The Wild, Wild Web is Being Tamed

I send this information for iCop members so you'll know what you can - and can't - do. I send it for those subscribers who are simply online consumers to protect you - so you'll know what to look for!

The Federal Trade Commission (FTC) has recently published guidelines regarding “Negative Option” enrollment programs and is taking a very aggressive position against merchants using this business practice.

"Negative option" means: if you don't do something to stop them, the merchant will continue to charge you on a regular basis. This usually, but not always, goes along with a free trial and/or "pay shipping only."

Recommendations taken from the FTC's website are included in the following article:

I don't mean to be redundant but, if you're an online business owner, you're also an online consumer. Please be sure you check websites to be sure they're in compliance with the FTC guidelines - BEFORE you buy!

That's a good start. You see, I have faith that “internet marketers” are more creative than the FTC. I don't doubt they'll find other ways to take advantage of people.

The latest little scam I've seen popped up again last week. I went to a site that displays four phony “trust” seals.

They read: Privacy Confirmed - Business Confirmed - Identity Confirmed - Security Confirmed.

Yeah? Confirmed by whom? Well, it claims to be by “Honest Online” with a bullet between those two words. So, it isn't the company you might assume!

The website is entitled "The Google Traffic Pump System." Aside from those seals - that link to no where - there's no contact information and no privacy statement. It only has one of those silly, "We hate spam as much as you do" lines.

It took me five - count 'em FIVE - clicks to get off the damn page. Now, there's a website I would avoid!

But, I'm also beginning to have faith the FTC will continue to add to their “guidelines” (which are really regulations) as needed. After about 15 years, it's about time, don't you think?

By the way, it isn't too late to get your own website legal documents brought up to date. Every iCop member should have this package:

Why Use a Third Party Merchant Account?

After over a decade online, I still use a third party merchant account. I know people wonder why a "professional organization" would do that, since it is considered by some to be UNprofessional. So, I'll tell you!

When I opened my first website, I researched regular online merchant accounts. Talk about a headache! It was gruesome. There was SO much difference in what they offered – there was SO much hype – and, it was expensive for someone just starting out.

I decided I would wait until my new business was two years old (that was the requirement), and just get a merchant account with my own bank. When the time came, I checked it out, and found that I would still be paying over twice the amount I was paying a third party merchant account to process payments.

That didn't make good business sense to me! And, by that time, I had heard the horror stories of having your own merchant account for an online business. There are major problems.

The main problems are fraud issues. Affiliate programs are especially susceptible to fraud. Any expensive products that can be resold are also at risk.

If you have your own merchant account, you will be expected to check every order for fraud. By this, I mean some thief using stolen credit card numbers. If fraud gets by you, you will be liable to return the money to your merchant account provider, since they paid you. And, you may not have it by the time the fraud is discovered.

Then, what happens?

Your merchant account provider places a "freeze" on your checking account! I've heard of providers leaving this freeze on bank accounts for up to NINE (9) months. You will also lose your merchant account – as if you committed the fraud!

Now, mind you, you may have funds in that account over and above the amounts of the fraudulent transactions. Doesn't matter. They freeze the entire bank account at least until they have every cent of their money back – PLUS the time it takes them to release your account. I've heard of the freeze staying in place for six months, even if they got all their money back in the first 30 days!

Do not believe for a minute they give a damn about any other funds they have tied up. They don't! How are you going to operate your business without money? In fact, how are you going to live without the money they tie up?

I know people who have been completely wiped out because they spent money paid into their bank by the merchant account provider. Then, months down the line, it becomes apparent that fraudulent transactions accounted for some huge amount of the sales, and they had to cough up thousands of dollars – already spent.

Thieves Checking for Good Credit Card Numbers

Then, you have the credit card scammers using your order page to check for good credit card numbers! They use some routine to input random numbers – just like the telemarketers dial random telephone numbers.

They may only put through sales of one dollar, or less. All they are doing is noting which numbers go through. Those they know are valid credit card numbers to be used in one scam, or another.

How does that hurt you? You are paying your merchant account provider a fee for every transaction! When the thieves are running through hundreds, or even thousands, of numbers, that can add up fast.

Do you think your merchant account provider will refund those fees to you when it becomes apparent what's going on? If you guessed yes – guess again! They don't care! The transaction happened – you PAY!

Not So With a Third Party Merchant Account!

Now, I can't actually vouch all third party merchant accounts. And, I'll be honest and tell you that, in two years, I went through four of them that didn't work out. But, since then, I've had the same one - and it works beautifully.

They check for fraud! They have people on staff who do nothing else. If someone started running numbers through, they'd catch it in a flash. We do NOT pay for bad transactions!

They even send us a warning if the machine check flags a transaction., i.e., name doesn't match address, comes from a country known for fraud, etc. They warn us not to deliver until they have checked it out, always within 24 hours – usually much faster.

Now, it's true – they deposit money into my bank account once a week, rather than every day. But, so what? Do I need it every day? Nope. And, for all this protection, I pay less than half what I would pay for a merchant account that gives me no protection whatsoever!

And, last, but certainly not least, the third party merchant account company takes care of all Payment Card Industry (PCI) Data Security Standard (DSS) requirements. I never have to lift a finger!

