So I got this little gem of an email in my inbox this week.

GREETINGS MY NAME IS ANGEL AND I AM THE DIRECTOR OF MEDIA REPRESENTING VISUAL MEDIA IMPACT IN TARRYTOWN, N.Y. I AM EMAILING YOU BECAUSE I SEE POTENTIAL IN YOUR TRAFFICKING DUE TO MY EXPERTISE OF SEARCH ENGINE OPTIMIZING. I HAVE OVER 10 YEARS EXPERIENCE WITH INTERFACE AND COMPUTER DEVELOPMENT AND WOULD LIKE TO RAISE YOUR CAPILIZATION RATES EXPONENTIALLY VIA- SPIDERS AND CRAWLERS AND OTHER COHERENT MECHANISMS AND STRATEGIC MANNERS WITH PAY-PER-CLICKS AND FULL SERVICE MARKETING MOBILE AND I-PAD XHTML APPLETS VIA-PORTABLE DEVICES. CALL ME ASAP! I NEED TO GIVE YOU A FREE CONSULTATION AND SEE YOUR FISCAL TOLERENCE LEVELS. IF AM AM NOT IN MY OFFICE TALK TO JERRY. I WANT TO FLY OR YOU FLY SO WE CAN GATHER PHOTOGRAPHS AND DEVELOP A STRATEGIC PLAN FOR VIDEOGRAPHY.

P.S- I’M PUTTING YOU ON MY FACEBOOK FOR “FREE!”

Wow. I’ve never had anybody tell me they wanted to “raise [my] capitalization rates exponentially via coherent mechanisms.”

It gets worse.

The email above was also accompanied by a voice message:

After introducing himself, “Angel” says he is “reaching abroad in a manner transcontinentally cuz I wanna network with you and I REALLY like you a lot.” After cumbersomely explaining what he does, he reveals he wants to “see my fiscal tolerance level.”

What begins as an over-the-top compliment is really just a poorly disguised sales pitch.

By the way, wasn’t it just this week that I warned you that flattery often precedes an effort to defraud?

Let’s look at all the red flags in this sales pitch:

• It begins with flattery — flattery from a stranger, no less!

• He wants to see my “fiscal tolerance level.” This phrase is designed to get the recipient to feel prideful (“Why, by Jove, I’m a man of means!”).

• He wants to fly out to see me. Again, another element to make the mark feel important.

• He mentions that he’s “put me on his Facebook for free.” Naturally, this is an effort to make me feel indebted so I will reciprocate by calling him back.

Three parts flattery plus one part reciprocity.

Overall, the pitch is perfectly horrid, even laughable.

But it’s a good example of how con men lead with flattery so you will lower your defenses.

Know the triggers and be on your guard. Not all efforts to defraud are as easy to spot as this one…

-Ryan M. HealySimilar Posts:

• Make Your Prospect Feel Special
• Three Business Models Explained
• Video #4: Copywriting Fees
• Answers to Your Most Important Questions About How to Build a Copywriting Business
• How to Spot a Con Man

Everybody is talking about the merits and disadvantages of mixing politics and marketing, and by “everybody” I mean two people in particular.

On Google+ Travis Campbell asks:

Are you willing to put your brand at risk to stand for what you believe in? Aaron Wall does great work, and is someone I’ve learned a lot from. How do you react to this? Is this something you’d consider?

When I saw Travis’s question and the accompanying image, I was immediately reminded of a post I wrote three and a half years ago. In that post, I asked Does Transparency Hurt Business?

Of course, there are many opinions on the answer to this question. My opinion? Transparency is a good thing — even if that means talking about your own mistakes or issues that polarize people.

Taxes, Government & Fraud… Oh, My!

In case you hadn’t noticed, I intentionally talk about things I support and things I disagree with, including bad government policies, excessive taxation, and fraudulent marketing practices.

So a small banner stating “I Support the Occupy Movement” is fairly innocuous, especially compared to some of the things I’ve written about.

