When a competitor posted shocking and personal accusations against Veritas Prep, Chad Troutwine's company, he wasn't about to back down. Here's what happened next.
Chad Troutwine stared at his computer screen, aghast. The website he was looking at had posted a series of accusations about Veritas Prep, his graduate admissions tutoring and consulting company. Veritas, according to the site, was operating illegally. It did not train its instructors. Troutwine knew the claims were false, but their sheer audacity floored him. Most astonishing was how personal the attacks were. "Chad Troutwine, porno movie-maker & a congenital liar, has been the author of many fraudulent claims," the site declared.
Troutwine knew who was behind the site. For four years, Veritas Prep, based in Malibu, California, had been embroiled in a legal battle with a competitor, Maple Leaf International Consulting, or MLIC. In fact, MLIC's president, Sonny Pitchumani, had posted scores of false, damaging claims about the quality of Veritas Prep's instruction. Even though Veritas Prep had won a judgment against MLIC, Pitchumani evidently wasn't about to back down.
1. THE PROBLEM
Convinced they could offer better test-prep services than the two giants in the industry, Kaplan and the Princeton Review, Troutwine and Markus Moberg launched Veritas Prep in 2002, shortly after graduating from the Yale School of Management. The company quickly developed a reputation for intensive instruction. It hired only instructors who had scored in the 99th percentile on the GMAT and offered courses with nearly twice as many classroom hours as those of other test-prep companies. By 2005, Veritas offered courses in 30 cities and employed 134 instructors.
MLIC emerged as a problem for Troutwine in 2006. The company's website included a comparison of its services with those of competing test-prep shops, including Veritas Prep. Many of the claims MLIC made on its site were inaccurate. MLIC alleged, for instance, that Veritas Prep's instructors had never taken the GMAT and that the company did not develop any of its own course materials.
Troutwine e-mailed Pitchumani about the inaccurate claims and included a list of corrections and clarifications. "I told him he was entitled to his opinion, but some things are factual," Troutwine says. But the attacks got even more vicious. When Troutwine tried to contact Pitchumani again, he got no response.
2. THE NEXT STEPS
In February 2007, Veritas Prep filed a lawsuit against MLIC. That August, the two companies reached a settlement, in which MLIC agreed to remove the false claims from its site. But a few months later, the claims were back. Over the next two years, anonymous reviews with similar content appeared on Google, Yelp, and various GMAT-related forums. "Do not sign up with Veritas Prep," one review said. "They rip you off and make you feel like an idiot for dealing with them." Troutwine did some investigating and found that many of the reviews originated from the same IP address, which he traced to MLIC.
The spate of bogus reviews, many of which appeared prominently in search results, threatened to undo the company's reputation. So in June 2010, Veritas Prep filed another suit against MLIC. Ten months later, a judge ordered MLIC to cease all its false claims against Veritas Prep; the judge also awarded Veritas Prep $129,319 in damages. (Pitchumani denies that his company is behind the anonymous reviews. He also claims that MLIC never received notice of any court action and that his company, based in New York City and Toronto, is outside the jurisdiction of California courts.)
Two months after the judgment, an employee alerted Troutwine to a new site, at veritasprepfraud.com. It not only attacked the company's services but also lobbed insults at Troutwine, Moberg, and others. Not even a court order, it seemed, was enough to stop the attacks. (Pitchumani denies any association with the site.) "Cyberterrorism seems almost fit to describe it," says Troutwine.
3. THE DECISION
Troutwine was loath to pursue yet another suit. So he sought to persuade companies such as Google and Go Daddy to take down any libelous content they hosted. Go Daddy shut down the site at veritasprepfraud.com, but a day later, an anonymously registered site, at veritasprepgmatfraud.com, appeared with the same content. Because the new site was not registered under MLIC's name, Go Daddy would not remove it without a subpoena. Instead, a representative suggested that Veritas Prep register other domains containing the terms fraud and Veritas Prep as a preemptive measure. Google removed the smear sites from its search index but refused to take down the false reviews on Google Places. (Neither Google nor Go Daddy would comment for this story.)
Troutwine considered enlisting the services of an online reputation-management firm that specializes in helping businesses manage their placement in search results. But Troutwine didn't like that approach--he wanted MLIC's false allegations banished entirely. "Pushing down negative reviews only obfuscates things," he says. Troutwine and Moberg decided that pursuing enforcement remained their best option, even though the process could take years. "We don't want this judgment to be meaningless," Troutwine says.
4. THE AFTERMATH
Veritas Prep now offers courses in 22 countries and earns some $10 million in annual revenue. But Troutwine believes the company's growth has been stunted. "We've been damaged, and other testing companies are the beneficiaries," he says. Still, the company is moving forward. Last fall, it made its entire curriculum available on iPhone and iPad apps. It also is revising its course materials to include additional material that covers the GMAT's new integrated reasoning section.
Given that Veritas Prep's reputation remains under attack, Troutwine believes it is even more important for the company to find ways to distinguish its services from those of bigger rivals like Kaplan. "Not every company could weather this type of storm," he says. "We just have to continue to offer a great product."
THE EXPERTS WEIGH IN
REPAIR YOUR REPUTATION
Getting MLIC's sites delisted from search results is the most important thing, because most people find companies through Internet searches. Having already done that, Veritas has already accomplished its main goal. I doubt it will have much luck getting Google to take down reviews on Google Places. It would be tough to get a court order for that, given the First Amendment issues involved. I also think using a reputation-management company can be effective from a marketing standpoint. Most of our clients pursue that option in addition to legal redress.
Tim Bukher | PARTNER
Handal & Morofsky, New York City
PUT UP A SITE OF YOUR OWN
With a determined detractor, there's only so much you can achieve through legal channels. A lawsuit should be the last resort. Troutwine and Moberg should have taken stock of how effective these attacks really were. I would have reached out to prospective customers who initially had interest but decided not to go with Veritas and asked them why they didn't choose the company. If the attacks truly warranted a response, they could have created a site with a name like truth.veritasprep.com. Anyone who searched for Veritas Prep would see that.
Andy Beal | CEO
Trackur, Raleigh, North Carolina
LAUNCH A PR CAMPAIGN
It is very hard to collect a default judgment, particularly if the company has no assets. And it's especially hard to get international enforcement on a defamation case. That said, the injunction against MLIC can serve as a symbolic pronouncement that the claims this company is making are not true. Legal remedies are often more effective in theory, so as a practical measure, Veritas Prep should think of the judgment as the cornerstone for a public relations campaign. Often, that's the reason businesses sue: because of the PR effect.
Lyrissa Lidsky | PROFESSOR
University of Florida Levin College of Law, Gainesville, Florida
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