Way back in the spring of 2009, we looked over the vast direct-sales empire of Canada’s Just Think Media, and compared it to “a strip mall where every store sells Amway.” We were interested in how the same company was behind such a wide variety of online businesses. What we didn’t learn until a fantastic article in the Atlantic about the Internet dark arts mastermind behind the company was that there was a lot more to it than sketchy business models. The Federal Trade Commission was then working very, very hard to untangle the company’s finances as the company’s founder, a Canadian high school dropout, partied in an $8,000-per-night hotel suite in Las Vegas.
Jesse Willms is still running business ventures. He started out still in high school, reselling used software. His company was such an impressive business success that he didn’t bother finishing school. Only it didn’t succeed only because the 16-year-old was good at business. He was, but as his business expanded, it evolved. The began to drop-ship, marketing and selling software but having outside companies handle order fulfillment and shipping. Then Microsoft noticed the dubious origins of some of the inventory he was selling.
What does a bunch of used copies of Office have to do with never-ending auto-shipments of colon cleanser? A lot, actually. Willms had to agree to never sell products from Microsoft and other software companies ever again, so he needed a new business. What was super profitable, could be marketed preying on human insecurities, and lent itself to a subscription model? Lots of things.
Diet supplements, credit reports, colon cleansers…all sold on the negative-option model, where the company kept charging your account and sending the profitable products until you managed to break free. It was very, very hard to break free, and the Federal Trade Commission noticed.
Negative option schemes will never really go away. Neither will shady merchants, which operate everywhere from street corners to slick-looking websites. Schemes pop up and proliferate too quickly for governments to protect us. How can we eradicate them? Scams lose their power when no one falls for them. If only identifying scams were as important a part of Internet literacy as using a mouse or scrolling with a touchscreen.
Jesse Willms, the Dark Lord of the Internet [The Atlantic]