For proof I haven’t shied away from “hot button” topics, you can peruse these posts (if you haven’t already):

• How Taxes Kill Business
• Internet Marketing on Life Support
• Why the Government Hates Small Business
• Internet Sales Taxes and Government Fairness

My business seems to be doing fine in spite of my views on business, marketing, and politics.

Actually, that’s not quite correct. I know for a fact I’ve attracted new clients because of my views. And potential clients I may have offended probably would not have been a good fit for me anyway.

“A Narrow Focus on Marketing Stunts Your Thinking”

As luck would have it, Drayton Bird wrote about politics and marketing on Sunday, November 6th, a few short days after Travis had posted his question on Google+.

Apparently, Drayton received some criticism from a fellow speaker a couple weeks ago. This person advised Drayton to stop writing about politics and focus solely on writing about marketing.

Drayton responded by writing a blog post. He titled it “Politics and marketing: why I won’t shut up no matter how much it bores you”.

He writes:

Two weeks ago one of the speakers at EADIM took me aside and made some helpful suggestions. One was that I should stop writing about politics – “I find it infuriating” he said.

He said I should stick to marketing, because that’s what I’m known for and what people want to hear about from me.

I respect his views so I listened, said nothing and thought about it.

He may be right but I don’t think so.

I believe a narrow focus on marketing stunts your thinking. We live in a wider world; everything we do is affected by what politicians do. If you doubt it, consider the current chaos and ask who is responsible.

[...]

Maybe this sort of thing doesn’t interest you and you don’t think it is worth learning from. I disagree. As John Donne wrote, “No man is an island”. Nor is our trade.

As Drayton points out, marketing is not practiced in a vacuum. Rather, it is connected with many other areas of life. We can learn volumes by observing and analyzing what is happening in other fields.

You see, marketing requires you to understand the world in a way most people never will. It requires you to understand human behavior in a way most people never will.

The depth of your understanding of the world and human behavior is based largely on your study of complicated topics like history and government and politics and (dare I say it?)… religion.

What I Didn’t Tell Travis

When I replied to Travis, I never explained why I write about controversial topics. It’s simple: I like to write about things that I get emotional about. That includes subjects most people avoid for fear of its effect on their business.

But I’m not too concerned about the potential impacts on my business. That’s because I feel that writing and publishing ought to be more about changing minds than making a buck.

Sure, you gotta have some money to get by. That’s why I work. But one of my primary motives in blogging is to persuade readers to see things differently than they do now. The money is secondary.

What do you think? Is it ever a good idea to discuss your political or religious views in a business context? Leave a comment and let me know.

-Ryan M. HealySimilar Posts:

• Quick Poll: Which Topics Should This Blog Cover?
• A Little Direct Response Gold
• I Demand a New Tax to Fund My Marketing!
• Big Government Targets Freelancers
• How Taxes Kill Business

Boiler room scams are on the rise, so I feel it’s important for you to know how this type of scam works.

• Step 1: You buy an inexpensive product or accept a “Free plus Shipping” offer from an infomercial or similar marketing medium.

• Step 2: Get a call from a boiler room where you are pitched an expensive coaching or mentoring program.

Now comes a decision point. Do you buy what was offered in Step 2 or not? If you don’t, there is no Step 3. But if you do…

• Step 3: Lose a whack of money. Could be $2,000. Could be $30,000 or more.

This kind of stuff happens every day in America and in the U.K.

Right now, boiler room scams are on the rise in the U.K. The most insidious scam involves persuading retirees and middle-aged investors to buy non-existent shares that are supposedly going to significantly increase in value in the near future.

Most boiler room scams in the U.S. involve capturing a person’s credit card information and then making unauthorized charges. Usually, there is a mysterious monthly charge that is less than $100. These charges can go undetected for months. Once noticed, it is difficult if not impossible to get the charges stopped without canceling the card.

Other boiler room scams use high-pressure sales tactics to get authorization, and then charge the card one time for a large four-figure or five-figure amount.

