|BUSINESSWEEK ONLINE : APRIL 12, 1999 ISSUE|
A Site for Soreheads
As ''hate sites'' target companies, managers are inventing defenses
Some people love to ride Harley Davidson motorcycles. Others enjoy collecting dolls and cute little toys. Richard Hatch is one of the few people on earth with a passion for both.
One day in 1997, the Bangor (Me.) resident rode to his local Wal-Mart at 7 a.m. to be first in line to buy a new batch of Tamagotchis--those tiny Japanese electronic ''pets'' that were faddish briefly. What happened next is in dispute, but both sides agree the tattooed, 210-pound, self-described ''house husband'' got into a shouting match with an employee and was banned from the store. In retaliation, Hatch hired a Web design expert and created Walmartsucks.com, a site devoted to attacking the Bentonville (Ark.)-based retailer.
In just two years, it has sprouted far beyond Hatch's wildest dreams of revenge. More than 1,500 customers have written in to attack rude store managers, complain about alleged insects in the aisles, offer shoplifting tips, and, from time to time, write romantic odes to cashiers. Disgruntled employees agitate for unions, expose the purported marital infidelities of supervisors, and urge consumers to shop elsewhere. Plaintiffs' lawyers, meanwhile, visit in search of clients and useful evidence against the company.
So it's no surprise that a few months after Hatch opened the site, Wal-Mart's attorneys sent a letter threatening ''necessary action'' unless he took it down within 48 hours. Hatch defied the $138 billion retailer--and ultimately Wal-Mart Stores Inc. (WMT) blinked, dropping efforts to close the site. ''Although it is hard to see some of the things that are said...we are not going to get into a tit-for-tat with people on the Internet. What we have to do is make sure that we define ourselves and not let someone else do it,'' says corporate affairs vice-president Jay Allen.
Wal-Mart is just one of scores of companies facing the problem of ''hate'' sites. More than 100 of America's biggest brand names have been targeted, from Allstate to Toys 'R' Us (TOY) to Viacom (VIA.B). And some companies have the honor of more than one attack site: Microsoft, for example, has in excess of 20.
While many of these companies have tried to silence their cybercritics, few, if any, have succeeded. Protected by the First Amendment, Web publishers are free to post almost anything online. A corporation's only legal remedy is generally to sue for damages--a step that would only draw more attention to the hate site. That freedom gives people like Hatch, not to mention public interest groups and disgruntled workers, unprecedented power to lash out at companies worldwide. ''The same people who used to stand on Hyde Park Corner and rail against things to 20 people now can put up a Web site and rail in front of 2 million people,'' says William J. Comcowich, president of UtiliTech Inc., a Stratford (Conn.) firm that charges companies $1,995 per month to monitor what's said about them on the Internet.
USEFUL DATA. While the sites' content is frequently sophomoric--and sometimes fictional--they also can be invaluable consumer tools. ''Untied Airlines,'' a site devoted to attacking United Airlines Inc., offers detailed advice about how to get the company to respond to complaints. And ''Intel Secrets,'' though not aimed at ordinary computer users, gives outside engineers detailed data about problems with the company's chips. Intel says almost all of the information on the site can be obtained from public sources but admits the data on the Web page can be useful to purchasers of its products.
Because hate sites give customers who used to have ''no way of finding out if other people had the same problem'' a way to connect, advocate Ralph Nader thinks they have the potential to revolutionize the consumer movement. Among other things, the sites can be used to exchange information, organize boycotts, and coordinate lawsuits. Hate sites ''can be done well or done poorly, but in general they are filling an important vacuum,'' Nader says.
Ironically, the information on many hate sites is sometimes most valuable to the companies being attacked. Walmartsucks.com, for example, asks customers to rate their local stores for cleanliness, prices, and customer service. Hundreds of people have responded with numerical scores and detailed comments--a free database that would be quite costly for Wal-Mart to reproduce on its own. But like most companies, Wal-Mart execs still don't consider hate sites to be a legitimate customer feedback mechanism.
