Website Legal Compliance – FTC Accelerates Crackdown On Fake News Sites

We’ve all seen headlines in search results like this one – “XYZ Exposed: Miracle Diet or Scam”. And perhaps we actually believed there was objective reporting or unbiased commentary behind the headline. But after reading the web page, it was clear that the headline was just a clever way to catch your attention and lure you to a sales page with an aggressive sales pitch.

The Federal Trade Commission (FTC) has seen these headlines too, and the FTC doesn’t think they’re clever at all. In fact, the FTC believes they constitute deceptive and unfair trade practices, as indicated by the FTC’s accelerated crackdown on affiliates of a popular diet drink with aggressive weight loss claims.

Modus Operandi

The modus operandi of these sites was to start with attention grabbing headlines such as the one listed above and these additional ones – “News 6 News Alerts,” “Health News Health Alerts,” or “Health 5 Beat Health News.”

The sites presented what appeared to be a skeptical commentator who raises the question of whether the diet drink is really effective. The commentator appeared to be objective; however, after a few paragraphs the commentator would conclude that use of the diet drink would result in a 25-pound weight loss in 4 weeks – all this without changing diet or exercise according to the FTC.

The prices for the supplement ranged between $70 and $100.

The FTC’s Claims

When the FTC originally initiated law suits against these sites, Charles Harwood, Deputy Director of the FTC’s Bureau of Consumer Protection stated: “We are alleging that nearly everything about these Web sites is false and deceptive”. In addition, the FTC pointed out that the defendants aggressively promoted the deceptive ads by spending millions of dollars for placement on high volume websites resulting in millions of views by consumers and substantial sales.

Specifically, the FTC contended that the offending sites –

* failed to disclose their material relationships involving the payment of affiliate commissions with the merchants of the products;

* failed to produce independent tests to support the claims made prior to public dissemination;

* included a section of “consumer comments” that were completely fabricated;

* used infringing logos of reputable media outlets such as ABC, Fox News, CNN and Consumer Reports to give the false impression of credibility; and

* misappropriated the image of a French reporter for use on the sites.

The Settlements

The cases brought by the FTC were against six affiliates of the merchant that manufactured and supplied the weight loss supplement.

In the settlements, the defendants agreed that they will permanently cease their allegedly deceptive practice of using fake news websites. In addition, the settlements require that the defendants cease making deceptive claims about their other products, including work-at-home schemes and penny auctions which most of them promoted.

The big hammer in the settlements included fines in an aggregate amount which represented the affiliate commissions the defendants received through their fake news sites.

These settlement results clearly indicate that the FTC aggressively pursued every dollar they could under the circumstances (the final amounts left most of them with few real assets, if any):

* one defendant’s $2.5 million judgment was suspended when he pays $280,000 and records a $39,500 lien on his home;

* another defendant’s fine of $204,000 was suspended pending the payment of $13,000 plus the proceeds from the sale of a BMW automobile, and

* still another defendant was suspended pending the payment of almost $80,000 over a 3 year period.

Conclusion

The take-aways from these cases include –

* fake news sites are virtually guaranteed to get you sued by the FTC,

* ditto for fake testimonials or user comments,

* diet supplements of any kind are high on the FTC’s radar screen for regulatory scrutiny,

* the FTC is serious about enforcing its guidelines that affiliates are required to conspicuously disclose the fact that they are paid commissions for endorsements, and

* consistent with the FTC’s long-standing policy, advertising claims should be substantiated prior to public dissemination.

The FTC continues to make it absolutely clear that the days of the “Wild, Wild West” on the Internet, when it was open season on deceptive marketing practices, is clearly over for good.

This article is provided for educational and informative purposes only. This information does not constitute legal advice, and should not be construed as such.

How to Get Legal Transcription Jobs and General Transcription Jobs

There are plenty of transcription job opportunities for you out there if you are willing enough to spend time and effort to put in the work. You cannot expect to earn a lot of money doing nothing. The good thing about doing general and legal transcription jobs from home is that you actually get to choose how much work to take in and what working hours you want to keep. This gives you time to spend with your family and to do other things that you want to do. If you are looking for a good way to earn a living from your home, doing transcription work could be just the work from home opportunity that you need.

