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FTC Halts Scammers Preying on Ecommerce Hopefuls

In a case reminiscent of one that came to light in Idaho last December, the Federal Trade Commission has stepped in to stop several companies from running a scheme that promised ecommerce financial success. Consumers ensnared by the accused reportedly lost thousands of dollars seeking a quick way to riches.

The FTC’s complaint details a scam that probably should have looked too good to be true. Websites created by the defendants touted stories where purported customers of the firms made “false and unsubstantiated claims about how much money” could be made.

People who bought into the scheme found themselves getting involved in a three part program that allegedly had an end goal of convincing people to proceed from relatively cheap business started kits, to permitting themselves to have their credit cards billed for thousands of dollars.

But that wasn’t the endgame. According to the FTC, the third part of the plan involved providing “coaching” to customers, while trying to sell these victims various add-ons like website design or drop-shipping services.

According to the FTC, most people who bought the defendants’ services did not get a functional online business, earned little or no money, and ended up heavily in debt. The FTC has alleged that the defendants violated the FTC Act by misrepresenting likely earnings and the nature of their services and also violated the FTC’s Telemarketing Sales Rule by misrepresenting material aspects of their investment opportunities.

The US District Court for the District of Utah issued a temporary restraining order on February 11, 2014, after the FTC filed its complaint against multiple individual and corporate defendants.

“This case halts a massive scam that bilked consumers out of millions for useless work-at-home kits and business coaching services,” Jessica Rich, Director of the Bureau of Consumer Protection, said in a statement. “The defendants duped consumers into thinking they could earn thousands working from home. Protecting consumers from such pernicious schemes remains a top priority.”

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David A Utter
David A Utter
David A. Utter is a freelance writer based in Lexington, KY. He has covered technology topics from search to security to online business and has been quoted in places like ZDNet and BusinessWeek. He considers his appearance on NPR's "All Things Considered" with long-time host Robert Siegel a delightful highlight. You can find him on Twitter @davidautter and on LinkedIn.