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Magic Jack Tries, Fails To Shut Up Boing Boing
Cheap VoIP company forced to pay $50,000 after defamation case goes belly up...

While Magic Jack's cheap VoIP dongle generally works rather well, our forums are occasionally littered with complaints about the company's business practices, be it it for little things like a website hit counter that used to artificially inflate their trial participant count (since fixed), or misleading marketing practices (like saying today is the last day of a free trial promotion, every single day). Our users generally overlook these problems for one reason: the service is dirt cheap, and works.

Like many companies, Magic Jack also likes burying things in their fine print and terms of service. Among them, the company includes language that requires users engage in binding arbitration -- a process that usually ends with the consumer losing, since the arbitration company works for the corporation being complained about. For most of the decade, the courts have repeatedly told companies that this language isn't legal, but that hasn't stopped it from being included in TOS anyway.

Back in 2008, gadget and culture blog Boing Boing ran a rather simple post highlighting some of Magic Jack's more dubious practices, including their bogus free trial user counter, their use of behavioral ad technology, and their inclusion of arbitration language in their terms of service. Magic Jack didn't like the post very much apparently, because they wound up suing Boing Boing for defamation. Unfortunately for Magic Jack, all of Boing Boing's claims were true, and Magic Jack has been forced to pay the website $50,000:

quote:
We had no idea that it would file a baseless lawsuit to try and shut me up, that CEO Dan Borislow would offer to buy our silence after disparaging his own lawyers, or that MagicJack would ultimately face legal consequences for trying to intimidate critics. . . At several points in the process, we could have taken a check and walked away: as it is, the award doesn't quite cover our costs. But we don't like being bullied, and we wanted the chance to tell anyone else threatened by this company what to expect.
According to Boing Boing, Magic Jack's suit claimed the blog's post subjected the VoIP outfit to "hate, ridicule and obloquy." The site claims MagicJack CEO Dan Borislow contacted them once he learned of the tenuous nature of his case in California court, agreed to a settlement, and then subsequently backed out. Once forced to settle, Magic Jack then demanded that the settlement dollar total be kept confidential. Boing Boing, unsurprisingly, didn't think that was a good idea:
quote:
We offered not to publish the amount of this settlement if Borislow would donate $25,000 to charity. MagicJack, however, offered to pay our entire legal bill only if we'd agree to keep the whole dispute confidential; when we refused, Borislow wrote that he would 'see us in court.' Nonetheless, we're happy with the outcome. The irony for MagicJack is that the proceedings are public record, so the silence it sought was effectively worthless.
Of course the lesson learned is that in the Internet age, the harder a company works to stifle criticism, the more attention that criticism gets. The better path is perhaps to listen to what your customers are saying about your business practices, and change them where possible if you value your customers.

Boing Boing has posted all legal documents pertinent to the case for those interested.
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topics flat nest 

pnh102
Reptiles Are Cuddly And Pretty
Premium Member
join:2002-05-02
Mount Airy, MD

1 recommendation

pnh102

Premium Member

Good Outcome Indeed

quote:
Unfortunately for Magic Jack, all of Boing Boing's claims were true, and Magic Jack has been forced to pay the website $50,000
If only more corporate-level frivolous lawsuits ended this way.
34574589 (banned)
join:2009-09-05

1 edit

34574589 (banned)

Member

Re: Good Outcome Indeed

said by pnh102:

quote:
Unfortunately for Magic Jack, all of Boing Boing's claims were true, and Magic Jack has been forced to pay the website $50,000
If only more corporate-level frivolous lawsuits ended this way.
Yeah the bastards!
In December 2008, MagicJack filed a $1,000,000 lawsuit (docket) against competitiors Joiphone and PhonePower, who linked to a blog post by a Singapore-based blogger whose own discussion of the product echoed ours: "Magic Jack (sic) will spy on you and force you into arbitration," Vinay Rasam headlined a post at now-vanished site voipphoneservices.org. In that case, MagicJack's legal rationale was trademark infringement, false advertising and violation of the unfair trade practices act.

