Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

Here's the actual FTC case:

http://www.ftc.gov/os/caselist/0723241/c0903814.shtm

Some context that isn't really spelled out on Jason's site:

* Jason was an officer and co-owner (apparently, 1/3 co-owner) of the company; he was not simply the VP/Engineering employee of Swish.

* Swish was targeted in an investigation of a Payday Loan promotion that surreptitiously enrolled applicants into a scam private Mastercard/VISA program.

* According to the FTC, "hundreds of thousands of consumers" ended up inadvertantly getting signed up for these cards, and for each signup, Swish was paid something like $10-$15.

* At issue was not the private MC/VISA card or its terms, but the fact that people signing up for payday loans on sites controlled by Swish were asked to provide bank account information, which was then surreptitiously used to enroll users into the private MC/VISA card.

There are no doubt many shades of grey surrounding the line Swish was alleged to have crossed. They may not have crossed any line at all. But they were hip deep in the muck on this. It's possible --- Jason doesn't say! --- that the FTC may not even have recovered all of Swish's revenue from this VISA/MC scam.

If your company has the words "Direct Marketing" in its value proposition and it operates a website that collects bank account information, lawyer up, run far, and run fast.

"Swish Marketing Inc., headquartered in Palo Alto, California, is a leading and fast growing marketer of prime and sub-prime financial services. Swish Marketing serves more than 1.5 million customers monthly, introducing a wide array of consumer financial products."

How do they serve those customers? On a platter?

Here are their top advertisers:

http://www.cashnetusa.com/

http://www.acecashexpress.com/

That's exactly how those customers are served. There haven't been that many the FTC has actually gone after though.

Another example: http://www.ftc.gov/opa/2007/08/edebit.shtm

Then you've got CPA Empire which is run by Scott Richter a notorious spammer. Their offers are extremely spammy/scammy. There are a lot of people making millions of dollars (well, not as much now) by feeding on the sub prime market. This was especially prevalent during the housing bubble as you could sell mortgage leads for $40-100 each. Auto loan and payday loan leads are/were also extremely profitable for affiliate marketing companies.

As those sources of revenue dried up the companies that were still around switched to recurring revenue models where they'd sell crappy products on free-trials and then bill the consumer the full price for a couple of months worth of the product before they had a reasonable time to cancel the subscription.

http://www.ftc.gov/opa/2010/08/acaicolon.shtm

Facebook and a few other places stopped allowing advertising for those products and the merchant account providers stopped handing out "high risk" accounts like candy so much of that revenue has dried up as well. Not sure what the latest scam is. If you dig into it though you'll find that a lot of these offers are run by the same people. One company goes under and they just come back out with a new name and scam six months later.

For further detail of what exactly this guy was doing -- see this screenshot from the Exhibit(hat tip to tptacek):

http://www.ftc.gov/os/caselist/0723241/100420swishcmptexhibi...

I have a sharp eye, and even I missed the trick here at first glance which is to change the default option on signing up for the VISA pre-paid card.

If you look at section 5 in Exhibit D:

http://www.ftc.gov/os/caselist/0723241/100420swishcmptexhibi...

you will also notice that these guys were charging a startup fee of $55 for anyone who got these cards.

For Jason Strober to claim that"I had nothing to do with the advertising" when the sole purpose of his company was to run the above scammy, unethical, and deceptive practices would be laughable if so many people weren't hurt by him.

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