This was inevitable, particularly after this video surfaced. Sacramento based law firm Kershaw, Cutter & Ratinoff, LLP is investigating complaints about unauthorized charges imposed social network users who were mislead into accepting offers of dubious quality. Among those being investigated: Facebook, MySpace, Zynga, RockYou, Offerpal Media, SuperRewards and many others.
It’s ScamVille, the lawsuit. And we’ve spoken to one other law firm considering a class action claim against these companies.
Will users be vindicated and get their money back? Maybe part of it. A recent class action settlement against WebLoyalty for post transaction marketing scams led to a $10 million settlement, just a tiny fraction of the total revenue pulled in by these offers. The law firms are the ones who get a payday.
Gawker, which broke the story, makes a good point though. That video of Pincus looks bad enough on a blog. Imagine what a jury will think of it. And services like Offerpal have now admitted that what they did was questionable. This will likely settle quickly.
He only admits to peddling the twinky toolbar. Is that a crime?
he has also admitted that they promoted gambling sites on their games for months, hiding it from facebook (presumably with IP blocking): http://bit.ly/1fYXOm
Which apparently is against the FB-Law. Is it against US law?
Not trying to play devils advocate here. Just trying to figure out what illegal activity really might have taken place.
i don’t really know, but then how is promoting scammy sms offers (which are legal) illegal?
This would not be a criminal lawsuit, no law broken(maybe). This would be a civil case.
not sure exactly what zynga did or did not do. but advertising online gambling that is illegal in the USA is itself illegal. yahoo and many others have been dinged by law enforcement and have paid fines etc
ehm, then read this post http://bit.ly/4Frh51 by pincus himself. they had those links on their apps for months, hiding them from facebook, pretending they didn’t know that neither facebook, or google or adsense allow this kind of advertiging
i am deeply sorry for my spelling
it should be.
But its not.
But it doesn’t matter that it’s not criminal. Civil suits happen every day in this country.
Let’s remember that Arrington isn’t an engineer, nor an entrepreneur, but rather an ex-lawyer blowhard from Atherton. Give him his dues. He may know nothing about technology, other than what he picks up at lunch and dinner meetings with other affluent fat bastards, but he knows how to sue. Oh baby, does he ever know that.
I love that you are now crusading against the inevitable result of your previous crusade that everything on the internet should be free.
The best part is that the only people who acted on your crusade are class action lawyers who are sleazier than any facebook farming game could ever be.
Oh the irony.
Well maybe if he read the Terms and Conditions of the offers he was peddling, he wouldn’t be in this situation now… would he.
I mean how stupid do you have to be, the Scam T&C are clearly stated. Lucky for us that litigation in a free market clears these issues out of the marketplace efficiently.
It is not just the handful of companies who will be the named defendants who are guilty, and it is not just social networks where this type of scam happens.
This kind of shit can happen to just about all internet credit card purchase transaction. If you do something as simple as buying a $10 book from a reputable company like Time Life, you will notice a $30 membership charge recurring on your credit card every month. You know the all familiar drill from there. You call, they insist that you affirmatively enrolled yourself in a memebership. You burn about 800 calories getting mad and stressed yelling into the phone at some flunky on the other end. You finally hang up and call your bank to start a chargeback proceeding (which entails jumping through more hoops).
hi glad you brought this up, Amazon opted me into some shoppers discount club when I purchased a CD once -put me off using them for ages once I saw the scam of it – i.e they hide the optin to automatically charge your credit card – while making you think you are joining some kind of free loyalty card program – I even logged into the crappy site and set up a profile there – all with no idea I was actually paying for it – when I was the charge I presumed it was the lovefilm club I had joined that same week- so they got the blame for all my unauthorized overdraft charges from my bank each month – I thought I was some how managing to spend too much / not add up – when all along it was this dumb discount club getting me into debt, I ignored it for 6 months – adamant that it was impossible I was being charged as I’d not opted into anything – then I read more and more about it via tabloids on-line and realized I’d been done over, worst of all is that I’d defended the company at one point thinking that were in the right
bastards !!!! – takes note not to spend my pennies in big rip off checkouts.
the same with amazon. they use the same small print approach for all their promotions. When you sign up for trial, they somehow enroll you to the monthly payments to the sevices that apparently are necessary to allow you to have a trial. Trial is free, but services are paid. When you think you cancel trial, you in fact cancel only trial, but not the monthly services. This is unbelievable. they copied worst practices. It took me a while to cancel all their memberships and sure cost me a money. No business with Amazon after that. I am sure other do the same.
