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CONSUMER WATCH

A `free' iPhone offer? There might be hang-ups

The newest online marketing scheme looks a lot like earlier ones that dangle the prize just out of reach.

June 24, 2007|David Colker | Times Staff Writer

The Apple iPhone isn't out yet, and already there are websites offering it "FREE!"

On the Internet, however, there are different degrees of free.

This one will cost you. And you might never get the prize.

The iPhone deals follow the same pattern as previous online free schemes, the Council of Better Business Bureaus warns. They promise high-ticket cellphones, iPods, laptop computers and high-definition televisions to those who fulfill a complex, sometimes expensive set of requirements.

Often, it ends badly.

"Some consumers actually do make it through the marketing gantlet and get their 'free iPod,' " Steve Cox, a council vice president, said in the nonprofit organization's warning. "But we've heard from consumers who spent hundreds of dollars and countless hours but never got the goods."

Jimmie Lee Zwissler was one of those who gave it a try. In late December, the 57-year-old registered nurse from Fairfax, Calif., came across a site offering the exact cellphone, complete with Internet access, that she wanted.

Many people who try these types of sites give up long before getting the prize.

But not Zwissler. The "free" site had met its match.

"I have a strong sense of right and wrong," she said. "They got me burned; they got me mad. But that only made me more determined.

"I wanted that phone, and I was not going to pay for it."

Her saga took nearly six months to play out.

The site she went up against was www.reward-path.com, which was offering a Cingular 8525 phone.

Zwissler didn't know it at the time, but she wasn't the first to have trouble with the site and others owned by Niutech, headquartered in Boca Raton, Fla.

In fact, after receiving hundreds of complaints, Florida Atty. Gen. Bill McCollum opened an investigation into the company (now called TheUseful), issuing the first round of subpoenas in November for information about its practices.

"We are investigating their marketing procedures," said Sandi Copes, McCollum's press secretary, "looking at their failure to conspicuously disclose all terms and conditions for obtaining the promotional gifts."

The investigation, for which former employees were subpoenaed for sworn statements, is continuing. On Thursday the company and its founder, Niuniu Ji, were served with a third round of subpoenas for information.

Though the approximately 500 complaints about Niutech that went to the Better Business Bureau eventually were resolved, the bureau rated the company "unsatisfactory."

"We met with the company," said Al Polizzi, spokesman for the Better Business Bureau of Southeast Florida. "We did not see that they had addressed the basic concerns."

The president of the company, Dale Baker, declined to be interviewed for this story but issued a statement saying: "We believe the terms, conditions and disclaimers provided on our website landing pages clearly explain the requirements to receive a gift."

The statement didn't address the state investigation except to blame the Better Business Bureau rating for "causing heightened scrutiny by the media and in some instances, the government."

The site is still operating. Among its current offerings is a Compaq Presario laptop.

When Zwissler entered the site, the first thing it asked of her was her address.

And the first glitch came up.

No matter how often she entered "CA" for her state, it came up "XX" when she submitted the page.

Zwissler immediately e-mailed the site's customer service.

"I'm a stickler for detail," she said. "I'm a nurse."

Customer service said the glitch would not cause problems.

Zwissler proceeded into the heart of the site, where she was presented with dozens of offers.

She was required to enroll in at least a few of them.

Some were for items that were "free" but came with shipping and handling fees. Others were for services or subscriptions that if not canceled in a matter of days could rack up charges of $50 or more.

Others cost money outright.

A non-Niutech site currently advertising a "free" iPhone has among its offers a diet program for "belly fat" and a supply of Septic Savior, a product you flush down the toilet to treat your septic system.

Commonly, the "free" sites make their money off fees and commissions paid by companies that get orders from the people trying to earn their prize. The sites often are deceptive, the Better Business Bureau said, but usually are operating legally.

Zwissler liked some of the deals at www.rewardpath.com, including one from Stamps.com.

"I followed the instructions to get $10 worth of stamps," she said, "and it was maybe $7 out of my pocket."

For the most part, though, she sought out the lowest-priced offers -- or ones with a no-cost trial period that she could easily cancel.

But as soon as she completed the requirements, a new set of offers -- and obligations -- popped up. This scenario repeated itself several times. In completing the requirements, Zwissler spent about $60.

After about six hours of work, she reached the end.

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