January 21, 2008

The Anatomy of a RipOff Report Lawsuit

E-Commerce SEO

UPDATE September 27, 2010: Response From RipOff Report Below

May It Please the Mozzers,

Last week, there were several excellent posts elucidating the many ways RipOff Report violates Google’s Terms of Service, and yet manages to stay on top of the Google search results pages. Rand, Chris Bennet, Will Critchlow, and Andy Beal did a great job of bringing RipOff Report out in the open for a serious discussion.

It is no secret that RipOff Report has been widely and universally accused of promulgating defamatory content and then extorting money from the victims of the very libel it publishes. This business model has made RipOff Report the subject of many lawsuits. In fact, I have at least seventeen listed in the Appendix at the end of this post.

Despite the ubiquitous outcry against RipOff Report, it appears to have survived most of the legal challenges unscathed, leaving it free to carry on business as usual. RipOff Report claims never to have lost a lawsuit.

Is it true that RipOff Report has never lost a lawsuit? Is this a failure of the legal system? Are the allegations unfounded? If there is truth in the allegations, then how is the system going wrong? Why can’t RipOff Report be held responsible for its conduct?

As promised, I want to spend Legal Monday digging into these issues. In order to accomplish this, we must take a trip together through RipOff Report’s sordid legal history. In doing so, we will gain a basic understanding of the following:

•    Defamation
•    The Communications Decency Act (42 USC Section 230)
•    The Racketeer Influenced and Corrupt Organization’s Act (“RICO Act”)
•    Extortion

Let’s get started!

I. Is It True That RipOff Report Has Never Lost a Lawsuit?

Yes and no. It’s true that none of the cases against RipOff Report has gone to trial. I have created an appendix of cases at the end of this post that indicates the status of each case. There are a lot of reasons for why RipOff Report has "never lost a case."

First, RipOff Report has had pretty good success in getting cases alleging mere defamation dismissed immediately. We’ll see why this is so below.

Second, RipOff Report sometimes has failed to appear to defend a lawsuit against them. When this happens, a default judgment is entered against RipOff Report. For example, RipOff Report failed to respond to a lawsuit in Canada and another one in the Caribbean. Thus, it ‘lost’ those cases, but it doesn’t really count because RipOff Report just gave up and no one ever had to hold a trial.

Third, RipOff Report, like most civil defendants, has settled many cases. When a case settles, the terms of the settlement are not public and it never goes to trial. Thus, it’s very difficult to determine who “won” when the parties settled.

Finally, there are several cases still pending. It is too early to tell how these cases will come out.

II. Why Does RipOff Report Continually “Get Off the Hook” for Spreading Lies?

First, we do not know if RipOff Report has ”gotten off the hook.” Many cases have settled and the terms of those settlement agreements are unknown. It’s entirely possible that significant amounts of cash changed hands and we will never know about it.

For example, Hy Cite Corporation settled its lawsuit with RipOff Report and its negative reports are now out of the title tag and below the fold. (I won’t link to the page, but you know where to find it.) Thus, RipOff Report clearly compromised on that issue.

⇒ Isn't It Illegal to Spread Lies About Someone? What Exactly is Defamation?

In its most general form, defamation is a false statement of fact that is harmful to a person’s reputation. Defamation is defined by each state individually, so your local jurisdiction will have slight variations, but this is a pretty good general definition. For more information about defamation, check out the Electronic Frontier Foundation.

Many, many plaintiffs in the cases against RipOff Report below made the mistake of accusing RipOff Report of posting defamatory content.

⇒ How is Bringing a Defamation Case a Mistake? Isn’t That Exactly What RipOff Report is Accused of Doing?

Well, yes. But thanks to a law known as The Communications Decency Act (“CDA,” 47 USC 230), RipOff Report cannot be sued for posting defamatory content written solely by its users. It's a different story for content that it creates.

⇒ Is RipOff Report Exploiting Some Kind of Loop Hole?

Nope. Most of us benefit from the Communications Decency Act. It makes the Search Engines and Web 2.0 function. We want users to interact with our sites without having to worry about being sued over something a user did. Sooner or later, some crazy person is going to write something on your site and you are going to be so happy for the Communications Decency Act because you’re not responsible for the crazy person’s conduct.

⇒ Why I Love the Communications Decency Act: Don’t Blame the CDA for RipOff Report’s Success

I’m going to be honest here. As someone who is in charge of handling the legal issues for a website with vibrant conversations driven by user contributions, I am relieved that the CDA exists. Without the CDA, SEOmoz would either have to independently review and investigate the accuracy of every comment posted to the site, or simply refuse to have any third party content altogether. Goodbye comments! Goodbye member profiles! See you later, YOUmoz! SEOmoz as we know it would not exist if it weren’t for the CDA.

⇒ Website Owners Are 100% Responsible for Content That They Have Created

I am an employee and I am posting this content. Thus, SEOmoz is responsible for everything contained in this post. However, SEOmoz is not responsible for your comments. (phew!)

⇒ Website Owners Risk Losing Immunity When They Alter, Develop, Collaborate, or Change User-Generated Content

It makes intuitive sense that when a website owner starts to change user-generated content, he should no longer be allowed to throw up his hands and claim no responsibility for the content.

The unresolved question for courts is where the line is between creating and editing. A certain amount of editing (for spelling, grammar) would not cause a website owner to lose immunity. However, substantial edits that affect the meaning of the user-generated content may cause the website owner to lose immunity. Thus, SEOmoz could lose immunity from suit by soliciting, creating, developing, and over-zealously editing your comments.

Similarly, RipOff Report cannot be held liable for content created by its users. Strangers can write just about whatever they want on RipOff Report and so long as Magedson (the manager and alleged controller/operator of RipOff Report)³ does not interfere, he cannot be liable. However, what if he substantially alters user-generated complaints? Is he responsible for titles containing defamatory language?

⇒ How Much Does a Website Owner Have to Change a Third Party’s Content Before He Can Be Held Liable?

No one knows right now. The statute creates very broad protection for website owners. However, if a website owner does enough editing to change the meaning of user-generated content, then immunity may be lost. There are several big cases in the pipeline that may help define this boundary in the next year or two. In the meantime, if you want to know more, you can check out the CDA immunity provisions here.

⇒ If RipOff Report Writes the Negative, Defamatory Titles and Stuffs Them With Keywords, Is That Enough to Make Them Liable for Defamation?

Arguably, yes. There is no agreement on this right now. Several courts have stated that if the plaintiffs can get evidence that RipOff Report is drafting defamatory titles, then there is a viable defamation claim and no immunity. Thus, if you’re going to sue RipOff Report, it is very important to allege that the website created and/or substantially altered the meaning of the content.¹ You need to allege facts that get you around the CDA immunity provisions in order to avoid being thrown out of Court.

There is more than just speculation that Magedson was involved in altering reports. The Declaration of Dickson Earl Woodard Deposition contains the sworn testimony of the Plaintiff's former employee² and states repeatedly that Magedson drafted fake complaints and manipulated search engines:

Attorney: So what I've gathered from all of your testimony, Dickson,
is that Ed Magedson has indirectly told you that he is responsible for
making posts about companies. He will make these posts.
Mr. Woodard: Yes.
Attorney: And then he will manipulate the search engines; is that
true?
Mr. Woodard: No question about the search engines. That's where the money is made.

In his Response to Woodard's testimony, Magedson blames Woodard for making the fake complaints.

Magedson’s deposition also throws his credibility into doubt. Read excerpts of his testimony and determine for yourself whether he’s telling the truth when he states that he did not write the email asking a disgruntled employee to write an inflammatory post about his employer.

III. The New [old] Approach: Next Generation Plaintiffs Are Focusing on RICO Act Claims Based on Extortion, Rather Than Defamation

Because the CDA bars RipOff Report from liability for many civil suits, attorneys are shifting their focus. In addition to defamation, attorneys are suing RipOff Report for violations of the RICO Act. These next generation plaintiffs allege that RipOff Report’s conduct is extortion and amounts to racketeering.

⇒ What is the RICO Act?

The Racketeer Influenced and Corrupt Organizations Act was designed to bust up organized crime like the mob. The Godfather, as everybody knows, never did his own dirty work. He had people to take care of his unlawful business. Thus, it was not easy for law enforcement to pin him with money laundering and murder because he wasn’t doing it himself. After years of mafia domination, the legislature wised up and finally made a law that made it illegal to be the head of an organization that conducts a pattern of unlawful activity. It didn’t matter anymore if the Godfather didn’t pull the trigger. Because he was in charge of the organization that made the murder happen, he could be found liable for a RICO Act violation.

Plaintiffs are now applying this same strategy to RipOff Report litigation.

⇒ The RICO Act is a Favorite with Plaintiffs Because it Allows for Punitive Damages

There is another brilliant thing about RICO Act claims that make them a very attractive avenue to plaintiffs’ attorneys: Punitive or treble damages. If you are found liable of a RICO Act claim and you extorted $50,000.00, the Judge can order you to pay three times that amount! Most civil lawsuits (like defamation, for example) only allow plaintiffs to recover the amount that they were actually damaged. The ability to recover punitive damages is what makes RICO so suave, my friend.

⇒ What Does a Plaintiff Have to Prove to Hold RipOff Report Liable for a RICO Act Violation?

The most common RICO claim makes it unlawful for a person to manipulate an enterprise for purposes of engaging in, concealing, or benefiting from a pattern of racketeering activity. In order to prove a “racketeering activity,” you must essentially prove a crime within a crime. Extortion can serve as a “racketeering activity” under the statute.

In the case of RipOff Report, a plaintiff must demonstrate that Magedson manipulated an enterprise (RipOffReport.com) for the purpose of engaging in a pattern of extortion.

Note: If you want to learn more about the RICO Act, I commend to your attention to Mr. Jeffrey Ernest Grell’s RICO Act in at Nutshell. It’s a thorough review and will tell you everything you want to know and more about RICO.

⇒ What is Extortion: When is it Wrong to Ask Someone for Money?

RipOff Report expressly states on its site that it is not engaging in extortionate conduct. This begs the question, what is extortion? Is paying someone tens of thousands of dollars in addition to a monthly fee to help you communicate with your angry clients the price of good PR, or extortion?

Generally, the term "extortion" means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right. In other words, you are committing extortion if you are wrongfully threatening someone to give you money or property. But it’s not always easy to determine whether the use of force is “wrongful.”

The good news is that the courts have already determined that taking money from a person in order to prevent him from being defamed is extortion. As an example, here's a kooky and highly entertaining case involving the criminal underbelly of the Church of Scientology that's surprisingly on point.

Further, several courts have ruled that the facts alleged against RipOff Report could amount to extortion. The courts in Hy Cite and Cambridge Who’s Who ruled that the allegations in the plaintiffs’ Complaints could result in a finding of extortion against RipOff Report.

⇒ Does the CDA Grant Immunity from a RICO Act Claim as Well as a Defamation Claim?

The CDA grants immunity against more claims than just defamation. For example, the CDA has granted immunity from suits involving negligent misrepresentation, interference with business expectancy, breach of contract, intentional nuisance, violations of federal civil rights, and emotional distress. However, the CDA does not grant immunity for federal criminal law, intellectual property law, and electronic communications privacy law.