“They somehow” do it?
They tell you they are going to do it. It may be an opt-out but it is still an option.
Why is it that when people fail to read what they are agreeing to, no matter how small the fine print, they turn into sniveling toads that blame everyone and anyone except for themselves?
Whether or not someone “fails” to read depends ALOT on how these signup pages are designed. They are design with the specific intent of causing the typical user to “fail” to read.
Like I said below, my lawyer, a bright young guy who is a phenomenal speed reader, makes a living reading fine print– footnotes of footnotes. Even he gets duped once in a while by these scams.
The question is: how many people who purchase on the internet have NOT been duped by these scams? I have a feeling that if you ask 100 people that question, chances are, less than 25 will say they have not been victim.
When an ordering system is such that such a huge percent of users “fail” to read, this says a lot about the design of the system.
My lawyer, a young guy who is an amazing speed reader, makes a living out of reading small print. Even he has been duped a couple of times by these membership scams.
But it is not as simple as saying you will boycott Amazon or some other company that did it to you. The problem is, almost EVERY company does it. When it is that pervasive, boycotting doesn’t work because there is no where else safe for you to go.
This practice must be regulated or outright banned at the Federal or even international level.
Looks like it’s time **puts on sunglasses** to hit back.
+5
So how are those IPO talks going, Zynga?
I wonder if that now that EA bought playfish, a better game maker, and not them, they’re somewhat shitting their pants.
Revenue isn’t profit. You have to wonder about the operating margins in a company with that many sweatshop employees, and that much hardware slowly pushing bits through those crusty PHP/MySQL pipes.
I tend to skip all acticles with this scamville pic om it for 2 reasons:
1. it’s feels cheap
2. same pic again and again?
2. it’s broken (buy more pixels unless using this “style” adds to the content which it does not)
OK, of subject, hail me! (or agree)
you idiot, that’s the point, it’s supposed to mimic zynga’s dumb games:
1. farmville is cheap
2. all of zynga’s game are the same codebase with different css rules applied
3. all of zynga’s games are broken
I think I remember when Gator (spyware/adware) sued somebody for taking the piss out of their logo – an antispyware company nicked their crocodile too – if zwinky are connected to them – maybe they should be illegal – they were like the piranas in the goldfish tank at affiliate conventions – merchants loved them, everyone else was scared or hated them because they behaved really antisocially on-line, changing cookies and stuff .
ummm.. you live a very narrowly defined nerd life don’t you?
was aimed at pic order
I believe you
I’m anti-lawsuit in general but this one I support. I don’t think myspace and facebook should be accountable though, it’s not their fault that the companies making these games used shady methods to earn money.
Unfortunately, though, the only people who win with class action lawsuits are the lawyers. The average class member will probably receive less than $10 even though they probably got fucked out of a lot more than that.
the old adage rings true: if you play with fire, you will sooner or later get burned. And yes, IPO for Zynga not looking so good with maybe 1/4 – 1/3 of revenues off the table and potential lawsuits looming.
They were wildly profitable with CPA ads. Without CPA ads, they’ll be only incredible profitable. Facebook and Twitter are considered multi-billion $ companies with only a fraction of the organic revenues of social games.
i wonder if the money at stake is enough to justify going for a class auction. Can someone get the statistics about the amount of money generated by recurring sms offers from superrewards/offerpal ?
It makes sense that the lawyers should be making all the money. After all, they are the ones who will be putting the fear of God into anyone thinking of emulating scammers that specialize in designing utterly addictive but utterly mindless games, while the users, sorry to say, should not be compensated for having wasted their time playing them. People can say what they want about companies like Google, but at least Google is trying to make people smarter, not dumber.
About the time Mark started Zynga (November 2007), he also (with my help) implemented a subscription program on Tribe.net that was suggested by the users. We brought in $20,000 the first month. I asked Mark and AT for money to fix things (like database servers!) with tribe.net, and they refused until i gave up in October 2008. They “didn’t have the money”, when i could plainly see the revenues via Google adwords and Paypal. Sure, he’s allowed to run his own companby into the ground, but this is literally all he ever does. He’s unfit to run a business that lasts more than a year or two.