Of course, many sites have absolutely no redeeming social value. One RadioShack (TAN) hater, whose Web page is available on Yahoo! Inc. (YHOO), accuses the company of allegedly supporting the Ku Klux Klan--a charge the company dismisses as outrageous. And William A. Sheehan III, a Seattle-area man who believed his credit had been unfairly damaged by several rating agencies, retaliated against some of the companies' employees by posting family information and maps to their homes on his Web site. Fearful the information might get into the hands of a stalker, the companies asked a judge in Seattle to close the site. But although Sheehan called the people ''scumbags'' and worse, he didn't advocate hurting them, so the judge let him keep the site.
Concern is also growing that some companies may be covertly using hate sites to tarnish rivals, says James M. Alexander, vice-president of WavePhore Inc., a Phoenix company that monitors the Internet for large corporations. In a federal suit filed last year in Michigan, Amway Corp. alleged that Procter & Gamble Co. (PG) ''has been a behind-the-scenes sponsor of a rogue Web site...that foments hate rhetoric about Amway.'' In addition to the standard array of negative news clippings and personal testimonials, the site ''Amway: The Untold Story'' has published some sensitive internal documents. P&G acknowledges it supplied some material to the creator of the site but says the documents were public and that it acted legally. It's trying to dismiss the suit. Although this is the only case where the issue has become public, Alexander says clients have told him they suspect competitors are behind certain hate sites.
KILLER SITE. While the negative sites are usually only a nuisance to large corporations, they can be deadly to smaller companies. In 1998, David Holker hired two Costa Mesa (Calif.) Internet site designers to help him develop a Web page for his company, Express Success Inc., an Orem (Utah) multilevel marketing company that sold car products. After a billing dispute, the designers created expresssuccesssucks.com, a site where they called Express Success a ''scam,'' pictured Holker in prison clothing, and posted an advertisement for one of his biggest competitors.
Holker claims the attack drove his revenues down from $60,000 monthly to nearly zero, since many of his clients came from the Net. ''The Internet is a wonderful way to market things, but it can be terribly abused,'' he says. Claiming defamation, among other things, Holker sued the Web site designers last year. His efforts to shut it down failed, but he's still seeking money damages. The Web design company says it's acting within its free-speech rights.
Because of the difficulty of suing hate sites out of existence, companies increasingly are turning to other strategies. Most big corporations, as a matter of course, now buy the Web addresses, or URLs, for their names followed by the word ''sucks.com'' or preceded by ''Ihate.'' But often they don't get there in time. Once a company spots a negative site, says WavePhore's Alexander, the fastest way to close it is to contact the person who created it and immediately try to address his or her complaint. ''You call them, you say you're sorry, you fix the problem, you write the check. It's the smallest check you're going to write,'' he says.
But it doesn't always work. Consider the story of Chase Manhattan Bank (CMB) and 23-year-old Scott Harrison, creator of Chasemanhattansucks.com. Even after Chase apologized to the New Yorker for taking months to eliminate an erroneous charge on his credit card, Harrison refused to dismantle his site, in part because other complaints posted there had increased his conviction that the bank's business practices needed to be exposed.
A few companies are reacting with their own Internet counteroffensive. In response to several sites urging consumers to boycott Nike Inc. (NKE) for underpaying Third World workers, the sports clothing manufacturer has created a site separate from the company's main Web page. It features photos of a humble but clean-looking shoe manufacturing plant in China and describes benefits offered to overseas workers.
Dunkin' Donuts Inc. has gone further. After a disgruntled customer established dunkindonuts.org, an attack site that appeared on many Internet search engines ahead of the company's own Web page, the company contacted about 25 people who had written in with complaints and offered them coupons for free donuts. ''If this was where customers were going to post their comments, we thought it was important for us to go ahead and address them,'' says spokesperson Jennifer Rosenberg. Now, the company is in negotiations to buy the site from its founder, 25-year-old David Felton of Hamden, Conn., who says he'll sell because ''they have been taking complaints and responding.''
Not too many other companies are likely to get off this easily, though. After having devoted dozens of hours to establishing his site, Walmartsucks.com's Hatch says that he has ''no intention of selling.'' Most other hate-page creators agree. That means Corporate America has little choice but to get used to them.
By Mike France in New York, with Joann Muller in Detroit
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