The Federal Trade Commission has announced that it has permanently banned an alleged work-from-home scammer from selling or promoting business opportunities and from using robocalls under the terms of a settlement.
The FTC alleged that an individual and a number of companies he allegedly controlled initiated millions of robocalls nationwide to promote purported sham work-from-home business opportunities, focusing on consumers concerned about working outside their homes because of the coronavirus pandemic. The defendants allegedly lured consumers into purchasing these programs with false promises that consumers could earn hundreds of dollars a day. They also allegedly falsely claimed to be affiliated with Amazon.com.
“These defendants used illegal robocalls, lies about income, and people’s anxiety about the pandemic to pitch their work-from-home scam,” said FTC attorney Daniel Kaufman, Acting Director of the Bureau of Consumer Protection
Under the settlement, the aforementioned companies will be banned from pitching business opportunities or work-at-home schemes, as well from any involvement with robocalls.
In addition, the settlement prohibits the defendants from making any claims about how much money consumers can earn, unless those claims are not misleading and the defendants have written substantiation for their claims. They will also be prohibited from misrepresenting their affiliation with any merchant or brand, as well as from misrepresenting any key facts about a product or service offered to consumers.
The settlement also includes a monetary judgment of more than $2 million, which is partially suspended due to an inability to pay. The defendants will be required to surrender the contents of a bank account and the reserves held in two merchant accounts to the FTC. If the defendants are found to have misrepresented their financial status, the full amount of the judgment would become immediately payable.
The FTC’s announcement comes on the heels of a recent crackdown on deceptive income schemes nationwide. In December 2020, the FTC – along with 19 federal, state, and local law enforcement partners – announced a nationwide crackdown on scams that target consumers with fake promises of income and financial independence that have no basis in reality. The impact of these alleged scams has intensified as regulators are paying more attention to activities that seek to take advantage of the COVID-19 pandemic and financial crisis.
Called “Operation Income Illusion,” the crackdown encompasses more than 50 law enforcement actions against the operators of work-from-home and employment scams, pyramid schemes, investment scams, bogus coaching courses, and other schemes that can end up costing consumers thousands of dollars.
“Scammers are preying on the unemployment and anxiety arising from the pandemic by making false promises of big income working from home,” said former FTC lawyer Andrew Smith, former Director of the FTC’s Bureau of Consumer Protection.
In addition to previously announced cases, the FTC has brought new law enforcement cases as part of Operation Income Illusion, as well as announcing a new settlement in a previously filed case.
In these cases, the FTC is asking the court to stop the deceptive schemes and to get money back for affected consumers.
Other agencies reporting actions as part of the sweep include: the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, the U.S. Attorney’s Office for the Eastern District of Arkansas, state agencies in Arizona, Arkansas, California, Florida, Indiana, Maryland, New Hampshire, Oregon, and Pennsylvania, and the Maricopa County Attorney’s office in Arizona.
Richard B. Newman is an FTC defense attorney at Hinch Newman LLP. Follow FTC defense attorney on Twitter.
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