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Rip-off reports win reprieve

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Consumer Complaints

Declan McCullagh CNET News

Published: 13 Jan 2004 08:15 GMT

A federal judge has rejected a Wisconsin company's legal attempt to assail BadBusinessBureau.com, which features thousands of negative reviews from consumers who claim to have been "ripped off" by unscrupulous retailers.

US District Judge Barbara Crabb last Thursday granted the request from the operator of the Web site, which also goes by the name RipOffReport.com, to dismiss a defamation lawsuit filed last August by cookware maker Hy Cite.

Because BadBusinessBureau.com does not have any offices in and had only limited contact with Wisconsin, it cannot be sued in the state, Crabb decided. The site had "not targeted Wisconsin citizens more than the citizens of any other state," Crabb wrote in a 13-page decision.

Ed Magedson, a self-proclaimed consumer advocate who runs BadBusinessBureau.com, said Hy Cite's reaction to criticism was typical of companies with something to hide.

"The companies that end up suing me are the companies that are guilty," Magedson said. "A company that is not guilty will come back and file a report. They'll file a rebuttal that says, 'this company did not do this or the company did do this. The customer is welcome to contact us because we want to satisfy our customers.'"

Magedson, who indicated he lives somewhere in Arizona, posts rebuttals provided by corporations but charges a $25 (£13.51) fee to post more than four of them. One complaint against Hy Cite, for instance, claimed it was "misleading and deceitful" for the company to refuse to cancel an order for its Royal Prestige cookware.

To avoid frivolous lawsuits, Magedson said, he has incorporated BadBusinessBureau.com on the Caribbean island nation of St. Kitts and Nevis in the West Indies. In addition to not being bound by Wisconsin law, Magedson said, US federal law says he is not liable for reviews posted by visitors to his site.

At least one federal appeals court has taken that view, ruling last year that Internet publishers should not be responsible for libellous comments that they republish. Also, in the United States, truth is an absolute defence against accusations of libel or slander.

But the West Indies have no such free speech protections, and Magedson's legal strategy has backfired before. Alyon Technologies said in a statement last August that it sued Magedson in the West Indies and obtained a $10m default judgment against him. Magedson claimed, however, that he has yet to pay Alyon any money.

John Scheller, an attorney for Hy Cite at the law firm of Michael Best and Friedrich, said his client still hopes to secure an injunction against BadBusinessBureau.com.

"We haven't had a chance to fully analyse the opinion and whether to appeal," Scheller said. "We were trying to stop some of the statements on the Web site about my client. (We still hope for) damages and/or injunctive relief to stop them from making disparaging statements about our client."