An FTC lawsuit alleges that money-making claims made by a related group of companies and individuals for their Amazing Wealth System are “amazing” all right – if by “amazing” you mean “not credible” or “unsupported by the facts.” The complaint charges the defendants with violating the FTC Act and the Business Opportunity Rule. One interesting factual twist is how elements of the “system” allegedly depend on subverting Amazon’s rules about online reviews and third-party sales.
Defendants advertise their Amazing Wealth System via direct mail, radio, YouTube videos, social media, and live events. (Consumers may know them by names like Amazon Wealth Systems, FBA Stores, Insider Online Secrets, or Online Auction Learning Center. But let’s be clear: The defendants have no affiliation with Amazon.)
According to the FTC, the defendants lure prospective purchasers in with claims like this:
- “My name is Adam Bowser, and over the past 18 years I have sold over $50 million online. I’m going to be hosting a few local workshops around the Seattle area to share my secrets for making money on Amazon.”
- “Get started selling on Amazon and make $5,000-$10,000 in the next 30 days . . . Even if you have never sold anything online before.”
- “Just last year we sold over $12 Million on Amazon.com. Now we want to help you become our next Amazon success story.”
The defendants’ initial step is bringing consumers in for a free two-hour seminar. At the seminar, they pitch their $995 three-day workshops: “How many of you would love to be able to learn how you can 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.”
According to the FTC, the three-day workshops shift the hype into overdrive, including the sale of more expensive packages like the $34,995 “Diamond” enrollment. As one pitch person said at a workshop, “So whether you want an extra $20- to $30,000 a year or you want to create a million dollar a year business, I’m going to show you how to do either of those.”
The complaint alleges that in purporting to showing people “how to do either of those,” much of the information the defendants convey is basic stuff available for free on Amazon’s Resources and Tutorials page. However, other “tips, tricks, and techniques” allegedly violate Amazon’s Business Solutions Agreement, the document that sets forth the rules that companies must follow if they want to sell on Amazon. For example, according to the FTC, the defendants instruct consumers who buy their Amazing Wealth System to get fake product reviews for the items they list on Amazon – advice that violates Amazon’s Anti-Manipulation Policy for Customer Reviews. Another of those “tricks” teaches people to use various ruses in an effort to “win the box” – in other words, to be the seller of choice in Amazon’s coveted Buy Box when the same merchandise is available from multiple sellers. As a result, says the FTC, purchasers who use the defendants’ system often experience problems with their Amazon stores, including getting suspending and losing their ability to sell on the site.
The FTC lawsuit charges that people who buy the Amazing Wealth System and try to use the defendants’ strategies are unlikely to earn the income the defendants advertise. And according to the lawsuit, the defendants’ brief “earnings disclaimers” are ineffective to undo the net impression that people who implement the “system” are likely to make money.
The complaint alleges other specific violations of the Business Opportunity Rule. The FTC says the defendants failed to make advertising disclosures mandated by the Rule, including the number and percentage of people who bought the business opportunity and achieved at least the stated level of earnings. Furthermore, in many cases, the defendants allegedly failed to furnish prospective purchasers in a timely fashion with the disclosure document and attachments required by the Business Opportunities Rule.
The case is pending in federal court in Nevada. The court has appointed a temporary receiver over the corporate defendants, enjoined the defendants from making deceptive claims, and frozen their assets pending resolution of the FTC’s preliminary injunction motion.
Even at this early stage, the case is a reminder to companies that offer business opportunities to conduct a Rule review to make sure they’re in compliance. What’s the message for would-be entrepreneurs? View money-making claims with a seriously skeptical eye. In addition, if anyone suggests that you solicit, post, or in any other way involve yourself with product reviews that aren’t 100% accurate and independent, you’re getting really bad advice. The FTC endorsements page has resources on that subject.