The victims of these scams almost never get refunds. A rare few are able to get chargebacks, but are forced to waste inordinate amounts of time and energy in order to do so. The majority never go to the trouble and just take the loss.

In Britain’s latest rash of scams, the marks are asked to wire money to a bank, usually off-shore, in order to buy the non-existent shares being pitched. Of course, once money has been wired to another bank, there is no way to get the money back. Once it’s gone, it’s gone forever.

The Telegraph reports:

DH, a Telegraph reader lost £400,000 to such a scam. He was conned by a company that appeared to be genuine – it had an FSA authorisation number and an HSBC bank account, albeit offshore. He has little hope of recovering a penny. [...] The average amount of money lost is £20,000, but the biggest individual loss to date recorded by the police is £1.2m.

The situation in the U.K. has gotten so bad that banks are now issuing letters to their customers warning them of boiler room fraudsters.

Are You on a “Sucker List”?

Boiler rooms usually work off compiled lists of people with similar demographic and psychographic traits. These lists are affectionately called “sucker lists.”

An easy way to get on a sucker list is to do what I described in Step 1 above: Buy an inexpensive product or accept a “Free plus Shipping” offer from an infomercial or similar marketing medium.

Of course, buying an inexpensive product from an infomercial is no guarantee you’ll be put on a sucker list. But it helps if that product is about a business opportunity or has something to do with making money.

This is because boiler rooms prey on vulnerable people who are desperate to make money. Greed is a common factor among those who get taken.

My Personal Experience with Boiler Rooms

I can say from personal experience that I’ve never had a good experience with a boiler room. I’ve spoken with a few, and even paid for some way-over-priced programs back in my early 20s when I was what they call a “hyper responder.”

In every case, the offer being pitched was a course, method, or opportunity for making money.

• The first time, I paid $5,000 for H. Roger Neale’s Fast Flip Real Estate Home Study Course. It was, in my opinion, nowhere near worth that much. I didn’t agree with the methods he taught, so I never used them. A complete waste of money.

• The second time, I bought into an MLM opportunity. It was an investment of about $2,000 or so. Again, I realized too late that I disagreed with the marketing tactics being employed. Fortunately, I was able to ship everything back for a partial refund. I think I lost a few hundred dollars on this deal.

• The third time, I made the biggest financial mistake of my life: I paid $30,000 for five vending machines. Although a boiler room was involved in the initial steps of the marketing funnel, the sale was commenced in a one-on-one meeting after a live presentation.

I began to wise up after this third episode.

So when I sat down to discuss buying the Denver, Colorado, territory for the Glazer-Kennedy Inner Circle business franchises that were first offered at the 2006 GKIC SuperConference in Chicago, I decided against the opportunity. (I have never regretted that decision.)

Why You’ll Give Thousands of Dollars
to Somebody You Don’t Know

Because of these experiences (and a handful of others where I said “no”), I began to catch on to how they were getting me (and many others) to part with large sums of money.

And while there are multiple persuasion tactics being used (authority, social proof, and urgency chief among them), the single biggest persuasion tactic is the use of consistency.

Humans want to be consistent — and congruent — in their behavior. Marketers know this. So the sales scripts they use rely on building small commitments in the beginning so that it’s difficult for you to say “no” in the end.

If you agree in the beginning, you can’t say “no” later without contradicting yourself and making yourself look bad.

So pride gets the best of most people and they plunk down a bunch of cash for an opportunity or coaching service that is not going to improve their life in any way.

Fraud: An Inside Look

If you have a few minutes, I highly recommend you watch this video. It covers many of the tactics boiler rooms use to manipulate their marks.

Take note of how the manipulation occurs. Jim Vitale, the former boiler room sales person in the video above, explains how it works:

• Authority – Authority is established right up front. “Hey, how are you Jim, the first thing I want to do is to grab a pen, I want you to write my name down. (Now I have control. I’m already telling you what to do).” If a person asks too many questions, the authority is reinforced later through the use of what Jim calls a “slap take-away.”

