Every Affiliate Manager has probably seen these sites come through their program for approval. It’s the ready-made mall sites that are sold as packages to people so they can make their millions on the Internet while they sleep. I’ve often heard Affiliate Managers ask whether there is any harm in accepting these types of sites into their program, even though they realize the sites are not likely to convert sales. It seems that there may indeed be risk in accepting these types of package deal sites into programs.
On August 21, 2007, the FTC issued a press release outlining the action taken against a company selling these types of mall sites to consumers. The investigation was conducted jointly by the FTC and the Arizona Attorney General’s Office and it appears the AG will be filing a parallel case.
The case was filed against The Results Group, LLC which sold affiliate sites and hosting to consumers as a business system for $99 to $599. They claimed that their system was generating over $50,000/month in commissions for some of their users. Yeah right. Anyone in this industry knows that is far from realistic. The Results Company would then pressure consumers into purchasing more “advertising” for the site they had purchased.
The FTC felt that consumers were provided with false and misleading information regarding The Results Group “turn-key” system. The upshot is that The Results Group will be returning about $435,000 to consumers and will give up thousands in cash which were the proceeds from the sale of luxury sports cars, the value of life insurance policies and a Las Vegas real estate deal. All of that sounds like the FTC hit them with “disgorgement of ill-gotten proceeds” legal whammy, which means they can go after those things purchased with money earned through a scam.
While less than half a million may seem like a bit trifling for the FTC go after, the order was for $19.5 million and $435,000 is the settlement amount. It sounds as if the FTC agreed to take whatever they could get based on current assets.
The FTC mentioned two merchants promoted through these web sites, Amazon and Overstock. While it is doubtful (or at least I would hope so) that the FTC or an AG would go after any of the merchants partnered with these types of mall site scams, there is a potential branding issue for merchants. As a merchant, do you really want your brand connected with such scams? Let alone even being mentioned in an FTC press release.
These types of scams can only exist because they have merchant affiliate relationships. Since anyone with half a brain in this industry knows that these types of sites just aren’t going to bring in any amount of revenue to write home about, it seems to be no reason to be connected with this type of business model at all.
My personal advice would be to hit the decline button and stay clear of such “turn-key” solutions.