Around mid August 2014, the owner/seller of a brand new company released a sales video which claimed that the seller had a “cutting edge technology” that would enable customers to receive a certain level of quality services based on the customer’s membership or package ownership level. The prices of the packages ranged from a one time price of $250 to $10,000. In addition, a superior special package was offered at $5,000.
After two months of actually receiving the service, the results were nothing close to what was advertised in the sales video. Consequently, a segment of the customers felt that “false advertisement” or “unethical marketing” had been committed by the seller. Because of this, they felt that they should be entitled to a partial refund of their investments.
The seller, on the other hand, maintained that he is under no obligation to give any refunds since the customers have signed the seller’s terms and conditions. These documents state that once commissions have been paid out into the field from the customer’s transaction, then no refunds would be given; and indeed, commissions have been paid out.
The Customers’ View
In the August 2014 version of the sales video, the seller clearly stated that the customer would receive “at least” a certain level of services that would correspond to the package purchased. In addition, while there was an income disclosure which essentially said that no earnings would be guaranteed, other statements were made in the sales video that the services would be provided by “experts” who have a success track record of an impressive level of over 70%. The sales video went on to state that even if the success rate drops to just 60%, the customer, “without having to lift a finger,” would still be able to “make crazy money.”
The whole idea behind the service was to enable people, especially those who would never be able to participate, to simply plug in and let the system do the work for them; and indeed, this point was made repeatedly in the video. This appealed greatly to many people who had no skills and no knowledge of the industry that the seller would be taking the customers into. As a result, a good number of people purchased the $5,000 package due to what was stated in the sales video.
But after two months of receiving services from the seller, instead of experiencing success at the level advertised which was to be over 70%, the actual success rate had been around only 49%, and the actual level of service provided had been only at a level of a $500 package owner instead of a $5,000 package owner for those customers who purchased the special $5,000 package.
The seller also changed the wordings in a new sales video and updated the terms and conditions around October 2014. The words in the new sales video were modified to now simply say that customers would be receiving services on “an average” of so and so. The wordings used in other corporate written documents such as the package descriptions, the compensation plan and terms and conditions were also changed to say services would be provided “up to” so and so.
On top of the above, the seller went on to change the “experts” without giving any clear explanation as to why they have performed so poorly. It appeared as if the seller had not been working closely with them. When the customers asked the seller about the backgrounds of the “new experts,” the seller would not divulge any information other than that they are people who are now “in-house.” This worried the customers because the old experts were supposedly people who have been in the industry for more than 20 years combined and now they know nothing about the “new experts” backgrounds.
All of the above lead many $5,000 package owner customers feeling that they have been mislead and that the seller should give them a partial refund.
The Seller’s View
While the customers claim as stated above, the seller maintains that he has not breached the contract and that he never guaranteed success and so forth. Therefore, he will not offer refunds because the customers have signed his terms and conditions which stated that once commissions have been paid out into the field, there would be no refunds.
Who is Right?
What are your thoughts on the situation? Do the customers have a right to some sort of refund despite the fact that they’ve signed the seller’s terms and conditions? Does the seller have any obligations to give refunds even though he has not been able to deliver services as advertised via his sales video?
Please share your thoughts in the comments section below.