• Social Proof – Jim says that after setting an appointment to talk with a prospect, he’ll give the person references. This is the use of social proof. If other people have had success, then you are more likely conclude that you can, too. Unfortunately, many so-called “references” are being paid by the company. In other words, they are fraudulent.

• Urgency – The phrase “ground floor opportunity” has urgency built into it. If you don’t get in fast, you might get in too late. Urgency is also built into the take-away. It’s common to mention a limited number of areas or territories, and that other people are “waiting in line” for the opportunity to get one. This is urgency created by scarcity.

It’s not that authority or social proof or urgency are inherently bad. But they can be used to manipulate people into making irrational and harmful decisions. This is why they are tools of the trade in every boiler room’s toolbox.

How to Protect Yourself
from Boiler Room Scams

If you find yourself tempted to buy into an expensive business opportunity or coaching program, please protect yourself by keeping these tips in mind…

• Tip #1: Always do your research before making an investment. Search Bing for negative/positive reviews and see what you can dig up.

• Tip #2: If it sounds too good to be true, it probably is. Don’t let yourself be manipulated by promises of easy wealth.

• Tip #3: If you must use a credit card to pay for the opportunity, then do not proceed. Say no and hang up.

• Tip #4: If you must take out a second mortgage to pay for the opportunity, then do not proceed. Say no and hang up.

• Tip #5: If the sales person asks for your credit card limit or how much credit you have available to use, then do not proceed. Say no and hang up.

• Tip #6: Do the math! Figure out how much you could realistically make in the next 3 months. Then cut that number in half. Then halve it again. Does your investment still make sense?

• Tip #7: Plan for the worst case scenario. If you none of the income claims are true, and you never make a penny, will you be able to recoup part of your investment? Can you resell whatever it is you’re buying? If so, what is the going rate on eBay right now?

• Tip #8: Talk to trusted friends and family members about the opportunity or coaching program you’re considering. Get their honest feedback — and take it seriously. The people who love you most are interested in protecting you from making a bad decision.

• Tip #9: Last but not least, never make a decision the same day or even the same week. Give yourself at least two weeks to consider any big investment. After you’ve “cooled off,” you’ll be more rational about the decision.

These tips, combined with the information above, should provide you with a good defense if you ever find yourself on the receiving end of a boiler room scam phone call.

Oh, and one last thing…

Do you have a story or experience about getting scammed by a boiler room? Please share by leaving a comment below.

-Ryan M. HealySimilar Posts:

• 7 Traits Scam Artists Have in Common
• Workers of Iniquity in the Internet Marketing Cesspool
• A $300 Infomercial Marketing Lesson for Free!
• Creating a Common Enemy
• More Thoughts on Writing with Authority

In December, there was one story I followed that completely fascinated me.

It all started with a November 26 New York Times article my dad forwarded. The article was “A Bully Finds a Pulpit on the Web.”

The article detailed the business practices of Vitaly Borker, a man who essentially misrepresented his products and then bullied his customers when they asked for replacement products or refunds.

According to Borker, ridiculing and threatening his customers boosted his bottom line. In his own words (“Stanley” is Borker):

“Hello, My name is Stanley with DecorMyEyes.com,” the post began. “I just wanted to let you guys know that the more replies you people post, the more business and the more hits and sales I get. My goal is NEGATIVE advertisement.”

It’s all part of a sales strategy, [Borker] said. Online chatter about DecorMyEyes, even furious online chatter, pushed the site higher in Google search results, which led to greater sales. He closed with a sardonic expression of gratitude: “I never had the amount of traffic I have now since my 1st complaint. I am in heaven.”

Well, as the saying goes, loose lips sink ships. Such was the case here.

As soon as the New York Times published its exposé, it began to go viral among SEO, marketing, and technology web sites.

Google responded quickly:

By treating your customers badly, one merchant told the paper, you can generate complaints and negative reviews that translate to more links to your site; which, in turn, make it more prominent in search engines. The main premise of the article was that being bad on the web can be good for business.

