In 2008, a few months before the $65 billion Madoff Ponzi scheme fell apart, the $3.65 billion Petters Ponzi scheme made headlines. Tom Petters told investors that they were financing the purchase and sale of consumer electronic goods when no goods existed. Rather, Petters used funds from new investors to pay off old investors. He and ten other individuals tied to the scheme have been convicted. Now, similar to the bankruptcy trustee in the Madoff case, Petters bankruptcy trustee Doug Kelley has formed a new international team of lawyers who specialize in asset recovery and who will attempt to claw back assets that can be linked to the Petters scheme.
I often speak to groups of professionals on how to avoid errors and omissions claims. When I started making such presentations more than 30 years ago, I would hold up a piece of notebook paper and explain that it was a professional’s “best friend” when it comes to avoiding future problems. A memo of a conversation with a client detailing and confirming the services that can (or can’t) be delivered and the realistic outcomes that can (or can’t) result from those services may provide the best defense when a client complains. This is only true to a point. Sometimes, written communications provide a client with ammunition for a claim of negligence.
As part of my blog training, I was asked to review my social media presence in general and in particular my LinkedIn account. My profile, admittedly, had not been reviewed in some time, so I updated my bio and skills section.
This made me think about “puffing,” which I learned about in my Contracts class in law school. For those unfamiliar with the term, it is something we experience daily in sales transactions and advertising. Puffing is the exaggeration of the positives of a service or product or anything else someone is looking to sell. Any advertisement that includes superlatives – such as “greatest,” or “best” – or statements that are clearly not intended as factual representations are not generally actionable if you buy the “product” and find it to be lacking. Consumers dealing with a salesperson should expect some level of “puffing.”