SAN FRANCISCO (CN) – A federal judge upheld most of a class action that claims Plimus, an online marketer, defrauds customers with phony reviews to induce them to pay for “lifetime access” to material that’s already free on the Internet.
Lead plaintiff Kimberly Yordy sued Plimus and its corporate parent Great Hill Partners in January.
She claims the defendants use “fabricated consumer reviews, testimonials, and fake blogs that are all intended to deceive consumers seeking a legitimate product and induce them to pay.”
Yordy claims says Plimus works with dozens of affiliate sites that offer the “free” digital goodies using the false advertisements.
“In the end, the only things provided to registered members of any of the Unlimited Download Websites include access to digital goods that are already available for free elsewhere on the internet, such as eBooks found at Project Gutenberg, (a public domain online library) or else, simply provides links to torrent search engines that allow a consumer to download already publicly shared digital goods,” the complaint states. (Parentheses in complaint.)
What’s more, Yordy says, aside from the fact that torrent search engines are available for free online, “accessing and downloading files through a torrent search engine is illegal and constitutes copyright infringement of the digital goods acquired. Accordingly, defendants and the unlimited download websites are promoting and profiting by directing consumers to illegal means of obtaining digital goods, all the while taking affirmative steps to give consumers the distinct impression that their conduct is legal.”
Yordy cites a movie download site she describes as a paid affiliate of Plimus, and says it shows fabricated “consumer reviews” praising the phony service, which were written by the company or its affiliates.
Plimus sought dismissal, claiming it is only the payment processor for online merchants and had no control over the ads.
But U.S. District Judge Thelton Henderson upheld most of the claims against the company in an 11-page order.
Henderson found Yordy had standing to sue and had raised a reasonable argument that Plimus had control over the allegedly misleading information.
The complaint had enough specific facts to support claims for fraud, negligent misrepresentation and breach of contract, Henderson found.
“By specifying the retail sales contract, the specific term, her own performance and the performance of the class she seeks to represent, and the loss of the sum of money paid for the [unlimited download website] access, plaintiff has sufficiently stated a claim for breach of contract,” Henderson wrote.
He granted Plimus’ motion to dismiss the unjust enrichment claim, which is not allowed as a stand-alone cause of action in this case.
The parties are scheduled for a case management conference on July 23.