We were horrified to read about Ms. Rodriguez’s dreadful experience. Even though our initial analysis pointed to this being an edge case and not a widespread problem in our search results, we immediately convened a team that looked carefully at the issue. That team developed an initial algorithmic solution, implemented it, and the solution is already live. I am here to tell you that being bad is, and hopefully will always be, bad for business in Google’s search results.

But the backlash didn’t stop here. Borker’s behavior toward customers went beyond “bad”; it was criminal.

On December 6, 2010 — just 10 days after the initial New York Times story broke — Borker was arrested in Brooklyn where he lives.

While this is an extreme case, there are a few lessons to learn here.

1. Be careful of what you say or do online. Sometimes information travels faster than a rumor in Washington.

2. Bad customer service is always a bad strategy. Boasting about bad customer service is even worse.

3. The Internet never forgets. What you say or do online (even behind “closed doors”) could end up living for decades on the Internet.

4. Never taunt Google. You’ll get slapped from Google’s 1st page of results all the way to Bing.

5. Take an active role in managing your online reputation. It could mean the difference between failure and success online.

-Ryan M. HealySimilar Posts:

• The Fluidity of Google Search Results
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• Your Diminishing Privacy
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Last week, I watched the season premiere of The Middle, a sitcom about a middle-class American family living in middle America.

In the first episode of the second season, Frankie, played by Patricia Heaton, gets on a kick to be more punctual and proactive with her family.

Of course, based on her poor track record, her kids doubt she’ll be able to keep up her new “super mom” regimen. So in a last-ditch attempt to get her kids to believer her, she exclaims, “This isn’t like the juicer! We’re following through!”

As you may know, I’ve written about juicers before. I bought one for my wife last Christmas. Turns out, she hasn’t used it as much as she intended to — which is why I laughed when I heard Frankie’s defense.

I bet there are thousands of people across the country who have lightly-used juicers sitting in their kitchen cabinets. In hindsight, many of those people probably regret spending the money. They might even feel like it was a total waste.

But Should We Blame the Marketers for Selling Us Juicers?

It might sound like a silly question, but I think it’s one that needs to be asked… and answered. After all, the marketers sold us juicers that we’re not using. Isn’t it their fault for getting us excited about buying something that is now not being used? Shouldn’t I be able to claim that the marketers defrauded me?

I don’t think so, not on that basis alone. A customer’s lack of use doesn’t constitute fraud. So long as the juicer will create juice whenever I put fruit in it, then there hasn’t been any deception; I haven’t been defrauded.

So, without any other information, we certainly can’t blame anybody but ourselves. Buying a product that doesn’t get used is not the marketers’ fault. It’s their job to position their product in an appealing way. It’s our job to discern whether or not the product is a good fit for us.

If we fail to do our job as the consumer — to carefully consider each purchase we make — then we’re simply being negligent in our responsibilities.

The same thing applies not just to juicers, but to all products — including information products. If I buy an information product and fail to use it, that alone does not constitute fraud. The real question is, Does the product deliver on its promises?

There Are Two Sides to Every Sale

Naturally, the customer and the seller make up two sides to every sale, but in this case I’m referring to the advertising (A) and the product (P).

If you want to have an average (but successful) business, the equation you want is A=P. When A=P, you have a satisfied customer because you are meeting expectations.

On the other hand, if you want a wildly successful business… one that is far above average… then the equation you’re shooting for is this: A<P. Really, this is just another way of saying “underpromise, overdeliver.” When you deliver an A<P experience, you have a thrilled customer; one who, in time, may go on to become an evangelist.

But what happens if your marketing equation is A>P. This leads to unsatisfied customers. What’s more, if the disparity between your advertising and product is too great (big A, little p), then that’s when fraud is being committed. You are intentionally misleading customers through your advertising — also known as “bearing false witness.”

When A=P, Fraud Can’t Happen

I submit that fraud can’t happen when A=P. And it can’t happen when A<P either. That’s because to defraud is to deprive of by deceit. If there is no deception, there is no fraud.

