Earlier today we wrote about a nasty survey scam that pre-IPO Intelius, the company founded by Naveen Jain after he left Infospace in late 2002, runs by customers after checkout. These customers are asked if they’d like to fill out a quick survey to get $10 cash back, but what they are really doing, via the fine print, is authorizing the transfer of their credit card information to a third party. The customer is then auto enrolled into a perpetual $20/month subscription for what appears to a completely bogus service.
We also pointed out that nearly all of Intelius’ revenue growth is driven by this survey scam, and questioned the IPO lawyers, bankers and accountants who have failed to discover it during the months-long due diligence process.
Jain’s son Ankur Jain (pictured right with Richard Branson) sent me a message via Facebook defending his father and suggesting that our original post is uninformed and misleading.
Ankur makes a number of assertions in his email. Among the more important: Ankur states that his father was cleared of any wrongdoing around the InfoSpace insider trading debacle, for example, and that the Seattle Times made false allegations against him (the three part Seattle Times story on Jain is here). Based on my review of the lawsuits, it seems that Jain was far from cleared of wrongdoing and the Seattle Times articles appear to be objective and well researched. In short, Naveen Jain did some fairly evil stuff with InfoSpace and paid out substantial amounts of money in fines and judgments.
Ankur also says that Intelius has “one of the strongest business models I have come across” and that the Adaptive Marketing survey scam/perpetual subscription is actually a legitimate service. As I described in my original post, based on my purchase of Intelius products and the subsequent voluntary tripping of the survey scam, I disagree strongly with both assertions. So do hundreds of consumers who’ve complained to the Better Business Bureau and other organizations.
The full message is below:
Michael,
I’ve been an avid reader of tech crunch for quite some time now, and have often enjoyed the articles you write on interesting startups. This just makes it all the more disappointing that you would write such a misleading and naive blog post on Intelius and my father, Naveen. I wanted to take this chance to not only respond to some of your false accusations, but also to clear the record for my fellow readers of tech crunch. In the past you have often strived for excellence and honesty, and so I hope you will take this opportunity to correct some of the wrongs you have written.
First I’d like to address your concern with Intelius and then the more important matter, my dad’s character. Someone who does as much technology reporting as yourself should be pretty familiar with companies such as Adaptive Marketing and how their product is integrated into services across the web. The service, similar to WebLoyalty, offers the users the ability to receive an offer that is relevant to their purchases by signing up for a free 7-day trial with a adaptive marketing [which can be canceled for no charge at any point in those 7 days]. Adaptive Marketing then provides that user with targeted offers and savings for as long as he or she remains a member. In fact, adaptive marketing provides this same offer through many other large web services. To call this a scam on Intelius, you would have to consider a series of other large companies including VistaPrint, Buy.com, Transunion scams as well [they all provide similar offers after checkout]. And frankly none of these companies are scammers whatsoever. Further, Intelius has one of the strongest business models I have come across with one of the most passionate set of leaders in the online industry. More importantly, these directors have an unbelievably high level of integrity. Take for example the chairman, Admiral William Owens. Among his many qualifications, Admiral Owens was Vice Joint Chief of Staffs for the US and CEO of Nortell. He is widely regarded as one of the most genuine and respected leaders in today’s global economy – and has shown his full support of the executive team by joining as chairman of Intelius.
But the most important thing I would like to address is my dad’s character. Outside of the corporate world, my dad has long been a supporter of many noteworthy organizations including United Way, Children’s Hospital, the University of Washington, TIE, Child Relief and You, and many more. He has taken the initiative to actively guide and mentor many young entrepreneurs in the country, thereby helping to lead the next generation of innovators and leaders to success. Yet, even within the corporate world, he has shown a strong conscience and high integrity. It is unfortunate the false allegations such as those made in the Seattle Times continue to circulate the web. But I would have expected a write like yourself to do some more research before referring to this article. For starters, I would recommend looking into the SEC letter or federal investigation, both clearing my father of any wrongdoing. At Infospace, he helped lead innovate some of the most used web services today. It is unfortunate that the stock price fell during the dot-com crash. Yet, keep in mind that unlike thousands of other companies that completely crashed during that time, my dad kept Infospace afloat and when he left the company, Infospace still had nearly $300 million in cash. With this new venture, Intelius, he has inspired many who have joined and built a service which is so crucial in today’s world. Intelius is offering millions of users the ability to arm themselves with knowledge– thereby protecting themselves from potentially dangerous associates and from Identity theft.
