What Stays in Vegas (13 page)

Check Your Mate

When Californian entrepreneur Kris Kibak started Instant Checkmate in 2010 along with a partner, he was inspired by the growth of online dating and came up with his site's name thinking of “check your mate.” “We were astonished to see how much time was spent on dating sites and their increasing popularity in our society,” he says. “We then
thought about the danger that women (and men) could face when meeting someone they met online in person—what if you were chatting online with a sexual predator or a person with a violent criminal history?”
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Since dating sites at the time did not provide background checks, he decided to provide access to personal data, including arrest records. The FBI does allow the public to look up individual names in its sex offender registry for free, but people have to know such a site exists.
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In addition, that service does not offer a broader background check. “Our primary concerns revolved around sexual predators or other dangerous people using dating sites to find victims,” Kibak said.

“We had an idea I liked (protecting vulnerable people from potential dangers) and that I thought was good for society, and I was excited to pursue that idea.”
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He worked from San Diego but set up a call center in Las Vegas, across the highway from the Strip, down a quiet street at the back of a parking lot no tourist would ever stumble across. It shared the Vegas address with the public as its mailing address.
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Less than six months younger than Matthew Monahan, Kibak is the son of a professor at California State University, Monterey Bay. He grew up in Santa Cruz, a beach town that embodies the California dream, with a boardwalk and an amusement park along the Pacific Ocean. He has ruggedly handsome looks, with some photos showing him with a few days' beard. Kibak set up his first website at age twelve.
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Before graduating from the University of California, Santa Cruz, in 2006, he had already established several Internet businesses.

From its early days, Instant Checkmate issued many blogs and press releases. Some detailed the merits of conducting background searches before giving away an unwanted pet,
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explained why it is a good idea to conduct a search on yourself,
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and noted how well stocked Instant Checkmate keeps its refrigerator.
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Even if sometimes trivial, the postings and news releases can help boost search engine ranking. Google and other search sites look for links to a website, among other things, to rank popularity when deciding its results.

At first Instant Checkmate did not feature Kibak's name or image. By 2013 the site for
thecontrolgroup.com
, which says it developed
Instant Checkmate, began including photos of staff members with more information about the company.
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The front-page photo of the site shows Kibak and the staff, almost all in shorts, on a beach on a cloudless day above a banner headline that reads, “The Control Group—Developing Good Times.” The company also generated positive publicity in the San Diego area by sponsoring a local beach cleanup and other events.

To drive traffic to its site, Instant Checkmate also turned to third-party affiliates. Such marketers have an incentive to grab attention because they are paid only when someone clicks an ad or email and becomes a customer. Some sent out provocative emails, sometimes in stilted English. “I just found out my new babysitter is a thief !” one email said. “Is the report I listened to legitimate? Your friend informed they conducted a criminal check on your aunt and it showed they have a felony. Just click this link to read it and see.”

Kibak has distanced himself from such messages, saying they were sent by third-party affiliate marketers who used techniques he does not approve of. “Instant Checkmate would not create or send emails of that nature, and those emails absolutely violate Instant Checkmate's policies,” Kibak said. “My best guess is that the emails were created and sent by an unscrupulous third-party affiliate advertiser. To reiterate, we do not condone this in any way.”
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Real money is at stake for affiliates who win new clients. In March 2014, for example, one affiliate site promised payment ranging from $18 to $29.50 per Instant Checkmate lead that resulted in new customers.
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Another site referred to a previous rate of $22.75 per lead.
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The company also offered a special incentive to its top producers—a trip to Dubrovnik, Croatia, for the “publisher who generates the most revenue running Instant Checkmate offers between February 1–June 30, 2014.”
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The contest was aimed at a sporty crowd with the lure “to sail, cliff jump, paddle board and jet ski.”
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Kibak points out that Internet companies routinely use third-party affiliates, and many well-known businesses such as Netflix and Amazon have used such services to help find new clients. “I believe we do a good job in making sure that third-party affiliates only send approved
emails,” he said. “When we learn that a third-party affiliate has sent emails that we do not approve, we take swift action to ensure the third-party affiliate no longer works with Instant Checkmate.”
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One such instance occurred in early 2012 when a Facebook ad briefly ran showing a dark-skinned man with small beady eyes, thick elongated lips, a massive nose, and a pointy head. He wore what appeared to be an orange prison jumpsuit: “You Can Now See Arrest Records of Anyone! Click Here to Search!” “We did not create that ad and were not aware of its existence until we read a blog post about it, at which time we immediately demanded the ad be taken down,” Kibak says.
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As Instant Checkmate grew, it typically quoted a spokesperson, Kristen Bright, in company statements. All efforts to reach her over many months led to dead ends. No returned calls. No emails. Public record searches for her did not produce an obvious match. Was she an especially shy spokeswoman—whose job was, after all, to talk with the outside world? Or was she a fictitious corporate creation, like Betty Crocker or Aunt Jemima?

Instant Checkmate also gained prominence for its Google ads in a very competitive marketplace.
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Like the Monahan brothers, Kibak and his team placed Google ads on millions of names, which meant an ad for the company's services would often pop up when someone searched for a particular name. The company invested enough so that its messages would often appear on the screen above those for PeopleSmart and other competitors. At times the ad message would ask if the individual had been arrested, such as “John Doe, Arrested?” Google ads lie at the heart of the search company's business, generating billions of dollars in annual revenue.