The issue over whether the CDA grants immunity from RICO Act claims has not been addressed by a court yet. So far, none of the RipOff Report rulings state that the CDA grants immunity from RICO charges. However, none of the courts have found that the CDA does not grant immunity, either.

The Hy Cite Court ruled, “Here, Defendants operate a website. Plaintiff alleges that Defendants create and solicit false and defamatory complaints against businesses, but will cease this conduct for a $50,000 fee and a $1,500 monthly retainer. Remedying the publication of false and defamatory complaints, which Defendants allegedly created and solicited, does not give Defendants the right to collect fees. Plaintiff has properly alleged threatened extortion.”

Thus, so far, courts are not bothered by the implications of the CDA on the RICO Act. I for one, hope it stays this way.

IV. Where RipOff Report Litigation Should Go from Here

The steady stream of lawsuits against RipOff Report have not slowed down and there is no indication that they will. Plaintiffs have become more sophisticated in order to avoid being kicked out of Court by the Communication Decency Act’s broad immunity provisions. Plaintiffs are being sure to plead that RipOff report was directly responsible for creating defamatory content, not just publishing it.

Because a lot of us have much to gain from a strong CDA, I hope that plaintiffs will continue to press the RICO/Extortion combo. This will direct the conversation away from the CDA and focus it on the extortion elements of the case. This is appropriate because this is what makes RipOff Report’s alleged conduct so reprehensible. If RipOff report were just providing a neutral and organic platform to publish good and bad comments about businesses, no one would be complaining.

What transforms this site from a consumer advocacy site to a menace (allegedly) is its aggressive violations of Google’s terms of service to increase its rankings, and concomitant demands for exorbitant fees to write a few rebuttal posts. It is not the defamatory nature of the posts that are the problem. After all, those are all over the web and probably always will be. The problem here is the apparent intent to damage a person or business’s reputation without regard to the truth of the matter, only to re-victimize the person or business by charging them exorbitant fees.
The legal theories have come a long way. A lot of cases are in aggressive investigation phases right now. I’m hoping that some plaintiff out there will take this case “all the way” so that the public can finally have full access to the evidence and testimony necessary to make a fair decision. If the allegations against RipOff Report are true, I believe the RICO Act is the best method for holding RipOff Report accountable.

Thank you for taking the time to read this Anatomy of a RipOff Report lawsuit. I hope you have found it interesting and useful. As always, I welcome your questions and comments. In particular, please let me know if you know of any cases that are not included in my Appendix below.

Very truly yours,
Sarah

Appendix of Cases

I thought it might be useful to list the cases involving RipOff Report that I have located so far and indicate their status. If anyone knows of others, please let me know so I can add it to my list. For example, I know there is a Canadian case that I’ve left out here. For your information, Xcentric Ventures, Badbusinessbureau.com, RipOffReport.com, and Edward Mageson are all the same party.

Ottis v. Magedson—Filed October 18, 2007, in the Nebraska District Court under cause number 4:2007cv03251. Mr. Ottis is asserting both libel and RICO Claims. Case Pending.

Children of America v. Magedson—Filed February 2007, in Maricopa County Superior Court in Arizona under cause number CV 2007-003720. The Court ruled that CofA may have a claim against Magedson for creating and developing complaints and/or titles to complaints. The case is still pending. If anyone has further information about this case, please let me know.

Xcentric Ventures v. Stanley—Filed May 20, 2007, in Arizona’s District Court under cause number 2:2007cv00954. This is an unusual case because ROR is the Plaintiff. Further, one of the named defendants is The Defamation Action League. How cool does that sound? There are some very interesting documents in the docket here. My favorite is a police report filed by Magedson regarding threatening letters that he received. He drops the complaint once the police begin investigating. You be the judge: Does it sound like Magedson made the whole thing up? The case is still pending with discovery (disputes) active.

Global Royalties v Xcentric—Filed May 10, 2007, in Arizona’s District Court under cause number 2:2007cv00956. The case is still active and pending a decision by the 9th Circuit ruling on the Roommates case (which will interpret the CDA). UPDATE: The case was dismissed in February 2008. The District Court granted ROR's Motion to Dismiss, ruling that mere allegations that ROR encouraged third parties to create defamatory postings was not sufficient to get Global Royalties around the broad CDA immunity. Notably, the question of a RICO act violation was not before the Court. Instead, the Court ruled consistently with prior CDA cases stating that if a third party wrote the content, ROR is not liable for defamation. This is true even when the original poster of the defamatory content later admits that the statements are not true and asks ROR to remove them. The Court states, "Unless Congress amends the statute, it is legally (although perhaps not ethically) besides the point whether defendants refuse to remove the material, or how they might use it to their advantage." You can read the Court's entire Order here.

GW Equity v. Xcentric—Filed June 1, 2007, in Texas Northern District Court under cause number 3:2007cv00976. This one is the source of some great declarations by a former employee who throws Magedson under the proverbial bus. Magedson’s only retort is that the employee was lying and that it was actually the employee inventing these stories. The case includes a RICO claim. The case is still pending and discovery is active.

RSA v. Rip-OffReport.com—Filed April 23, 2007, in the New Jersey District Court under cause number 2:07cv01882-HAA-ES. RSA also sued Google in this case. That was a mistake. Case voluntarily Dismissed in August 2007. The report is still online and there is a rebuttal from the owner.

IGIA v. Xcentric—Filed January 2007, in the Southern District Court of New York under cause number 1:07-cv-00222-SAS-KNF. Complaint alleges RICO Act and Defamation claims. Default Judgment entered on December 20, 2007. The Defendant did not appear and defend the lawsuit.

Manchanda Law Offices v. Xcentric--Filed July 25, 2007, in the New York Southern District Court under cause number 1:2007cv06708. Originally failed to plead RICO, but amended the Complaint in October 2007 to include a RICO claim. The lawsuit was never served and was withdrawn by the Plaintiff in November 2007. The negative “reports” are still on Ripoff Report.

Magedson v. Sharp—Filed February 2007, in Maricopa County Arizona State Court under cause number CV2007-001968. The case is still pending. If anyone has further information about this case, please let me know.

Energy Automation Systems v. Xcentric Ventures—Filed November 2, 2006, in Tennessee’s Middle District Court under cause number 3:2006cv01079. Recently Settled.

Cambridge Who’s Who Publishing v. Xcentric—Filed December 11, 2006, in New York’s District Court under cause number 2:2006cv06590. Settled January 16, 2008.

Magedson v. Federated Financial Services—Filed October 2005, in Maricopa County Arizona under cause number CV2005-015552. Case dismissed December 2005. If anyone has further information about this case, please pass it on.

Hy Cite v. Badbusinessbureau.com—Filed December 11, 2004, in Arizona District Court under cause number 2:2004cv02856. The plaintiff amended its Complaint to include defamation, RICO Act claims, and trademark infringement. The Court dismissed the trademark associated claims, but ruled that the RICO Act claims and the claims that Magedson authored and/or edited defamatory statements can go forward. The case includes a thoughtful and well-written Order authored by Judge Earl H. Carroll going through the legal arguments and defenses. Surely, this well-reasoned order created the impetus necessary for the parties to settle in May 2007. Interestingly, Hy Cite is still listed on RipOffReport.com, but unlike other rebuttals to complaints, the rebuttal appears in the title and above the Complaint. I speculate that this could have been part of the settlement terms. [Note: Hy Cite originally filed in Wisconsin. However, that case was dismissed because the Wisconsin ruled that it didn’t have jurisdiction over RipOffReport.com et al.]

Whitney Information Network v. Xcentric—Filed January 27, 2004, in Florida’s Middle District Court under cause number 2:2004cv00047. This case is helpful for providing evidence that Magedson solicited reports designed to harass businesses. See document 158-2, which is an excerpt from a deposition with Magedson in which he discusses an email where he invites a disgruntled employee to “post something or part of the e-mail below? This would be great, and it would definitely piss them off!” UPDATE: This case is now dismissed. In February 2008, the District Court dismissed this case after Ripoff Report filed a Motion for Summary Judgment. The only claim before the Court was defamation. There was no RICO Act violation alleged in the Complaint. The Court ruled that RipOff Report cannot be held liable for defamation by having created the drop-down menu of descriptions (such as "scam" and "rip off") from which the person filing the report chooses to describe his or her report. In other words, drop down menus don't make you an author. The Court noted that Ed and other RipOff Report employees submitted signed statements indicating that they had never authored a report. The plaintiff did not submit any evidence that RipOff Report authored the reports at issue in the case. Thus, the Court held that the case was dismissed because there was no evidence that RipOff Report authored the reports at issue in this case. You can read the Court's Order here. Also, you can read Eric Goldman's summary here. While looking for the Court's order in this case, I found the transcript from Ed Magedson's deposition taken back in August 2007. I'm sorry it is broken up into many many pieces. I'm going to list them here for those who are interested. Parts 1-9 are the deposition and index; the remaining parts are exhibits. Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8, Part 9, Part 10, Part 11, Part 12, Part 13, Part 14, Part 15, Part 16, Part 17, Part 18, Part 19, Part 20, Part 21, Part 22, Part 23, Part 24, Part 25, Part 26, Part 27, Part 28, Part 29, Part 30

George S. May Intl v. Xcentric—Filed September 15, 2004, in Illinois District Court under cause number 1:2004cv06018. Agreed dismissal in February 2007.

Pritchard v. Magedson—Filed April 14, 2004, in the Western District of Pennsylvania under cause number 2:04-cv-00567-JFC. Case closed on Plaintiff’s Motion on May 2004.

Leavenbaum v. Xcentric—Filed October 2004, in Maricopa County Superior Court for the State of Arizona under cause number CV2004-020368. Case closed on October 2005 by an Order on Dismissal. If anyone has further information about this case, I am curious.

Alyon Technologies v Badbusinessbureau.com—Filed 2003 in the Eastern Caribbean Supreme Court In the High Court of Justice Federation of Saint Christopher and Nevis Saint Christopher Circuit under claim number SKBHCV2003/052. Default Judgment entered on July 4, 2003 for $27,100,932.00 because the defendants failed to appear and defend themselves in the suit.

MCW v Badbusinessbureau.com—Filed December 2002, in the Northern District of Texas District Court under cause number 3:06cv0179. There is a valuable opinion from this unpublished case that states Magedson is not entitled CDA immunity to the extent that he is developing and creating “report titles, headings, and some of the defamatory messages posted on the websites.” Case closed and the report is still online with no rebuttal.

Magedson v Village Voice Media--Filed January 31, 2008, in Maricopa County State Court under cause number CV2008-002416. Unfortunately I don't have access to the Complaint that was filed. However, I imagine that Magedson is suing because of this article written in the Pheonix New Times News. Ironically, he may be suing the news paper for defamation-related claims. If anyone has a copy of this Complaint, please send me a copy. UPDATE: ROR write defensive letter about filing this case.