You can get more information about how to get transcription jobs through the internet. In most cases, you would not have to have specialized training in order to get into transcription. There are, however, some types of transcription work that require knowledge of terminologies and understanding of processes with regard to the medical and the legal fields. General transcription work would normally have less restrictive requirements and will allow you to start getting jobs as soon as you pass your transcription test.

You have to be able to get connected with companies needing to outsource their transcription requirements if you are to start getting general and legal transcription jobs. It is not that easy to find which one of the millions of companies around the world are outsourcing their transcription jobs. While a job search online would yield you several options, it would be tricky to weed out the legitimate offers from scams on your own. Others who have been duped by these scams just chalk up these scams as one for experience. You do not necessarily have to go through this. There are resources that you can turn to in order to avoid these scams.

If a particular site promises you millions in earnings doing transcription work in exchange for a large sum of money you invest in their account, this should be a clear warning signal for you. There is no way through which you can earn millions in a snap doing general and legal transcription jobs. You do get compensated enough for the kind of work that you turn in when you do transcription work. The more satisfied clients you have, the more repeat businesses you will most probably get, and the more money you will earn. Find out how you can avoid these scams, how to get online medical transcription training and how to get transcription jobs without specialized training.

Choice of Legal Entity Structure in Thailand

Private limited company

By far the most prevalent form of entity that is used in Thailand is the private limited company. A private limited company is simply a company that has at least 3 shareholders (all of which can be US nationals and/or corporations once the Treaty privileges are invoked) and at least 1 director who is resident (domiciled) in Thailand (who may also be a US national).

The liability of the shareholders is limited to the amount of the private limited company’s share capital. The shareholders appoint director(s), who act according to a registered set of articles and memorandum of association, both of which remain under the control of the shareholders.

The business activities of a Thai private limited company are set out in its memorandum. The activities are usually drafted in very wide terms and provided the memorandum does not allow any of the 6 restricted business activities under the Treaty, a private limited company would usually be able to undertake virtually any kind of activity that a US corporation would require of it to undertake in Thailand. But whilst a private limited company is the most widely known and most common form of doing business in Thailand, it may not be the most advantageous structure for tax.

As the activities of a private limited company are revenue-generating activities, it is therefore liable to all the corporate and transaction taxes payable by taxable entities in Thailand, the two main ones being corporate income tax, which is payable at the rate of 30% of the net income earned by the entity plus profits remittance tax at the rate of 10% of net profits remitted out of Thailand (equating to 37% income tax on net income), and VAT at the current rate of 7% on all sales of goods or provision of services by the Thai private limited company.

Representative office

In terms of its legal attributes, a representative office entity is the same as a branch office, i.e. an arm of the US corporation that forms it. But whereas a branch office conducts activities for commercial gain (i.e. for revenue-generating purposes), a representative office conducts its activities for its head office only – not for any consumer, i.e. a representative office conducts non revenue-earning activities. And as the activities are non revenue-earning, the Thai Revenue Department has prescribed that provided a representative office complies with the rules and conditions for representative offices, it shall not be subject to either income tax in Thailand or VAT in Thailand.

A representative office entity in Thailand is the right tax-effective and cost-effective choice for a US corporation carrying out any non revenue- earning activities in Thailand, such as:

  • Sourcing goods and services in Thailand for the US corporation.
  • Checking and controlling goods purchased or goods manufactured in Thailand for the US corporation.
  • Providing information and advice in relation to goods sold or services provided by the US corporation to consumers in Thailand.
  • Propagation of information concerning new goods or services of the head office; and/or
  • Reporting on matters in Thailand to the US corporation.

The above activities are those listed in the Thai Commerce Ministry guidance for representative offices, and in the case of a US corporation’s activities in Thailand not exactly fitting into the guidance, but are nevertheless, non revenue- generating activities (such as, for example, a US corporation is required to research/gather information in Thailand and report back to the US head office only), it would be a worthwhile exercise to seriously consider a representative office entity for the activity in Thailand.

