Scams

All posts tagged Scams

Personal Finance blogger Lazy Man & Money is being sued by a multi-level marketing company called MonaVie that sells a very expensive juice. The crux of the matter is that Lazy Man is highly skeptical of the claims the company makes about the product and the company is trying to shut down his freedom of speech on the basis of a very flimsy trademark infringement case.

While I am no lawyer and the extent of my legal knowledge is limited, I have been sued, involved in lawsuits and have been sent threatening letters that required legal opinion. Did I say I was sued – that’s only partially correct. The company I had a minority ownership stake in was sued.  My friends and I started an internet telephony company together to sell prepaid calling cards and pinless dialing services. When we started it several years ago, we were tired of paying outrageous per minute fees for international calls and we just wanted to make free telephone calls. We also wanted to make some money off of it and after raising about $30,000 and co-signing $75,000 worth of loans for telecommunications equipment we realized we didn’t have any money left for marketing. So we deliberately decided to infringe on an existing trademark of a foreign company that does not do any telephony or telecommunication business in the USA. We knew we were going to get sued in a year but since we didn’t have any money left we didn’t really care.

We were able to use the goodwill of the foreign company to bootstrap our small outfit to the point where we hired about a dozen people in India to do all the back-end work.  A year later the company sent us a cease-and-desist letter and we complied and changed the name. However, I didn’t know that the main partner re-inserted the company in to the website after a month or so. About 6 months later, the company came back and sued us for trademark infringement, all our domain names, $50,000 and 30% royalties on all income.  When you fight a legal battle against people with deep pockets, you usually lose! Especially when you are wrong. Long story short we lost our domain name and we settled for $1,000. Was it worth it? In terms of return-on-investment, yes. There’s no way we could have gained that sort of traction with a $1,000 marketing budget. But would I do it again – definitely not. However there is a lesson here, the same lesson I learned from working for Michael Robertson a few years ago – you should never back down from a good fight.

On to the next story. A few years ago, I had put down a deposit on a spec home in Florida. It was a small deposit and it was pure speculation. If the home prices increased, I would close on it else I would walk away from it and my deposit. Unfortunately for the builder, the market turned sour and it seems everyone was walking away from their deposits. So I got a letter in the mail saying that if I didn’t close on the home he would sue for damages on various technical aspects of the contract.  I showed it to my lawyer and he said its a shake-down. His advice was to ignore the letter since the cost of pursuing this line of reason was too expensive for the builder.  He was right. Unfortunately, I found out the hard way that this goes both ways. Someone I know embezzled money from me and some investors by arranging  a sale of assets to an out-of-state entity. He set up a dummy corporation with the same name and deposited the check from the buyer into that account. He was then nice enough to wire us some of the money but then he skipped town with the rest. After talking to lawyers and the DA’s office in that town we realized that it would probably cost us between $25,000 and $50,000 to get a judgment against him, and if he’s spent the money, we’re out of luck! The lesson here is that suing people can get to be very expensive.

The third story is about me and a group of investors suing a group of real estate developers for deliberately misleading investors on an investment. The gist is they lied and withheld materially important information. Obviously we formed a group and sued them all. 1 of them settled for a third of the amount owed (plus interest and legal fees), 1 of them went underground and the 3rd is claiming she has no assets. The legal cases involved the last two are still underway so I can’t really say much about it except that suing people really does get very expensive, especially when you’re paying an attorney $375/hour to fly to another city and take a deposition!

So what’s my 2 cents on Lazy Man’s case? I don’t think MonaVie has a strong case and they know it too. Otherwise they would be wasting time with multiple cease-and-desist letters, they’d just sue him. Secondly, I think its just going to create more bad publicity for the company as multiple bloggers write about this and link back to Lazy Man’s site (boosting his rankings in the search engine for the search term – MonaVie is a scam). However, they’re obviously well capitalized so they’ll probably take this a lot further than they should. If it was me, I’d just pay Lazy Man to advertise on his site. That would just make him lose credibility in the eyes of the “faithful” MonaVie followers.