He’s a talented wee fucker, ain’t he. A used car salesman of the highest quality.
Lord, more VCs should invest in companies run by a scammy salesman. It’s good fer dee economee.
Its about time these companies be brought to justice. Im glad Mr Arrington took a stance and outed these companies for what they are, and im even happier to see that there is the possibility these people will be brought before the courts now.
Im with you Arrington, the system needs cleaning up of all these scams.
When does Google get sued for running IQ Quizzes in their ad network?
A few months ago, Zynga had a guy on the payroll named Blake whose sole job was to go trolling around social blogs and leaving cut & paste comments about how awesome Zynga was. And then his job was to make retarded youtube videos about how awesome Zynga was. And then he left unceremoniously. And now he’s an aspiring male model. Only in America.
They still have his horrible youtube videos up, him running around asking everyone how they like working @ zynga. Most responses seem lackluster and tired.
His comments here are great too:
http://www.oned...com/jobs/zynga/
At least he knows who to idolize:
“Mark Pincus – Thank you, from the bottom of my heart, for making this possible. Rather, making it possible for US to make this possible.”
Yikes.
Why would anyone get tired working in a sweatshop that stifles creativity with one week deadlines to push ‘feaures’ like a new button on a shitty UI.
Touche. Does not look like they’re ‘having a ball’
Sorry, I’m against this. Scamville is unethical, but it is not (and should not be) illegal. Suckers are born every day. Facebook should be protecting suckers, not my tax dollars.
Yep, he was a sucker for thinking he could get away with this scam when so many have been busted before. Ignorance of the law is no defense. Just because the entire Federal Government was snoozing during the Bush Admin, doesn’t mean it was legal even if some of you young guys never did any due diligence and assumed it was. A huge framework was put in place over the course of the 20th century to protect the public from these scams. One of many reasons for government and taxes.
I guess there is a big lesson here for CEO’s who A. either lie to Bloggers or B. don’t understand their business model.
Hopefully VentureBeat will clean up their act too.
From the attorney website:
“Users of these games may have been charged without their consent for “special offers” that result in hidden charges to credit and debit cards, sometimes through the use of phone text messages and auto-recurring SMS subscriptions.”
Uhm maybe somebody should explain to them that your credit or debit card can’t be charged through “phone text messages and “auto-recurring SMS subscriptions.” SMS charges have nothing to do with credit/debit charges.
By the way, did anybody else find it funny that these attorneys are linking to Gawker as an explanation of what’s going on…
Read more about this practice in the article “The Secret Shame of Social Networking: How Silicon Valley Got Hooked on Scammers” at Gawker.com.
You can’t make this stuff up…
I am sure almost everyone knows that when you signup free subscription for trial, there is a terms and condition and which no one care while signup due to free. Look at techcrunch ads in right columon and you will notice many monthly trail subscriptions, all are going to continue until you cancel.
I noticed this is very well-known business model and no one can think it is newly discovered and scam.
Do we think this trial offeres can be stopped?
Free trials existed for years without scams attached to them. If you have a good product then a free trial can really help in retaining a customer with no strings attached. There’s no problem with a legitimate free trial, they are just hard to find online these days due to lack of enforcement of existing law since 2000. Once internet advertising is cleaned up, free trials shouldn’t be the pervasive problem they are today.
It’s not to do with continuity/free trials as such – it’s the unknown or confusing ***opting in to a subscription without permission*** that is the crux of the problem – I’m always joining up for free trials of this or that – I like trying out services before I buy too, I’d not want to see free trials disappear, I’d just like to clearly know how much it will cost after the trial, before I sign up – or to actually be told in the first place it is a free trial for a paid service – customers also want an easy way to opt out of a paid subscription – not a premium number that is always engaged.
Even eBay sellers are more honest than this bunch of crooks – hiding behind confusing sign up forms doesn’t impress customers anymore – you gotta just be open, and tell people what they are buying – it’s tough for scammers – but they will have to learn NOT to treat customers as “suckers”
The race for revenues led many unethical players to take advantage of very questionable offers. Conveniently, they disregard their end users in order to advance their own agendas and “maintain control” of their companies. The video of Pincus is very disappointing. Such a shady character — anything to get where you want to go, huh, Mark? This is a microcosm of the Wall Street fiasco where personal, self-serving agendas take precedence over the well-being of the customers. I’m sure the legal pursuit of this situation will get about as far as they have with the Wall Streeters: no where.