¹It was brought to my attention on March 21, 2008 by David Gingras, an attorney for RipOff Report, that this comment may "invite people to make knowingly false allegations." Although I don't think my article does this, I want to make sure that the reader understands I am not advocating dishonesty. Please do not make knowingly false allegations against any person or company at any time.
²Previously, inaccurately reported as RipOff Report's former employee.
³It was brought to my attention on March 28, 2008 by Maria Crimi Speth, another attorney for RipOff Report, that Ed Magedson is not the owner of RipOff Report. Xcentric Ventures is the legal owner of RipOff Report. Ed Magedson manages Xcentric. Many Complaints allege that he operates and controls Xcentric and RipOff Report.

****SEOmoz did not author the below Rebuttal and it does not reflect the views of SEOmoz. The Rebuttal does not attest the veracity of any of the factual statements contained therein. Update Published on September 27, 2010****

RIPOFF REPORT’S OFFICIAL RESPONSE TO

“ANATOMY OF A RIPOFF REPORT LAWSUIT”—

WHO’S TELLING THE TRUTH?

I.               INTRODUCTION

    If you’re reading this page, chances are you’re looking for information about the website www.RipoffReport.com or its founder, consumer advocate Ed Magedson. Maybe you or someone you know has been reported on the site. Maybe you are seeking options for how you can respond to a report. Maybe you are an attorney doing research on the Ripoff Report’s litigation history, and you want to know why so many lawsuits have been brought against the site and why so many lawsuits have failed. Maybe you’re a person who just doesn’t like the Ripoff Report for some reason and you’re trying to connect with others who share your views.

    Whoever you are, if you have just finished reading SEOmoz’s article about us you may feel you know more about the Ripoff Report than you did before. You may even feel you have gained some legal insight and factual knowledge that may help you effectively combat a Ripoff Report, whether in a court of law or in the court of public opinion.   We have some important news for you—you’ve only heard half the story, and if you think the “Anatomy of a Ripoff Report Lawsuit” article was fair or balanced or insightful or accurate, you need to hear the Ripoff Report’s response before reaching that conclusion. Given the chorus of negative and sometimes hateful criticism directed at our site, we think you’ll be surprised when you hear what Ripoff Report has to say.

    We know that the Ripoff Report is very polarizing; you either love it or you hate it. We know that no one likes to have negative things said about them. We get that. We know that many people would like to see the Ripoff Report disappear completely. We also know that millions of users visit our site each month and we know they feel it’s an incredibly valuable tool and a powerful resource. We also know that the Ripoff Report is frequently used by local, state, and federal law enforcement to locate victims of frauds, scams, and other illegal practices (we know this because we work with law enforcement on a regular basis and frequently receive letters of appreciation for those efforts).

    We also understand that many people who visit this page have already made up their minds about the Ripoff Report. We realize that nothing we say here will ever change that. This response is not written for those of you who have already decided that the Ripoff Report is evil. Rather, this response is intended to provide all of you undecided folks out there with helpful, true, accurate, and complete information about the Ripoff Report so that you can reach an informed decision about whether to love us or hate us, whether to sue the site, whether to post a rebuttal to a complaint, or whether to respond in some other fashion (such as hiring an SEO company). Hopefully, once you hear OUR side of the story, you’ll be much better informed about these different options.

    We absolutely recognize and respect the right of our critics to disagree with the way we operate. At the same time, conclusions about us (or anything else) shouldn’t be based on false, incomplete, or misleading information masquerading as fact. So, we invite you to listen to our side of the story and then decide for yourself who is telling the truth about the real Ripoff Report.

WHY HAS RIPOFF REPORT TAKEN SO LONG TO RESPOND?

    Before we begin our response, it’s important to explain something about the timing of this action and the reasons behind it. As many visitors to this page may already know, back in 2009 the Ripoff Report filed a lawsuit against SEOmoz and Sarah Bird based on the “Anatomy of a Ripoff Report Lawsuit” article. A complete discussion of that case is beyond the scope of this response, but we want to share some basic details so that you understand the timing and context of this response.

    Our Complaint (which you can read here) accused the article’s author, Ms. Bird, of making various false statements about the Ripoff Report in her article.   In addition, it alleged that the article encouraged people to make false claims in lawsuits against the Ripoff Report such as claiming that we created defamatory material in reports when, in fact, we did not. For the record, Ms. Bird and SEOmoz disputes these claims and disagrees with our characterization of the article.

    Ms. Bird and SEOmoz asked the court in Arizona to dismiss the Complaint on technical grounds—they argued that Arizona lacked personal jurisdiction over them. This is a fancy way of saying, “You can’t sue me in Arizona because I don’t live there and don’t have any ties or contacts there.” Among other things, this argument was based on Ms. Bird’s claim that she did not know the Ripoff Report was based in Arizona. If you’re interested, you can read SEOmoz’s Motion to Dismiss here, Ripoff Report’s response here, and SEOmoz’s reply here.

    Our lawsuit against SEOmoz was filed on January 21, 2009, and the Motion to Dismiss was filed a few months later in May 2009.   Eventually, we received an order (available here) granting SEOmoz’s Motion to Dismiss. In layman’s terms, this means that the judge dismissed our lawsuit because the court decided that it should have been filed in Washington State (where SEOmoz is based) rather than Arizona (where the Ripoff Report is based).

    Now, for all you non-lawyers out there, it is important to understand that this type of ruling does NOT mean that we “lost” or that the court found in favor of SEOmoz on the merits of the case. Rather, the ruling merely addressed the location where the case should have been brought, not whether Ripoff Report’s claims were well-founded. In her ruling dismissing the case for lack of jurisdiction, the judge simply held that posting defamatory statements about another person on the Internet is not sufficient to expose the author to jurisdiction in the state where the plaintiff is located.

    We decided to exercise our right to appeal the matter to the Ninth Circuit Court of Appeals. During that process and because the courts are so congested, the appellate court routinely asks the parties to engage in settlement discussions to see if they can find an alternative solution to their dispute. In the course of these discussions, Ripoff Report made the decision to settle the case and forego our right to appeal. In exchange, SEOmoz agreed to publish this response explaining our side of the story.

    Although we continue to believe that our lawsuit was valid and that certain statements in the SEOmoz article are false and defamatory, waiting up to two years for the appeal to be decided was not a realistic option for us. Instead of spending years in court, we hope to use this opportunity to educate the public about the REAL story—the one that SEOmoz never told you. Whether or not you agree with the law or with Ripoff Report’s policy decisions, we hope that you listen closely to what we have to say and then decide for yourself—is the “Anatomy of a Ripoff Report Lawsuit” an honest evaluation of the Ripoff Report, or is it simply another smear campaign? You be the judge.


II.              PREFACE—THE #1 MOST IMPORTANT THING YOU NEED TO UNDERSTAND

    Although the truth isn’t always as exciting as fiction, we think that people reading this page should know the details that SEOmoz never bothered to tell you—such as what it’s really like to sue Ripoff Report and the risks plaintiffs may face when suing us. We will get to that in a minute, and we will also explain to you the inside background of Ed Magedson, the operation of the Ripoff Report, and even the real story about the federal RICO/racketeering law that the article suggests could be the future downfall of the Ripoff Report. (SPOILER ALERT—the article is completely wrong about RICO, and we’ll tell you exactly why).

    Before we begin that discussion, it is essential to understand one crucial fact about Internet law, and yes, this is the part where we need to talk about the Communications Decency Act (or “CDA” for short).   If you’re unhappy about something posted online, the CDA (which is a federal law that applies to any case brought anywhere in the United States) controls most types of claims you may have. If you misunderstand this law or refuse to accept what the CDA says, you’re going to have a very hard time understanding or agreeing with any of our remarks since much of what we say and do is based on the rules created by the CDA.

    Now, the SEOmoz article gives some basic information about the CDA, so we don’t need to cover the law from scratch. However, when it comes to Internet posts, you just need to be aware that the law makes a very clear distinction between two parties:

    A.) The “author” (meaning the person who actually wrote something posted online); and
    B.) Everyone else (such as websites hosting the content)

    Under the CDA, the author of something posted online is always responsible for the accuracy of his or her words. Although defamation claims are extremely complicated (particularly here in the United States) authors generally can be sued for what they say and they can be held accountable for any false statements they make. So, when an author creates a false and defamatory statement, you can always sue the author and recover any and all damages you can prove were caused by the untrue statement(s). The CDA does not affect your right to sue the author in any way, so if you’ve been unfairly criticized in an online post, you can take the author to court if you feel that’s the best option.

    But what about everyone else? Can you sue other people besides the original author, such as the company hosting the website where the statements were posted? What about people who re-post material written by someone else? Do they share the same responsibility as the original author? Do they have any responsibility at all for the accuracy of the material?

    As the article explains and as many, many courts have held, the general answer is NO—the CDA prohibits plaintiffs (this means the person who brings a lawsuit) from suing any third parties (like Ripoff Report) for material written by someone else. This is a very clear and basic rule, and this is the reason why Ripoff Report has been so successful in court. As a general rule and with only limited exceptions as explained below, we do NOT create reports and we do NOT change reports. Unfortunately, people lie about this all the time but the facts are the facts—we simply don’t write reports or change reports (except for clearly marked editorial comments/postings and other material as explained below). For that reason, you can sue the author who creates any false statement about you but you cannot blame Ripoff Report for providing the forum where such statements are posted. As the saying goes: “Don’t shoot the messenger… .” Ripoff Report is just the messenger of comments written by our users, and under the CDA, you can’t blame us for the content of someone else’s message.

    This may sound unfair at first, but if you honestly stop and think about it, it’s not. Why not? Because consider what the Internet would look like without the CDA—websites would no longer permit visitors to post any material.   Doing so would lead to unlimited liability for the website even if it didn’t create or alter (or even see) the offending content, so rather than taking the risk, websites would just block any/all content from visitors.   Don’t think that’s such a big deal? Imagine the impact this would have on the amount of content available online.   Here are just a few examples—

Without the CDA, product reviews on Amazon.com and user feedback on eBay.com would no longer be allowed because one false comment by a user could result in these sites being dragged into court and sued for unlimited damages.
Without the CDA, Facebook.com would not exist because the site would have to fact-check every posting made by all of its 500 million+ users.
Without the CDA, Youtube.com would not exist because the site would be liable for any inaccurate statements made in a video posted to the site.
Without the CDA, there would be no Twitter.com, Wikipedia.com, LinkedIn.com, Craigslist.com, Blogger.com … basically no sites that allow users to post material.
Without the CDA, you wouldn’t be allowed to post comments about Ripoff Report on SEOmoz.org or any other site.
Without the CDA, huge amounts of content on search engines like Google would vanish because search engines would be required to verify each comment made on the billions of pages they index or risk liability for anything inaccurate that appears on an indexed page.

    Are you starting to get the picture? Without the CDA (which has only been around since 1996), the Internet would immediately revert back to something like what it was in the early 1990s—a bland, slow-moving, rarely-updated world with little new content, limited or no ability to post real-time comments, and virtually no way to quickly share thoughts and ideas with a broader audience. Is that really something you want to encourage? Despite all the criticism and uproar over it, the CDA makes the Internet much more vibrant, interesting, and useful. Make no mistake about it—if you take away the CDA, you take away many aspects of free speech that your fellow Americans have fought and died for. It’s that serious.