So, while I watch many of my good friends online pulling their hair out, paying for fraudulent transactions, paying for the scumbags to check credit card numbers, so they can look "professional" - I rest well at night. I'm also protecting my business, my reputation, and my money!

Sometimes, it just pays to outsource certain services! And, your merchant account is one of them!

Yes, I will tell you which third party merchant account I use. Look here:

New Data Security Regulations

We just get past the deadline for compliance with new U.S. Federal Trade Commission (FTC) guidelines and something else rises up ...

The State of Massachusetts has passed a LAW imposing new minimum data security standards on companies that collect, store or transmit personal information concerning Massachusetts residents.

By October 1, 2010 similar requirements will be imposed for all customers by the credit card industry. But, right now, we need to deal with Massachusetts.

To be sure I don't misinform you, I would prefer you get the full information from a more official article here:

All these new rules are making folks wonder if they should even be in business on the Web. Yes! You should!

iCop members have always been required to adhere to regulatory agency guidelines. It's right there in our guidelines and always has been. I changed the wording a bit with the new regs, but it's nothing new.

Twitter has shown me how pitifully many people are out there still trying to make a killing with quick buck money-making schemes. They simply never end - and people just don't get it!

If you're going to have your own business - have it! Just follow the rules like you would down on Main Street. People have been doing it for generations.

Nobody ever said, "Here's the Internet, go out and do whatever you please with no regard for the law or ethical business practices!"

This is exactly what iCop has always been about: high online business ethics and excellent customer care! Now, finally, the Wild, Wild Web is being tamed. The crapola is on its way out. 'Bout bloody time!

How "Guidelines" Become Law

This article is to help both online business owners, those thinking about selling online AND online consumers! I'm putting to rest some questions and arguments, once and for all.

If you were to start a business down on Main Street, you would - without question - find out what the legal ramifications are, and do whatever is necessary to cover your butt.

I continue to fail to see WHY folks think that should be different if they have a business on the Web. It still seems as if way too many online business owners think they can cut corners just by the very fact that they DO operate online.

This is an erroneous idea that gets people into trouble!

I DO understand you can start an online business for FAR less capital than it takes down on Main Street. This is a GREAT thing for those losing jobs or needing additional income. I whole-heartedly recommend it!

However ... Are you in business - or not? The Web isn't a playpen, and it should be taken seriously if you plan to make a living on it!

Who do YOU do Business With?

Consumers ARE finally becoming more savvy about who they choose to do business with. They look for physical contact information - including a telephone number.

But, they are ALSO learning to look for the legal documents that protect them. True: it's becoming more complicated. At one time, it was mostly just a Privacy Statement they expected.

So many scammers have now brought consumers to the point for knowing to look for more protection. Can you blame them?

I shop online constantly, and you'd better believe I'm VERY careful to be sure the companies I patronize have the proper legal documents! I want to be SURE I'm dealing with a professional - and legal - business!

Which Brings Us to My Point ...

I RARELY join an affiliate program. If I did it for one iCop member, I'd feel like I had to do it for all of them. No time.

But, I DID join the AutoWebLaw Pro program when it first came out. Why? Because this is a product that can do nothing but help every single online business owner!

In fact, it's a NECESSARY product to doing legitimate business online. I truly believe in it for several reasons - not the least of which is the money business owners can save by using it instead of running to a business attorney every time some regulatory guideline changes.

And, by the way, the words "guidlelines" and "regulations" ARE used interchangeably by the regulatory institutions!

In another life, and for 15 years, I dealt with legal documents, and business laws in particular, for the businesses I represented in keeping them out of bankruptcy. There isn't much I don't know about how the legal system works for business.

So, you can believe me when I tell you the documents in AutoWebLaw Pro are TOP-NOTCH. And, I'll guarantee you - I wouldn't promote them for a single minute if they weren't!

It isn't just the current FTC new "guidelines." The AutoWebLaw Pro package is full of more legal advice than you can shake a stick at! All you have to do to gain that advice is READ all the documents.

Now, I know the U.S. Federal Trade Commission (FTC), or a similar agency in other countries, isn't going gunning for every small business owner online. They don't have the staff for that.

But, let a couple of consumers report you for something, and see what happens! Once a red flag goes up, an investigation can start while you're blissfully drinking your coffee and counting your money.

You won't know anything about it until someone arrives on your door step with a subpoena!

“Well, (Boo-Hoo) it's only a guideline!”

“Yeah, Pal, it's a guideline today, but as soon as we take you to court, and win - which we will - it sets a precedent that makes it part of the LAW. We refine the “law” as we go along!”

The BASIC law simply says, “No deceptive advertising.” But, what constitutes deceptive advertising is determined by the courts!

You should also know - if you don't live in the USA and your payment processor IS in the USA, all U.S. FTC laws also apply to you. Refuse to comply and you can lose your payment processor!

Two Final Tips

  • Consumers are absolutely RIGHT to look for, and read, legal documents on a website. And, not lay down a single penny until they do!
  • Every online business owner is ALSO an online consumer. Legal documents apply to you from BOTH sides!

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To re-publish articles by jl scott from this site, please include the following byline - with live links - after each article you use.

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* dr. jl scott is the Founder of Chamber of Commerce - on the Web™ - and also the publisher of the Online Business Trade Journal™ - the blog that keeps you up to date with online business coming of age. Visit:

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