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Thursday, March 30, 2006

Ohio AG sues University Painters

Ohio Attorney General and Republican Gubernatorial hopeful Jim Petro has sued Virginia based Maxco Development, Inc. d/b/a University Painters and two company officers. Press Release:

Petro Sues Virginia Company For Scamming College Student Workers

March 9, 2006

COLUMBUS – Attorney General Jim Petro today sued a Virginia company for deceiving Ohio college students into paying thousands of dollars for a business opportunity -- selling house painting services -- that held no realistic promise of profit, violating 14 sections of Ohio law that protect consumers and business-opportunity purchasers.

Petro filed the lawsuit in Franklin County Common Pleas Court against Maxco Development, Inc. (doing business as University Painters) and company officers Joshua D. Jablon and Thomas F. Torres, all of Alexandria, Virginia, alleging numerous violations of the state’s Business Opportunity Purchaser’s Protection Act and Consumer Sales Practices Act. Attempts to mediate more than a dozen open complaints his office received about the company have failed, he said.

“Students sign the University Painters contract thinking they will learn to manage a business and earn money, but they end up deep in debt with regular calls from collection attorneys,” Petro said. “This company preys on the inexperience and trusting nature of young people, and our lawsuit will bring them to account for that.” He said University Painters is reportedly recruiting now on college campuses in Ohio for the coming summer.

Petro asked the court for an injunction against the company, civil penalties totaling more than $300,000, and financial repayment to 13 students who told the Attorney General they were duped into paying the company thousands of dollars before realizing they had no realistic chance to profit from the venture.

According to the suit, the company violated state law by pressuring the students to pay the company roughly $3,000 for marketing materials and “logistical support” and misrepresenting the students’ legal right to back out of the contract during a standard “cooling off” period. Afterward, when the students failed to meet the unrealistic sales goals set for them, the company enforced monetary claims against them by invoking a “confession-of-judgment” clause in their contract, a ploy that put the students at an unfair disadvantage and is illegal in Ohio, the suit said.

Ohio’s Business Opportunity Purchaser’s Protection Act protects citizens attracted to promises of help in starting a business in exchange for making large initial down payments. The state’s Consumer Sales Practices Act prohibits sellers from misrepresenting the nature of their business, products or services; the price of their goods; or the terms of the transaction.

Consumers may file complaints with Attorney General Jim Petro’s office online at www.ag.state.oh.us or by calling 1-800-282-0515.

(Editors: Some complainants in this case have agreed to be interviewed for this story. Contact Mark Anthony at phone number listed below.)

For Additional Information on this Press Release:

CONTACT: Mark Anthony, Attorney General’s Office, at (614) 466-3840

Related: According to the Progressive Blog Alliance, the career services office of Duquesne University sent an e-mail to its students and recent graduates warning them of and providing a list of questionable companies, of which University Painters is one.

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Friday, March 17, 2006

NY AG settles massive privacy breach

New York Attorney General's March 13, 2006 press release shows the importance of adhearing to what you say in your privacy statement:

Attorney General Eliot Spitzer today announced a settlement to address what may have been the largest breach of privacy in internet history.

The settlement with
Datran Media, a leading e-mail marketer, follows an investigation that identified the improper disclosure of the personal information of more than six million American consumers.

"With this case, we hope to set a new standard for internet marketers and consumer research companies," Spitzer said. "Personal information secured through a promise of confidentiality must always remain confidential."

Datran was alleged to have improperly used information it had obtained from several companies that compile and sell information on consumers.

The largest such company, Gratis Internet, had assured consumers on several web sites it owned and operated that it would "never lend, sell or give out for any reason" the information provided by users. Among the sites on which Gratis collected user information were "freeipods.com" and "freedvds.com."

The Attorney General’s investigation revealed that Datran knew of Gratis’ promise to consumers when it purchased the consumer lists. But after obtaining these lists, Datran sent millions of unsolicited e-mails to the listed consumers.

The seven million files that Gratis sold to Datran is believed to be the largest deliberate breach of a privacy policy discovered by U.S. law enforcement to date.

Under an Assurance of Discontinuance with the Attorney General, Datran has agreed to pay $1.1 million as penalties, disgorgement and costs. Datran must also:

• Destroy the information obtained from Gratis and the other list sellers at issue;

• Avoid acquisition of any personal consumer information without first independently confirming that such acquisition is permissible under relevant seller privacy policies; and

• Appoint a Chief Privacy Officer or other employee to oversee privacy compliance efforts.

Spitzer noted that Datran cooperated fully with his office’s investigation, and that the company began improving its list purchasing and due diligence practices in April 2005, just prior to the commencement of the investigation.

Beth Givens, Director of the Privacy Rights Clearinghouse, a consumer advocacy organization hailed the settlement.

"A privacy policy is more than an empty promise. Companies must be held to their word. Attorney General Spitzer sends an important message to any company that would violate the terms of an agreement of a data seller."

Spitzer said he hoped the case would help establish basic controls on data compiled and sold by professional consumer research companies and list builders.

"Companies must adhere to known privacy policies and promises. Failing to do so constitutes a clear consumer fraud," said Spitzer.

Spitzer’s office is continuing an investigation into Gratis and other companies that compile and sell consumer information.

This matter was handled by Assistant Attorney General Karen Geduldig of the Attorney General’s Internet Bureau, under the direction of Ken Dreifach, Chief of the Internet Bureau, and with the assistance of fraud analyst Sibu Thomas.

Emphasis added. This press release pretty much says it all. Meanwhile, Datran has not issued a press release of its own.

