Product-Review Site Called a RICO Scam

     LOGAN, Utah (CN) — The maker of NordicTrack fitness equipment sued an online product review site for $10.5 million this week, in a RICO complaint accusing it of posting bogus reviews of companies that refuse to pay it “membership” fees.
     Icon Health & Fitness sued ConsumerAffairs.com, Consumers Unified and David Zachary Carman on Tuesday in Cache County Court.
     Logan-based Icon, launched in 1997, specializes in NordicTrack fitness equipment such as treadmills, ellipticals and exercise bikes. The company this year received three Consumer Reports Best Buy awards and a Golf Digest Editor’s Choice Award.
     ConsumerAffairs was founded by former journalist and nonparty James Hood in 1998, according to the complaint. It presents itself as an “independent, trustworthy Web-based consumer news and resource center,” with consumer news, recall information and consumer reviews.
     Carman acquired ConsumerAffairs in 2010, and is sole manager of defendant Consumers Unified, Icon says.
     Icon claims Carman hung his hat on a business model centered on asking companies to pay fees to become “accredited members” of ConsumerAffairs.
     “Defendants discriminatorily post reviews and ratings based solely on whether customers have paid fees, and thus using deception and manipulation, defendants post negative reviews for those customers who do not pay, such as Icon, and post positive reviews for those who do pay,” the complaint states. “Defendants’ actions have resulted in the incorrect and baseless degradation of Icon’s good reputation, and defendants have committed the same in an effort to coerce Icon into paying for defendants’ purported services and products.”
     On Aug. 5, Icon says, ConsumerAffairs sent it a Member Accreditation Agreement, “which as a courtesy (presumably) removed the exorbitant $9,000 setup fee and required a $3,000 per month fee for each month Consumer Affairs’ ‘services’ were provided.” Icon declined the offer, which it says included a nondisclosure agreement.
     “Membership entitles companies to exclusive ConsumerAffairs ratings-related treatment and “ratings image transformation services,” the complaint states.
     For instance, if a member does not like a posted review, it may have the “negative feedback” removed from the site if the reviewer “does not respond within 5 days, the response is insufficient, the facts underlying the complaint are disputed, or the dispute is ‘resolved.'”
     ConsumerAffairs publishes an “overall satisfaction rating” based on an unspecified subset of star-rated reviews, plus a summary of star ratings of 1-5. Companies that pay the fees can have reviewers update star ratings or have a rating removed, Icon says.
     “None of these options are available to companies who do not pay ConsumerAffairs’ lucrative setup and monthly fees,” the lawsuit states.
     Icon says ConsumerAffairs solicits and posts positive reviews for paying members, and does not post or remove legitimate positive reviews for nonmembers, to “coerce” them to subscribe.
     “ConsumerAffairs utilizes its computer resources in order to puff the reputation of those companies who pay for its services and to deliberately degrade the good will and reputation of those who do not,” Icon says in the complaint.
     All of his, Icon says, resulted in the “incorrect and baseless degradation” of its reputation.
     The respected nonparty Consumer Reports, which publishes online and in print, charges subscription fees to only consumers, accepts no outside advertising, and independently tests products through industry experts, Icon says. This is wholly different from the system used by ConsumerAffairs, Icon says, “because ConsumerAffairs deliberately creates a biased, manipulated review system that not only favors those who pay, but also disfavors those who do not.”
     ConsumerAffairs and Consumers Unified did not respond to requests for comment.
     ConsumerAffairs’ Twitter account on Thursday touted weight-loss programs, car rental companies and the “dangers of ‘masked caffeine.'”
     Icon representatives could not immediately be reached by phone.
     Icon seeks $10.5 million for commerce and trade violations, unfair competition, “malicious cyber activity,” fraud, defamation, intentional interference with prospective economic relations and racketeering, plus costs of suit.
     It is represented by Brad Bearnson with Bearnson & Caldwell in Logan.

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