Lawsuit » Internet giant hits Pacific Webworks over deceptive practices.
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Google Inc. is suing a Utah company, alleging it is engaged in a widespread fraud involving thousands of people and millions of dollars by trading on the good name of the Internet-search giant.
Google filed suit in U.S. District Court for Utah late Monday against Pacific Webworks of Salt Lake City, seeking to shutdown dozens of Web sites under various names that are appropriating the Google's name and reputation to sell bogus products. The kits purport to allow people to make money from home with Google.
"The kit is advertised as free, except for a nominal shipping and handling charge or access fee," the lawsuit says. "However, people who sign up for these offers have their credit cards charged with substantial recurring monthly fees. They also receive little of value, or nothing at all, in return for their payments."
A tangle of companies and various Web sites linked to Pacific Webworks "perpetuate Internet scams on unsuspecting consumers" by appropriating Google's name and using its reputation, the Mountain View, Calif., company says.
The Utah-based companies "engage in the illegal and infringing acts alleged below through an interrelated network of entities that share common ownership, officers, managers, office locations, business and accounting functions. To avoid detection and identification of all those behind the scam, this network includes an ever-changing coterie of Web sites that utilize the same templates to generate the same fake news stories, fake testimonials, fake blogs and pressure tactics to drive unsuspecting consumers to credit-card processing sites like those run by PWW."
Google says the recurring charges on consumers' credit cards have generated millions of dollars in revenue.
Shares of Pacific Webworks, which is traded over-the-counter, plunged 53 percent in trading Tuesday, finishing at about 7 cents a share.
On July 29, the company was trading at 34 cents a share. In an amended annual report filed July 6 with the Securities and Exchange Commission, the company touted a 250 percent increase in revenues for 2007 above the previous year.
Financial figures for 2008 apparently aren't available. But in its latest quarterly report filed in November, Pacific Webworks reported third quarter revenues were up 11.45 percent and second quarter revenues by 168 percent over the same periods last year.
A phone call and e-mails to Pacific Webworks' headquarters seeking a response to the lawsuit were not returned.
Hundreds of complaints are posted on Internet boards against Pacific Webworks and related companies. The local Better Business Bureau has given the company an "F" grade after receiving 732 complaints.
The majority of the BBB complaints are about Google-related promotions in which a trial is offered at little or no cost. But an obscure part of the purchase agreement states that customers must indicate they do not want further services or products or they will be charged even more, said Jane Driggs, president of the Utah BBB.
"If you weren't paying attention you'll find out when your bank account drops that they're charging a monthly fee," said Driggs.
Pacific Webworks also is facing a proposed class action lawsuit in Illinois where a lawsuit states many of the same allegations as the Google action. One ad touts "Earn up to $978 or more a day using GOOGLE," the suit says.
The small initial fee is used as "bait for a credit card number that can then be used to impose addition charges on the consumer," the lawsuit says.
In addition, the Federal Trade Commission in June lodged a lawsuit in federal court in Nevada against entities that appear to be connected to Pacific Webworks.
The Utah Division of Consumer Protection also has filed suit against three companies that appear to be related to Pacific Webworks for failing to pay a fine for deceptive practices. Texas also has filed an action against some of the same companies. In 2007, Pacific Webworks and division reached an agreement over deceptive practices related to "free" promotions in which the company agreed to refrain from violating Utah consumer laws.
Google is asking for unspecified economic damages, that Pacific Webworks be restrained from using its name and trademarks. It wants a judge to order the Utah company to transfer to it all Internet domain names that contain Google's names or trademarks.