I urge you Michael to be more careful in the posts you place on Tech Crunch. Such a well respected blog cannot afford to post uninformed and/or misleading posts. I look forward to hearing from you & if you have any other questions or concerns, please feel free to email me or contact me at [REMOVED].
Best,
Ankur Jain
Interesting. Time would tell I believe.
This totally happened to me! I approved a $2.99 fee for a simple back ground check to check my credit score (which btw was a total scam), then 2 days later I received a charge OF $20!!!!! I called the service hot line and was put on hold for 15 mins! When I finally talked to someone the basically told me to deal with it! I promptly hung up the phone called my bank and had my account closed so that they couldn’t scam any money off of me AGAIN! I wish I had done some research on this company!
Michael, whats your response to Ankur’s message?
This doesn’t prove anything. Intellius is a bad service, mis-guided the consumers willfuly.
VistaPrint atleast sends me business cards even if the quality is not so good.
You did the right thing reporting the first one, no this one!
Its gotta be pretty tough to see a site you regularly visit totally rag on your dad. That’s a heartfelt letter and, in my opinion, prompts a second look at Intelius. There’s plenty of scammers on the internet, but its very easy to wrongly group a site with overly aggressive advertising into the “scammer” category.
Did you seriously just post this guy’s phone number? That seems a little tacky to me.
– ankur (not jain)
It’s shameful that Intelius would drag Naveen’s young son and a former Admiral into this mess. I have to admit however that it’s a clever PR tactic to use these pawns in this way. What a soap opera!
Ah, never mind– I see that it was removed.
– ankur (not jain)
Michael, I agree with you! If you going to sign up someone for a creative marketing sale you should let them know in BOLD what they are getting and not be deceptive for whatever reasons.
I also do not care what nonprofit charitable causes the founder of the company has supported and how many jobs he created!
A scam is a scam and is scam! It is a scam even if the law clears it, but we do not care about the letter of the law, but the spirit of the law!
I am also against companies that offer personal information for sale in the face of fear mongering !
So Ankur Jain, you not saving the world from Terrorists by forcing people to subscribe to Intelius!
i think ankur is a gangster for stepping up for his dad. i have seen intelius develop in front of my eyes and it ACTUALLY is run by leaders with good ethics. If you have your doubts, give it a second look without bias.
In February 2000 Jain gave a presentation to over 500 money managers at the Goldman Sachs Technology Symposium in NYC.
The temporary walls were rolled back at the Grand Hyatt to accommodate the throng, people were literally hanging from the rafters. Jain gave a cocky presentation that included the quote
“we (infospace) are going to make a shitload of money”
Long story, short….he did not. Of course, the stock was at the tail end of a move from $100 to nearly $1,400…over 3-4 months.
Incredible…I have seen promotional CEO’s in my days, but nothing like Jain in the first quarter of 2000. His net worth was increasing by tens of millions on good days, and it clearly intoxicated him.
The stock’s chart is awesome
http://tinyurl.com/3hbztm
Dear Ankur Jain,
I surely hope you are not working at your fathers company. Since filing your S1 the company has gone into the “Quiet Period”. You my boy may have just opened a can of worms were the SEC may now start to ask questions.
As far as the Admiral. Let’s see how his legacy is captured in Wikipedia when he passes on…..,” he served his country and then got suckered into a con that came crashing down”
My suggesting is that you advice your dads corporate counsel of the letter you wrote to Michael. Odds just increased that this company will not go public.
