Naked Rhino Media has filed a defamation and breach-of-contract suit in federal court against Too Much Media, creators of the NATS back-end affiliate program software, and the company's Chief Executive Officer John Albright.
Naked Rhino, which operates sites like BrandiLove.com and SinamonLane.com, alleges that the defendants are responsible for destroying the company's business through "intentional and reckless online Internet verbal assaults concerning the reputation and operation of Naked Rhino as well as [Too Much Media's] suspension of Naked Rhino's online payment processing, reporting, and affiliate management system (NATS)."
They are seeking $5 million in damages.
The dispute is centered around a post made by Albright on GFY.com's message board. In it, he publicly stated that he had suspended the NATS license for XclusiveCash, Naked Rhino's affiliate program, because he believed the company was shaving, or altering sign-up and re-bill statistics in order to cheat affiliates, after a discrepancy between the number of re-bills reported by payment processor CCBill and the number reported to the NATS system.
The board post has created quite a bit of conversation in the webmaster community.
"That's not how you handle your business, especially in an industry like this one. You can't just go online, as a business, and post something disparaging about somebody else. As pretty much all the posters on GFY have noted, you can destroy reputations and businesses like that," says attorney Al Zakarian, who, along with Michael Fledman and Rob Apgood, is representing Naked Rhino in the case.
"From what I've read on the posts, people are missing the point. It's not about 'why isn't XclusiveCash not coming on the boards and defending themselves'—the damage has already been done. It was done when [Albright] decided he was going to air it out [on the boards] before anything was fleshed out."
In the lawsuit, Naked Rhino alleges that Albright's statement was used not only to ruin the company's reputation, but to deflect attention away from NATS, which has been heavily marketed as being shave-proof. The complaint reads, in part, "the 'shave-proof' NATS program was the real likely cause of the missing re-bills."
The suit points to several previously reported NATS/billing company integration issues and situations where similar disputes were played out on message boards, such as NATS's feud with affiliate program Jason and Alex.
Since Albright's accusation, XclusiveCash has seen a mass exodus of affiliate traffic, according to President Chris Potoski. The company has been working to rebuild traffic through other means.
"We've taken every possible step to start generating our own traffic. I'm not going to let this situation ruin everything we've worked so hard to build," Potoski says. "Any good businessperson would look at this and say revenue is not going to be coming in from this source, at least for the foreseeable future, how do we make sure the business survives? We've taken steps to ensure that."
XclusiveCash will also launch its own proprietary back-end tracking system, which has been in development for the past year, in the next two months. But can they recover?
"I think once the facts are known, we'll be able to rebuild webmaster confidence. It's going to be a long process," Potoski says. "It's possible to come back from something like this, but it's going to take time and it's certainly going to cost us in the short run. Whether it costs us dearly in the long run remains to be seen."
As of press time, Albright had not returned several messages seeking comment.
To view a copy of the complaint, " \n target="_new"> click here.