    Now, Ripoff Report has heard the argument, “Yeah, well the CDA wasn’t intended to work this way…” or “Ripoff Report is exploiting a loophole in the law … .”   This criticism is understandable to a degree, but what we don’t understand is this—what is so unique about Ripoff Report that we should be treated differently from any other site? Is it the fact that people use our site to post negative complaints? If that’s the standard, then surely SEOmoz should also be denied CDA immunity for the many angry comments posted about us on this page, right?

    We anticipate that most people would respond to this with a few main arguments such as:

Ripoff Report should be denied immunity because it allows anyone to post anything without any kind of verification no matter how harmful it might be;
Ripoff Report should be denied immunity because it keeps reports on the site permanently and won’t remove something even if it’s later proven to be false;
Ripoff Report should be denied immunity because it charges money to companies who want help dealing with negative reports.

    OKAY—points noted. But aren’t one or more (or even all) of these arguments also applicable to many other websites that allows users to post comments? After all, to our knowledge, SEOmoz does nothing to confirm or verify any of the comments posted here. Does that mean that SEOmoz isn’t protected by the CDA? What about Google or Bing or Yahoo? They index and link to content without any verification, and they won’t remove anything simply because you ask them to. Should we exclude search engines from protection under the CDA? Of course, if there’s something negative about you at the top of their search results, search engines won’t take it down but they will happily accept your payment to run favorable advertisements to mitigate the negative information. Is that extortion?

    Emotional arguments like these might make you feel better, but they usually are not helpful because they’re focused on a problem, not a solution. Maybe someday in the future our Congress will find a better solution to negative online speech in a way that doesn’t simultaneously destroy the right to free speech that we all enjoy, but until they do, the CDA is here to stay.

OTHER BASIC CDA RULES YOU NEED TO KNOW

    Before we turn to the more specific parts of our response, it’s worth responding to and debunking a few legal myths about the CDA that seem to be circulating out there. Accepting these basic rules will hopefully help provide a better explanation for Ripoff Report’s protection under the law.

RULE #1—Creating or Editing SOME Content Does NOT Affect CDA Immunity As To OTHER Content

    One of the most popular CDA myths goes something like this—Ed Magedson made changes to Report #123 on the site and therefore he has lost CDA immunity as to ALL reports on the site. Sounds good, right?

    The problem with this is that Courts have been extremely clear in explaining that CDA immunity is not an “all or nothing” deal. In other words, a website can create (or change) some content without losing immunity as to any other content that it didn’t change; “It is not inconsistent … to be an interactive service provider and also an information content provider; the categories are not mutually exclusive. The critical issue is whether [the website] acted as an information content provider with respect to the information that … is false or misleading.” Gentry v. eBay, Inc., 99 Cal.App.4th 816, 833 note 11, 121 Cal.Rptr.2d 703, 717 note 11 (Cal. 4th App. Dist. 2002) (emphasis added).

    So, what does this mean in plain language? It’s pretty simple—if Ed Magedson creates an entire report (say Report #123), he would absolutely be responsible for that entire report. Likewise, if someone else wrote Report #123 but Ed made significant changes to it that altered its meaning, he might be responsible for those changes but he is still protected by the CDA as to everything else that he did not create or change. So, unless you want to bring a lawsuit based on something you can prove was created or materially modified by Ed, then the CDA will still apply and will prevent you from suing Ed or Ripoff Report for something that someone else wrote. Courts have consistently agreed with this argument in cases involving the Ripoff Report. Some recent examples are Intellect Art Multimedia, Inc. v. Milewski, 2009 WL 2915273 (N.Y.Sup. 2009); Whitney Information Network, Inc. v. Xcentric Ventures, LLC, 2008 WL 450095 (M.D.Fla. 2008) and GW Equity, LLC v. Xcentric Ventures, LLC, 2009 WL 62173 (N.D.Tex. 2009).

RULE #2—Providing A List Of Categories Does NOT Affect CDA Immunity

    If you have ever used Ripoff Report to create a post, you know that we offer a broad list of categories and topics that people can pick from to characterize their reports. Some of the categories are extremely generic such as “Automotive” or “Electronics”, while others are a bit more provocative such as “Outrageous & Popular Rip-Off”. We used to have a category called “Corrupt Companies” but we decided to delete that one in favor of some more neutral terms. As of September 2010, we now have more than 500 different categories and topics to choose from when submitting a report.

    When creating a new report, an author is required to pick one category and one topic to describe their submission, but we do not tell authors which ones they should use. In addition, we do not move reports from one category to another. For those reasons, regardless of what category an author chooses to apply to a report, the CDA continues to protect us from liability based on an author’s category selection because merely providing a list of categories to choose from is “minor and passive participation in the development of content [that] will not defeat CDA immunity, which can even withstand more active participation.” Global Royalties, Ltd. v. Xcentric Ventures, LLC, 2007 WL 2949002, *3 (D.Ariz. 2007).

RULE #3—Ripoff Report’s Corporate Advocacy Program Does NOT Affect CDA Immunity

    Later in this rebuttal we will talk in more detail about Ripoff Report’s “Corporate Advocacy Program” or “CAP” which is a paid service we offer to companies who want extra help (beyond the free options we offer) dealing with customer service issues. Some people who don’t like or don’t understand the program have called it a form of “extortion” and they have argued that the CAP program somehow causes Ripoff Report to lose its protection under the CDA. This argument is just plain wrong. In fact, this argument has been rejected by every court that has considered the issue, so don’t take our word for it. Here’s how a federal judge in Texas explained the impact our Corporate Advocacy Program has on our CDA immunity:

Defendants have a “Corporate Advocacy Program,” in which, for a fee, Defendants will investigate “rip-off reports” targeting a company and draft and post rebuttals to a negative report. The Court does not find this makes Defendants “information content providers” under the CDA. Plaintiff cites no case law demonstrating that such conduct bars CDA immunity, and has not demonstrated that the “Corporate Advocacy Program” has played any role in this case. Like other courts to consider this issue, this Court does not find the “Corporate Advocacy Program” prohibits Defendants from immunity under the CDA.

GW Equity, LLC v. Xcentric Ventures, LLC, 2009 WL 62173, * 13 (N.D.Tex. 2009) (emphasis added).

    Now, if a federal judge has determined that the CAP program does not affect Ripoff Report’s immunity under the CDA, why do people keep repeating this myth? What purpose does this serve? Ironically, critics of the Ripoff Report seem to think that spreading misinformation like this somehow helps their position, but really the opposite is true—they just end up hurting themselves and anyone else who believes these lies by encouraging them to pursue lawsuits that have no chance of success. As explained later in this rebuttal, people who rely on the myths and lies about the Ripoff Report have consistently lost in court and have wasted huge amounts of their own time and money in the process. Although we do not expect our critics to take our word for it, the fact remains that our litigation track record proves that suing us (as opposed to the author) is not a smart way to respond to a report on our site. You can believe our critics who claim that we’re wrong, but unless a critic is willing to pay your legal bills, we wouldn’t recommend trusting their advice.

III.            SPECIFIC COUNTERPOINTS

Background Of Ed Magedson & The Ripoff Report

    Now that we’ve talked a little about the law, let’s discuss some facts. For all that’s been said and written about Ed Magedson and the Ripoff Report, it’s amazing how little of it is actually true. Well…it’s not really that amazing. A long time ago, one of Ed Magedson’s most outspoken critics vowed to do to Ed what he perceived Ed did to him—destroy his reputation. He made up and widely disseminated numerous lies. Those lies have been repeated over and over. Examples? Here’s a few: Ed is a wanted criminal and a fugitive in hiding (FALSE). Ed is a convicted felon (FALSE). The feds (FBI and FTC) are investigating Ed (FALSE). Ed has been criminally charged with activities like extortion/racketeering (FALSE). There’s a $20,000 reward for his capture and arrest (FALSE). The list of lies goes on and on. Isn’t it ironic that the same people who claim that Ripoff Report is “horrible” for spreading false information are doing exactly that?

    Our critics also say that Google is “in bed with” Ripoff Report and that our “honeymoon with Google must stop”. This is baseless. The truth is this—Ripoff Report has no deal, no understanding and no relationship with Google. Virtually all of the garbage written about Ed Magedson is nothing but a groundless smear campaign undertaken by people who have complaints about them on www.RipoffReport.com or people who have an economic interest in generating fear about the Ripoff Report (such as SEO providers). Don’t believe that’s really the case? Here’s an easy way to check—if you see a page which slams Ripoff Report, see if you can determine who the author is (like most phonies, these folks usually don’t say who they are). If you can find an actual name, go search for it on Ripoff Report. We’ll bet you’ll find several reports which were posted long before the article which criticizes us. Apparently, these misguided individuals believe that they can discredit negative postings about them by attacking Ed Magedson, thereby making themselves look better.

    History is filled with examples of this type of conduct. We all remember the 1995 murder trial of OJ Simpson which ended with OJ’s acquittal. Even though virtually everyone believed he was guilty, OJ was acquitted largely because of the credibility of one of the lead detectives on the case, Mark Fuhrman, who found a bloody glove on Simpson’s property. During the trial, Detective Fuhrman lied about his of racial epithets in the past, and Simpson’s lawyers hammered him for it, calling Fuhrman, “a genocidal racist, a perjurer, America's worst nightmare and the personification of evil.” Ouch. Even though all the other evidence of his guilt was overwhelming, OJ was acquitted largely because of the relentless attack on Detective Fuhrman. Although OJ used this tactic to “win” his case, was justice really served by doing so?   Apparently our critics think so because they use the exact same strategy—attack the messenger to generate doubt about the message.

    Ed Magedson is nothing like Detective Fuhrman, but his critics apparently feel they can use the same tricks that OJ and his lawyers did—spread awful lies about Ed Magedson and make people question Ed’s motives and credibility. This tactic worked for OJ, so why wouldn’t it work for anyone named in a Ripoff Report?

    The answer to this is should be obvious—no matter what they say about him, Ed Magedson is not the person who writes each report on the Ripoff Report site. So, when people use OJ’s tactics and try to cover up a report by attacking Ed, this really accomplishes nothing.

Who Is Ed Magedson?

    Okay, so if Ed Magedson isn’t the bad guy that everyone claims, then who is he? What’s the deal with those crazy mugshots you see plastered on various websites? Is he really a fugitive on the run from the law? Here’s the real story.

    Ed is a lifelong consumer advocate who grew up in New York and who has been involved in a wide variety of businesses over the past 35 years. Among other things, Ed has been a real estate investor and developer, night club owner, publisher, author, and even a musician. In the 1970s, Ed started a small business—the “Flower Children”—that hired young hippies and senior citizens to sell flowers on street corners all across America. Eventually, the flower business grew into a nationwide operation with stores in more than 30 states. Based on his experience, Ed knows exactly what it’s like to be a hard-working entrepreneur, putting his heart and soul into starting and growing a business from the ground up.

