Federal Trade Commission

This feels like price gouging topped off with a sprinkling of bait and switch.

Price gouging is a pejorative term for a seller pricing much higher than is considered reasonable or fair. It can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits. Non-pejorative uses are generally in reaction to what the writer believes is an unjustified restraint on the market.

A class action lawsuit can be filed - however, getting it class approved is another story. And, since LL clearly stated what the use of open spaces were initially for, and never changed that definition - and the owners of a good percentage of the open spaces mis-used the land, it would open counterclaims by LL for breach of implied contract by its users.

Anyhow - all that ballyhoo is absolutely ridiculous. I'ma run to Micky Dees and grab me a big mac prior to the rising cost of secret sauce, and then stop to watch the inflation of my thighs ...

Anyway - the entire FTC thing ... lol ... you can try - but it will go no where.

Erm ... did you ever happen to read the post? People were utilizing open spaces outside the scope and nature of Linden Lab's specifications. If anyone did happen to sue ... and were utilizing the open space as an estate rental or utilized the open spaces as anything OTHER than it simply being an "open space", then that individual would open themselves up for a breach of contract suit that would actually be viable. And, in this situation - the money is so minute that even thinking of instituting a suit is absolutely ridiculous. There has been no fraud, there has been no breach of contract by LL, and holy hannah - I do feel sorry for those individuals who actually used open spaces in the correct manner - but I do believe those individuals are few and far between. For those individuals who utilized open space sims as rentals/estates ... oy ... well, they've just simply been given the opportunity to actually utilize those sims as rentals/estates ... but are being charged appropriate use fees for it.

I work as a lawyer for the Dutch Consumer Authority which is a part of the Dutch Ministry of Economic Affairs. The FTC is the institution we call for when whe get signals of misbehaving companies settled in the U.S. There are companies which are now being investigated by the FTC without even doing harm to consumers but they are investigated only because of the possibilty that they might harm consumers in the future . So again... there is a chance that LL is violating the law and a good way to stop this acting is by filing complaints.

LL has not violated any laws. If anything, most users have taken advantage of the open space sims and utilized them for their own personal use against the terms of service listed for those specific sims, and as a result, would be liable to Linden Lab damages caused by an overload on their services when their sims were not used in the manner with which they were purchased to use.

And, if you work with the ministry of economic affairs as a lawyer, i can see where their time and money is going ... get back to work =P

Lol its evening here.. I worked already for the whole day
Raising up the fees is nothing where they violate the law for.. but the fact that they have asked setup fees and that they now raise tiers without new customers having the chance of take out their profits from the rented space.. they are acting against the E.U. directive Unfair Commercial Practices.

They've got 2 months to take their profits.

and u think thats enough for the $250 setup fee??

The issue has actually been stated rather more clearly on wikipedia (!)

It's that LL first, by making OpenSpaces such a great deal, made any land business that didn't buy openspaces unviable.

Then, by now switching them such a bad deal, they made any land business that _did_ buy openspaces unviable.

But, there isn't a precedent for this kind of thing. Businesses get hurt every day by web hosting companies, card processors, and, yea especially LANDLORDS raising their prices. If they could sue, I think they'd be doing so left right and centre by now - although there might be a question if LL's status as a monopoly provider of virtual worlds could affect this.

Wulfric, nobody has "2 months to take their profit", because cashouts have been locked. That is arguably more dangerous than anything to do with OpenSims, as it puts LL into the same position PayPal were in a few years ago, of potentially being told "comply with bank regulations or stop being one. now."

IF the OS sims couldn't handle the resources they were being allowed...WHY allow them?

Yes, the product belongs to Linden Labs and yes, it's their right to decide what to charge for it.

No, it's not Linden Labs' responsibility to make SL a profitable business environment for anyone but themselves.

However, just a few months back, LL made the decision to double the number of prims available on the OS Sims...and to make them a very attractive option. And it worked. I'm sure they've sold TONS of them, at a nice little profit. Now they want to cry that customers are using unfairly, when it was within their power all along to limit current issues via controls like prim & agent limits, requiring linking of OS sims to the full Sim(s) owned by
the Payor, putting a very low limit on the OS/FS ratio per Payor, etc. (I'm not sure if there's even a cap now to how many OS sims a Payor can purchase, or if it's linked to the number of Full Sims s/he owns.)

The bottom line is THEY made the bed and have been gleefully lying in it all this time, selling sims hand over fist (many thousands of them, according to Stephany's own post!) with no regard to any issues that putting up MANY THOUSANDS of new sims might create? And NOW they want to penalize all who bought in good faith for this gaffe by not just raising prices, but also making it impossible for owners to sell.

