FTC Shuts Down Business Opportunity Scam

Aug 06, 2018

The Federal Trade Commission has charged Sellers Playbook, Inc., a related company and two individuals with running a business opportunity scam. According to the complaint, the scam violated two consumer protection laws –  the Business Opportunity Rule and the Consumer Review Fairness Act (CRFA).  Conduct that violates either law is an unfair or deceptive act that also violates the FTC Act and the M assachusetts consumer protection statute.

The defendants in this case promoted their business opportunity scam under several names –  Sellers Playbook, Sellers Online, and Sellers Systems. They described the scheme as a “comprehensive program” to assist purchasers in launching and growing a new online business selling products as a third-party seller on Amazon.com.” Consumers who signed up paid anywhere from $497 to $30,000, depending on the particular package or level of enrollment they chose.

Any consumer who signed up also had to sign a form contract with a “non-disparagement” clause. These terms prohibited consumers from posting or publishing negative reviews, assessments or criticism about the system – exactly what the CRFA was designed to protect against. This is the first case the FTC has brought for violations of the recently-enacted CRFA. The Act outlaws form contracts between businesses and consumers that contain terms prohibiting people from publishing or posting negative reviews about a product or service and/or attempting to impose fees or penalties on anyone who does so.

To make matters worse, the individual defendants were repeat offenders. This past March the FTC charged them being involved in a nearly identical get-rich-quick scheme  that operated under a different business name (FBA Stores). In that case, a federal court in Nevada issued a preliminary injunction  shutting down the operation.

The complaint against Sellers Playbook is another attempt by the FTC to to crack down on violations of the Business Opportunity Rule. These cases have a lot of similarities. They typically include some variation of the following:

  • The defendants use email, videos and social media to advertise and market “free” seminars and live events. Consumers who click on a link in an ad are then routed to the defendants’ website.
  • The websites contain false and unsubstantiated claims about how much money consumers can earn if they sign up and pay for a particular program or system. Here are some t ypical bogus earnings claims:
    • “ How many of you would love to be able to make an extra $5,000 to $10,000 a month by spending 30 minutes to an hour a day learning and implementing a plug-and-play system I’m going to share with you here in a moment.” 
    • Holy cow, guys. That’s when you start seeing the returns of what we want you to have, $20,000 a month,”
    • “Potential Net Profit: $1,287,463.38,”
    • “Starting with $1000…1 year later over $210,000
  • The websites may include a disclaimer that the earnings claims are not  typical. But the disclaimer is usually buried at the bottom of a page in small, grey font against a white background, making it hard to see.
  • The defendants do hold free seminars and live events that last a few hours. But they use them to pitch whatever system or program they are selling. The programs may include coaching, business strategy and advice; software;  help in building a website; “educational” materials; support; and customer leads. Many of the offered strategies and techniques are deceptive and therefore unlawful.
  • Of course, these programs and systems aren’t free. In fact, they’re usually very expensive.
  • The ads typically include gross overstatements as to how much a typical person who pays for the program will earn. They often cite industry performance data to support false earnings claims. But the data generally does not reflect typical performance. In fact, few consumers earn anything close to advertised amount, if they earn anything at all.

If you were the victim of a business opportunity scam and didn’t get the results you were promised, please contact me. You may be able to recover the amount you paid, as well as your legal fees and expenses.

 

 

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