Have a nice summer and say hi to Richard Branson next time you see him.
Sincerely,
Elliot Spitzer
good reply!
Ha, Ha! Chapter 11 Baby! You have been caught with your pants down!
The bastard probably sold out his stock options and even heavy sold short the stock!
Dude you better run before SEC gives another look at you!
Have you heard of Crazy Eddy?
Jake (#9) How can you give it a look without bias once you know what their model is to capitalize via deception. I guess we definie ethics differently.
As for Ankur, the apple appears not to have fallen far from the tree.
I’ve met this kid–came off as kind of a cocky slimeball. He wants to take over all of the collegiate entrepreneurial clubs in the country with a secret elite society called “Kairos.”
Phhht.
Sometimes in a war, silence is the best option.
Ridd - if you’re going to trash someone, you should do it under your real name. I disagree, strongly, with Ankur, but he came at us head on with his real identity. I give him serious credit for that.
Ankur also says that Intelius has “one of the strongest business models I have come across”…
Looks like the dad’s bombastic nature has rubbed off on his son. It is this very nature that makes me despise Naveen. I couldn’t care less about his crimes as there are tons of white colar criminals out there.
Like father like son…or is Adaptive Marketing and Intelius the most fantabulous companies ever known since ZANGO?
@Ankur Your letter has as much facts as Mr. Arrington’s posts. Here are some of your “points”
Point 1: “you would have to consider a series of other large companies including VistaPrint, Buy.com,.. and frankly none of these companies are scammers whatsoever.”
Rebuttal: If bigger companies pull the same scam, the scam is “frankly” not a scam anymore?
Point2: “Further, Intelius has one of the strongest business models I have come across with one of the most passionate set of leaders in the online industry.”
Rebuttal: How old are you? How many companies have you came across? Do you mean you are an avid reader of TC?
Point3: “He is widely regarded as one of the most genuine and respected leaders in today’s global economy”
Rebuttal: Really? He was a part of some restate company in asia… is that all it takes to earn respect on the global economy scale?
Point4 : “At Infospace, he helped lead innovate some of the most used web services today.”
Rebuttal: They are… what?
I would like to know what YOU WANT TO ACHIEVE BY WRITING THIS LETTER?
Ankur, thanks for pointing out the other firms. I’d known that VistaPrint pulls a great deal of its revenue from these sorts of scams (by some accounts, its the only profitable segment of their business). It would be interesting to take a general look at the number of big firms who are basically run as fronts for this kind of bait and switch con. I do agree that Intellius is hardly unique or even the worst offender on this.
When it walks like a duck, sound like a duck and smells like a duck it is a duck!!! Same applies to crooks.
Mr. Arrington,
My name is Samuel Iglesias, and I’m a rising senior at Duke University. I found Mr. Jain’s presentation at Duke–one brimming with insincere bravado–highly distasteful (and it wasn’t long before others in the audience made this known to him). His message was, it seemed, “Kairos is taking over your college entrepreneurship club. You better hope you’re good enough for us.” He provided no concrete benefits (aside from some bland statements of “endorsement” forwarded through some of his father’s connections), no long term objectives that made sense (”we want to find the most passionate people at every school” And do what, barbecues?), nothing that indicated to me that working through his network and his friends would really propel my idea forward. If there was anything I took away from his presentation, it was “control.” “Complete rebranding throughout the country.” Kudos to him. I wish him the best, really.
My two cents: as he and his friends try to make a sale at college campuses nationwide, they should reexamine their Napoleonic approach–it’s not good at winning over friends.
Samuel
Maybe he is an ugly duckling that will grow up to be a beautiful swan! lol
son defending dad, of course he’s saying all the good thing in this world regarding his dad if he has the right mind.
Mr. Iglesias,
It’s funny that you bring up Ankur’s Kairos “society.” It seems to me that Kairos is just an unsubstantial marketing scam that allows Ankur to expand his own personal network nationwide.
