Legal Remedies For Horrible Internet Marketing
I have a theory that many business people who aspire to get high rankings on the Internet are often getting sold ridiculously ineffective Internet marketing packages with onerous contract terms at high prices. Many of these packages are being sold by very large companies who sound a lot like that large phone book your mother would hand you when you were growing up (if you are my age) which you would use to find the phone number and address of a local business. In this post, I will examine some of the one-sided contract terms of one such third party provider and discuss why such terms should scare people. I will then look at two case studies of what can go wrong once you sign one of these egregious contracts and have problems or disputes with your SEO provider. Lastly, we will consider what options you have if you get taken by an Internet marketing scam.
THE CONTRACT TRAP
Your first defense is to avoid an ugly, one sided contract. Just don’t sign anything you don’t understand. Have a lawyer do a quick review of it. I am going to analyze one such contract. While the language may differ among different contracts, these are clauses that might be in any Internet marketing contract which can make your dispute with the provider virtually unwinnable if you can even afford to get to court.
TERM. The most convoluted aspect of the Internet marketing provider I have analyzed is clause 2, the Term. The language in the contracts I have seen basically says it is a one year contract which if cancelled, requires the buyer to pay the full amount owed. Very few business people have the protection that if they underperform, and the client eventually gets disappointed enough to leave, and can ask for the entire contract price. The term also automatically renews every year unless cancelled in writing within 30 days of the end of the term. It’s almost like getting married to your SEO provider then trying to get a divorce later on. One other interpretation of the language in the contract I have reviewed is for every reported problem that happens, the SEO provider’s attempt to fix the problem restarts the one year term of the contract all over again. As a result, poor performance yields a longer contract. The best Term you can get is one which is cancellable at will. At a minimum, it is worth negotiating for cancellation rights if either side does not perform the basic requirements of the contract.
DOMAIN NAME REGISTRATION – Some Internet marketing companies will register a domain name for you, but they will do it in their name. Now they own your domain name. This is a real nice position to be in if you decide to leave your contract. Feel like changing the name of your website if you ever have a dispute? Feel like building a new website? You should always own your domain name. You are paying for it. Although I have not seen this contract term used in a dispute, it makes your fight impossible to win if your Internet Service provider owns the address for your website which you have been marketing up until the dispute.
CONTROL OF WORDS and CAMPAIGN: You lose all rights or ability to pick the words to describe your practice. Essentially, you are allowing someone who is not is not in your business and does not know your profession to do this for you. They then won’t tell you what words they are using in the finished marketing campaign. You also have often agreed to a set price in your contract to obtain a certain number of clicks. So you have no ability to carefully select words which maybe are less expensive but are more effective in converting prospects into customers.
DISCLAIMER OF WARRANTIES: Beware when your contract says there are no
LIABILITY: You substantially limit your ability to collect damages if there is limitation of damages which excludes delay, consequential damage, literally any other form of damage but in no event will the Internet marketing company be responsible for damages greater than the total value of the contract. Beware of terms which limit the only damages to the value of the contract. This might be a few thousand dollars in a typical contract pay per click contract. The kicker is with this amount of damages, unless you are a lawyer, you can never afford to hire a lawyer to get out of the agreement even if the Internet marketing provider completely fails to provide any of the service they say they will provide. In the end, you will spend more than your damages.
EXCLUSIVE REMEDIES
FORCE MAJEURE. In the contracts I have reviewed, if really bad, catastrophic things happen, the Internet marketing provider is off the hook for performing their contract. But by the way, you still have to pay under the terms of the contract. Even Katrina hits and if you are under water.
Now let’s see how these contract terms play out in two real life disputes.
A DISAGREEMENT ON A PAY FOR CLICKS CAMPAIGN AT MY FORMER LAW FIRM’s WEBSITE
In February of 2008, my former law firm was aggressively pursued by a sales person from a “feet on the street” phone book sounding company which now offers online versions of the traditional yellow pages with lawyer lists and Search Engine Optimizing packages to get your website more visitors. I could not personally attend this sales presentation because of a pre-existing board meeting commitment but had a conference call with the sales representative. I told him point blank that I refused to sign a contract without a video tape testimonial where he would describe on tape what they were offering us which I promised to play in about 10 months at a Pittsburgh legal technology conference I assist in promoting called T-Bolt (The Best Of Legal Technology). Since the sales rep could not commit to a video tape testimonial, I told him this was a deal breaker. My former partner while sitting in the same room in an action of miscommunication then signed a contract with this Sales Rep who had been told by me, the Majority Partner, that we were not interested in signing a deal. (Sorry, this post is not about partner miscommunications, which can make for interesting reading) Two days later I found out we had entered into a $9,000 contract without the required video tape testimonial. It was also the contract I discussed above. My former partner and I immediately attempted to nullify the agreement via letter and email and disputed the validity of the agreement. We made approximately 8 different phone calls and emails challenging the ethics of their approach, requesting they incur no further costs on our web campaign and suggested we litigate the issue if necessary. We still could not get anyone to agree to rescind the contract let alone talk to us intelligently about the issue.
