say that I think there are many Internet marketers who’ve crossed the line and should not be followed, supported, or endorsed. Enough is enough.

Let me also say that I believe there are many ethical Internet marketers who deliver fair value for a fair price — and do not engage in high-pressure sales, deceptive marketing methods, or the outright fraud I’m now aware of.

What this means is this:

• You must choose your mentors and teachers in the online space wisely.

• You must be especially wary of outrageous, hyped-up claims. (If it sounds too good to be true, it probably is.)

• When possible, you should get a second opinion from someone you trust when you’re tempted to spend a large sum of money for an event, coaching program, home study course, etc.

• And, possibly most important of all, you must protect your reputation. Because, in the end, your reputation is the most valuable asset you have.

Internet marketing is not going away. The Internet will continue to be a marketing medium. But how that medium is used will most definitely change — possibly more dramatically this year than ever before.

Ultimately, I don’t think there’s any reason to panic. But you should certainly be proactive about complying with the new rules and making sure you’re dealing with reputable online business owners. (This advice is as much for me as it is for you.)

Really, it all boils down to these three things:

1. Guard your mind.
2. Guard your wallet.
3. Guard your reputation.

Simple, for sure. But as most principles go: easier said than done.

-Ryan M. Healy

P.S. So far, my 4th business prediction for 2010 — “The End of the Internet Marketing Guru as We Know Him” — is happening a LOT faster than I expected.

P.P.S. Would love to get your comments on this post. Were you already aware of these issues? How do YOU think all these changes and revelations will affect Internet marketing?

P.P.P.S. In case you are interested, here are the new merchant account terms as spelled out by Jud Smith of PowerPay:

PowerPay cannot accept merchant applications for products and/or services employing “Negative Option” enrollment, in addition to the following practices:

Marketing models that employ “Free-Trial”, “Deferred Billing” and/or “Shipping Only”. Customers must be receiving a tangible good or contracted service in exchange for charging of payment cards. Incentivized discount offers are acceptable when the cardholder is receiving something in exchange for payment, however we will be unable to support accounts engaging in hidden or delayed charges and ‘free’ offers that are not truly free.

“Cross-Selling” and “Up-selling” business practices. All sales should be directly between the business entities (merchant) processing the transaction and the cardholder, with cardholder authorization for all purchases.

Per Payment Brand guidelines, the use of multiple merchant accounts, billing descriptors and merchant processors may be viewed as an attempt to avoid chargeback monitoring programs and is prohibited. Perceived non-compliance has led to termination of processing relationships. PowerPay will review the business consideration for opening multiple merchant accounts to ensure compliance with Payment Brand guidelines.

Transactions generated from internet traffic and all other lead sources must be managed and monitored for potential fraud using an approved system. Third Party service engagement may be a requirement for account approval.

The FTC has recently published guidelines regarding “Negative Option” enrollment programs and is taking a very aggressive position against merchants utilizing/employing this business practice. Recommendations take in part from the FTC’s website may include but are not limited to the following:

Material terms should be disclosed in a clear, concise manner. Unnecessarily long or inconsistent terms are viewed as an attempt to mislead the consumer.

Terms should be disclosed in a conspicuous manner, clearly placed and labeled on websites in a location that indicates the importance and relevance to the transaction. Fonts and colors must be easy to view.

Material terms must be disclosed prior to completion of the transaction and before a financial obligation is incurred by the consumer.

Customers must provide affirmative consent to any offer, examples include a mandatory “I Agree…” statement checkbox, where the customer is acknowledging the Terms and Conditions of the offer and consents to be entered into continuity program as a result of completing the transaction. Pre-checked boxes do not qualify as affirmative consent.

Merchants must not discourage or make difficult in any way the disclosed cancellation procedures and all cancellation requests must be honored in accordance with the stated terms of the transaction.

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