Please go visit Lazy Man’s site and try to link to it with the word MonaVie in the anchor text! Or if you want some entertainment, go visit Help You Sue.

Recently someone of Digital Point Forums was selling the code for a video blog. I thought I’d give it a shot. I sent him the money via Paypal and he sent me a link to download the code.

Unfortunately, the code was incomplete and didn’t work at all. I sent him several emails asking him to fix the code. At his request, I even set him up with an FTP username-password so he could copy the code over himself. Apparently I’m not bright enough to unzip a file and upload it to my own server!

He never uploaded any code and he stopped responding to my emails.

Anyway, after more than a week I got tired and contacted Paypal. I opened a dispute and they sent the seller an email which he ignored. After 2 days I escalated the dispute to a claim.

But Paypal denied the claim! Here’s their canned response:

You have chosen to escalate your dispute to a PayPal claim. By ending communication with the seller, you are asking PayPal to investigate the case and decide the outcome. As part of our investigation, PayPal reviewed any communication you may have had in the Resolution Center.

Our investigation into your claim is complete. As stated in our User Agreement, the claims process only applies to the shipment of goods. It does not apply to complaints about the attributes or quality of goods received. Therefore, we are unable to reverse this transaction or issue a refund.

———————————–
Transaction Details
———————————–

Transaction Date: Feb 14, 2008
Transaction Amount: -$11.00 USD
Your Transaction ID: XXXXXXXXXXXXX
Seller’s Transaction ID: XXXXXXXXXXXXX
Case Number: XXXXXXXXXXXXX
Seller’s Name: syed sinofer
Seller’s Email: [email protected]

Luckily it wasn’t a large amount, but it still left me pretty pissed. I suspect that the seller had bought a piece of software that generates a video blog and was just zipping up the resultant code and illegally reselling it. By its inaction, Paypal is condoning these fraudulent sales. Basically you can sell anyone complete crap and Paypal won’t do a damn thing! So long as you actually send the buyer something, you’re safe to continue scamming people!

Until today I was under the impression that Paypal would protect me against fraudulent sellers. Doesn’t seem like this is the case.

Several people have asked me whether Timeshares are a good investment or not.

Some of the reasons the Timeshare companies give are

  1. Its a good investment. If you get title to the property as a fractional owner, you get all the tax deductions of home ownership.
  2. The cost of your vacations never goes up. So you beat inflation.
  3. You can exchange you timeshare with other people in different parts of the world and live for free whenever you go on vacation.

On the surface it sounds really good. A while ago I had the misfortune of being conned into attending one of these in Vegas in exchange for some free show tickets. The reason they can afford to hand out $200 worth of free tickets is because they use high-pressure tactics to persuade you to buy an overpriced condo.

Lets do the math…

They wanted $35,000 for a 1 week rental of a bedroom condo. So basically they took a $300,000 condo and sold it for $35,000 x 52 weeks = $1.825 million!!!!

Plus you pay an annual $850 “maintenance” fee. That doesn’t sound like putting a cap on the cost of my future vacations, since this maintenance fee will go up with inflation.

Also, in order to exchange you timeshare with other timeshare owners you needed to subscribe to a service that charges around $185/year. Out of kindness, this fee was waived for the first year and I would get 2 round trip tickets to anywhere in the world plus a 7 day fully paid for vacation to Cancun.

Hmmm….if I invest the $35,000 at 8%, thats $2800. Add $850+$185 to that and I get $3835. I don’t think I’ve ever spent that much money for living accommodations on a 2 week trip anywhere in the world. Granted, I didn’t stay in 5 star hotels, but I’m pretty sure you can rent a condo for about $1,000/week anywhere in the world in peak season. And if you can get more than 8% return on your investments, you’re losing even more money.

I think its a big scam. The presentation I went to was offered by the Hilton. They had 4 huge towers on a tiny postage stamp of a lot. I think there were probably 400 condos on 1 block of land. Thats like selling 1 building for around $720 million!!!! DAMN, I need to get into business!

But if your heart is still set on “investing” in a timeshare, make sure you check-out the resale market at my Timeshare store.