Nasir and Matt discuss the legal fallout from a company scamming consumers with work from home opportunities. They then answer, “We sent some of our employees to a conference and one of them lost their laptop. Are we responsible for buying them a new one?”
NASIR: All right. Welcome to our podcast where we cover business in the news and add our legal twist and also answer some of your business legal questions that you, the listener, can send in to firstname.lastname@example.org.
By the way, last week, I don’t know if you knew, I forgot to say “dotcom” and so I’m sure, like, all these people sent these emails to “ask@legallysoundsmartbusiness” and it didn’t go anywhere so I apologize.
MATT: Well, that’s the most likely result of what happened – people just couldn’t figure it out. I know, when I don’t hear dotcom after something, it sends me in a tailspin.
NASIR: I agree, and don’t forget to add “wwwdot” too to that email address. I always forget to say that.
MATT: Is that…?
NASIR: Actually, don’t do that. I wonder if that would work. I don’t think so.
MATT: I don’t know.
NASIR: If you send it to email@example.com. I don’t know. Let’s try it We won’t be able to know if it worked.
MATT: This is what people want to listen to on a Monday morning.
MATT: Hopefully they’re listening to this later in the day.
NASIR: Even though this comes out on Monday morning, I don’t think most people are listening to it on Monday morning.
MATT: Yeah, that’s true.
NASIR: Maybe, like, 10 percent, I suppose.
MATT: Probably even lower than that.
NASIR: Yeah. Well, if I’m watching it, I’m at least 10 percent of the 10 people that are listening. No, I’m just joking.
MATT: We never said who we were. Should we just leave it this way?
NASIR: Oh, I don’t know.
MATT: Keep it a mystery. We get introduced during the song so I think we’re okay. Let’s just keep it this way. I like it so people don’t know who’s who.
NASIR: Yeah, I feel like the listeners went crazy there. They’re not sure who we are and – I don’t know – I guess we should go forward.
NASIR: Actually, no, my name’s Nasir Pasha.
MATT: I guess I’ll also introduce myself as Matt Staub. The cat’s out of the bag now. Okay. Well, we have a pretty cool story to talk about today, I think. I’m sure people are familiar with this. This is a Michael Scott special right here. I think he definitely would have been pulled into this at some point.
MATT: We’re talking about this company. This is one company in particular but I know there‘s a bunch of different companies out there that have or are still doing this. It’s one of those scam companies where, basically, it cons people into paying money. I kind of view it as just like a pyramid scheme almost, right? If you get people to pay money and then, you know, well, I guess I don’t know. I don’t know how those people then make money. Anyways, this company cons people into paying X amount of dollars to get this package to start off whatever they’re going to end up doing and then it has all these upsells, blah blah blah. Basically, there was just a lawsuit or an order that was decided and this company has to pay $25M to consumers who made no money through whatever this service is, and just to get to the specifics, I guess they had about 110,000 people who signed up for this.
MATT: More than 99.8 percent of them didn’t make a single penny. So, not good numbers overall. I was trying to figure out actually how they ended up making money. So, they get people to pay to get the startup package, the quick sell program, and then there’s all these upsells on how to, if you really want to make money, we’re going to sell you this $2,300 extra add-on. But I don’t even know how they… I mean, some people obviously made money off of this.
NASIR: I don’t know what the software actually did. It seems this quick sell program. However, here’s the funny thing about all this, right? As we’re talking about it, it seems obvious, okay, this is a scam, but there are “legitimate” business structures that are very similar where you recruit sales people or other individuals that require some kind of buy-in in order to participate and, without naming anything specifically, but some multilevel marketing structures are like this, some are not. You know, it just kind of depends upon that. But, a lot of times, if you’re selling a product, you actually have to purchase the product and there’s some kind of guarantee with that and what-have-you. So, just to speak from the legalities of it, there are some legitimate structures like that. But, if you are going to be presenting these business opportunities as the FTC calls it, there’s all these different types of disclosures that are now required just as a response to these make-money-from-home quick – what’s the word I’m looking for?
