HR News & Trends

Job Board TheLadders Hit With Class Action Lawsuit Calling It a “Scam”

TheLadders02

Job board TheLadders is being sued in New York federal court in a class-action consumer lawsuit alleging that for years it falsely claimed it offered only high-paying jobs.

Brought by an Arkansas woman representing perhaps as many as a million customers of the job board, the suit says:

From its inception until September, 2011, TheLadders scammed its customers into paying for its job board service by misrepresenting itself to be ‘a premium job site for only $100k+ jobs, and only $100k+ talent.’ In fact, TheLadders sold access to purported ‘$100k+’ job listings that (1) did not exist, (2) did not pay $100k+, and/or (3) were not authorized to be posted on TheLadders by the employers.”

TheLadders says it is providing “best job-matching service”

According to the suit, many of the jobs offered on TheLadders were scrapped from other sites with no attempt at verifying how much they paid or even if they were current.

The suit, filed this week by the New York class action firm of Bursor & Fisher, was reported by recruiting consultant and blogger Nick Corcodilos. He’s posted a copy of the lawsuit here.

TheLadders issued this statement in response to news of the suite:

We just learned about this yesterday afternoon, and have put it in the hands of our counsel to resolve. We remain steadfast in our commitment to providing the best job-matching service, while serving as the fastest-growing source for professional jobs. In fact, we’re focused on migrating our members to our new online experience, featuring Scout, by April 1, as well as launching our free native iOS app. We continue to be a free resource for recruiters and employers to help them find the right person for the right job.

Specific counts detailed in the lawsuit

Five specific counts are alleged in the class action suit:

  1. Violation of Arkansas’ Deceptive Trade Practices Act — Based on the residency of the class representative and the claim that TheLadders falsely promoted its jobs as bona fide $100k paying positions.
  2. Breach of Good Faith and Fair Dealing — Based on the claim TheLadders “intentionally, purposefully and/or negligently” offered unauthorized jobs posts for positions which no longer existed and did not pay $100,000 a year.
  3. Money Had and Received — Based on the claim TheLadders collected money from job seekers for services it did not provide and “has no right to.”
  4. Breach of Contract — Based on the claim TheLadders violated its contract with its subscribers who were promised “a premium job site for only $100k jobs and only $100K+ talent,” but didn’t get that.
  5. Unjust Enrichment/Restitution — Based on the claim that TheLadders received benefits from the subscription-paying job seekers that it didn’t deserve.

Positioned as a website for high-paying jobs

Founded in 2003 by Douzet, Andrew Koch, and Marc Cenedella,who is now executive chairman, TheLadders for years positioned itself as a site to find jobs paying at least $100,000. At a time when most job boards were free to job seekers, TheLadders charged to see the jobs. Recruiters initially could post high-paying jobs for free.

The site’s advertising said all jobs were “hand-screened.” Subscription fees, which could cost $30 a month — discounts for longer terms — were estimated to bring in millions annually. One estimate of the private company’s finances put the annual revenue at about $80 million.

Over time, TheLadders revised its business model. Several years ago it began charging recruiters to post jobs and search its database. For a fee, recruiters could also use a concierge-style service to source and do an initial vetting of candidates for them. In September 2011, TheLadders announced it would now accept jobs paying as little as $40,000.

In addition to the subscription income, TheLadders also offered resume reviews and rewriting services, with additional fees charged for the resume writing help.

Lawsuit” site’s purpose is to “upsell … paid resume writing”

The lawsuit says the resume service amounted to little more than a generic, form letter review, whose “sole purpose” was to “upsell members into useless paid resume rewriting services for applying to the non-existent $100+ positions on TheLadders’ job board.”

Throughout the suit are references and examples of the company’s own advertising and statements by Cenedella, as well as blog posts critical of The Ladders. Among them is a strongly worded article by ERE Media’s founder and chairman, David Manaster. (Editor’s Note: ERE Media is the parent company of TLNT.)

The suit doesn’t specify the amount of money being sought, but it does ask the court that TheLadders return all the money it collected for its premium subscriptions, profits it made, and punitive damages.

John has been writing about recruiting and employment for nearly a decade,and has worked in the field for almost twice as long. He traces his connection to the employment industry back to the beginning of the commercial Internet when he managed some of the earliest news oriented websites. These offered job boards, which became highly popular with users. John worked with agencies and large employers on job postings, resume search, and campaigns, before consulting with media companies on audience development and online advertising sales.