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After receiving consumer complaints, a Pittsburg, PA, TV station decided to investigate the new business in town. "The Dot Com Company" has opened offices in several western Pennsylvania and West Virginia locations, and advertised for a number of different positions. Unfortunately, when the prospective employees showed up, they were ushered into a large room full of other "applicants" and shown a pitch for BigSmart.
BigSmart has just settled with the Attorney General of the State of Maine, following accusations of operating a lottery illegally, paying headhunting fees, and misrepresentation. BigSmart has also paid damages to LL Bean for misrepresenting its association with that well-known mail order company based in Maine.
The operation in Pennsylvania is strongly reminiscent of the tactics used by Equinox International before its recent shutdown in April, 2000. Therefore, it comes as no surprise to learn that the owner of "Dot Com", one Ed Lamont, used to be a member of Equinox in another state. Among other complaints, Equinox was accused by the FTC and eight states of false and misleading advertising because they also placed help wanted ads that turned out to be recruiting pitches.
The Channel 4 report also discussed the high-pressure tactics used by recruiters to coerce people into "investing" their money and signing up for the scheme without having a chance to investigate it or even ask questions of the presenter.
Apparently in response to this investigation, BigSmart has written to its "mall owners" the following letter, in an obvious attempt to cover its legal backside.
"Dear Valued Bigsmart Member,
"We want to thank you for your hard work over the past several months. We pride ourselves on the quality of our members, and we want you to know how much we appreciate your important contribution to the value we provide to our customers and retail partners.
"However, recently it has come to our attention that a few of our mall owners may have violated company policies and procedures. We are confident these are isolated incidents, but we take them very seriously. We are counting on you to work with us to maintain the integrity and high ethical standards of Bigsmart.com. It is for this reason we are letting you know what has been alleged, what we are doing about it, and why it is important for you to understand and comply with all company policies and procedures.
"A few independent mall owners have been accused of using deceptive advertising to lure potential new mall owners to a recruiting session. At the session, possibly misleading statements were made about income potential. It also appears that members of the audience were discouraged from asking questions, and were subjected to high-pressure sales tactics. In addition, at least one independent mall owner gave an unauthorized interview to the news media rather than referring them to the company’s marketing department to ensure accurate responses were given.
"As you know, all of these actions are in direct violation of our stated policies and procedures. Marketing materials must be absolutely accurate, and must be approved in writing by the Bigsmart.com corporate office prior to being disseminated. No interviews may be granted without prior written permission from the corporate office. These policies help all of us by ensuring that our public image is presented in a consistent and positive way. Furthermore, high-pressure sales tactics are strictly prohibited.
"We have suspended the membership of the mall owners accused of the above violations pending the outcome of our investigation, and we are withholding their commissions until the matter is resolved.
"In the mean time, we ask that you please take a moment now to review our policies and procedures at http://www.bigsmart.com/live/pol_pro.html . Keep in mind that they were carefully designed to protect and benefit all of us, including our retail partners and customers. We know that it's easy to get caught up in the excitement of e-commerce and of owning your own business, therefore it is crucial that everyone strictly adhere to all policies and procedures.
"If you have any questions, please contact us at legal@bigsmartmail.com . Thank you again for your continued support.
"Best Regards,
"Richard Slaback
CEO
Bigsmart.com"
However, as was clearly stated in the legal agreements between the Federal Trade Commission, eight states, and Equinox International last April, written company policy means nothing unless it is carried out in the field.
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