Raising prices is fine. Those who purchase after the rate hike will know exactly what they're getting into. Thrusting those who purchased under an ill-advised plan that was 100% the fault of LL into this situation is reprehensible behavior. Existing OS sims should be grandfathered, and they should work on repairing the damage from there.

One of the issues I have a problem with - is the "chance to take out their profits from the rented space..." open spaces were never sold by LL to be rented out as estates, but again - if you read the terms of service for the open spaces - to be lightly used spaces. I'd say if anything was unfair here, it would be the unfair advantage taken by consumers who utilize the land outside the scope of the terms of service. Setup fees, also, are not illegal. They are fees used to set up the electronic service - and it does cost to set up electronic land. You have to take into consideration the coding that would need to be done in order to get the land situated in a certain space on a server, and then - the work done in order to make it "live." If, say, you wanted to use a studio for a recording session - you would be charged a "setup" fee. Or, maybe, you wanted to cater an event - well, again - there are "setup" fees that are used in order to set the event up. Anyway - its not night here - and I need to get my butt back to work. =)

I'm done now ... I'll get off ya'll's back ... but - again, I don't see an issue here. I do, again, state - that I feel for those individuals who CORRECTLY utilized open spaces and now have to incur higher costs because of the ABUSE of the open space sims.

OpenSpace sims have a prim limit assigned to them of 3,750 prims. How can it be abuse to use the prims you are paying for? LL promoted the sale of OS sims by increasing the prim count. Why did the increase the prim count if they didn't want people using them?

There has never been any limit stated on the number of scripts you can run or number of avatars that can access the sim.

OpenSpace sims on the mainland are used for sailboat races, with race courses and bouys set up by LL. This brings dozens of scripted boating vehicles, with one or several people aboard into the open space sim at the same time. This is encouraged by LL. Based on this example, how can it be abuse to put your own OS to a similar use or lighter use?

You can always give it a shot!

By virtue of justifying the price increase to compensate for the enhancement of server overload performance, Linden is breaching their own contract by volition when the new tier service did not remove the "light use" clause in the contractual agreement.

Furthermore, when they did not allow the openspace owner to use the "extra resources" with the exclusion clause for openspace to "light use" only, Linden is breaching their own "intent" in this price increase when they stated explicitly that "intended" purpose of raising the tier price is to "pay for the extra resource use by the openspace owner".

If they change their "intent" again later, that is ground for deception of consumers.

The difference here is that if McDonalds raised the price of the big mac by claiming that the price increase is to pay for increasing the calories of delivered on each big mac, then when the new big mac is delivered, it is exactly the same calories as the old big mac, then it is (1) deception, (2) breach of contract for the "intended purpose of price increase".

Their increase tier price did not compensate for the extra bandwidth/resource usage; if so, the "light use" clause of the openspace would be removed.

When they deliver exactly the same usage requirements and limits as before, then they are breaching their own contract.

This has to be the most comical thread I have read yet.

For those that say OS sims have been used in some forbidden way .....read these 2 paragraghs that are on the "begining land owners" support page.
______________________________________________________________________
What is an Openspace?
Openspaces are a 16-acre piece of standalone virtual land. Openspaces run 4 regions to a single CPU, and support 3750 primitives. Openspaces are available to Residents who already own Private Regions.
Openspaces are offered to allow Estate owners to create open ocean or land in and around their Regions in the same way that the Linden mainland does. They are intended for "light use" rather than Residential areas with large amounts of content or scripts. While they can and have been used in other ways, they are not recommended for any other purpose.
_________________________________________________________________________
Why do I have to be an existing Region owner to own an Openspace?
Openspaces are offered to allow Estate owners to create open ocean or land in and around their regions in the same way that the Linden mainland does. They are intended for "light use" rather than residential areas with large amounts of content. While they can and have been used in other ways, they are not recommended for any other purpose.
__________________________________________________________________________

Where does it say the OS Sims can't be used for whatever purpose. it doesn't.

In fact, many OS Sims lag less then the full sims in my experience.

The Fact of the matter is LL feels that the OS Sims have more value now that they have become popular for many uses

LL has baited a great many people into the non-refundable purchase of a product that they were aware they could not support if used to their full potential. Now they are raising the price to force people they deem to be less profitable off the sims, namely the non-profits and people who don't make money on their sims. The worst abusers who make the most money, run the most vendor scripts, etc., won't have trouble with an extra 50.

LL added prims, they raised the avatar cap to increase the incentive to purchase. "Abuse" use of the land was basically offered as an incentive for sale. You don't need 3700 prims for rocks and trees, and no limits were put in place to prevent the "abuse". They have the ability to cap avatars, lower prims, limit scripts, and instead they raise the rent.