I love and use PhonePower Glad to see MagicCrap is not allowed to go on bullying people. Would be great to see the CEO of PP and all the other people they bully take the jack@ss to the cleaner...

Ericthorn
It only hurts when I laugh
Premium Member
join:2001-08-10
Paragould, AR

2 recommendations

Ericthorn to pnh102

Premium Member

to pnh102
Love it

Bill Neilson
Premium Member
join:2009-07-08
Alexandria, VA

1 recommendation

Bill Neilson to pnh102

Premium Member

to pnh102
Sadly, companies like going after those that can't defend themselves

Even those with moderate salaries can go broke trying to fight against these huge companies.

Having fought a case against a company worth over $550M, i can tell you that their tactics can be absolutely over-whelming if the right lawyers aren't hired to fight them.

They know how to run up a bill on the opposing side.

hurleyp
join:2000-06-20
Ottawa, ON

hurleyp

Member

Re: Good Outcome Indeed

Wow, obloquy. I have no idea what that is, but I hope it was worth the $50,000 to be able to use that word.

AVD
Respice, Adspice, Prospice
Premium Member
join:2003-02-06
Onion, NJ

AVD

Premium Member

Magic Jack v. Angry Mutants



The name of the case is worth $50K

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

FFH5

Premium Member

Companies use lawsuits to shut up critics all the time

These types of lawsuits(SLAPP) are usually only effective against those without the financial capability to fight back. Magic Jack made a mistake by picking on someone with the money to defend themselves.

Karl Bode
News Guy
join:2000-03-02

2 edits

1 recommendation

Karl Bode

News Guy

Re: Companies use lawsuits to shut up critics all the time

Yes, TK Junkmail, clearly the lesson to be learned here is that Magic Jack just sued the wrong people, not that the suit itself was idiotic, or that trying to silence legitimate criticism usually backfires.

FFH5
Premium Member
join:2002-03-03
Tavistock NJ

1 edit

FFH5

Premium Member

Re: Companies use lawsuits to shut up critics all the time

said by Karl Bode:

Yes clearly the lesson to be learned here is that Magic Jack just sued the wrong people, not that the suit itself was idiotic, or that trying to silence legitimate criticism usually backfires.
SLAPP suits work all the time. They rarely backfire as you say. That doesn't make it right; but it does make it a fact of life until some of the state anti-SLAPP laws are enforced vigorously. And even with anti-SLAPP laws, most people can't fight back because of financial limitations.
»www.google.com/search?pz ··· +the+Web

SLD
Premium Member
join:2002-04-17
San Francisco, CA

SLD

Premium Member

Re: Companies use lawsuits to shut up critics all the time

Just one more reason to redefine corporations for what they are - headless sociopaths with no criminal liability. A $50,000 settlement (or judgement) feels like a slap on the wrist for these entities. But to you and I - it is financial ruin.

fireflier
Coffee. . .Need Coffee
Premium Member
join:2001-05-25
Limbo

fireflier

Premium Member

Re: Companies use lawsuits to shut up critics all the time

It would never happen, but perhaps something that would do nicely in situations such as these: the judge specifies a "compensation amount". Then the income of the defendant is ratioed to the income of the claimant suing them. That ratio is applied to the compensation amount and awarded to the defendant. Big entity sues little guy? Little guy wins? Entity pays out the ass, and little guy receives compensation beyond just their legal bills.

It would provide incentive for big guys to make sure they've got a case before going off suing anyone that pisses them off.

Just wishful thinking. . .

SLD
Premium Member
join:2002-04-17
San Francisco, CA

SLD

Premium Member

Re: Companies use lawsuits to shut up critics all the time

It will only never happen if people keep insisting it will never happen. We have nothing to fear but fear itself.

