Am I Liable for This? You Be the Judge…

Yesterday I received an email from a reader who had hired a copywriter based on my recommendation in late 2009.

Unfortunately, he was not happy with the sales letter he received from the copywriter, and the copywriter allegedly did not complete the work he had been paid to do.

About seven weeks ago, the reader wrote to me about his negative experience with this copywriter. It was the second complaint I had received from readers regarding this copywriter, and I had also received an additional warning from a fellow marketer.

At that point, I pulled my endorsement of the copywriter, and made it clear on my website that I am no longer recommending him.

Now yesterday I received another email from the reader…

Hi Eric,

I hope you are well.

Just to let you know I contacted BBB.org, PayPal and my credit card company.

The business of [redacted] is not registered with BBB.org.

The complaint with PayPal can only be filed within 45 days from the date of payment and that period is exceeded due to [redacted] procrastination and the story telling.

My credit card company is not able to provide the refund of $1344 I paid to [redacted] for the letters he never wrote as there is an involvement from PayPal between them and the vendor.

I acted on your recommendation to choose services of [redacted] as you described him trustworthy and reliable.

From all people and businesses who gave testimonials on his web site only one responded on my enquiry.

The others simply ignored my enquiry and some of the have URL error.

I do not want to lose $1344 USD for nothing as I acted in full honesty and transparency and am asking you to provide me with the full refund.

Hope to hear from you soon.

Kind regards
Dragutin

As you’ve seen, the reader is asking me to compensate him for the payment he made to the copywriter.

I should mention that I do appreciate his polite tone. If he had sent a “flame” I wouldn’t be featuring it here.

I asked him for some additional information, and here is a copy of his communications with the copywriter:

PDF of email correspondence [redacted]

So there are really two questions at stake here…

1) Am I legally liable for the products I endorse or promote as an affiliate?

2) What is the right and ethical thing to do?

The ramifications are very significant, because the answers to these questions affect not only this situation but also…

– Everything I endorse/promote.
– Everyone who endorses anything or promotes something as an affiliate.

This is why the Internet marketing world was in a tizzy last December when the FTC rolled out their new guidelines for endorsements and testimonials.

So let’s answer the first question, as it applies to this situation:

Am I legally liable?

According to the FTC, endorsers may be liable for false or unsubstantiated claims made in an endorsement, or for failure to disclose material connections between the advertiser and endorsers.

Let’s talk about false or unsubstantiated claims.

If I had blindly promoted the product/service without checking it out first (as many affiliates do in this industry, and as I have done in the past on occasion), then I believe I might bear liability if my claims did not match up to the product. Let that be a word of warning to all affiliate marketers: You ARE responsible for what you say/write.

However, in this case I was speaking from first-hand experience. I had actually paid this copywriter $197 to write a sales letter for me, and I felt that the product I received was a good value for the amount that I had paid.

Therefore, my claim was substantiated, and I made the recommendation in good faith that the copywriter would provide similar value for other customers.

Now let’s talk about disclosing material connections.

I initially wrote my recommendation in October of 2009, which was prior to the new FTC guidelines going into effect.

When the new guidelines went into effect on December 1st, I added an “Affiliate & Material Connection Statement” to my website, which I believe satisfies this requirement. If I am shown otherwise, then I might need to get more aggressive about disclosing material/affiliate relationships.

In this particular case, I never did get paid an affiliate commission for the sale in question. So I’m not sure how that affects the material connection from a legal standpoint. Am I still an affiliate if I’m getting scammed too?

OK, so in my opinion I am NOT legally liable for the copywriter’s failure in this situation.

But that brings us to the next question…

What is the right and ethical thing to do?

Although I am someone who believes in absolute truth, and a clear distinction between right and wrong… the realm of ethics can still be grey at times.

I’ve tried to put myself in the customer’s shoes.

If I were him, I probably would have written the same email to me.

I’ve been a victim of scams in the past, so I’m familiar with what he is feeling. It’s one of the worst feelings that the pallet of human emotions can paint. Anger, frustration, regret, self-loathing… all rolled into one. The only way out of it is to go through the grief cycle, and reach a point of acceptance.

From the look of my dear reader’s emails, he’s gone through the denial and anger stages, and has now come around to the bargaining stage. Like I said, I’d be bargaining too.

I see this from two perspectives… justice, and compassion.

From the justice standpoint, I believe it would not be right for me to give him the refund out of my own pocket. Would justice be served by this? No.

Now… IF I had been paid a commission, I do think partial justice could be served if I refunded that commission to the customer. But in this case, there is no commission to speak of.

From a compassion standpoint, I’d love to help out my reader.

If we were talking about a much smaller dollar amount, I probably would have just offered to pay for it (or more likely… I wouldn’t have gotten an email about it in the first place). But $1344 is a decent chunk of change.

We all know the golden rule: do unto others as you would have them do unto you.

If it were the other way around, would I want him to pay for my refund out of his pocket? Yes I would, at this moment in time. But after more time has passed, I would most likely come to the conclusion that justice would not be served by an otherwise innocent affiliate paying me out of his own pocket.

In other words, my sense of justice would eventually trump my desire for recompense. (The two are not mutually exclusive. The victim should be paid back in order for justice to be served, but taking the money from the wrong person is not the solution)

So I do not think it is my moral obligation to pay for the customer’s loss…

But I want to know what YOU think!

I told the customer I would post this on my blog, and take my reader’s opinions into consideration.

I want to know:

What would you do in my situation, and why?

I am absolutely willing to pay a full refund to the customer if the arguments in his favor outweigh the arguments against.

I wish I could just err on the side of compassion, but obviously such a precedent could open me up to a lot of headaches and abuse due to other customers taking advantage of my leniency. If that is the outcome, then I will probably change some things about how I run my business.

Post your comments below. Please do not “trash” me OR the customer or even the copywriter. That’s not the point of this. At the same time I am not necessarily looking for support. I want your honest opinion, even if you are not on my side.

Obviously this is not something that needed to be made public, but I am doing so because I think we can have a good constructive conversation. This is an important topic that affects all Internet marketers. So let us know what you think.

Thanks for your input!

UPDATE: I’ve now posted the conclusion to this saga here:

PART 2