    For the last 20+ years, Ed has lived in the Phoenix, Arizona metropolitan area. Although he’s not willing to disclose his home address for obvious reasons, he is not in hiding and he’s not even difficult to reach. You can always feel free to email him ([email protected]) or just give him a call at (602) 359-4357 (follow the prompts and you’ll be connected to Ed). You can also send regular mail to Ed at PO Box 310, Tempe, AZ 85280.

    Ed has always been a “people person”. He is an idealist who is passionate about fighting for civil rights and fighting against political corruption. Ed’s main focus is helping others and fighting to strengthen consumer’s rights, particularly in cases where the little guy (the average consumer) has been victimized by the big guy (large corporations, etc.). No matter what the problem is—poor customer service, dishonest salespeople, and fly-by-night scammers—Ed has spent the last 20 years helping consumers fight back by giving them a powerful forum to speak out and share their stories with others. That’s why he created the Ripoff Report website. Since the Ripoff Report was created in 1997, Ed has spent literally millions of dollars fighting to defend the First Amendment and to protect the free speech rights of the many millions of individuals who use the Ripoff Report website.

    Now, about those mugshots and all of the anti-Ed sites posting them…here’s the truth. Nearly 40 years ago in the early 1970s, before the first personal computer was created, Ed was busted in Florida with a tiny amount of marijuana. Yes, that’s right—just like President Obama, President Clinton, and President George W. Bush, Ed has tried some pot. If you think this has anything to do with the accuracy of information appearing on the Ripoff Report in the year 2010, then you’re entitled to that opinion, but we don’t see the connection.

    Also, in 1974 Ed was the victim of identity theft. Someone stole Ed’s checkbook and used it to pass several bogus checks. After some of those checks bounced, Ed was arrested and charged with passing the bad checks. The “mugshots” from this arrest are the ones you see all over the Internet on anti-Ripoff Report sites. However, as soon as the police realized that Ed wasn’t the one who wrote the checks, the case was dropped.

    Now, does this sound like the background of a hardened criminal engaged in racketeering? We don’t think so, but apparently our critics feel that digging up and misrepresenting ancient dirt like this will somehow make people doubt the 600,000+ reports posted on our site. OJ Simpson might support this kind of smear campaign, but now that you have heard the truth do you really think you can trust all of those anti-ROR sites? We sure hope you’re smarter than that.

The REAL Story About How Ripoff Report Operates

    Enough about Ed—let’s talk about the Ripoff Report site. It’s a little strange, but lots of people claim to be self-professed experts in how the Ripoff Report operates. Yet when you dig a little deeper and ask them whether they have ever actually tried to create a report themselves, their answer is almost always the same: “Uh, well, no.” Likewise, have they ever spoken to Ed Magedson? “Um, well, no.”   Ever been part of the Corporate Advocacy Program? “No.” Ever spoken to anyone who was on the program? “No.”

    This is really unfortunate because the process for how reports are created is hardly a secret—anyone is welcome to log into www.RipoffReport.com at any time and see for themselves how the process works.   In short, the process is quick, easy, and free, and if you follow these steps, you’ll instantly see that our critics have grossly misrepresented the role we play in creating reports and their titles.

How Reports Are Created

    Currently, reports on our site are created in a simple five-step process that includes the following:

   STEP 1—Basic Info

    The author is presented with blank forms asking for information about the person/company they want to report. The information requested includes the subject’s name, address, and phone number. Contrary to popular belief, we don’t “solicit” people to write reports about any specific company. Our users are literally given a blank slate to write about whomever or whatever they want.

   STEP 2—Title & Category

    The author creates a title for their report by entering text into four boxes which include the company’s name, a short description of what the report is about, the city and state where the company is located. As an author enters text into the four blank boxes, their text is combined into a one or two line title which is displayed in real time so the author sees the title exactly as it will appear on the site.   The author is also required to pick a topic and category from a list of more than 500+ options to describe their report.

    NOTE—Some people falsely suggest or imply that Ed Magedson or someone else at our site writes the titles to reports. SEOmoz’s article even asks a loaded “hypothetical” question—“If RipOff Report Writes the Negative, Defamatory Titles and Stuffs Them With Keywords, Is That Enough to Make Them Liable for Defamation?”   That almost sounds like SEOmoz knows something you don’t, doesn’t it?

    TO BE CLEAR—THIS IS 100% FALSE. RIPOFF REPORT DOES NOT CREATE TITLES TO REPORTS AND DOES NOT ‘STUFF’ TITLES WITH KEYWORDS. Like the text of reports themselves, report titles are written solely by the original user at the time they submit their report.

    Don’t believe us? That’s fine—you can easily confirm this yourself by logging into the Ripoff Report and seeing exactly how the title creation process works. If you have any doubts about where report titles come from, please take five minutes and do this. When you do, you’ll see what we mean—every word in the title is supplied by the author, not by the Ripoff Report.

   STEP 3—Write Your Report

    In this step, the author is presented with a blank box into which they can type their report.   Other than a few very generic suggestions (such as advising people not to write in ALL CAPS), Ripoff Report doesn’t offer any guidance about what the user should say.

   STEP 4—Add Photos

    Recently, we added a new option which allows users to attach photos to reports. This may be helpful for someone who wants to include a document such as an invoice or a receipt supporting their complaint. Companies can also use this feature during the rebuttal process to upload any proof that they have showing a report is false. Of course, Ripoff Report is fully compliant with the Digital Millennium Copyright Act or “DMCA”, and we will remove any infringing photos from a report if we receive a valid DMCA notice.

   STEP 5—Submit Report

    Once an author has created a title, typed their report, and attached any photos they may have, the last step is to click a box agreeing to our Terms of Service. Among other things, users must agree that their report is truthful and valid. Our terms also explain that we won’t remove reports upon request, so if anyone feels that they may want to delete a report in the future, they’re free to use another site.

The Review Process – What We Remove/Don’t Remove

    Once a report is submitted, it doesn’t appear on the site immediately. Instead, all reports are held until they can be reviewed by one of our staff members who we call “content monitors”. The content monitors review every submission to the site in order to make sure the report is appropriate (reports may be rejected if they contain little or no useful substance). The content monitors will also remove any material that is illegal such as threats of violence, social security numbers, bank account information, or other personal details which could be used to commit identity theft.   Ripoff Report maintains a strict set of written guidelines that each content monitor must follow during this process, and following a recent upgrade to our software, all changes are tracked and logged so there’s no dispute about what the user originally submitted versus the way the final version of the report looks.

    For the record—Ed Magedson is NOT one of the content monitors and, in fact, Ed does not have access to the system where changes to reports are made by the staff of monitors. This is why claims accusing Ed of creating or altering reports are so easy to disprove—he doesn’t even have access to make any changes! So much for all those bogus claims of Ed tampering with reports.

    Other than these policies, we generally do not investigate reports for accuracy. Why not? Three simple reasons.

    First, we’re not legally required to do so and since it would be unfair to only investigate some things but not other things, as a general rule we let both sides say whatever they wish and we leave it to our readers to decide which party to believe. Second, even if we wanted to, it would be virtually impossible for us to even attempt to investigate everything submitted to the site. As of mid-2010, the Ripoff Report has more than 600,000 unique reports, and millions of responses/rebuttals to the report with up to 1,000 new submissions every day.   Given this massive volume of information, we cannot and do not verify or confirm everything that our users post to the site (which is equally true of comments posted on SEOmoz.org and many other sites). Third, if someone approaches us and claims to have “solid proof” that a report is false, we have no way of evaluating how reliable that “proof” really is. Maybe it’s 100% legit and maybe it’s 100% phony, but whatever it is, we have no way to tell the difference. So, we allow companies to post free rebuttals showing their proof to anyone viewing the report. If the proof is really so compelling, then posting it in a rebuttal should be sufficient to negate the report.

Ripoff Report Does NOT Alter Reports

    Because courts have consistently held that the Ripoff Report is entitled to protection under the CDA as long as we don’t create or substantively alter reports, people who don’t like the law have come up with an obvious way around this outcome—just lie and say that Ed Magedson wrote or altered the report! Easy way around the CDA, right? Wrong.

    Putting aside the fact that lying is illegal and unethical, this strategy doesn’t work for a very basic reason—if you make an allegation like this in court, you need admissible evidence to support your claim.   Don’t have any evidence? Maybe that’s OK when launching a flame war on a blog, but in a real court of law, if you don’t have evidence, you don’t have a case.

    Unfortunately, the “Anatomy of a Ripoff Report Lawsuit” article incorrectly suggests (in bold text, no less): “There is more than just speculation that Magedson was involved in altering reports.” To support this, SEOmoz offers the “sworn testimony” of someone named Dickson Woodard and implies he was a “former employee”. This almost makes it sound like Mr. Woodward was a former employee of Ripoff Report and that he had inside knowledge about Ed Magedson creating or changing reports. Sounds like pretty powerful evidence…or is it? Let’s do some fact-checking and see how accurate and reliable this “evidence” really is.

    First of all, who is Dickson Woodard? Did he really work for Ripoff Report as the article implies?

    ANSWER—NO, Dickson Woodard never worked for Ripoff Report. Very much to the contrary, as explained in a letter he sent to us, Mr. Woodard worked for a company called GW Equity. This company sued Ripoff Report based on material that Mr. Woodard posted on our site. Do you think that may have given Mr. Woodard any motivation to make statements that exonerated him and incriminated Ed Magedson?

    Here’s another important fact (and one not explained in the article)—before GW Equity sued Ripoff Report, it sued Mr. Woodard in a separate case claiming that he was the author of several harsh posts about GW Equity on Ripoff Report. How did Mr. Woodward initially respond to the lawsuit against him? Well, he did what most people do when they’re caught in a jam—they blame someone else. Mr. Woodard (who represented himself without a lawyer) tried to avoid responsibility by blaming Ed Magedson, claiming that Ed “modified” his reports. That’s what most people assume is the testimony quoted in the SEOmoz article, but as explained in a minute, that’s not what Mr. Woodard was actually talking about.

    What’s also interesting is something else the article never mentioned—Ripoff Report was not a party to the original case between GW Equity and Mr. Woodard. Not only were we completely unaware of the case (because we weren’t involved in it), we were not present at his deposition so we didn’t have any chance to cross-examine Mr. Woodard and ask him to explain exactly how he knew that Ed altered reports. For that reason, after GW Equity sued us, the court determined (in a ruling you can read here) that Mr. Woodard’s testimony was NOT admissible evidence in our case since we were not present during his first deposition. Because Mr. Woodard’s testimony about Ed changing reports was ruled inadmissible, and because there was no other admissible evidence to support that claim, we won the case. This same outcome has also occurred in every other case where people have tried to use Mr. Woodard’s testimony against us, so the take-away is obvious—Mr. Woodard’s testimony as quoted in the article entirely inadmissible and useless in any lawsuit against us.