MATT: Get rich quick scheme.
NASIR: Get rich quick schemes. So, disclosures are everything from, you know, if you make an earnings claim, what kind of disclosures are associated with that and truth in advertising principles, of course, apply as well. So, they’ve regulated a little bit so I think we’ve seen less of those signs or billboards that say, “Make money from home.” Every once in a while, you see them on the intersections pretty much across the country.
MATT: Yeah, and just to follow up with what I was saying before, this is what ultimately people are going to do. Help consumers find businesses of excess inventory to sell and they would find the buyer for the inventory and pay consumers half the sales price. That’s the actual description. But, basically, what this company was doing was not, like you said, you have to provide specific information to help consumers evaluate a business opportunity and they just weren’t doing that. Even more so, this was a summary judgment motion that was granted.
MATT: So, this got knocked out very quick into the legal process. I mean, I get that the disclosures weren’t there. I kind of have probably an unpopular opinion on this. I almost side with the company. I understand you have to provide consumers certain disclosures and certain information, but I almost side with the company itself. You know, the people that signed up for this, why would you do it? It doesn’t make any sense.
MATT: I feel like it’s a little bit of common sense at some point, right? I don’t know. Like I said, it might be an unpopular take.
NASIR: Yeah. Basically, you’re saying this judgment is basically awarding stupidity even though probably the consumers may not be refunded everything, it’s a $25M judgment, but who knows if that actually is equal to what the consumers actually paid? What’s interesting is we’re calling them consumers, and I think that’s the right name for them, but they’re not business owners, they’re not individuals that are trying to run their own business. They’re consumers in the sense. They basically just bought a software for sometimes thousands of dollars and pretty much got screwed on that end. So, I see what you’re saying, but I don’t think that the people who are actually purchasing this are necessarily in the best position to not be taken advantage of.
MATT: I agree completely and that’s why I didn’t go fully in. I guess they also falsely claimed consumers would earn at least $4,000 or more in the first 30 days. So, that’s an issue, obviously.
NASIR: On average, yeah.
NASIR: And $4,280 per deal. I think you’re just kind of on the side of the business because you’ve done this to many other people in your past and you feel justified about it. Is that what it is?
MATT: Yeah. Actually, I have a couple of these companies myself and I’m worried that the FTC is going to come after me. I already made one Michael Scott reference, but this reminds me of when Ryan had wolf.com.
MATT: Was it wolf.com? Well, he did have wolf.com.
NASIR: There was a couple.
MATT: I don’t know if it was the same thing, but when Pam and Jim were getting married, you know, he came in, he’s like, “I’m getting them a gift,” he’s like, “Would you rather have $50 today or $500 in six months.”
MATT: And then, Pam ends up saying, like, the $500. He’s like, “All right. Well, all I need is $50 from you now.” So, it’s like a reverse gift – a backwards gift – and she ends up giving him money.
NASIR: There was also that other episode where Michael actually literally pitches a pyramid scheme to the entire staff. That was funny.
MATT: And he draws it on the whiteboard and Jim says, “It’s a pyramid scheme,” and he says it’s not, and Jim goes up and draws a pyramid over the diagram that Michael’s drawing.
MATT: Actually, I did watch The Office last night for the first time in a few weeks so maybe it’s fresh on my mind.
NASIR: Yeah, good reference, for sure.
MATT: Well, if anyone’s listening that has one of these companies, or I guess that’s been scammed by one of these, this is good information to know.
NASIR: Yeah, and let us know, too. You know, we’d like to know some inside information in that aspect.
MATT: So, now, we’re into the question of the day, and here we are. Santa Clara, California.
“We sent some of our employees to a conference and one of them lost their laptop. Are we responsible for buying them a new one?”
NASIR: This kind of reminds me of the last issue, right? I mean, you have to kind of take responsibility of your own stupidity, I suppose.
