So, Have They Actually Done Anything Wrong?

So far, we’ve gotten an insider’s view of a phone consultation between two high-profile Internet marketers. And we’ve caught wind of other anticompetitive practices that may or may not be going on inside the Internet marketing space. But has anybody actually done anything wrong?

Here’s a great comment Antone Roundy made here on this blog that sheds light on this question:

Up to a point, what these guys are doing is just smart business: build industry connections, promote each others’ stuff, time your product releases so that they don’t drown each other out (not sure whether that’d be illegal or not by itself).

But if they’re promoting each other regardless of product quality or value for the price, that’s unethical at best. And if they’re agreeing to a pricing scheme or taking products off the market during other peoples’ launch periods to reduce competition, I’d expect the FTC to be breathing down their necks really soon.

With that in mind, here’s a list of specific business practices I’d consider blatantly wrong:

• Fake Endorsements – I’ve said it before and I’ll say it again. Fake endorsements are wrong. You should not recommend a product unless you’ve personally reviewed it or used it yourself. In cases where you can’t review a product in advance (for instance, a seminar), then hedge your recommendation; tone it down a bit; let people know you’re making the recommendation based on the person’s reputation and not necessarily the product or service itself.

• Non-Payment of Affiliate Commissions – Let’s call this for what it is: theft. If you promise to pay a commission to your affiliates based on their performance, and then you refuse to pay them after they’ve performed, then you’re committing a crime. I know this happens quite a bit because people have a tendency to spend the money they owe to affiliates. Then, when it comes time to pay, they have nothing left. The trick is to discipline yourself so affiliate commissions are always paid first, no matter what.

• Paying A-List Affiliates, But Not B-List Affiliates – If you selectively pay out affiliate commissions, you’re guilty of favoritism. This is yet another form of theft (non-payment of affiliate commissions), but it’s more sinister because it indicates you actually do have the financial means to pay your affiliates — you just choose not to pay certain ones. It’s willful theft versus theft due to stupidity.

• Positioning a Product as a “Magic Bullet” When You Clearly Know It’s Not – I’m fine with enthusiasm, conviction, and metaphors in the sales process. If you have a great product, do your best to sell it! But I personally believe that you should not position a product as a cure-all if you know it’s not a cure-all.

• Using Intimidation to Prevent Competitors from Running Promotions at the Same Time as Your Launch – If you and a partner have agreed to promote each other’s products, then of course it makes sense to run your promotions at separate times so you can support each other. As Antone Roundy pointed out in his comment, it’s just smart business. But trying to prevent other promotions from happening by intimidating your competitors is just slimy — almost like what you’d expect the Mafia would do if you marched into their territory and started offering competitive “protection services.”

I’m sure there are other practices that should be included in this list, but these are the ones that come to mind.

So, what should you do when you see these things happening? It’s simple, really. You opt-out of the sales process. You unsubscribe. You choose not to buy.

As Stephen Dean pointed out in a recent blog post, November 2 was voting day. But so is today. And tomorrow. In fact, every day of the year is a day you get to vote for the businesses and charities you want to support.

Rather than get hung up on past financial mistakes you may have made, decide today that you’re going to make better choices. Decide today that you’re going to vote with your dollars and support credible businesses with good reputations. That’s really the best recourse you have — and the fastest way to effect change.

-Ryan M. Healy