-Juan
@Mr.Arrington
Bravo , for this great disclosure. Regardless if they are breaking the law or not, this kind of practice needs to be outed, and let the consumer decide for themselves.
@Ankur
If there is nothing wrong, then there is nothing to defend.
@Jain
You know you are wrong, you know your practices are wrong, but people have done worse to get paid. You’re just unlucky your business model got exposed.
@the techcrunch readers
Gotta Love the Drama
Again, good job Mr.Arrington
ChangeForGood,
I hardly think exposing a scam lowers to tone. In fact, the role of the media should be to inform the public about these things. Without them, big business and the government would walk all over us. If the media reported enough of these scams, they wouldn’t keep happening.
two things to know about indian culture, family loyalty is very highly valued, and it is totally normal to try to get everything you can from your customers, and a third, lying is normal, an accepted part of daily life. they don’t get mad at each other for any of this … even big companies, say, the distributor of apple …
I second the motion from ChangeForGood. TC is rapidly not becoming worth staying up past midnight for. Back to basics.
I found out only this morning that I was a victim of the VistaPrint survey scam.
I had no idea when I filled out the survey that I would be charged anything, let alone be charged twice a month forever for filling out the survey.
@Ankur, if your father is responsible for doing the same thing as VistaPrint, in my opinion he has the moral compass of a cockroach. But I suspect that even cockroaches wouldn’t want to be associated with him either.
If i can get 5 people to type the number “1″ i will bring the system down. The entire thing.
I am the president of the entrepreneur group at Emory, a member of Kairos, and I was also at the conference Samuel attended. The Kairos society is a great idea that encourages the entrepreneurial spirit amongst students worldwide. It provides students with the ability and resources to network and connect amongst each other to further act upon their ideas that they wouldn’t otherwise have the opportunity to develop. The strong support nationwide and amongst the brightest business minds in the country is a testament to this fact. It’s a great service that should be praised and embraced, much like was done at your own school, Duke, which is a founding member of the Kairos society. In any case, Ankur is right on, and deserves to be heard.
Jason
Come on, its a scam. The same way that those infomercials you see on nutritional supplements that have not been evaluated by the FDA that claim to cure everything from obesity to impotency are a scam. The same way that any opt-out monthly recurrence subscription “service” is a scam. Sure, it may be legal, but they are scummy and scammy and should be outed as such. At least have the integrity to admit you are taking advantage of stupid people. Yes Ankur, taking advantage of ignorant and/or stupid people has long been a great business model, no wonder you view it as strong!
I understand the guy might not be that famous that there are many photos of him out there, but I found it kind of strange associating such a post with Richard Branson picture.
I got from the text he is not associated in any way with the issue.
Still, a quick review of the posts let me think Branson is associated with the story (his face is about half of the picture !).
The post unnecessarily demeans Richard Branson, an innovative and upstanding entrepreneur, by associating him with Ankur Jain.
I’m posting as someone who actually got fooled by this “Privacy Matters” upsale. I consider myself a savvy web consumer too, and I can usually spot these things from a mile away. But this was well done, very conspicuous, and I guess shocking coming from a company that is selling something as serious as background checks. I was able to get a refund from them, and the customer service rep seemed to have probbaly been through the routine a million times before. Still, I had to find the number and information through a consumer complaint website and almost cancelled my credit card in fear that it had been compromised.
As for the letter, it is honorable to defend his father’s honor like that. Any good son would do the same thing, and I don’t blame him for the passion in it. But as a consumer and potential investor, his character should be called in to question. There is a storied history of shady business tactics that date back almost a decade. As someone said, “if it walks like a duck, and quacks like a duck”.