We placed the transaction in dispute with our credit card company and refused to pay any invoices. We said we were willing to litigate and pay any reasonable damages if we were breaching the contract at 2 days into the deal. A month passed and all of our communications were ignored as the buck was passed from department to department at this large company. In the interim, we found a local SEO company which was interested in optimizing our entire website instead of a single home page. Frankly, our discussions on Internet advertising were much more strategic and based on our firm’s goals instead of simply choosing from a menu several different “canned” Internet options involving the number of clicks that would hit our website in exchange for different dollars invested. Then on April 9th, 2008 while surfing the Internet, I noticed two paid for ads for my law firm on page 1 of Google and page 1 of Yahoo. SEE ATTACHED. When the ads links were clicked on, an error message appeared that said the site was not available. My SEO web expert said this result could kill us online as Google would then increase the cost for us run any pay per click campaign to punish us because our website appeared to be unreachable. SEE ATTACHED. I immediately called national Internet company’s District Manager who denied anything to do with the ad. “It must be a ghost ad”. After I said I had kept screen shots of the ad and threatened a full blown PR effort against this company within the legal community both in Pittsburgh and nationally, they agreed to let us completely out of our contract. Coincidentally, the mysterious ads disappeared immediately after we were let out of our contract. My contacts in the SEO field inform me we are the first customer of this particular company to have been released from a contract.
A MORE TYPICAL DISPUTE WITH AN INTERNET MARKETING COMPANY WHERE THE CUSTOMER LOSES
Based on my past experience and interest in this topic, I agreed to assist a small business owner who had entered into an agreement with this same national Internet marketing service. My client owns a spa and has some prior skills with technology. On September 19, 2007 she signed an agreement with this third party Internet marketing company. She correctly provided her contact information on a business card and on her enrollment contract. Nevertheless, the provider failed to transfer this information over to the online posting and instead put her incorrect phone number and “reduced” her hours of operation by starting her hours at 1PM instead of 10AM. In addition, her logo was not listed as clearly as the demonstration postings the sales representative had showed her. Plus, her ranking on their site was much lower than was represented to her. My client attempted on multiple occasions to fix this problem and after a half dozen attempts, finally cancelled her credit card and requested to be let out of the contract. The Internet Marketing company’s response was to threaten to sue her in collections court and impact her credit report.
At this point in time, I was contacted to represent her. When I analyzed the contract above, I found her damages would be limited to the value of the contract. There would be no damages for the possible lost business for her business hours being incorrectly posted for 4 months saying she opened at 1PM instead of 10AM. Then, despite repeated requests to change the hours and the incorrect phone number and address they originally posted on the site, they allowed for no termination without paying the value of the contract. The only remedy upon notice of a problem was the SEO provider could fix the problem AND the contract start date would automatically move to that date. Thereby, by constantly messing up, all the Internet marketing provider was doing was rewarding its own incompetence by extending the date of the contract. My client could not sue for damages because the cost of pursuing a lawsuit would equal the cost of the contract win or lose. This contract is one which a lawyer would have a hard time fixing unless the contract could be invalidated.
We drafted a three page letter outlining every mistake they have made which we sent to them as well as the state Attorney General and the Better Business Bureau. We also told every potential customer we could find about the poor service and one-sided contract we had encountered. The Internet marketing provider finally agreed to issue a credit for the 6 months of poor service and offered an upgrade in service, but refused to let her out of the contract. This, by the way, was the only remedy my client was pursuing. They also separated the SEO services (pay for click program) from the online listing and said there were not problems there so the SEO services would continue as contracted. MY client is now stuck with an SEO contract with a provider they no longer trust with separate terms they did not bargain for. If she does not provide notice on the cancellation date, the contract automatically renews. If she cancels, she owes the entire contract. In addition, her ad is still not correct after 10 months.
WHAT CAN YOU DO?
First of all, be skeptical about any contract up front. If you are evaluating a several thousand dollar agreement which looks ugly, spend a few hundred dollars and have a lawyer review it. At least you know what you are getting into. Google your potential service provider and see if others are upset with their service. Between doing legal and business research, at least you know what you are getting into.
If you have already signed the deal, you might want to contact your attorney general. An attorney general in the state of Washington took steps against an Internet Marketing company getting it to pay a fine and desist from their anti consumer business practices. Another strategy is to turn your $3,000 dispute into a $300,000 dispute. Send an email to the Better Business Bureau. Post a blog posting describing what happened to you. Make presentations at your local chamber of commerce or other networking groups. Tell the company you are in a dispute with that you plan on doing this - not as a strategy to extort a settlement - but to bring to the light of day for others mistakes others might wish to be wary of. This is ultimately how I got out of my contract. To do this, you need to keep records, snap shots of website errors you feel the company has caused, notes from all your dealings with the company, and copies of emails and letters you have sent.
123 Law Group Quoted in International Article on Virtual Law Firms
Karl Schieneman, Esq./MBA was quoted for the Canadian Bar Association’s publication on solo practitioners and small law firms. The article is called “Going Virtual: Will you be up for the challenge” by Daniel Casciato. Click here to read the article about why virtual law firms are growing in the United States.
1-2-3 Law Group On Serial Entrepreneurship Panel
Come hear Karl Schieneman, Esq./MBA and founder of 1-2-3 Law Group speak on August 7th as a panelist on serial entrepreneurship in the Entrepreneurship Thursdays program. This event is being held at Firewaters Grill on Federal Street on the Northshore. The show starts at 5:30PM with singing by the talented Jessica Lee. Interviews start at about 6PM. It is a great opportunity to come meet Karl and talk about all things legal or entrepreneurship. The cover charge is $5 at the door.