Unfortunately, it seems many people within the Internet marketing community are throwing the baby out with the bathwater. Their logic goes something like this:

• Some marketers of high-priced products have committed fraud, therefore all high-priced products are fraudulent.

• Some Internet marketers have committed fraud, therefore all Internet marketers are frauds.

• And so forth.

I’m sure you can see the fallacy in the statements above. And yet, for some strange reason, the fallacy persists.

Now, lest you think I’m defending Internet marketers who use deception to make sales, I present…

The Laziness Alibi

In recent years, it’s become popular for marketers to accuse their own customers of laziness. If the customer complains that the product didn’t work, the marketer’s defense may sound something like, “Well, you didn’t take enough action. Or you didn’t follow the process correctly.”

This may or may not be true. But if fraud has occurred, then it is irrelevant whether the customer has taken action or not. If the marketer lied to sell the product, then the marketer is liable for committing fraud — even if the customer never opens the product!

To illustrate this point, imagine if a tire store sold some tires to a customer, and the customer took them home to install them himself. When the customer gets home and tries to mount the tires, he suddenly realizes that each of the tires has a slit in the sidewall; he can’t even air them up!

So he calls the tire store to explain the situation and the manager of the store says, “Have you actually used the tires yet?” The man replies, “Of course not! How can I drive on tires that won’t hold any air?”

You see the problem.

And a marketer who accuses you of not taking action — when the product you were sold doesn’t even work — is just as ridiculous as the imaginary scenario above.

In far too many cases, “The Laziness Alibi” just doesn’t hold up, especially in the upside-down world of Internet marketing.

Consumer Laziness Encourages Fraud

Here’s the bottom line:

Sometimes the problem is with the customers. Just because they haven’t used a perfectly good juicer doesn’t mean they’ve been defrauded.

Sometimes the problem is with the marketer. If he’s intentionally deceived a customer, fraud has been committed, regardless of whether or not the customer ever uses the product.

And, unfortunately, laziness on the part of consumers makes it all too easy for marketers to commit and perpetuate fraud. After all, if you never use a product you buy, you’ll never know you’ve been defrauded.

-Ryan M. HealySimilar Posts:

• How Laziness Sneaks In
• A $300 Infomercial Marketing Lesson for Free!
• What Marketers Can Learn from Hitler
• Basics of Business Growth
• Brandwashed

A salesman representing a brand name car shop knocked on our door to sell us discounted oil changes.

The offer was fairly good as far as offers go. You pay for a certain number of oil changes up front and the cost of each one is substantially below retail.

All good and fine.

But I said no. Not really interested. I told him I plan to keep taking my Honda Odyssey to Ralph Schomp, the dealer I bought it from.

Why I Turned Down a “Good” Deal

A few years ago, my father-in-law started up an auto repair shop with a couple partners.

Dishonesty and all kinds of fraud plague the auto repair business, so their goal was to create a shop where everybody was totally honest — no shenanigans.

And yet in spite of this stated goal, my father-in-law struggled to find honest mechanics.

One of his mechanics kept telling every single customer they needed a new ball joint. Obviously, my father-in-law became suspicious. How could every customer need a new ball joint?

One night he closed up shop and told his best mechanic to come back to work an hour after closing. He didn’t give his mechanic any prior information. All he said was, “Give this car a check and tell me if it needs any work.”

Turns out, everything was fine with the car. It didn’t need a new ball joint at all.

But what “ball joint guy” had figured out is that most people have no idea how cars work, so they’ll believe anything you tell them. If you tell them they need a new ball joint, they almost have no choice but to believe you.

“Ball joint guy” had also figured out that replacing ball joints was quite lucrative. High labor cost, low material cost, so he got to keep a bigger piece of the profit.

Needless to say, they fired “ball joint guy” pronto.

It’s Not Just Mechanics Who Are Dishonest

Unfortunately, that wasn’t the end of the problems my father-in-law ran into while trying to run an honest shop.

Later on, he discovered that one of his partners (who was also the operations manager) had been intentionally overcharging customers and pocketing the difference.

