January 12, 2004 5:26 PM PST

Judge protects consumer rants

A federal judge has rejected a Wisconsin company's legal attempt to assail BadBusinessBureau.com, which features thousands of negative reviews from consumers who claim to have been "ripped off" by unscrupulous retailers.

U.S. District Judge Barbara Crabb last Thursday granted the request from the operator of the Web site, which also goes by the name RipOffReport.com, to dismiss a defamation lawsuit filed last August by cookware maker Hy Cite.

Because BadBusinessBureau.com does not have any offices in and had only limited contact with Wisconsin, it cannot be sued in the state, Crabb decided. The site had "not targeted Wisconsin citizens more than the citizens of any other state," Crabb wrote in a 13-page decision.

Ed Magedson, a self-proclaimed consumer advocate who runs BadBusinessBureau.com, said Hy Cite's reaction to criticism was typical of companies with something to hide.

"The companies that end up suing me are the companies that are guilty," Magedson said. "A company that is not guilty will come back and file a report. They'll file a rebuttal that says, 'This company did not do this or the company did do this. The customer is welcome to contact us because we want to satisfy our customers.'"

Magedson, who indicated he lives somewhere in Arizona, posts rebuttals provided by corporations but charges a $25 fee to post more than four of them. One complaint against Hy Cite, for instance, claimed it was "misleading and deceitful" for the company to refuse to cancel an order for its Royal Prestige cookware.

To avoid frivolous lawsuits, Magedson said, he has incorporated BadBusinessBureau.com on the Caribbean island nation of St. Kitts and Nevis in the West Indies. In addition to not being bound by Wisconsin law, Magedson said, U.S. federal law says he is not liable for reviews posted by visitors to his site.

At least one federal appeals court has taken that view, ruling last year that Internet publishers should not be responsible for libelous comments they republish. Also, in the United States, truth is an absolute defense against accusations of libel or slander.

But the West Indies have no such free speech protections, and Magedson's legal strategy has backfired before. Alyon Technologies said in a statement last August that it sued Magedson in the West Indies and obtained a $10 million default judgment against him. Magedson claimed, however, he has yet to pay Alyon any money.

John Scheller, an attorney for Hy Cite at the law firm of Michael Best and Friedrich, said his client still hopes to secure an injunction against BadBusinessBureau.com.

"We haven't had a chance to fully analyze the opinion and whether to appeal," Scheller said. "We were trying to stop some of the statements on the Web site about my client. (We still hope for) damages and-or injunctive relief to stop them from making disparaging statements about our client."


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Arizona Federal Judge Protects Business in Same Case
Check it out: Hy Cite sued Rip-Off Report in Arizona after this Wisconsin Court dismissed, and the US District Court in Arizona has ruled that neither Rip-off Report or Ed Magedson personally are immune under the Communications Decency Act where Wire Fraud and Threatened Extortion are alleged as predicate acts under the Racketeer Influenced Crimnal Organizations Act (RICO).

<a class="jive-link-external" href="http://www.bad-business-rip-off.com/" target="_newWindow">http://www.bad-business-rip-off.com/</a>
Posted by ben ssmith (2 comments )
Reply Link Flag
here is the link to the arizona court order
<a class="jive-link-external" href="http://www.bad-business-rip-off.com/12.05Dismiss.pdf" target="_newWindow">http://www.bad-business-rip-off.com/12.05Dismiss.pdf</a>
Posted by ben ssmith (2 comments )
Link Flag
I can't speak for the legalities involved but I can say that Rip-Off Reports is doing a public service.

I would think that any comments on the site are protected under the Second Amendment. Companies with well funded legal teams should no be allowed to quash publishing consumer comments. Truth is an absolute defense against accusations of libel or slander.

I intend to keep checking Rip-off .com any time I have doubts about a business.

If you find hundreds of complaints about a company chances are something's wrong.

Regarding Hy Cite: Hy Cite Corporation, which sells cookware and water filters under the name of Royal Prestige, will pay $1.35 million for victim restitution and penalties and will drastically reform how it does business to resolve State charges that it lied to consumers to scare them into paying several thousands of dollars each for cookware or water filters. Hy Cite also settled charges that it discriminated against Hispanic customers by setting up harsher cancellation and financing policies for them than for Anglo customers.

A lengthy investigation by the Los Angeles County Department of Consumer Affairs prompted the California Attorney General?s Office to sue Hy Cite. This is the second time the Attorney General charges the Madison, Wisconsin-based Corporation for similar complaints.

The lawsuit charges that Hy Cite salespeople lied their way into the homes of consumers, and once inside used deception and high pressure to scare consumers into buying their cookware.

Posted by ozark123 (19 comments )
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