"Abuse" was no different before the original change. People were still using openspaces for businesses, etc., though only not in as great numbers. Openspaces are not being abused any differently now, so there was no surprise as to how people were going to use them, and LL did nothing to prevent people from using them thusly.

So, LL baits a lot of people into sending them $250 each to "set up" openspaces, offers incentives for those people to do so. They make literally millions of dollars on setup fees. Then, they are shocked, SHOCKED to find that people are "abusing" said servers, and now they are going to run you off the servers you bought so they can "set up" again for other people.

This goes beyond simple bad business, it is pretty obviously purposeful. Regardless, services were offered that LL were aware we couldn't use to the full extent they were advertised and now we are offered either a lesser product or a higher price after we are locked in. That is not legal.

http://www.ftc.gov/bcp/guides/baitads-gd.htm

Sec. 238.4 Switch after sale.

No practice should be pursued by an advertiser, in the event of sale of the advertised product, of "unselling" with the intent and purpose of selling other merchandise in its stead. Among acts or practices which will be considered in determining if the initial sale was in good faith, and not a stratagem to sell other merchandise, are:

(a) Accepting a deposit for the advertised product, then switching the purchaser to a higher-priced product,

(b) Failure to make delivery of the advertised product within a reasonable time or to make a refund,

(c) Disparagement by acts or words of the advertised product, or the disparagement of the guarantee, credit terms, availability of service, repairs, or in any other respect, in connection with it,

(d) The delivery of the advertised product which is defective, unusable or impractical for the purpose represented or implied in the advertisement. [Guide 4]

Note: Sales of advertised merchandise. Sales of the advertised merchandise do not preclude the existence of a bait and switch scheme. It has been determined that, on occasions, this is a mere incidental byproduct of the fundamental plan and is intended to provide an aura of legitimacy to the overall operation.

It's very hard to read what you just posted and not believe that what Linden Lab has done does not violate both the intent and the letter of the applicable law.

Ok, but is anyone actually suing? You know, with a lawyer?

And remember, that even if you win the lawsuit, afterwards LL can just ban you from SL because they feel like it.

No one offered you eggs, at a discount....upped the volume in the egg, then charged so much you want to give the egg back without getting your initial investment

We are talking an increase of over half..........I think Linden DOES have a problem, and my advice, don't stop petitioning. The more complaints lodged, the more they must answer!!!

So, then you would be perfectly fine with paying the setup fee for a full sim and then have them raise the tier rate by 67% 2-3 months later?

Firelight

Let's not forget, it isn't 67% for many. Non-profits are losing their status. What percentage increase would THAT be? Also, the ability to transfer our virtual land, which people bought quite often as an investment, is now changed.

Decrease prices on an unsustainable service, increase prims, accept millions in setup fees, then within a handful of months enact punitive price increases and change the agreement in a manner that devalues the service and makes it impossible for many people to afford. People leave, you keep the hardware they bought with their setup fees and a lot of profit. Then, you re-setup the hardware for other people elsewhere.

...if, once the press and hopefully the legal authorities are done, there is anyone to set them up for. No one is telling them they can't raise the rent. But $75-$125, this soon, after they lower it to bait people in, and as a punitive response to something that price has nothing to do with? Please folks, open your eyes.

People don't seem to pay attention to the "bait" in bait and switch. It isn't just raising rent. People can raise the price of their products as they like.

What they can't do is advertise a product as transferable land, available to non-profits at half cost, for the new, low, low cost of half, with twice the prims...

...and then once they feel they have peaked sales of openspaces change the transfer abilities, remove the non-profit status, and increase rent by 67% PUNITIVELY.

Raising the price of eggs 100% doesn't relate to how the eggs were marketed. If they post an ad and say they will sell you eggs under certain conditions, then don't keep to the conditions for a reasonable expectation of use, then sure, they'd have to be looked at about their marketing practices.

People have compared this to gas prices, eggs, yadda yadda. If you rented a house with a non-refundable deposit equal to three months rent, and two months later the advertised rent went up 67%, you wouldn't feel that you'd been suckered? Of course you would. The lurkers who are fanboying LL are alts of Lindens or just the usual forum conservatives that knee-jerk everything as far right as they can without growing a little mustache.

LL set forth a deal for us to buy land. We bought it, gave them a non-refundable setup fee, and once they had us locked in changed the terms of transfering said land, revoked non-profit status, and raised our teir anywhere from 67% to the godawful increases those non-profits are seeing.

This is predatory, unethical, and needs to be punished. LL has ceased responding to us. All that is left is for LL to be revealed to the world as having done this in as many venues as we can get the word out in. They won't respond to us, perhaps they will respond to the others we can bring to them.


http://www.ftc.gov/