The Real Rip-Off Report

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And then there's the Better Business Bureau. For years, the organization has been a Magedson target. In his self-published book, Do-It-Yourself Guide: How to Get Rip-Off Revenge, he spends an entire page railing against the Bureau's system of sorting out complaints before announcing them to the public.

"In our opinion, the Better Business Bureau (and their inaccurate files) is a bust, because they solicit membership in exchange for favorable status," he writes.

The site goes much further. It calls the bureau a "racketeering enterprise."

Magedson himself chooses the "Top Rip-Offs." And, as he once admitted under oath, he doesn't exactly have a scientific selection system.

The questioning came during a lawsuit from a guy named Steve Miller. Miller, who owns a Fort Lauderdale credit-counseling company, has become Magedson's sworn enemy after the two men battled over reports about Miller's company.

Miller is the only person, to date, who's been able to get Magedson to give a deposition in a court case. By hiding his whereabouts, Magedson has been able to personally evade service.

(Even Magedson's corporate agent is pretty tricky to find. Ever heard of Reeves Mountain, Arizona? According to Magedson, it's somewhere northeast of Phoenix, and close to just about nothing. Mapquest doesn't have a listing. Neither does Google Maps. And if you haven't heard of it, imagine some lawyer from Wisconsin trying to find the guy, much less serve him with papers.)

The deposition in Miller's case was supposed to be limited strictly to issues of jurisdiction: Could Miller sue the Rip-Off Report in Florida when the company is based in Arizona?

But things got extraordinarily testy. For five hours, Magedson and Miller's attorney, Christopher Whitelock, sparred over just about everything they could possibly spar over. Even Magedson's own attorney, Speth, seemed exhausted by the contentiousness of the debate. "Ed, please, let me handle this," she says at one point, according to the transcript, while Magedson and Whitelock argue over her.

Near the end of the long day of questioning, though, Magedson answered some questions about why he'd chosen Miller's company as a "Top Rip-Off." And he admitted it wasn't because there were numerous complaints about the company.

It was because Steve Miller had been playing hardball. Miller had called him, Magedson said, threatened him, and posted stuff online that embarrassed him.

"And I have no other way to retaliate to him," Magedson said, according to the transcripts. "You know, or to respond to him, so . . ."

Miller's attorney, Whitelock, pressed him: "You put it up there a week or so ago to retaliate against him, correct?"

Magedson tried to backtrack. "Well, I guess that's the wrong word."

"Well, you used it, not me," Whitelock pointed out.

"Yeah, I take it back," Magedson said. "It was the wrong word."

Even with that admission, Magedson ought to be covered by the Communications Decency Act. He's allowed to edit. He's allowed to move content around.

But Goldman, the professor in California, notes that Magedson recently lost two motions to dismiss libel claims based on the merits of the law. In each case, the business that is suing the Rip-Off Report has been given the judge's permission to continue.

"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.

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.

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Sarah Fenske
Contact: Sarah Fenske