As we have discussed in previous posts on Free Enterprise, online social media outlets can be a powerful marketing tool for you. They can help you gain word of mouth buzz that you would not ordinarily be able to get. And the best part? It's typically free.

The problem is when small business owners start sending their products out to bloggers or online reviewers, or paying them a fee in order to acheive that word of mouth buzz.

It is important that you are aware of the new guidelines set out by the Federal Trade Commission (FTC) that govern endorsements and testimonials.

With the recession cutting into the pockets of many small businesses, it hurts even more when you realize that you lose even more because of inventory loss. According to CNN, this loss is 25% more than the losses that small businesses face from shoplifting. Stealing from employers is not that uncommon.

Employees actually stole an estimated $15 billion dollars from retailers last year according to Univ. of FL criminologist Richard Hollinger. The scary part? The closed circuit TV monitoring system never pinpointed the crime occurring.

It seems that many small business owners just don't have the time, patience and resources to sift through all of those hours of footage in order to catch the perpetrators.

Now they have a solution to their problem.

Nothing says danger like a red flag.  And that likely inspired the Federal Trade Commission (FTC) to name its anti-fraud regulation which requires certain creditors and financial institutions with covered accounts to implement programs to identify, detect, and respond to warning signs--the "Red Flags" Rule. After initial delays, the date the Rule will begin to be enforced is now November 1st, 2009.

The implementation of the Act comes at a time when consumers are growing wary of identification leaks and news stories of data breaches.   According to the FTC, over 9 million Americans are victims of identity theft every year. 

As a small business owner, you wear many hats and shake a number of hands in an average day... you don't have time to get duped by scams.  And the state of California agrees.  As the Central Valley Business Times reports, the state is suing 8 individuals and 6 businesses for orchestrating scams targeting small business owners.

What did they do?

One point for email marketing.  And another against litigation factories.  In a ruling by a Ninth Circuit federal appellate three-judge panel last week, the court dismissed a suit filed against an email marketing company for sending an alleged 13,000+ unsolicited emails to the plaintiff-- who himself happened to be a 'professional plaintiff' who profited from filing anti-spam lawsuits against online marketers.

The Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) of 2003 sets forth requirements regarding who can send commercial email and establishes penalties for spammers and companies whose products are advertised if they violate the law, and gives individuals the right to opt out of email spam lists.  The recent ruling took a little bite out of CAN-SPAM's ability to regulate internet marketing and opened the door for companies to sidestep the act's strict provisions.  The court held that CAN-SPAM does not enable individuals to file lawsuits against internet marketers, but instead reserves the right to sue specifically for private parties.  It also prevented the claims from being tried under Washington state law, holding that the federal law preempted the state version.

After hearing so much for so long about the devious Ponzi scheme that Bernie Madoff used to snatch nearly $65 billion from small businesses, individuals, non-profit organizations, and various other entities that invested with him, we have been wondering about the Madoff victims.  While Madoff contemplates life and times while doing the jailhouse rock,  what of the unsuspecting souls that lost big and small to his borrow-from-Peter-to-pay-Paul scheme, during a time when the economy was also flat-lining?

The Wall Street Journal reported that the Madoff victims caught up in the intricate Ponzi web have begun to receive refund checks from the Internal Revenue Service (IRS) for taxes paid on money that didn't actually exist.

What Small Business Can Learn from #twittergate...

As has been widely covered in tech news, Twitter executives were recently victims of a hack-and-send job in which confidential documents were not only accessed but distributed to media outlets and have begun to be posted online.

The ease and simplicity in which the hacker compromised Twitter's private docs can make any small business owner evaluate the safety of their online information.  What is an entrepreneur to do?

Recent discussion of whether C.I.A. interrogators should be held liable for acts now considered to be torture highlights the questions that come up when deciding who should be held to account when an employee violates the law. Particularly because (unlike the federal government) small businesses can't claim sovereign immunity if sued, they must pay strict attention to the doctrine of "respondeat superior." This holds that an employer is liable for the bad acts of an employee if the employee was acting within the scope of their employment.

Hopefully most small business owners and employees will never have to confront questions of waterboarding. It's also likely that any bad acts committed by most employees will not have been specifically given the green light by written opinions from their boss' lawyers. This is good because unlike the federal government, businesses cannot claim sovereign immunity when they get sued.

Yesterday the Department of Justice and the F.B.I. released their annual Internet Crime Report. It cited a 33% increase in complaints received by the Internet Crimes Complaint Center (IC3). At the same time that overall cybercrime is on the rise, small businesses in particular have become prime targets for computer crimes.

According to the IC3 report, the top types of complaints included undelivered merchandise (32.9%), internet auction fraud (25.5%) and credit card fraud (9%). For more details on the report, see coverage on FindLaw's Blotter.

With the increased ways in which business is conducted online, small businesses can become cybercrime victims in a multitude of ways -- as online purchasers who do never receive their order, as sellers to online credit card fraudsters, or as the holders of lots of data which nefarious hackers would like to borrow, for example.

News of stimulus money gives hope not only to small businesses in need, but also to scam artists looking to prey on those seeking government assistance. With headlines publicizing increased federal support for small business loans, small businesses need to be on alert for loan scam artists. Here are 6 tips for avoiding small business loan scams.

1. Beware of any loans or financial assistance offered via unsolicited phone call,
   email or letter.
2. Beware of any lender who guarantees your loan without reviewing your credit, or makes promises that sound too good to be true.
3. Beware of anyone who pressures you to make a decision on the spot.
4. Beware of anyone requesting payment of fees before the loan is made. Costs such as processing fees are normally taken out of the money loaned, not paid beforehand, and never before the loan has been guaranteed.
5. Never make a payment by wire transfer or money order.
6. Research any lender or loan broker before doing business with them. Lenders and loan brokers must register with the states in which they do business. Contact your state Attorney General's office or your state's Department of Banking or Financial Regulation to check their registration.