Branch office

Similarly to a private limited company entity, a Thai branch office of a US corporation would usually be able to undertake virtually any kind of activity that a US corporation would require it to undertake in Thailand (except for, of course, the six restricted business activities under the Treaty).

But unlike a private limited company, a branch office is the exact same legal entity as the US corporation that forms it, and therefore, a US corporation forming a branch office assumes all liability for the operations of the branch office in Thailand.

That being said, however, if it is the case that the business activities in Thailand requires the US corporation’s guarantee of performance of the activities in Thailand and/or the activities in Thailand will be conducted for a finite period of time after which time the activities in Thailand would cease (for example, business activities involving a particular project to be carried out for a period of time in Thailand) then a branch office entity could be a bit more favorable.

A branch office in Thailand pays the same 30% rate of corporate income tax as a private limited company plus the same 10% profits remittance tax (making the total income tax payable equal to 37%) and the same rate of VAT (current rate of 7%) on all sales of goods and provision of services by the branch office.

But whilst there are no major Thai tax payable differences between a branch office and a Thai private limited company, an exit from a branch office entity in Thailand is far less cumbersome, far less time consuming and therefore far less than an exit from a Thai private limited company entity, which is required to comply with all the legal dissolution and liquidation procedures prescribed in the Thailand Civil and Commercial Code.

Regional office

Unlike for a branch office and the similarly for a representative office, the Thailand Revenue Department has prescribed that regional office entities in Thailand are not subject to corporate income tax or VAT in Thailand.

And similarly as for representative offices, the Thailand Ministry of Commerce has prescribed that regional office entities shall not undertake activities in Thailand for commercial gain, but shall undertake non revenue-earning activities for the head office company only.

The prescribed non revenue-earning activities for regional office entities are as follows:

  • Coordination or supervision of operations;
  • Consultation or management services;
  • Personnel training or development;
  • Financial management;
  • Marketing & sales promotion management;
  • Product development; and
  • Research and development services.
  • Regional operating headquarters

Finally, for a US corporation that is carrying out the types of business activities listed above for regional offices, but those activities are being conducted for commercial gain, i.e. a charge is made by the regional office to the branches or affiliated companies in SE Asia for the services rendered to them by the regional office, the US corporation would be wise to consider a type of legal entity in Thailand known as a Regional Operating Headquarters (ROH).

An ROH entity in Thailand has the same legal attributes as a private limited company, but it is additionally registered as an ROH entity under the Thai Revenue Code, which provides ROH entities the following exceptional tax privileges:

  • 0% income tax on income generated from branches/affiliates outside Thailand; and
  • 10% income tax on income generated from branches/affiliates in Thailand.

should note that whilst the Treaty of Amity may override the Thai FBA in relation to ownership, it does not however override the Thai FBA in relation to the minimum capital requirements of foreign entities in Thailand.

Thus, for any of the legal entities of company, branch office, representative office or regional office, a minimum amount of Bt 3 million (or about $100,000) is required for establishment of the entity in Thailand. This minimum amount of Bt 3 million forms the “capital” of the entity (similar, if you like, to share capital), it shall be actually remitted into a Thai Baht bank account (you cannot hold this sum in a USD account in Thailand) and it is required to stay in Thailand under the termination of the entity in Thailand, but of course, it can be used for the purposes of the entity.

For an ROH in Thailand, the minimum amount of capital is increased to Bt 10 million (or about $330,000).

Minimum capital requirements for each non-Thai (foreign national) employee in Thailand

You need to note however, that in addition to the minimum capital requirements under the Thai FBA, Thailand’s Foreign Employment Act prescribes that for work permit and immigration purposes, the employer entity in Thailand shall have paid-up capital of at least Bt 2 million (or around $67,000) per foreign national employee (including US national employee) in Thailand.

Thus, in addition to meeting the required capital amount of a minimum of Bt 3 million stipulated under Thailand’s Foreign Business Act, if a US corporation will be seconding foreign nationals (including US nationals) to work as employees of the entity in Thailand, the entity in Thailand will be additionally required to meet the Foreign Employment Act requirement and have at least Bt 2 million of paid-up “capital” in Thailand for each foreign national employee.