PhoenixDown
FIOS is Awesome
Premium Member
join:2003-06-08
Fresh Meadows, NY

PhoenixDown to FFH5

Premium Member

to FFH5
I thought you were against regulation?

ptrowski
Got Helix?
Premium Member
join:2005-03-14
Woodstock, CT

1 edit

ptrowski

Premium Member

Re: Companies use lawsuits to shut up critics all the time

Last time I checked this website was not a corporation trying to stifle criticism.
ptrowski

1 edit

ptrowski

Premium Member

Re: Companies use lawsuits to shut up critics all the time

Yes, it is an LLC but is a bit different than the topic here. The great thing is if you don't care for a corporation then don't use their products. In your case, don't use their website.
Expand your moderator at work
34574589 (banned)
join:2009-09-05

34574589 (banned) to ptrowski

Member

to ptrowski

Re: Companies use lawsuits to shut up critics all the time

said by ptrowski:

Last time I checked this website was not a corporation trying to stifle criticism.
Sorry, I think you misunderstood what I meant? MJ was try to sue PP for linking to the article that criticized MJ.
It would be no different then having a link on your site to an article (not written by you), criticizing any VoIp provider Potrowski and then having said provider sue you. Am I making sense?

ptrowski
Got Helix?
Premium Member
join:2005-03-14
Woodstock, CT

ptrowski

Premium Member

Re: Companies use lawsuits to shut up critics all the time

said by 34574589:
said by ptrowski:

Last time I checked this website was not a corporation trying to stifle criticism.
Sorry, I think you misunderstood what I meant? MJ was try to sue PP for linking to the article that criticized MJ.
It would be no different then having a link on your site to an article (not written by you), criticizing any VoIp provider Potrowski and then having said provider sue you. Am I making sense?
No, as I was not referring to you.

Shadow01
Premium Member
join:2003-10-24
Wasteland

Shadow01

Premium Member

Re: Companies use lawsuits to shut up critics all the time

said by ptrowski:

said by 34574589:
said by ptrowski:

Last time I checked this website was not a corporation trying to stifle criticism.
Sorry, I think you misunderstood what I meant? MJ was try to sue PP for linking to the article that criticized MJ.
It would be no different then having a link on your site to an article (not written by you), criticizing any VoIp provider Potrowski and then having said provider sue you. Am I making sense?
No, as I was not referring to you.
Then who were you referring to? It almost appears as if you are have a conversation with yourself...

ptrowski
Got Helix?
Premium Member
join:2005-03-14
Woodstock, CT

ptrowski

Premium Member

Re: Companies use lawsuits to shut up critics all the time

said by Shadow01:

Then who were you referring to? It almost appears as if you are have a conversation with yourself...
The person who was modded by Karl. It is who Karl was referring to.
34574589 (banned)
join:2009-09-05

34574589 (banned) to Karl Bode

Member

to Karl Bode

Re: Companies use lawsuits to shut up critics all the time

said by Karl Bode:

Yes, TK Junkmail, clearly the lesson to be learned here is that Magic Jack just sued the wrong people, not that the suit itself was idiotic, or that trying to silence legitimate criticism usually backfires.
WIN!!!

cameronsfx
join:2009-01-08
Panama City, FL

cameronsfx to FFH5

Member

to FFH5
said by FFH5:

These types of lawsuits(SLAPP) are usually only effective against those without the financial capability to fight back. Magic Jack made a mistake by picking on someone with the money to defend themselves.
SLAPP suits usually find Judges unwilling to put up with them ater a MTD (motion to dismiss) is filed. In Florida, SLAPP suits against the government make you pay them big money.

MagicJack was stupid in filing the "Defamation" case to begin with.

Example:

"All Toyota's (Or Ford, etc.) Suck!" is my headline on my blog. Toyota or Ford sues for defamation. I answer it denying everything. Then, I alert the news who, in turn, furthers the blog and I said "All Toyota's Suck" again in an interview. Then I file a MTD citing the 1st Amendment and lots of case law and even ask for sanctions against Toyota. Judge throws them out of court and maybe sanctions their idiocy. I explain at MTD hearing BMWs are superior since they have standard stuff Toyota doesn't have and that's why they suck, which was in my blog if Toyota could read.