On a related note, Spitzer is ever on the lookout for internet violations. The AG's Internet Bureau has an online complaint form for consumers to file Internet Concerns. A PDF fill-in version of the complaint is here. So, be careful with what you do with personal information and adhear to what you promise to do with such information. You are just a few clicks away from being reported.

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Thursday, March 16, 2006

Use current player in ad, get a cease and desist letter

Artificial grass and synthetic turf manufacturer FieldTurf distributed promotional photos which contained a doctored image of University of Michigan quarterback Chad Henne (his number was changed from 7 to 17). Michigan associate athletic director Judy Van Horn sent FieldTurf a cease and desist because "the NCAA expressly forbids the use of a currently enrolled student-athlete's name, image and reputation for commercial purposes.''

FieldTurf's advertisement agency, Canspan Advertising, was very apologetic, and said it won't happen again.

Source: The Ann Arbor News

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Ohio exempts Visa and Mastercard from new gift card law

The Ohio Legislature has passed Subustitute Senate Bill 33 which is still, as of today, awaiting Governor Taft's signature. The law, if signed (check here for updates), states that no person can sell a gift card with an expiration date of less than 2 years of issuance and prohibits charging maintenance or service fees within those two years.

However, the law has seven exemptions to these prohibitions. Number six exempts "a gift card that is usable with multiple, unaffiliated sellers of goods or services." In essence, those typically issued by Visa and Mastercard.

Sheryl Harris, a Cleveland Plain Dealer columnist, says don't blame the Bill's sponsor, Sen. Bob Spada (R).

Spada introduced a spare bill with few exceptions and then for two years fought off gift-card issuers' attempts to kill it.

But the exemption was inserted after the bill moved to the House and is contained in the final version.

Hopefully, as Ms. Harris concludes, "when the Ohio legislature becomes more interested in looking out for consumers than for special interests, it will polish this law into the bill Spada envisioned."


Wednesday, March 15, 2006

Howard Stern

By now, everyone has heard about CBS's lawsuit against Howard Stern. One of CBS's contention was that Howard and Sirius had a secret agreement whereby Stern received additional compensation for brining in a certain amount of new subscribers attributed to Stern.

Howard contends that the Sirius shares he recieved in January was an accelerated payment. And that there was no secret agreement. On both counts he is correct. And Sirius' SEC filings prove him right.

This January 5, 2006 filing states:

We have directed The Bank of New York, the transfer agent for our common stock, to issue on January 9, 2006 an aggregate of 34,375,000 shares of common stock for the benefit of Howard Stern and Don Buchwald, his agent. Pursuant to our October 2004 agreement with Stern, we agreed to deliver these share in December 2010, or earlier if as of the end of any fiscal year we exceeded agreed upon subscriber targets. Our December 31, 2005 subscriber total exceeded the subscriber target we agreed upon with Stern in October 2004.

And this October 12, 2004 filing states:

We are also obligated to make substantial stock-based incentive payments under the agreement if we significantly exceed agreed upon year-end subscriber targets during the term of the agreement, or acquire material amounts of subscribers during the term directly and trackably through Howard Stern's efforts. In addition, upon reaching an agreed upon number of subscribers, we will share a portion of the revenue we derive directly from advertising on the Howard Stern channels, and the revenue we derive from subscribers acquired during the term directly and trackably through Howard Stern's efforts.

Note the 2004 date. SEC filings are public record, and thus hardly a secret.

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Tuesday, March 14, 2006

Surf board artist sues Hollister

California artist Robb Havassy has sued Abercrombie & Fitch and it's California lifestyle Hollister division for the unauthorized use of his surfboard art in hundreds of Hollister stores.

Columbus Dispatch story. Hat tip: The Art Law Blog.


Thursday, March 09, 2006

Outsourcing Irony

According to the this Business-Standard.com article, the All India Bank Employees Association ("AIBEA") has demanded that the Reserve Bank of India ("RBI") withdraw a circular which authorizes nationalized banks to outsource various regular banking services. Such services include "identification of borrowers, collection and processing of loan applications, verification of primary information about borrowers, creating awareness about savings products, post-sanction monitoring, monitoring of self-help groups, follow up on loan recovery, disbursal of small value loans, recovery of principal and interest, collection of deposits, sale of various products, receipt of small value remittances, and delivery of small value payments and other payment instruments."

The AIBEA calls the circular an "outrageous attempt to outsource normal banking activities" and demanded immediate withdrawal of the circular.

Apparently, what's good for the goose is NOT good for the gander.

Hat tip, the Outsource Reporter.


Tuesday, March 07, 2006

WIPO tips for photographers

The World Intellectual Property Organization ("WIPO") has a great article on the Legal Pitfalls in Taking or Using Photographs of Copyright Material, Trademarks and People (PDF version). Hat tip, I/P Update.

Table of Contents

1.1 When do you need permission from the copyright owner?
1.2 Will the photograph contain an object that is protected by copyright?
1.3 Has the term of the copyright expired?
1.4 Will you use a “substantial part” of the work?
1.5 Will you do something that actually constitutes an act which the copyright owner has the exclusive right to make?
1.6 Does a special exception apply?
1.7 From whom do you need permission?
1.8 What if you reproduce a copyright work without permission?
1.9 Do you need to identify the author of the copyright works you capture in your photographs?
1.10 Can you make changes to a work?
1.11 Can you copy ideas from a copyright work?

2.1 Can you freely take photographs that include trademarks?

3.1 What should you bear in mind when photographing people?
3.2 Are people protected by intellectual property rights?
3.3 When is a permission particularly recommended?
3.4 Tips for Photographers

Related post.

Legal Books for Photographers:

Business and Legal Forms for Photographers

Legal Handbook for Photographers: The Rights and Liabilities of Making Images

The Law, In Plain English, For Photographers