    As for what he was talking about when he said that Ed changed reports, Mr. Woodard later submitted a sworn declaration in another case (Whitney Information Network, Inc. v. Xcentric Ventures) explaining that his prior deposition testimony in the GW Equity lawsuit (the stuff quoted by SEOmoz) was taken out-of-context and that when he said that Ed changed reports, was only referring to material that Ed Magedson posts about companies in the Corporate Advocacy Program. Mr. Woodard’s declaration plainly states that he has no personal knowledge about Ed changing reports other than as part of the Corporate Advocacy Program. For that reason, as the courts held in both the Whitney and GW Equity cases, Mr. Woodard’s testimony does not show that Ripoff Report has lost immunity under the CDA or that Ed Magedson alters reports about non-CAP members.

    In sum, SEOmoz may feel that Mr. Woodard’s testimony shows there’s “more than just speculation” that Ed Magedson alters reports on our site, but two different federal judges have reviewed and rejected that claim.

What Is The Corporate Advocacy Program?

    Enough talk about lawsuits. Let’s turn to the one aspect of the Ripoff Report that has generated the most controversy—our Corporate Advocacy Program. What is the CAP program?   Who is the program for? Who is the program NOT for? Is the program extortion?

    Let’s say you run a business and for whatever reason, you find that you have one complaint from an unhappy customer about you on Ripoff Report. How can you deal with this?   For starters, most of the time all you have to do is simply file a rebuttal explaining your side of the story. Rebuttals are 100% free and when done correctly, a rebuttal can actually serve as a powerful form of free advertising.

    How can you create an effective rebuttal? Well, here’s a great example from a company called OvernightMattress.com.   As you can see, the company used our free rebuttal option as an opportunity to explain that it was listening to its customers and changing the company policy that generated the complaint.   Anyone who reads this rebuttal should feel comfortable doing business with a company that shows that level of concern for customer service (and by the way - Ripoff Report has no relationship of any kind with this company).   Perhaps OvernightMattress.com would prefer to see the report disappear, but in the mean time they really did a great job showing the world that they do care about providing great customer service, and they did this without paying a dime to Ripoff Report and without incurring any legal fees or court costs suing us.

    But what if instead of having one complaint, you have 100 or more?   And what if you have tried to fix the issues that have caused these complaints to occur, but you’re still being slammed by unhappy customers posting complaints on our site or any of the other copycat sites?   What other options exist to help you deal with this?

    Although you always have the option of filing free rebuttals to each report (which many companies will do), Ripoff Report’s CAP program may be able to help. So, what is CAP and how does it work?

    It’s really not that complicated. In a nutshell, the CAP is a customer-service program in which Ripoff Report is hired to help assist companies who need help dealing with out-of-control complaints by angry customers. We work with our members and their customers to address existing complaints, to help prevent future complaints, and to proactively resolve any new complaints that might arise. The CAP program never involves removing reports, so it’s only useful to companies who really understand that they can’t solve customer complaints by sweeping them under the carpet.

    When a company joins our CAP program, they enter into a detailed written contract with us explaining everything that the program involves. The first thing that we do is to prepare an email (drafted jointly with the new CAP member) which is sent to everyone who has posted a report about that member. This email announces that the company has joined our program and as part of doing so, we explain that they have made a commitment to fixing any issues which caused the customer to be unhappy in the first place.   Our email outlines this commitment and explains that any customers with unresolved issues will be contacted by the company to make things right with them. This can include offering full refunds if appropriate.

    Next, with the written permission of the CAP member, we update all existing reports to reflect that the member has joined our program and has made a commitment to complete customer satisfaction.   Of course, existing reports are never, ever removed, but we want to inform people about the CAP member’s actions so we add an introduction to each report which talks about the company and the positive steps they have already made and the ones they have promised to make in the future. After our introduction, the original complaint remains on the site without any changes.

    After joining our program, we expect that by working with us and with their customers to fix the problems which caused complaints in the past, our CAP members should see a dramatic reduction in unhappy customers filing complaints in the future. However, in the event a future complaint is submitted to our site about a CAP member, we will immediately intervene to get the member and the customer in touch with each other to see if the complaint can be resolved to the customer’s satisfaction. If so, we will give the customer an opportunity to withdraw their complaint. If the matter is not resolved, the complaint will be posted. Furthermore, we also work to resolve disputes on behalf of CAP members even with customers who haven’t tried to file a complaint yet. For instance, if someone emails us and inquires about whether they should do business with a CAP member, we can respond and explain all of the steps that the member has made to fix past problems and ensure that they aren’t repeated in the future.

    Now, what happens if a CAP member fails to keep their commitments?   Do we just allow them to continue paying us to stay in the program? Absolutely not. Although most of our CAP members have always lived up to their promises and have experienced sustained long-term benefits from the program, that’s unfortunately not always the case. Recently, a company involved in our program was accused of engaging in various kinds of unlawful activities.   Even though they have not been found guilty of any wrongdoing, we immediately suspended that member from the program until such time as the accusations against them could be heard in court.   We are hopeful that the charges against the member will be resolved in their favor, but if they are not, we obviously would not agree to continue providing our endorsement to them or to any company that is found to have violated the law.

IV.            IS THE CAP PROGRAM EXTORTION? DOES RICO APPLY?

    One of most disappointing and grossly misleading parts of SEOmoz’s article is the suggestion that by operating the CAP program, Ripoff Report may be engaged in “extortion” and/or racketeering in violation of the federal RICO laws. While we admit that we don’t know much about the author’s work history and qualifications, because we have successfully defended numerous cases accusing us of these kinds of claims, we would like to explain the law to you in a little more detail.

    So, what is extortion and how come no one has ever succeeded in proving that Ripoff Report is committing extortion? What about RICO? If these claims are so great, why hasn’t anyone won such a case in the two+ years since this article was written? After all, more than 30+ lawsuits have been filed against the Ripoff Report over the years, so you would think that if we were engaged in extortion and racketeering, at least one court would have exposed that by now, right? Does SEOmoz really know something that 30+ judges and 30+ groups of highly educated and aggressive plaintiff’s attorneys don’t know?   We don’t think so, and here’s why.

    The article provides an accurate textbook definition of extortion which is familiar to any first-year law student—making a threat to engage in unlawful conduct (usually force or fear of force) in order to get someone to hand over money. In a typical case, this might involve the bad guy threatening his victim by saying, “Give me your money, or I will burn your house down.”   Burning down another person’s house is illegal, so threatening to commit that unlawful act in order to get money from someone is extortion. This is very basic common sense.

    On the other hand, not every kind of threat is extortion. For instance, if you fail to pay your bills on time, you might get a letter from a collection agency threatening to shut off your phone, disconnect your power, or even repossess your car unless you pay. Are those threats extortion?

    Of course not, and the reason why is pretty simple—extortion generally can’t be based on a “threat” unless the threat is unlawful. Stealing someone’s car is unlawful, but if you fail to make your car payment, your bank probably has a lawful contractual right to repossess your car. Because the bank’s threat to repo the car isn’t unlawful, the bank can make that threat in order to pressure to into making your payment, and doing so simply isn’t extortion. There are literally dozens of cases which explain this type of general principle in RICO/extortion cases, but here are just a few recent examples:

Sosa v. DirectTV, Inc., 437 F.3d 923, 939 (9th Cir. 2006) (RICO/extortion claims could not be based on demand for money to resolve threatened litigation because “inducing fear of economic loss could not in itself constitute extortion…. The use of the fear must be ‘wrongful’.”)

Rothman v. Vedder Park Mgmt., 912 F.2d 315, 318 (9th Cir. 1990) (explaining that landlord’s threat to raise rent as to any tenant who refused to agree to new rental terms was not extortion and could not support a RICO claim because raising rent was not unlawful)
All Direct Travel Services, Inc. v. Delta Airlines, Inc., 120 Fed.Appx. 673, 2005 WL 23420 (9th Cir. 2005) (RICO/extortion claims could not be based on airline’s threat to fire employees unless they paid certain disputed debts because, “it is not extortion to threaten economic harm when you have a legal right to engage in the activity you threaten.”)
Cintas Corp. v. United Here, 601 F.Supp.2d 571 (S.D.N.Y. 2009) (RICO/extortion claims dismissed against defendant who created website containing damaging information criticizing the plaintiff in an effort to pressure plaintiff to allow defendant to create labor union because, “When a party does not have the right to pursue its business interests unchecked and receives a benefit [from defendant’s conduct], it cannot be the victim of extortion.”)
American Computer Trust Leasing v. Jack Farrell Implement Co., 763 F.Supp. 1472 (D.Minn. 1991) (RICO/extortion claims could not be made against software company which threatened to deactivate software used by plaintiff unless they were paid because the threat was not unlawful or wrongful)

    If you apply these principles to Ripoff Report and the CAP program, it is obvious why the program does not constitute extortion—by virtue of offering CAP, Ripoff Report is providing a 100% legal service that benefits our members. Just like any other business, it is not illegal for us to request payment for our services, nor is it illegal for us to decline to provide services for free. A car dealer is under no obligation to fix your broken transmission for free (assuming your car is out-of-warranty), so it’s not extortion for a dealer to demand money to provide that service to you.

    Based on this, on July 19, 2010, a federal judge in Los Angeles issued a detailed, 53-page ruling explaining that our Corporate Advocacy Program is not extortion under California law because: “The offer to help Plaintiffs restore their reputation and facilitate resolution with the complainants in exchange for a fee does not constitute a threat under California Penal Code § 519.”

    The fact that our service may help people who have been targets of Internet defamation does not change this. Obviously, infecting someone else’s computer with a virus is illegal, but that doesn’t mean that companies who sell anti-virus software are committing extortion simply because they charge money to help protect their customers from these illegal actions. Offering goods and services is not illegal, so asking for money to provide such services is not extortion. Just like an anti-virus company which does not create viruses, we are not the authors of the offending content, and we do not accept money to remove offending content. All we do is offer a program (in addition to other free alternatives) which we believe is extremely useful and valuable to companies who need our help improving their customer service.

    Despite the massive amount of legal authority that supports our position, the SEOmoz article mentions a case called Kattar and suggests based on that one case that “courts have already determined that taking money from a person in order to prevent him from being defamed is extortion.” This nice sound bite seems at first like it might apply to Ripoff Report, but does it really? No. Here’s why.

    First of all, the defendant in the Kattar case made threats of physical violence in an effort to obtain $100,000 from the victim. Because threats of violence are always illegal, using such a threat to obtain money easily qualified as extortion. This doesn’t apply to Ripoff Report for obvious reasons. We don’t make any threats, whether violent or non-violent.

    Second, although the facts are somewhat complicated, in Kattar the defendant also made a threat to invent phony and damaging information and to provide it to a third party unless the victim paid up. The court found this threat was also extortion because inventing false information in this manner was unlawful, so demanding money to refrain from doing so amounted to extortion.

    The SEOmoz article suggests that Ripoff Report’s conduct is somehow equivalent to the defendant in Kattar, but this overlooks an important fact—in Kattar, the defendant was the one who threatened to create the phony information if he wasn’t paid. In other words, the defendant was the author of the damaging information, and the defendant was the one demanding money to keep his mouth shut. Creating false information is unlawful (in most instances), and so when a person demands money to refrain from creating lies about the victim, this unlawful threat can qualify as extortion.