Public Figures and companies have to pass a huge test on defamation. MagicJack uses infomercials with, "THIS IS A LIMITED OFFER!" every night on TV.

Doctor Four
My other vehicle is a TARDIS
Premium Member
join:2000-09-05
Dallas, TX

Doctor Four

Premium Member

Ha Ha Ha! Serves them right!

What a fitting end to a frivilous litigation case they filed.

Theire ads were quite annoying, playing sometimes twice or more in a single commercial break.

Now if only a similar fate would befall Cash4Gold and National Collector's Mint.

And speaking of annoying and deceptive TV ads, anyone notice the absence of ads for Video Professor? I don't think I've seen one in more than six months.
dekerfman
join:2004-10-07
Weirton, WV

dekerfman

Member

Re: Ha Ha Ha! Serves them right!

Your just watching the wrong channels. The "Professor" is still around.

Doctor Four
My other vehicle is a TARDIS
Premium Member
join:2000-09-05
Dallas, TX

Doctor Four

Premium Member

Re: Ha Ha Ha! Serves them right!

said by dekerfman:

Your just watching the wrong channels. The "Professor" is still around.
Not on AT&T U-Verse TV. I haven't seen a single ad from him on there. Now they may be on Cable or FiOS TV.
fiberguy2
My views are my own.
Premium Member
join:2005-05-20

1 edit

fiberguy2 to Doctor Four

Premium Member

to Doctor Four
Sooooo, what you're saying is that you're okay with this becuase you don't like the fact they're dumping money into advertising and making money from a product? .. is that it?

Personally, I'm GLAD magicjack got their ass slapped by their own wrong doing and I'm glad they lost money for this... (Sadly, the $50,000 they lost cost no more money than what a few television commercials cost them to air nationally) But, I'm glad they lost for the RIGHT reasons.. someone caught them doing something wrong, they (MJ) tried to sue them to shut them up, and the courts saw this.. THAT is what I'M happy about... not becuase they lost and becuase their ads were annoying.

Video professor ads are still running strong as ever here.. Maybe they just gave up on Texas.

Be happy and angry.. but for the right reasons... that's all I'm saying. But, similar fate for people who's ad you don't like and hoping for that kinda fate, at the hands of the courts, is only, well, anti-American.. like them or not, they have a 1st Amendment right to speak and you don't want to be on record against what is the foundation of this country, do you?

(Oh, and yes, I have a MJ... use it occasionally, but it's always worked, and worked well for me. When ever I see a MJ ad and don't want to see it, that's my que to use one of the smaller rooms in the house, if you know what I mean.. that goes with all ads)

tvtek
Live life to its fullest
Premium Member
join:2004-03-07
Walnut Creek, CA

tvtek to Doctor Four

Premium Member

to Doctor Four
said by Doctor Four:

What a fitting end to a frivilous litigation case they filed.

Theire ads were quite annoying, playing sometimes twice or more in a single commercial break.

Now if only a similar fate would befall Cash4Gold and National Collector's Mint.

And speaking of annoying and deceptive TV ads, anyone notice the absence of ads for Video Professor? I don't think I've seen one in more than six months.
Yep, the Professor ads are still on and I am looking forward to learning how to use ebay!.

I can deal with the Magic Jack and Professor commercials. They need to kill off the lousy freecreditreport.com (that isn't really free) commercials.
caco
Premium Member
join:2005-03-10
Whittier, AK

1 edit

caco

Premium Member

In the perfect world

Magic Jack come out with the Monster Voip dongle and get sued by Monster.

anon19730102
@sbcglobal.net

anon19730102

Anon

Ha! I love it!

Eat crow, MagicJack! I once tried your product... it sucked so bad (in my experience) I actually SMASHED it to pieces. I'm so glad you never got another drop of my money and I've discouraged others not to get it as well.

