Consumers Lost Thousands of Dollars Each After Being Told They Could Earn Income Through Online Businesses
At the Federal Trade Commission’s request, a federal court entered a temporary restraining order halting a deceptive work-from-home scheme that conned millions of dollars from consumers by falsely telling them they could easily earn thousands of dollars a month by purchasing bogus business coaching services and establishing their own Internet businesses. According to the FTC, consumers who bought into the scheme lost thousands – sometimes tens of thousands – of dollars each, most of it through racking up huge credit card charges at the defendants’ urging.
The U.S. District Court for the District of Utah froze the assets of the defendants, who did business under a variety of names, including Essent Media, LLC, Net Training, LLC, YES International, Coaching Department, and Apply Knowledge, and appointed a temporary receiver to take control of the operations, pending the outcome of a preliminary injunction hearing set for March 20, 2014. The FTC seeks to put a permanent stop to the operations and return money to consumers.
“This case halts a massive scam that bilked consumers out of millions for useless work-at-home kits and business coaching services,” said Jessica Rich, Director of the Bureau of Consumer Protection. “The defendants duped consumers into thinking they could earn thousands working from home. Protecting consumers from such pernicious schemes remains a top priority.”
According to the FTC’s complaint, the defendants’ websites told numerous false “rags to riches” stories, using photos – obtained from stock photo agencies – of supposed users of the defendants’ services, and made false and unsubstantiated claims about how much money consumers could earn. The defendants’ scheme had three inter-connected phases. In the first phase, the defendants used deceptive emails and websites to induce consumers to purchase relatively inexpensive work-at-home kits. They sold these kits, which typically cost from $37 to $99, with claims such as:
If You Can Spare 60 Minutes A Day, We Can Offer You a Certified, Proven And Guaranteed Home Job To Make $379/Day From Home!
“Important: Read my full report now as only 15 people are accepted into this program per city at any given time . . . because of the personal support given to each new member to ensure everyone’s quick financial success. Don’t hesitate . . . this page is taken down (literally) when the limit is reached, so read on . . .
But instead of showing consumers how to earn this income, the websites tried to sell them more products or services. In the second phase of their scheme, the defendants promised consumers that they would earn thousands of dollars a month using defendants’ coaching program to assist them in establishing their own online businesses. The defendants also encouraged consumers to put the entire cost of the program, generally from $3,000 to $12,000, on their credit card, claiming they would be able to pay it off within a few months. In the third phase of their scheme, the defendants pretended to provide consumers with the promised “coaching” services, while pitching yet additional costly add-on services such as business formation, website design, website development, accounting and tax filing services, and drop-shipping services, none of which proved helpful.
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 corporate defendants are Apply Knowledge LLC, also doing business as Apply Knowledge Institute and Coaching Department; Dahm International LLC; Dominion of Virgo Investments Inc.; eCommerce Support LLC; Essent Media Inc.; eVertex Solutions LLC; EVI LLC, also d/b/a Members Learning Center; Nemrow Consulting LLC; Novus North LLC, also d/b/a Mymentoring, Yes International LLC, and Your Ecommerce Support International LLC; Purple Buffalo LLC, also d/b/a Netmarketing; Supplier Source LLC; 365DailyFit LLC, also d/b/a Net Training; Vensure International LLC; and VI Education LLC.
The individual defendants are David Gregory Bevan, Jessica Bjarnson, Phillip Edward Gannuscia, Chad Huntsman, Scott Nemrow, Jeffrey Nicol, Thomas J. Riskas III, Babata Sonnenberg, and Ken Sonnenberg.
The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the District of Utah. On February 11, 2014, the court issued the temporary restraining order against the defendants.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
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