FTC Accuses SkyBiz of $175 Million Scheme

A federal judge has shut down SkyBiz.com at the request of the Federal Trade Commission after the Internet business was accused of conning consumers out of $175 million in an international, online pyramid scheme.

SkyBiz.com, Tulsa, OK, claimed to sell online tutorials on Web-based products, but the FTC said yesterday that the company was actually an illegal marketing scheme. According to its Web site, registering for SkyBiz is free, and participants earn commissions on sales referrals for its “e-Commerce Web Packages.”

Chief Judge Terry C. Kern of the U.S. District Court in Tulsa ordered SkyBiz to halt activities temporarily. The judge also ordered its assets frozen to preserve them for future consumer compensation and put the company into receivership, the FTC said. A hearing on the preliminary injunction is scheduled for June 26.

The company could not be reached yesterday for comment.

According to SkyBiz, buying the e-Commerce Web Packages — which included online marketing tools such as software for building Web sites, educational software, e-mail accounts and Internet service — was optional. However, the FTC charged that the $125 cost of buying the package was actually a hidden sign-up cost, and consumers had to buy the package in order to earn money for recruiting additional participants.

In the complaint, the FTC charged that SkyBiz's claims that consumers stood to make substantial income on their investments were false. The FTC also charged the company with aiding consumers in deceiving others by providing promotional materials that made false claims.

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