MATT: Well, this might not be stupidity. You could definitely have a laptop – did it say lost or stolen?
NASIR: It said lost.
NASIR: Oh, yeah.
MATT: I feel like everyone loses stuff. I don’t know.
NASIR: Yeah, that’s true.
MATT: I haven’t lost a laptop, I guess.
NASIR: Yeah, I’ve never lost a laptop. But, yeah, if you leave it in a conference for even, like, ten minutes, it could disappear. I don’t know what kind of conference that is. You can’t trust those people, I suppose. But the general rule is that employers have to pay for all the expenses that are incurred in the scope of their employment. But, now, the question is, is this a personal laptop or company laptop? If it’s a company laptop, can you force your employee to reimburse because they lost it? And then, there’s another issue, if it’s a personal laptop, does the company have any responsibility to reimburse the employee. So, I see those two issues there. I don’t know if it says whose laptop it is.
MATT: So, how do you want to answer it?
NASIR: Oh, I don’t want to answer either of them.
MATT: This is the analysis you would do.
NASIR: Yeah, exactly. But, since we’re on this show, I think we should. Of course, if there’s some responsibility for the laptop and the procedures have, any time the employee checks out a laptop or has their own laptop, there should be a separate agreement that is associated with that because, especially if you want to end up withholding any wage because they lost the laptop and it’s their fault for some reason, then you would want to have that in writing and almost every state requires that before you can do that. The question is, if it’s not their fault – I don’t know – I don’t think it’s a very good idea to withhold any money or ask for a refund from your employee because that’s just the course of doing business. It’s the same thing if someone stole something from your store, you can’t charge your employee because it’s somehow, you know, they should have paid attention more or something to that effect. But, if there was some negligence involved, that’s a different issue.
MATT: Yeah, I think it would have to be, like, gross negligence. But, if it’s issued by the employer, if it’s the employer’s laptop that the employee loses, I don’t think they’re going to be able to take that out of the person’s paycheck the next pay period. I mean, that’s just like you said, it’s kind of the cost of doing business. If it’s the employee’s personal laptop, but the employer was requiring them to use it, I mean, I guess that’s a much tougher issue.
NASIR: It is a tougher issue because this is in California so California has kind of expanded the scope of what is reimbursable for the employee. And so, now, this is a personal laptop that’s being used for business and it’s being required. So, okay, they may get a portion of reimbursement for the use of that. But, if they lose the entire thing, does that mean that they get reimbursed for that? Most likely not; but, at the same time, I could see a court kind of changing its opinion of that. But, right now, there’s not any clear indication that that is the case. So, the most conservative approach would be to just reimburse versus not and, again, I hate to say this but it’s something that you may need to get a specific opinion on, depending upon that circumstance.
MATT: Yeah, we gave a lot of different options here.
NASIR: Don’t take our legal advice.
MATT: Well, I think we answered it.
NASIR: So, I guess we answered the question. “We sent some of our employees to the conference. One of them lost a laptop. Are we responsible for buying them a new one?” Oh, I think this question implies that it’s their laptop, right? Buying them a new one. Well, I don’t know, I guess it could go either way. So, if it’s a personal laptop, I think you’re more inclined that you don’t have to. I think most attorneys will say that you don’t have to, but I’m sure you can find another opinion that would say otherwise. In this circumstance, I think, you’re going to have to look into a little bit more of a good case law so that’s why I don’t think I’m comfortable saying either one. But the conservative opinion is to just buy them a new one. But then, if it’s the company’s laptop, like Matt said, unless it’s gross negligence, then you’re going to have to foot the bill, and that’s just kind of the cost of doing business.
MATT: Or just get an insurance policy to cover it, if it’ll cover it, yeah.
NASIR: Yeah, of course.
MATT: Always an option.
NASIR: All right. So, that’s it. All right. Thanks for joining us, everyone.
MATT: Yeah, keep it sound and keep it smart.