So if the cost of the repair was $100, he’d charge $110 and keep the $10 difference for himself. Over a period of a year or two, he stole around $20K from the till.

Figuring the whole thing out was an accounting nightmare. It took a couple months of secret monitoring to collect enough records and evidence. They literally had to let the partner keep stealing until they had built their case!

Long story short, they arrested the dishonest partner, brought their case against him, and he was found guilty. He went to jail, and he’s still there.

Trust Trumps Price

Based on my father-in-law’s “insider experience,” I’m personally very hesitant to try any auto repair shop. I figure most mechanics are like “ball joint guy” — making up imaginary repairs that put more money in the mechanic’s pocket.

But I feel good about Ralph Schomp. They’re not the cheapest, but they’ve provided consistent quality service. They honor their price quotes. They always throw in a complimentary car wash. And they treat everybody with respect.

It’s one of the best dealerships I’ve ever done business with (or even visited).

So the brand name company wants me to buy cheap oil changes from a door-to-door salesman? It just seems like a gimmick to get me into the repair shop where they’ll try to get me to pay for expensive, imaginary repairs.

-Ryan M. HealySimilar Posts:

• Auto-Tune Your Sales Copy!
• Results of the Kindle Marketing Experiment
• Can TV Grow Your Business?
• Does Transparency Hurt Business?
• What’s Worth More than $970.50 an Ounce?

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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During my career as a freelance copywriter, I’ve encountered a few exceptional negotiators and a handful of con men.

How do you spot a con man? First, it helps to know the definition.

According to Princeton’s WordNet, con man is short for “Confidence Man: a swindler who exploits the confidence of his victim.”

With that in mind, here are three traits to watch out for.

Flattery

This is the first and foremost thing to look out for. A compliment is normal. Flattery is not.

Whenever somebody flatters me, I watch my wallet. Flattery is normally a prelude to an unusual or out-of-the-ordinary request.

The psychology works like this:

Flattery makes you feel all puffed up and great about yourself. But this is a set up so you’ll agree more easily to whatever request comes next.

You are more likely to make a bad decision when you are feeling overconfident. Flattery is an easy way to build your confidence.

“…a flattering mouth works ruin.” Proverbs 26:28

Bragging

A person who brags is not necessarily a con man; he could just be insecure.

It’s the type of bragging that matters.

Some people brag about how good they are at a specific skill. This is your garden variety braggart, relatively harmless.

Others brag about their good character or how much money they give to their church, poor people, etc. This is your con man variety of braggart.

It is designed to get you to lower your guard… to get you thinking about what a good person it is you’re dealing with. Next thing you know, the con-man lowers the boom.

Watch out for people who brag about their good character.

“But when you give to the needy, do not let your left hand know what your right hand is doing, so that your giving may be in secret.” Matthew 6:3,4

Unrealistic Promises

A common negotiating tactic is to build neediness in the other party.

For instance, a potential client might tell you that there’s “huge” potential, and that you could make “tens of thousands of dollars.”

He’s building your confidence to the point where you believe this future pay-off will really happen.

The next thing he’ll do is ask you to work for free for an indeterminate amount of time. If you believe the vision he’s painted, you might agree to unreasonable terms, work hard for months… then never see a single cent.

“Like clouds and wind without rain is a man who boasts of gifts he does not give.” Proverbs 25:14

Safeguard Yourself

A con man uses all kinds of techniques to build your confidence in yourself and in him. Once your confidence is high enough, you’re in a vulnerable position. That’s how you get conned.

Ask yourself: “Am I feeling overly confident? Why?”

Ask yourself: “Why is this person flattering me? Why is he telling me all about his good deeds? Why is he promising me a huge pay-off somewhere down the road?”

Answer these questions. Be honest with yourself. Don’t be taken in.

-Ryan M. Healy

P.S. The truth is finally coming out about certain marketers who do business on the Internet. Here are three posts you may be interested in:

• Internet Marketing Retires
• Internet Marketing on Life Support
• 7 Traits Scam Artists Have in Common

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