So while I don’t blame him for his passion toward his father, I do think it’s wrong to hold back what I consider a scam. The business has been clearly boasting profits using this underhanded tactic. Investors should be made aware of this before putting down their money. It is only a matter of time before Intelius builds up a nasty reputation for underhanded tactics with consumers. When that day comes, their core business model depletes, and the company is not attractive any longer.
Hats off to TechCrunch for exposing this tactic!
Ankur: Your father is scum of the earth. He deserves to rot in prison. He has been essentially robbing people for $20 per month. By the sounds of things, he is a career criminal. How can you defend this behaviour? Your father is a thief and liar. Deal with it.
There is no question that Naveen Jain’s and Intelius’ practices are unethical. No only should themselves be ashamed, but also the banks and legal counsel that advise them on their IPO, who have chosen to close their eyes in light of the IPO fees. My advice is that we bring these accomplices (Deutsche Bank and UBS) to shame.
Ankur’s reply shows how ignorant he is. Just because his father may have made some charity donations, that does not mean Intelius’s practices are not a scam.
We need to bring this story to the attention of the WSJ, Financial Times, NY Times, etc. Let’s show the power of the People and the Internet!
Constantine
Having read through both the original article, and this follow-up letter, it seems that we can all agree that what Mr Jain and Intelius are doing is not illegal. And it is not technically a scam, unless you consider charging for a non-existing service a scam. It’s unethical, yes. You’d be downright stupid to buy the “service”, yes. But it’s not breaking the law. So I suspect the IPO will go ahead (as someone mentioned above, the banks make money regardless of which way the IPO goes), but like the previous companies Mr Jain has been involved with, it will tank. Thank you Michael for another very entertaining (and informative) article.
Man I just read the original articles linked, excellent read! This is one of the best stories I have read on tc in a long time. The articles had links including tons of documents and audio clips to support their claims. Sorry Ankur, but you should seriously distance yourself from your father if you want to be respected.
this letter is another scam…..ankur in pic looks like a kid…i do not think he wrote well orchestrated letter like this within few hours of posting here
dad jain is using son jain to get good marks at TC
Mike u r falling for jain’s scam one more time
Awww, are you worried about your inheritance Ankur?
Michael, did DAG invest with Intellius, great company. How many X return will it be. Some lucky endowment will make a killing.
I heard Venturebeat did a very positive review, since they share investors.
Michael-
I love the articles. I am really surprised that you are as direct about your accusations. I figured you, as a lawyer, would side-step any direct accusations. I mean, the evidence speaks for itself, but outright calling it a scam, or Intelius a scam company is pretty gutsy of you. I hope you don’t have to defend your comments in court!
I am curious, did you happen to lose any money on the Infospace stock plunge? You seem extra bitter in this story. I mean, you are often bitter … but you seem extra bitter!
I’ve been sick of Intelius’ bullshit “we have the information that you want” approach for a long time, and never likes that http://people.yahoo.com funneled you to their site so naturally. I was thrilled to see that Yahoo re-vamped that. They still link to Intelius, but it doesn’t look as blatant as before. I mean, before it look like a true Yahoo endorsement of this BS company.
Dear Potential Customer
I am offering you an opportunity to make some money while I scam you out of more money.
And it is your fault if you fail to notice the scam in fine print.
My reputation precedes me well. I have a built a reputation of being a serial scammer just see by efforts at infospace. Also, I have dragged the brightest and most well respected names through the dirt (see former CEO of InfoSpace) now recently stepping down from current position. I can’t wait until my next effort come to fruition.
FakeNJ
Fancy that. Dad’s morals - or lack thereof - rubbed off on his son. Surprise, surprise!
Good stuff Michael, thanks for having the courage to take this stuff on.
Here’s my take on this….Family of scammers…
http://bonchibuji.blogspot.com.....mmers.html
Hell, Mr. Arrington, you know how to draw people to your blog.
You gotta write books on this - good PR skills.
I can’t stop learning from you.
Apart from anything else, they should be put on trial for this slogan:
Live in the know. Live Inteliusly.
Inteliusly, sheesh