The president of an online reputation management company became the target of a $500,000 Bitcoin reputation blackmail scheme. The firm was forced to use its own ORM resources to suppress the attacks and clear the president’s search results.

Mike Zammuto, president of Brand.com, first learned of the extortion plot when he received an anonymous e-mail on February 10, and then another two days later, demanding the equivalent of $500,000 (US) in Bitcoin or the blackmailers threatened to smear the reputation of Zammuto and his company.

After receiving the threats, Mike Zammuto conferred with advisors and did not succumb to the blackmail, ultimately turning the case over to the FBI’s Cyber Crime Division.  The derogatory online posts, including false charges of being a pedophile and having been arrested for fraud, were later determined by investigators to be connected to the blackmail scheme, says Brand.com.

When reached by e-mail, the FBI would neither confirm nor deny the existence of an investigation.

“This is a chilling experience,” Mike Zammuto said.  “Not only is there a practical concern for loss of business, but this is a deeply personal attack, its rattling.”

Web site posts inaccurately accused Mike Zammuto of fraud, molestation

An independent investigation revealed 12 reports on RipOffReport.com, a consumer review website where users can publicly publish information regarding alleged experiences with businesses.  Other items had been available through a Google search but were later removed.

“The posts contain items which are not only totally fictitious but are shocking in how vicious they are. They can only be the work of someone trying to harm me and Brand.com, and not simply criticize me for anything I actually did to them,” Mike Zammuto said. “The blackmailer’s intent was to position me as a crook and a violent deviant and to con well-intentioned online activists into thinking they should help perpetrate this attack out of some sense of justice.”

The company offered to reporters criminal background searches to verify these claims, which showed there is no evidence of either the executive or the company ever being charged with or convicted of the crimes asserted in the posts.

“I am certain he would not have told them he was doing it for money,” said Mike Zammuto. “The allegations contain many specific claims of criminal activity which have never been alleged against me, let alone investigated or prosecuted.”

Why false posts remain online, have legal protection

Although the posts on RipOffReport.com were false, the malicious content was not removed.  Web sites have little motivation to do so due to legal loopholes and lack of financial incentive.

Deep inside the Communications Decency Act (CDA) of 1996 is sub-sect 230, which protects online intermediaries that protect websites like Ripoff Report against a range of laws that might otherwise be used to hold them legally responsible for what others say and do, according to Digital Media Law.

Section 230 grants interactive online services of all types, including news websites and blogs, broad immunity from certain types of legal liability stemming from content created by others.  This immunity covers defamation and privacy claims, as well as negligence and other tort claims commonly associated with publication.  This immunity cannot be lost even if the content is edited, so long as your edits do not materially alter the meaning of the original content.

When Mike Zammuto contacted Ripoff Report to inform them the malicious posts were false and part of a blackmail scheme, he was rebuffed. Along with refusing to divulge reviewers’ names, they also do not remove reports from their database.

Speculation from Mike Zammuto is that advertising revenue earned from site visitors incentivizes sites such as Ripoff Report to keep all content posted.

“I have been aware of Ripoff Report’s tactics, and their priorities, for several years now,” Mike Zammuto said. “The site is very clear about its policies when it comes to removing content.”

Mike Zammuto chose not to reach out to Ripoff Report based on previous interactions with the site.

According to the website’s legal disclaimer, the information that Ripoff Report provides is the sole creation of consumers. Ripoff Report expressly states on their website that, “although the First Amendment does not protect defamatory speech, this does not mean that you can contact the Ripoff Report and obtain an author’s name just by claiming that something in a report is false or inaccurate.”

Online reputation blackmail a growing problem

Online reputation blackmail is on the rise. Police in multiple countries are examining a rise in the number of teens who are being ‘sextorted’ – forced to perform actions on video under threat of blackmail – and its connection to several recent suicides.

According to Internet security professional Michael Legary, cyber crime, particularly cyber crime involving digital currency like Bitcoin, has increased dramatically over the past few months.

“A Bitcoin has a secret key that only you know,” he explained to CTV News. He noted that these assets are impossible to regulate because they are not linked to federal resources.