    Ripoff Report simply does not do what the defendant did in Kattar. We do not create false information—PERIOD. Likewise, we do not demand or accept money to remove anything from our site—PERIOD. Even when a company joins our CAP program, existing reports are never removed, so there is no basis to compare us to the defendant in Kattar. Using the example about burning down a house, it might be extortion to threaten to burn down someone’s house if they don’t pay you, but it is not extortion for a company to sell you a sprinkler system that will help to extinguish a fire that someone else set.

    We have a lawful right to extend our help to people who ask for it, and we have a lawful right to refuse to remove material posted by third parties. Neither of these things are unlawful, so offering a paid program which helps companies to work with their customers doesn’t qualify as extortion, even if negative speech created by a third party plays a role in the exchange.

    While you may disagree with this view, if you work in the SEO industry you should be glad that it’s incorrect to say: “The good news is that the courts have already determined taking money from a person in order to prevent him from being defamed is extortion.” Honestly—isn’t that exactly what SEO companies do? They take money from people who are targets of defamation in order to help hide the hurtful information. If SEOmoz’s view of the law was correct, any SEO company that did this would be guilty of extortion. In all fairness, this statement would be technically correct if the article added a little more information such as: “taking money from a person in order to prevent him from being defamed is extortion if the person demanding the money is also the person who threatened to create the defamatory information.”

    The simple fact is that Ripoff Report is NOT engaged in extortion, and every court that has ever considered the merits of a case against us has agreed with that position.

OTHER REASONS WHY RICO DOESN’T APPLY TO RIPOFF REPORT

    One of the most astonishing statements in the SEOmoz article was the following:

"Because a lot of us have much to gain from a strong CDA, I hope that plaintiffs will continue to press the RICO/Extortion combo. This will direct the conversation away from the CDA and focus it on the extortion elements of the case. This is appropriate because this is what makes RipOff Report’s alleged conduct so reprehensible. If RipOff report were just providing a neutral and organic platform to publish good and bad comments about businesses, no one would be complaining."

    Again, we would like to note for the record that after these remarks were published, several RICO/extortion lawsuits were filed against us which appeared to directly follow the article’s instructions, including one which copied its factual allegations against us word-for-word. To date, none of these cases have survived, and we think it’s important for you to understand why.

    As noted above, SEOmoz’s article suggests that demanding money to prevent someone from being defamed is extortion, and therefore by extension the federal racketeering law (RICO) might be a helpful way for people to shut down Ripoff Report.   Unfortunately, this legal analysis is entirely wrong.

    Why? Because RICO claims cannot be based on a single act of extortion or any other crime. These claims (which are exceptionally technically complex) require much, much more than that.   Like what?

    For starters, by definition a RICO claim has four required elements: 1.) conduct 2.) of an enterprise 3.) through a pattern 4.) of racketeering activity. See 18 U.S.C. § 1962; Sun Savings and Loan Ass'n v. Dierdorff, 825 F.2d 187, 191 (9th Cir. 1987). The phrase ‘pattern of racketeering activity’ is defined in 18 U.S.C. § 1961 requiring “at least two acts of racketeering activity … .” Of course, there are more than two reports on our site, but this doesn’t mean that RICO applies. Here’s why.


RICO DOESN’T APPLY TO DEFAMATION CASES

    So, what about damages from false and defamatory posts? Can you collect damages under RICO for harm to your reputation? SEOmoz thinks so, but this view is legally wrong.

    Again, because RICO was created in order to combat organized crime such as the Mafia, it is not a law of wide application. Instead, the law only applies to certain specific wrongful acts listed in the statute, only when there is a pattern of such acts, and only when that pattern has directly caused certain kinds of damage. For starters, here’s exactly what RICO’s main section says: “Any person injured in his business or property by reason of a violation of section 1962 of this chapter may sue therefore in any appropriate United States district court and shall recover threefold the damages he sustains … .” 18 U.S.C. § 1964(c). That sounds pretty broad, right?   If your business was harmed by a false post on Ripoff Report, surely you should be able to sue under RICO, right?

    No, because courts have already held that damage to a person’s reputation (such as might be caused by a defamatory posting) is not one of the narrow kinds of damages covered by RICO. This was the precise holding in Padilla Rodriguez v. Llorens Quiñones, 813 F.Supp. 924 (D.Puerto Rico 1993) which involved a dispute between the plaintiff (a superior court judge) and the defendant (a local district attorney). According to the complaint, the defendant devised a plan to destroy the plaintiff’s reputation so he could take over the plaintiff’s judgeship. The plan included a variety of attacks including the publication of defamatory statements accusing the judge of being “corrupt” and engaging in wrongdoing. Based on these events, the defendants sued for numerous claims including both defamation and RICO/extortion.

    The district court held that RICO’s statutory text limits a plaintiff’s recovery to harm to their “business or property”. Because the primary harm alleged by the plaintiff was reputational, the court found that any such damages could not be recovered under RICO:

In endeavoring to determine whether an injury to reputation is an injury to business or property under Section 1964(c), or, alternatively, is more akin to personal injury, it is essential to keep in mind RICO’s specific purpose to thwart the criminal invasion and acquisition of legitimate business enterprises and property. The plaintiffs in this case are alleging nothing remotely resembling such an invasion or acquisition. The damages which they claim are no more than injuries which flow from the negative articles published by the newspaper defendants. Primary among these alleged damages is the plaintiffs’ loss of reputation.

Padilla Rodriguez, 813 F.Supp. at 928 (emphasis added).

    Because reputational harm is simply not within the scope of the RICO statute, the court concluded, “damages relating to injury to reputation are personal injuries not recoverable under RICO.” Id. (emphasis added). As noted in the Padilla Rodriguez case, other courts have reached similar results. See Grogan v. Platt, 835 F.2d 844, 846 (11th Cir. 1988) (holding Congress did not intend to allow recovery under RICO for personal injury damages arising from wrongful death, assault and battery, and negligence); Bennett v. Centerpoint Bank, 761 F.Supp. 908, 916 (D.N.H.), aff'd without op., 953 F.2d 634 (1st Cir. 1991) (finding fear for one’s personal safety after receiving a threatening telephone call is not an injury to business or property as required by Section 1964(c)); Zimmerman v. HBO Affiliate Group, 834 F.2d 1163, 1169–70 (3rd Cir. 1987) (damages for emotional distress are not recoverable under RICO).

    Put simply, if someone posts false information about you on the Ripoff Report, you can always file a lawsuit against the author and you can recover any and all damages the court awards you. However, damage to a person’s reputation is not actionable under the federal RICO statute, and such claims have consistently been dismissed in lawsuits against us. Unless SEOmoz is willing to pay your legal fees (plus the fees you would have to pay to Ripoff Report once you lose your case), we strongly caution everyone to seek an independent legal opinion from a RICO-qualified attorney before you assert such claims against us or against anyone else.

V.             ANATOMY OF A REAL RIPOFF REPORT LAWSUIT

    This might be surprising, but before the article was published do you know how many times SEOmoz contacted Ripoff Report for input on the article about how Ripoff Report lawsuits work? How about this—ZERO. Despite suggesting that the real goal was to help readers “dig into the issues,” prior to publishing the article the author never bothered to contact us and never bothered to ask us for any input or response to help her gain a better understanding about how Ripoff Report lawsuits work in the real world.   Why not? Why would a person claim to be writing an investigatory article about a company’s litigation history and then fail to make any effort to contact the company or give an opportunity to respond before the article was published?

    Since we do not believe the article accurately describes how a REAL lawsuit against Ripoff Report works, we’ll cover that briefly. We also want to explain the serious legal and financial consequences of bringing a lawsuit against Ripoff Report, so we will offer some insight into those points. We also want to set the record straight as to some of the additional factual errors contained in the article.

    Let’s get started!

WHAT HAPPENS WHEN YOU SUE RIPOFF REPORT?

    This is a pretty broad question, so we’ll respond somewhat generally. There are really only two main types of lawsuits brought against the Ripoff Report: 1.) Lawsuits that do NOT accuse us of creating the offending report, and 2.) Lawsuits which DO accuse us of creating the report.

    Several years ago, the first type was the most common—we were frequently sued simply for acting as the “publisher” of a report written by someone else. In our experience, most people named in a Ripoff Report know exactly who the author is, and in the past, plaintiffs were pretty honest in their lawsuits against us. Thus, plaintiffs would sue us claiming that a false report written by ‘Dan Defendant’ (as an example) was posted on Ripoff Report, and the Complaint would allege that we were liable for republishing Dan’s post even if we did nothing to create or alter the report.

    When a Complaint makes such a claim, courts will routinely dismiss them immediately because the CDA bars any liability for republication of material that a website did not create. One basic example of this was a federal case filed in Arizona called Global Royalties, Ltd. v. Xcentric Ventures, LLC, 2007 WL 2949002 (D.Ariz. 2007). In this case, the plaintiff was honest and did not accuse Ripoff Report of creating any part of the offensive post. Rather, the plaintiff knew exactly who the author was, and they had no reason to believe and no evidence to show that Ripoff Report had any involvement in creating or changing this report. Because the plaintiff was honest and did not accuse us of creating the report, the case was immediately dismissed for failure to state a claim based on the court’s determination that we were protected by the CDA.

    After winning cases like this for several years, plaintiffs who were unhappy with the outcome decided to change their tactics and do what SEOmoz recommends: “if you’re going to sue RipOff Report, it is very important to allege that the website created and/or substantially altered the meaning of the content.”   Making that allegation in a Complaint changes the case in a significant way—regardless of whether the allegations are true, a court faced with a motion to dismiss is required to assume the facts in the Complaint are true even if they’re not. So, when a plaintiff files a Complaint accusing us of creating or altering content, this generally means the case cannot be dismissed as quickly or easily as it would without such an allegation.

    While that may sound great to enemies of the Ripoff Report, there’s a BIG problem with this strategy—it’s blatantly illegal and unethical to make false claims in a lawsuit, and as we explain in the next section, doing so will almost certainly get you and your lawyer into very, very big trouble.   Moreover, as we said before, without admissible evidence to support your claim, it will only take about 60–90 days for the court to grant summary judgment in favor of Ripoff Report in most cases.

    Put simply, if you believe that making false allegations against the Ripoff Report is going to help you prevail or help you to get revenge on us by dragging us into a long and expensive lawsuit, we’re sorry to tell you but that’s just not the case. If you accuse Ripoff Report or Ed Magedson of creating or changing content without evidence to support your claims, not only are you going to lose your case, at minimum you’re going to end up paying Ripoff Report’s costs and attorney’s fees.

VI.            ANATOMY OF A RIPOFF REPORT COUNTERCLAIM

    So let’s say you hate the CDA and want to take revenge on Ripoff Report by bringing a lawsuit accusing Ed Magedson of creating a report or a title about you even though you know that’s not the case. Because you won’t be able to prove your claims, the court will enter summary judgment against you. This is what happened in Whitney Information Network, Inc. v. Xcentric Ventures, LLC, 2008 WL 450095 (M.D.Fla. 2008). But what happens next? Do you simply get to walk away? No.

