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The Real Rip-Off Report

Continued from page 5

Published on February 01, 2007

"The Rip-Off Report cases are some of the very few exceptions to an otherwise uniform application of the law in a defendant's favor," Goldman says.

  • Keri Rosebraugh
  • Laura Segall
    Ed Magedson
    Ed Magedson

Subject(s):

Ed Magedson, www.RipOffReport.com

And that's probably not because judges are rethinking the Communications Decency Act, or because Speth doesn't know what she's doing. (An attorney with the respected Phoenix firm Jaburg & Wilk, she clearly does.)

It's because, as the number of lawsuits against Magedson has increased, lawyers have learned about Magedson's willingness to take money from companies to mitigate bad complaints. He calls it his "corporate advocacy program."

Here's how it works: Businesses pay Magedson a fee, plus a monthly retainer. And in exchange, Magedson makes "EDitor's comments" next to complaints — generally saying that the claims are false.

Business owners are already allowed to post rebuttals to complaints. But Magedson weighing in has a much stronger effect.

It's not "he said versus she said." It's an impartial arbiter of truth declaring that one side is right and another side is wrong. And, though Magedson says he investigates every report and would never support a company that wasn't in the right, his comments come without a clear disclosure that he's now on the company's payroll.

But it's hard to blame a business for ponying up.

Take Chandler Hill Partners. The Tucson firm, which specializes in job searches and outplacement, was getting dogged by complaints on the Rip-Off Report. CEO Sarah Hightower Hill was convinced the posts came from competitors, but she knew that no one would believe that coming from the company's CEO.

Making it clear that she is not speaking specifically about Magedson's site, Hill says that online bashing is "one of the biggest dilemmas facing American business today."

"All of us," she says, "are at the mercy of what people might write about us online, even if those people wish us ill will or have nothing to do with our business. It's a very damaging thing."

And so Chandler Hill paid to join Magedson's corporate advocacy program. Today, if you look up the company on Magedson's site, you get a four-page editorial, written by Magedson himself.

Just the headline, written in Magedson's typically unedited style, makes it clear: "[M]ost complaints posted are verified untrue, competitors making false claims to hurt companys reputation, Most complaints not from real clients, evil work of a competitor."

For Hill, it's been a blessed relief. She says she's pleased with the program.

But some businesses question why they should have to pay tens of thousands of dollars just to clear their names from complaints that are false in the first place.

Indeed, the program is not cheap. Speth says there's a sliding scale, depending on the number of complaints, and that it can be as cheap as a few hundred dollars. But documents in court files, and several business owners who spoke to New Times, suggest that joining the program was offered to some at more than $50,000. And there's a monthly fee on top of that.

Of course, the program is still much, much cheaper — and more effective — than litigation.

Israel Kushnir, CEO of the Illinois-based George S. May International Company, says his consulting firm was tarred by "heinous" complaints on the Rip-Off Report, including one report alleging that the company's founder was a pedophile who inflicted porn on his staff at recent staff meetings. Since the founder has been dead since the 1960s, the complaint was ludicrous.

The online allegations were infuriating — not just to him, he says, but to the founder's daughter and granddaughter, who currently own the company.

So, in 2004, George S. May sued. But Kushnir says he met with Magedson earlier this month and told him he's decided to drop the case.

"I realized Ed Magedson and George S. May were simply accidental enemies," Kushnir says. "He didn't start his site to attack George S. May. He didn't even know George S. May. Rather than continue to spend an enormous amount of money and energy and litigation, I thought, there's got to be a better way to deal with things like that."

The George S. May Company is going to join Magedson's corporate advocacy program. (Kushnir declined to say how much he's paying.) Basically, Kushnir will pay Magedson to reveal the complainants against the company, and then Kushnir can do what he would have wanted to do all along — address them.

Good news for Magedson. But not such good news for the people who had anonymously blasted George S. May. After all, Magedson will be giving them up. And if they're current employees, they're probably going to be in trouble with a capital T.

Kushnir says he won't sue anybody — he's learned his lesson — but if it's a disgruntled secretary who called the founder a pedophile, it's hard to imagine things will end happily for her.

Kushnir says he's happy with how things ended. But the incident does raise some ethical questions.

It would be one thing if businesses were paying for public relations, which is how Magedson tries to frame it. But, really, what businesses are paying for is a chance to fight back against a negative.

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