And now this type of corporate behavior makes me most sick of all. I'm glad you got your just deserts and hope your company goes down, as it deserves to, in my opinion! It absolutely will suffer some from this. You made your bed, now you can sleep in it and suffer a market penalty for your behavior!

You'll think twice before trying a stunt like this again (if you're smart)!

SHAME SHAME SHAME!

fuziwuzi
Not born yesterday
Premium Member
join:2005-07-01
Palm Springs, CA
Hitron EN2251
Nest H2D

fuziwuzi

Premium Member

Re: Ha! I love it!

said by anon19730102 :

Eat crow, MagicJack! I once tried your product... it sucked so bad (in my experience) I actually SMASHED it to pieces. I'm so glad you never got another drop of my money and I've discouraged others not to get it as well.
Since they have a money-back guarantee, that wasn't a very bright thing for you to do. Do you think they care that you smashed it? After all, they got to keep your money instead of returning it to you. You pwned yourself

My partner and I use Magicjack frequently over the last 2 years, he has it in Shanghai and uses it to call me here in the US. It has been invaluable to us, so much that the last time I renewed I bought a 5 years subscription.
amigo_boy
join:2005-07-22

amigo_boy

Member

Re: Ha! I love it!

said by fuziwuzi:

Since they have a money-back guarantee,
MJ's guarantee is only 30 days. And, it begins from the date of order. Not the date of shipment, nor even receipt/registration.

There have been people who had in reality only a 7-day trial.

Not sure about "anon's" circumstances. But, it's not quite as open-ended as you describe.
said by fuziwuzi:

My partner and I use Magicjack frequently over the last 2 years, he has it in Shanghai and uses it to call me here in the US. It has been invaluable to us, so much that the last time I renewed I bought a 5 years subscription.
I've used MJ for almost 2 years. It's been 80% positive. Unfortunately the 20% negative is due to extended periods of non-usability.

At $1.67 per month (not counting the initial $20 cost of the USB device), you can definitely save some money. I replaced my landline. But, I wouldn't recommend that for anyone except the most dedicated (have a cell phone for backup, two pay-as-you-go VoIP accounts as backups).

But, I would counsel anyone considering MJ to keep in mind that, at times, they'll get exactly what they paid for. You can't expect a lot for $1.67 per month.

Between tremendous value versus occasional breakdowns in the service, and unprofessional behavior by the owner (often resembling PT Barnum), I think that's why many MJ users form into nearly religious camps: "True Believers" who can't admit any negativity. And, the "anti" camp who are out to save the world from the evils of MJ.

Mark

Samir
join:2010-02-06
Madison, AL

Samir

Member

The Exception to the Rule

The sad truth that this type of justice is rarely dispensed. There are THOUSANDS of companies out there doing this to people every day and getting away with it by hiding behind arbitration clauses and other 'bought' laws that the average person can't change.

Case in point is my experience with the franchisor 1-800-Radiator. All the truth about the franchisor was documented on the forum on www.franchise-chat.com. But the site owner mysteriously decided to shut down the forum a few months back. The 1-800-Radiator thread was the highest activity thread ever on the forum and was a top 5 hit when searching for 1-800-Radiator in google. I suspect someone got pressured to get rid of the information as it was probably costing 1-800-Radiator millions a year in lost franchise sales. No lawsuit was every brought because you can't sue against the truth. But you sure can bury it.

I expect to see more drastic actions in the media on situations like this that have no justice--the guy with the plane just showed how it works. And there will be more to come of this as more people get pushed over the edge by unethical people with money.
amigo_boy
join:2005-07-22

amigo_boy

Member

MJ's changing EULA

Part of the problem for MJ (or, anyone who might try to critically assess MJ) is that they frequently change the EULA without notice, nor documenting what changed.

In the past, the EULA said MJ would provide an uninstaller. The company was regularly criticized for providing no uninstall, and that the EULA language could be seen as harming the enforceability of the EULA.

That language disappeared about 2 years ago. Like it never existed. (Today, MJ provides a unintallers at its support web site.).

