Zer01 Loses $43 Million Lawsuit To MLM Partner For Never Delivering Phones

from the vaporware-scams dept

Remember Zer01? The company that made really quite stunning claims about being able to offer a VoIP-based mobile phone that would offer unlimited voice and data on smart phones for a low price? After some investigations by reporters like Nancy Gohring and our own Derek Kerton it became pretty clear that the whole thing was pure vaporware, tied to a multi-level marketing (MLM) scheme that had a questionable past. It certainly sucked in lots of folks, a bunch of whom showed up in our comments insisting that the phones were real and we'd be proven wrong soon enough. Of course, multiple promised launch dates came and went with nothing to show for it. Laptop Magazine, whose credibility took a big hit, rescinded its "best of show" award for the product, and eventually the company tried to blame everyone else for its problems, suggesting that it was its MLM partner, Global Verge, who was the real problem. Oh yeah, and all those journalists who asked tough questions and weren't satisfied with the non-answers they received. As part of that Zer01 "dissolved" its relationship with Global Verge (the "parent" operation of Buzzirk Mobile, which was set up to sell Zer01 -- or, more accurately, to sell the "dream" of being a Zer01 sales rep, in typical MLM fashion).

Of course, if it was really everyone else's fault, you would imagine that somewhere along the line, Zer01 would show up with an actual product. One that people could see and actually use -- just as Derek had asked to use the "demo" phone at CTIA, a request that was denied. But, of course, none of that happened. Earlier this year, Zer01's website just disappeared. It also turns out that Global Verge sued Zer01, and has now been awarded $43 million. Of course, considering that Zer01 seems to have disappeared entirely, you can consider that $43 million to be worth about the same as $43 million in Monopoly money. Apparently, Zer01's boastful CEO, Ben Piilani lost his lawyers after "he stopped replying to contact from his counsel." In other words, Piilani has disappeared.

Assuming that Piilani doesn't re-emerge and appeal, then Global Verge may try to take any assets it can, which may include some apparent patent applications that Zer01 claimed it had -- though, the details were never explained, so I wouldn't hold my breath on the actual existence of such patent applications, or the likelihood that they get approved. Of course, as Gohring's latest piece on the saga points out, many people are still upset with Global Verge for convincing them to sign up to sell these non-existent phones. Global Verge tap dances around all this:

"One of the misnomers out there is that with Zer01 that we were charging people to come into the company to sell the Zer01 service. We never charged any of our distributors one dime for any service or any phones or any of the ability to sell the phones or the service," he said.

Yet, Robbins himself spoke repeatedly on conference calls for associates last year that were almost exclusively about the Zer01 service and the potential benefits of becoming an associate in order to sell the service.

Robbins maintains that associates who signed up to become part of the marketing program last year did so in order to get other benefits of being part of Global Verge, such as national ID recovery, back-end management systems to manage their businesses, a video conferencing program and travel sites to save money on travel.

Of course, it seems that many of those who signed up don't agree. Gohring notes that two dozen complaints have been filed against Global Verge to the Missouri state attorney general's office. Yet another reminder that if something seems to be too good to be true... it probably is.

Filed Under: mlm, multi-level marketing
Companies: buzzirk, global verge, zer01

Multi-Level Marketing Company Threatens Blogger Who Writes Critical Post

from the just-because-you-don't-like-it,-doesn't-mean-it's-illegal dept

Over and over and over again, we hear stories of companies that simply dislike what others are saying about them online, and send over threatening legal letters with no legal basis. These cease-and-desist letters are mostly designed to scare users into giving in, because there's no law against someone criticizing you or saying something bad about you (assuming it's not untrue). The latest, sent in by Davis Freeberg involves the Everyday Finance blog. The blogger there was approached by a company called "Shop to Earn," which offers a multi-level marketing (MLM) system. The blogger wrote a post about it, which Davis Freeberg describes as "well balanced," though the blogger explained the weaknesses of the system and why he chose not to participate.

So what happens? Yes, of course, Shop to Earn got upset and sent Everyday Finance a legal nasty-gram demanding the posts get taken down. As Everyday Finance notes, it's likely this had something to do with the fact that the posts had made it up the Google search results list. The blogger at Everyday Finance tried to adjust the post, taking out things like the phrase "fatal flaw," but Shop to Earn said that wasn't good enough and Everyday Finance needed to take down the entire site. This is, quite clearly, bullying through cease-and-desist. It's about trying to shut up a negative review of their business model because they didn't like what it said.

And, it appears that Shop to Earn isn't just focused on the blogger at Everyday Finance. The company has also sent cease-and-desist letters to other blogs, which were also extremely critical of Shop to Earn's program (though, that link is also quite well-balanced, pointing out the key flaws to Shop to Earn's program). Apparently, Shop to Earn seems to think that any review of its program that is negative is somehow libelous, and will threaten bloggers with legal action. What it may quickly learn is that (a) someone giving you a negative review and pointing out the obvious flaws of your program is not defamation and (b) trying to threaten bloggers into taking down their site will simply call much more attention to all of those negative reviews.

Filed Under: cease and desist, defamation, everyday finance, mlm, multi-level marketing, streisand effect
Companies: shop to earn