All I have to say is… In your face!
This video of Pincus doesn’t indicate he did anything ‘illegal’ – Zynga gave users poker chips in exchange for downloading an annoying zwinky bar tool. Lots of other sites give nothing to their users and try to get them to download the zwinky bar. Does the zwinky bar take your credit card number and make unauthorized or undisclosed charges? Didn’t think so.
This video is hardly incriminating.
WHY isn’t TC going nuts over the advertisers themselves who actually generate these ’scams’? I know, I know, Zynga made money off these ads too but who makes the bulk of the money? The actually companies/entities who bill the suckers’ cell phones, etc. And the carriers who happily pass along the fraudulent charges to their customers.
The ‘Hats off to you Mr. Arrington/President Lincoln’ posts are funny, all TC has done is played Captain Obvious on behalf of the gullible population that doesn’t understand that if an ad is flashing at you it’s probably not a good idea to give it your cell phone number. The two comments about Amazon and Time Life doing the same thing should really get your hackles up – Pincus is small time in comparison.
I think the reason they are targeting Zynga – is because it’s a leader in the new wave of social games that people are putting their trust in, Zynga ‘feel’ small enough to pick up, and shake all the crap out of their pockets (scam) and still survive – people like Amazon are too big to do that to, sad but true.
I understand the scam about all the offers which i did not partake of, But something else i s missing here. Zynga has taken real money through pay pal and others and not delivered any goods. I only spent 10 dollars to buy items for yoville and never recieved my yocash, this was taken directly from my account. for a month i emailed zynga every day and every day i recieved a bot reponse, pay pal has refunded my money but i browsed the forums and found several thousand comments how zynga had taken real cash from thier accounts and not delivered goods. these people did not choose the offers scams, it was money from tier accountsand credit cards and third party s is thre anything we can do about this fraud and theft ?
Linda you can get your money back with PayPal, you just need to e-mail PayPal, tell them what happened and that you want to open a complaint – then they will ask Zynga to provide evidence that they delivered goods – they might have made a mistake/glitch in the system – either way as a customer you are entitled to your goods or money back.
oophs just read money back bit o_O – well my brain is cold – that’s British Gas fault, they are rip off merchants too… grumble…
Notice how Pincus got lots of yuks from the audience when he bragged about screwing people over to keep control of his company, and how the overwhelming majority of responses here support taking him down for the same things. Could any of these be the same sheeple?
Mike, I just want to point out a subtle aspect to all of this which is not readily apparent in a lot of the articles. The real culprits here are the small but notorious group of unscrupulous and unethical or immoral MARKETERS who devise and distribute scammy or sleazy offers, and who change landing pages without alerting the distribution channel or publisher. Unfortunately they are only a very small percentage of all marketers, but they tarnish the whole industry. I do believe that the distribution channel or network does have a responsibility to police what they distribute to the extent they are able to do so, but at some point it becomes a real practical and economical challenge, ie when you are getting literally thousands of offers being pushed into your system for subsequent distribution. I do not believe that this means the network has deliberately engaged in a questionable practice. Rather it means that the current controls were insufficient to prevent questionable offers from making it through the distribution system, so therefore those controls need to be increased and strengthened. Many if not most of the “scammy” offers that have come to light in the recent blogging can be found on late night network TV, cable TV, open Web, Email, and of course in your snail mailbox. Social media now gives them another channel to distribute their offers. So although I do believe that the messenger (the offer network) in this case does indeed have a serious responsibility for quality control, the real culprit is the company who designs the scammy offer with the clear intent of deceiving the consumer, and who uses deceptive tactics to sneak the offers into distribution. It’s interesting in the list of companies being “investigated” by this law firm that almost all of them are distribution channels or publishers, ie the messengers, not the marketers who designed the offers and put them out into the marketplace. The lawyers should therefore add all of the TV and cable networks, newspapers, magazines, the Postal Service, and the Internet to the list of defendents. Or instead, the main target of efforts to eliminate “scammy” offers needs to become the marketers who are the sources of the offers, and who will continually find new channels and creative ways to distribute their offers as long as they continue to operate. We, the networks, aggregators, and distributors of marketing offers, will absolutely do our best and will significantly dial up our efforts and resources to police and QC the content that flows through us. But if we all went out of business tomorrow, and a new set of networks replaced us, the same scammy offers would still be there since the same marketers would still be distributing them. So as we move forward with additional checks and balances in our distribution industry, a big part of our focus needs to be on who the perpetrators are and how to exclude them from distribution in the same way that spammers cal be “blacklisted” by ISPs. IE we need to get at the true root of the problem.