Shock Value

In 2012 and 2013, Instant Checkmate's success continued to grow.
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The upstart surpassed PeopleSmart in web traffic. It expanded its staff and in 2014 moved into new corporate offices in San Diego.
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Yet data brokers more broadly were going through a turbulent time.
Congressional committees and the Federal Trade Commission stepped up examination of industry practices. Some called for more regulation. Computer programmer Thomas Lowrey IV, who worked at Instant Checkmate, believes the personal data industry is in desperate need of a legal overhaul. He wonders why companies that cannot guarantee the accuracy of their data are allowed to stay in business. “Most of these companies try to market themselves as a tool to assist in discovering more about people you don't trust,” he says. “The problem is, how can anyone trust these companies themselves when they practice extremist marketing and exploit people's lack of trust for one another?”
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Kibak strongly disagreed with the assessment, calling Instant Checkmate “a due diligence or precautionary tool.” “The quote above is like saying that ADT Home Security systems or manufacturers of locks for doors—are ‘exploit[ing] people's lack of trust for one another.' Obviously that's not true—those companies, like Instant Checkmate, provide tools that people can use to protect themselves.”
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Another complaining about Instant Checkmate's approach was Meagan Simmons, a Florida woman whose mug shot appeared in an ad for Instant Checkmate beside text that read: “Sometimes the cute ones aren't so innocent.” She filed a lawsuit in 2014.
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“The ad contained her arrest booking photo and did not identify her by name,” Kibak said. “There is greater freedom under the law with publishing public records, like arrest booking photos, because this is a matter of public interest and the photo is not owned by the person arrested. We also did not suggest that she was endorsing or a spokesperson for Instant Checkmate. In any event, we are defending the lawsuit and are no longer running the ad.”
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A month after that lawsuit was filed, an even bigger blow hit Instant Checkmate. The FTC charged the company with violating the Fair Credit Reporting Act by advertising its services to users including landlords and employers. The complaint alleged the company did not take reasonable steps to ensure the reports were accurate or that those coming to the site had a permissible reason to receive such reports.
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How Instant Checkmate advertised its services, both on its site and on Google, proved key to the case, as outlined in a March 21, 2014,
complaint that noted: “The company, through its Google Ad Words ad campaign, ran advertisements that would appear in search results when users sought background checks on ‘nannies,' ‘babysitters,' ‘maids,' and ‘housekeepers.'”
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It also quoted from Instant Checkmate's website: “GOOD REASONS to get instant criminal checks on anyone right now. . . . (2) Check out tenants before they rent.”

The company issued a statement referring to “a technical violation” of the Fair Credit Reporting Act. “The FTC recognized that Instant Checkmate is a responsible company and agreed to a settlement where Instant Checkmate did not admit liability,” it said. “The few ads that concerned the FTC ran briefly over two years ago and are not representative of Instant Checkmate's advertising.”
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Instant Checkmate agreed to settle the case and pay a fine of $525,000.

Matthew Monahan says it is a challenge to compete when rivals or marketers working on their behalf attempt to stir up fear when advertising their products. “When you say things like, ‘Your neighbor may be a sex offender, find out the shocking truth, click here and see the mug shot photos,' you create their whole entertainment, shock-value kind of approach. It drives a lot of eyeballs, it drives a lot of curiosity,” he rued.

Caesars faced a similar dilemma in Las Vegas. Could they ignore outside supplementary personal information from data brokers when their rivals aggressively used such insights for marketing? Unlike the Monahan brothers, who had a cushion of cash for long-term investment, Caesars did not have the luxury of time after the financial crisis. With a massive debt load, the casino chain faced more urgency in boosting revenue. Rivals such as Wynn were using raw public records on Las Vegas weddings to market directly to newlyweds. But a different type of data broker working directly with businesses offered far more sophisticated insights, sometimes thousands of pieces of information about any one person.

7

Direct Marketing

How Would You Like to Earn $10,000 in a Summer?

After enrolling at Wesleyan University in 1993, Joshua Kanter returned home to New Jersey for the first time over Thanksgiving. His mother had gathered his mail into a four-inch stack, most of it junk. One envelope grabbed his attention. “How would you like to earn $10,000 in a summer?” a bold headline from University Painters asked. Working the summer before college had brought in only $1,200, not enough to fulfill Kanter's dream of buying a car.

At that time University Painters sought out college students in certain ZIP codes so it could target key markets. To find the right entrepreneurially minded youth, the company rented lists of students at universities within a few hours of their family homes. Kanter did exactly what the direct marketer intended: he called University Painters to find out more. He learned that the company would grant him a house-painting franchise in exchange for 26 percent of sales. He received choice terrain to test his business acumen: Princeton, New Jersey, a prosperous town with strong business potential.

Kanter started returning home from Connecticut on weekends to knock on doors with the offer of free house-painting estimates. The teenager might have deterred some potential customers with his shoulder-length hair, but he showed energy and sincerity. People sensed he was a good kid and responded positively to his sales pitch. Over summer break, he went into overdrive, making the rounds and organizing his growing enterprise ninety to one hundred hours a week.
Occasionally he pitched in and painted, but he focused on finding new clients and training employees.

University Painters' direct mail pitch far underestimated Kanter's actual earnings. The first year he piled up $45,000. The second year, after getting a conservative haircut and suspending his studies for a year, he really hit the jackpot, earning $105,000. He bought his first car, a maroon 1982 Honda Prelude that had already journeyed 250,000 miles. Kanter had become a convert to the magic of direct marketing. Less than two decades later he would help lead a massive direct-marketing operation at Caesars that sends out 750 million offers a year.