    As we stated above, misusing the courts by pursuing a claim that you know is groundless is illegal and may subject both the plaintiff and his/her attorney to civil liability under Section 674 of the Restatement (Second) of Torts. What does this mean? Simple—if you bring a groundless lawsuit against Ripoff Report and lose, you can be sued in a new lawsuit filed in Arizona and you can be forced to pay all of Ripoff Report’s attorney’s fees and costs, plus any other damages caused by your actions. What sort of numbers are we talking about? While they will always vary based on the length and facts of the case, attorney’s fees in excess of $100,000 or more are certainly not uncommon.

    Although this may sound harsh, Ripoff Report is unwilling to tolerate anyone who ignores the law or uses the court system as a weapon to file bogus lawsuits. For that reason, after the court granted summary judgment in our favor the lawsuit filed against us in Florida by Whitney Information Network, we took the extraordinary step of filing our own lawsuit against Whitney and its lawyers here in Arizona.   A copy of the Complaint we filed in that case can be viewed here.

    Word to the wise—if you bring a lawsuit against us which contains allegations that you know are false, you should be prepared to not only lose that case, but also to face a new lawsuit filed against you here in Arizona.

VII.          HOW TO RESPOND TO A RIPOFF REPORT

    So if you’re still reading at this point, you may be asking yourself—well, if I can’t sue Ripoff Report, what CAN I do to respond to a negative report about me?   The honest answer is PLENTY! You have numerous options available to you, and if you follow a few simple steps, you should easily be able to reduce if not eliminate the effects of a negative Ripoff Report without having to spend a dime.

    Here are just a few suggestions for anyone dealing with a negative post on our site—

TIP #1—Stay Calm

    That’s easy for us to say, but trust us—after more than a decade of experience in both running the Ripoff Report and having more than our share of criticism, we understand that it’s human nature to be very upset when you see a negative online posting calling your business a ‘scam’ or accusing you of something you didn’t do. We don’t like people bashing us and we know how upset people can get when an anonymous poster threatens their economic livelihood.

    Nevertheless, the #1 most important advice we can give you is this—don’t make any decisions when you’re upset. Wait until you’ve calmed down before making any decisions about what to do.

TIP #2—Get Good Advice

    If you are the victim of a derogatory Internet post (whether on our site or somewhere else), you should immediately try to get advice from a local attorney who has knowledge and experience dealing with similar cases. This is especially true if the post is causing real, significant economic loss to you or your business. As we explained above, the CDA has no impact at all on your right to sue the author of any false Internet posting, but the law usually provides relatively short time limits to do so (often one year from the date of publication, regardless of when you learned of the posting). In addition, if a posting has been made anonymously finding an author may require sending subpoenas to third party ISPs who may not keep information for very long, so time is truly of the essence.

    Unfortunately, Ripoff Report cannot simply hand over anonymous author information upon request, but if you have a legitimate claim we will be happy to help you get this information as promptly as possible.   In fact, we have created a section on our site explaining exactly what you need to do in order to get author information from us.

    If you don’t know a local attorney, we strongly recommend that you call the state bar in the state where you are located and ask if they have a lawyer referral service. Many times, these services can direct you to a local attorney who can meet with you for a reduced fee and give you advice on your options, but again, please make sure the person you meet with is knowledgeable and experienced in dealing with online defamation cases. This area of law has many unique rules that not all lawyers are familiar with, so you need to find someone who has handled previous Internet cases.

TIP #3—Always File a Rebuttal

    It’s a common misconception that the WORST thing you can do in response to a report is to file a rebuttal. People spreading this myth seem to believe that rebuttals cause reports to appear higher in Google’s search results than they otherwise would, but we have never seen any evidence that would support that claim. On the contrary, even when a report has no rebuttals, it will often appear on the first page of Google, so leaving the complaint unanswered is generally a bad idea.

    In our view, failing to post a rebuttal is really one of the biggest mistakes you can make. Regardless of how true or false a report may be, when you leave it unanswered you guarantee that anyone who finds the report will only hear half the story. Unless you agree with every word in a report, we think that filing a rebuttal is the BEST thing you can do, and it won’t cost you a dime. We already suggested you review this great example from a company called OvernightMattress.com, but just in case here are some additional suggestions for what makes a good rebuttal:

Say sorry! No matter how much you disagree with what the author has written, it’s almost always better to begin with an apology. This defuses the situation and it shows you are concerned without making you look defensive. Even if you don’t believe in the saying “The Customer Is Always Right”, you should always assume that if someone took the time to complain about you, they’re probably looking for someone to say sorry to them…SO SAY IT!
Offer to immediately fix the author’s complaint. This is a no-brainer, but it is something that many people overlook. If someone has written a legitimate complaint about you, then your best bet isn’t to hide the complaint. Rather, you should use that as an opportunity to shine. How? Easy—by offering to do whatever it takes to make the customer happy. If the complaint isn’t legitimate, you can always explain your side of the story, but in most cases, this may not help to impress other customers. NOTE: if a complaint is simply fake and wasn’t written by a real customer, there’s not much you can do to please the author, but by the same token your offer of a full refund or some additional remedy will make you look good but won’t cost you a dime since the fake author will never take you up on the offer.
Provide positive info about your company. Again, no matter whether a report is true or false, because a Ripoff Report can appear on the first few pages of Google, a complaint about your company may be seen by lots of people. That being the case, why not use it as a free advertisement for your company? Your rebuttal can contain testimonials from satisfied customers, information about awards you have won, or other positive information that will draw customers to your door. What not get creative and say something like this: “We’re sorry that we had an unhappy customer write a complaint about us, but in order to prove that we’re a great company, we will offer 25% off any purchase if you print this page and bring it in—just tell us you saw us on the Ripoff Report!” This may seem a little unusual at first, but why not try it? What do you have to lose?
Ask your happy customers to post rebuttals praising you. Another no-brainer. One of the most effective strategies we ever saw was a doctor who was criticized in a report. Rather than getting mad, the doctor told his patients about the report and asked them to post rebuttals sharing their opinions about him. Around 40+ rebuttals were filed by happy patients praising the doctor and giving him glowing reviews. No lawsuit was filed and the doctor never paid us a dime. Problem solved!
Provide contact information so people can find you. If you’re going to write a rebuttal, we always suggest that you include your real name, phone number, and email address so that people can reach you if they need more information. Many people seem to use anonymous rebuttals, but in our experience it’s much more effective to put a name and a face on your business so that customers will feel safer trusting you with their business.

TIP #4—Be Cautious With Paid SEO Services

    If you have been named in a Ripoff Report, you may receive solicitations from “report removal” services offering to help “restore your reputation”—in exchange for a fee. Some people incorrectly assume these emails have been sent by Ed Magedson or someone else associated with Ripoff Report. To be clear—Ripoff Report NEVER sends out emails soliciting anyone to pay money for report removal similar services.

    These emails are usually sent by people offering SEO (search engine optimization) services. The general idea is that if you pay their fees, they will create lots of web pages and other material which will appear higher on Google than the Ripoff Report. Thus, the report on our site won’t be removed, but it will be bumped down so far on Google that most people won’t find it.

    It is important that you do your homework and make sure the company you work with is reputable, and is able to provide the promised services. Make sure you know what you are getting into. For instance, ask if the results will continue after you are no longer making monthly payments, or if the results are only temporary. We have heard lots and lots of stories from people who paid hundreds or thousands of dollars to SEO companies only to find the results were temporary or otherwise ineffective, so please use caution when considering this option.

TIP #5—Get Super-Creative

    We’re constantly on the lookout for people who have come up with useful suggestions for responding to reports and we want to give credit to one of the best examples we’ve seen: http://editweapon.com/rebuild-online-reputation/   As explained on this page, a company who was listed on Ripoff Report and other sites found that Google was adding the words “scam” and “complaints” as part of its auto-suggest feature.

    FULL DISCLOSURE—this company did join our Corporate Advocacy Program, but they went even further than that. They actually purchased a domain name with the word “scam” following their name and they used it to create a page explaining why they were NOT a scam. Within just a few weeks, their “not a scam” website was ranked 7th on Google.

    Now this process might not be right for every situation, but clearly you don’t need to join CAP in order to learn from this example. If someone has posted negative information about your business, it’s always a good idea to strike back with your own website(s) explaining your side of the story.

TIP #6—Consider Using Ripoff Report’s Arbitration Program

    As a final suggestion, we want to explain that in response to demand for more options and solutions, we have recently created a new arbitration program which allows anyone to dispute the accuracy of a report in a fast, easy, and relatively inexpensive process. Our new program was modeled after the Uniform Domain-Name Dispute-Resolution Policy, and it allows anyone named in a report to have the matter reviewed by an independent arbitrator who has contracted with Ripoff Report to provide this service.

    How does the process work? In short, if you want to dispute a report you can file a short complaint with us identifying the report and explaining your side of the story. You will also need to provide evidence supporting your position. Once we receive the required information, we will forward this to the author who will have an opportunity to submit a response.

    All materials are then reviewed by an independent third party arbitrator who will make a decision as to whether the report is accurate or not (one of our arbitrators is a retired judge from the Arizona Court of Appeals). Ripoff Report plays no role in the decision, and we will agree to honor the arbitrator’s decision.    So what happens if a statement in a report is determined to be false? We will redact that statement from the report and post a copy of the arbitrator’s ruling showing that the dispute has been resolved in your favor.

    What does this cost and how long does it take?   Currently, the fee is $2,000 which covers the fees charged by the arbitrator and additional administrative expenses. In most cases, we expect that the arbitration process will take about 30 days from start to finish, depending on the availability of the arbitrator. Compare that with the average cost of a lawsuit (which can easily exceed $100,000) and the average time for a case to get to trial (which can be 1-2 years, not counting appeals).

    How can you get more information about the program? Just send us an email at: [email protected] and we’ll send you the program rules, agreement, and the forms you need to complete the process.

VIII.         CONCLUSION

    As we said at the beginning of this rebuttal, Ripoff Report knows that many people out there are angry at us. We know that many of you don’t agree with our policies. We understand that some people even feel we’re operating outside the law. We hear those complaints loud and clear.

    Rest assured, we’re constantly striving to listen to our critics, to adjust our practices when appropriate, and to do everything we can to stay within the bounds of the law while still giving our users a powerful forum to share their thoughts with the world.   For the most part, we think many of the negative opinions about us are based on the rumors, lies, and half-truths being spread by crooked companies who are trying to trick people into thinking that Ripoff Report is evil. Don’t be fooled, and don’t believe everything you read online—even if it’s posted on our site.

    Now that you have heard our side of the story, if you still disagree with what Ripoff Report does, we understand and respect that. Even if you still feel that Ripoff Report should be shut down, we hope this rebuttal has helped you to understand the drastic impact that changing the law would have on everyone’s right to free speech. Like the Internet itself, Ripoff Report is always evolving and changing, and we hope that in time, even our critics will understand the important role we play in fostering and promoting freedom of speech.

The Anatomy of a RipOff Report Lawsuit

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The Anatomy of a RipOff Report Lawsuit

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