George
BULLSHIT. It is not a small group of marketers. Just about ALL merchants do it. Amazon does it. All the “free credit report” sites do it. My latest loss came from Time Life Books!!! That’s a reputable company that has been around for decades. I bought a $10 book and next thing I know, $30 month charges started appearing. Get it right people: this shit happens at all levels and in all contexts of internet sales transactions.
Excellent article Michael and I love the comments on this article. It is crucial to be ethical these days.
WE ALL KNOW ZYNGAS NOT A LEGIT COMPANY ANY WAY
Mark pincus is a f–ing criminal douchebag.
everyone in the Valley knows his track record. None of his former employees want to work with him. He is reviled by his own fellow tribe founders and “friends.” the guy is all about cash at any cost, and usually thyself your life, your effort, your sense of ethics, the law, etc.
Michael – please go after his investors like Fred Wilson for promoting this sort of criminal enterprise. Dint just let this one hide behind Pincus. There are way mote fraudsters that are sitting on the sidelines. These shitbag cowards and moral midgets are allowing Pincus to take the heat for what they knowingly invested in.
The problem is deeper than just Zynga. It’s the cabal that funded, aided and abetted this organized, money laundering farce of a company.
to think the myspace ceo was beating his chest the other day http://www.mysp...article_id=1109
This would be a *huge* win for the digital ad industry. The shift to start weeding out scammers in the new medium is starting. This class action lawsuit will put it in full throttle.
Ridiculous article. Of course lawyers what to look into things that what they do. With the economy going down hill people are more ” Sue happy ” everyday.
If people actually took the time to see what they were filling out in the surveys they would not go for those offers to begin with. Instead they either don’t pay attention or don’t understand what they are doing and should NOT be filling them out in either case.
I get so mad when i read stuff like this, Seriously people REALLY need to take some more personal responsibility of their own lives. Not blame others or have that ” i am entitled ” attitude. If they were too ignorant to follow the directions it is their own fault. I have had NO problems OR charges of any kind filling these things out.
I made the choice to do these surveys…. as DO everyone who fills them out. No one forced anyone to fill them out. Chalk it up to a loss learn from it and move on for crying out loud. America is already broke now the lawyers want whats left!
Knowing the way most class actions law suites work, the lawyers will get 10 or 20 million dollars. All the real victims will get $100 of gaming credit ($25 for farmville, $25 for mafia wars, etc…) that is non-negotiable for real money.
ScamVille: The Musical will out next year, I guess.
fraud is often the case, especially when it comes to the internet. Everything free
Maria
go peddle your ayn Rand bullshit somewhere else. Your caveat emptor crap is tired an simply false.
Taking a page from your logic Why don’t we all take some personal responsibility for 9/11 and admit to funding dictators and just apologize to the islamofacist we helped create. Will that help address the clear and present danger? No. You cut the heads off the hydra. You hold it up to others and say “behold, this will be you next.”
To Icanhascheetburger: you are freaking hilarious and on point
~M~
Anyone who complains about unathorized SMS recurring transactions is an idiot. No matter how the offer was advertised online, the service always sends an SMS text with a PIN code and disclaimer of the $9.99/mo charge – I’ve checked out the confirmation process on ringtone, horoscope, and IQ offers, and they all send my phone a text with the code stating in the same message the monthly charge.
The services that allow this billing, like Mobile Messenger, have only been approved to bill cell carriers’ (except for Sprint, which I believe stopped allowing these offers) customers because they have this disclaimer.
This is no different than if I go to a local gym, sign up for their free trial, give them my credit card, and if I don’t cancel during the free trial, they start billing me for monthly service.
The case – The People VS. Zynga is now online at AllRise community court. Join in to cast your vote and influence the debate http://bit.ly/AllRise274