I don't understand how a contract like this can be even remotely enforceable when it changes so frequently, and customers can't even decipher how it changed.

IMO, with the way MJ changes its EULA, anyone could say "To the best of my memory, MJ's EULA says they can to eat your children." I think that kind of defamation would be MJ's fault for not providing all the revisions of the EULA (or, a change log).

Mark
firedrakes
join:2009-01-29
Arcadia, FL

firedrakes

Member

web

this is why i love the web.
travelguy
join:1999-09-03
Bismarck, ND
Asus RT-AC68
Ubiquiti NSM5

travelguy

Member

TANSTAAFL

As a favorite author coined - there ain't no such thing as a free lunch.

Every call that MJ connects to a PSTN number costs MJ a certain amount per minute (usually a few cents, occasionally more). MJ to MJ calls are "free" but they are such a small percentage that they are meaningless and will be for a long time.

Given the annual subscriber revenue that MJ is collecting, it's almost certain that MJ is paying more in call termination fees than they are collecting in recurring revenue. The only thing that is keeping them afloat are the sign-up fees. Subtract the cost of the dongle and advertising, and you have to wonder how much longer they will survive. In fact, the whole setup sounds suspiciously like a certain 1920s investment scam.

Don't know what MJs exit strategy is, but I suspect things are going to be quite messy.

••••••

aaronwt
Premium Member
join:2004-11-07
Woodbridge, VA
Asus RT-AX89

aaronwt

Premium Member

My Magic Jack still works flawlessly.

I've been using Magic Jack for over a year now and it still works great. I've used it on nine systems. on WinXp, Vista(32 and 64bit) and Win7(32 and 64 bit)

Zero problems with any of them. It just keeps working and giving me clear audio and great phone calls at a low price
NyNexit
join:2009-11-01
Huntington, NY

NyNexit

Member

A side note

The most recent issue of 2600 had a great article exposing Magic Jack's tactics. IE: the installation of monitoring software, ad software, usage stats. etc. It's a good read.
tmc8080
join:2004-04-24
Brooklyn, NY

tmc8080

Member

voip 3rd party providers

magic jack is in the same league with skype, ooma and a couple of others for consumer's money. they all play games to try squeezing as much money as possible out of the consumer as possible given their quality of service which-- may not be as realiable as a true SIP provider of VOIP and less reliable than a 1st tier provider of service (such as a telco or cableco).

imo, the quality of service isn't all that much better than a google voice (free, no really FREE) provider and your tied to a stupid dongle-- that is unless you "HACK" the service to string together a series of interconnected workarounds to make it work with a sip router or other device/software.

as others say, it all depends on your needs. sometimes these lower quality voip services combined with a prepaid cellphone as a backup/emergency "plan b" is all customers need instead of spending $30+ a month for a "phone line". most consumers are sick & tired of getting RAPED by telcos for the reglatory fees that go hand-in-pocket with a "plain old telephone line" service of which many rural and non broadband access customers still in 2010 are stuck with that monopoly. until the prepaid cellular services go lower than $25 a month for unlimited calling they are NOT a competitive alternative to voip which can function on as little as 64kbit of dedicated data.

dvd536
as Mr. Pink as they come
Premium Member
join:2001-04-27
Phoenix, AZ

dvd536

Premium Member

So what'll they do now?

recode the softphone to open dongle flash for read/write every 1 second to ensure quicker dongle failure?
sludgehound
join:2007-03-12
New York, NY

sludgehound

Member

That's a lot of jack to lose.

$50k is enough jack to tick them off a bit. Plus all the neg
PR. In Manhattan their commercials are 24/24 on all kinds
of shows, as much as the Chopper, towel and Snuggy.
One more useless/unneeded device to chuck out. Outcome made me glad never bought into this clown circus. Can imagine the immigrant pop has flocked to it tho. Prob keeps
them in biz since the locals are faced with a seeker to job
ratio of 20:1 so even a Golden Jack won't draw.
Hah, just now a Vonage Sounds Good ad on CNBC.