Two Web-based companies and their principals will pay $80,000 in consumer redress in a settlement based on a Federal Trade Commission complaint filed in February, the FTC said yesterday.
The complaint alleged that Wealth Systems Inc., Ecommerce Network.com LLC and their principals, Martin Wilson and Shane Roach, violated the FTC Act involving unfair and deceptive business practices and the FTC Franchise rule in their direct mail and telemarketing of Internet-based business opportunities.
The FTC also alleged that the defendants claimed consumers could earn $20,000 to $50,000 “next year” by purchasing “Web broker packages” priced from about $300 to $1,400 or more and that the companies provided testimonials from “Web brokers,” one of whom claimed to have made “over $300,000 in a little over a year.”
These and other claims made by the companies were deceptive or unfounded, the complaint alleged. Further, the FTC alleged that few, if any, of the consumers who made purchases made any money and few received refunds.
The settlement prohibits the defendants from misrepresenting products and services in the future. It also prohibits the defendants from selling, renting or otherwise disclosing personal information about their purchasers or prospective purchasers in connection with the business opportunities.
In addition to $80,000 for consumer redress, a judgment of almost $15 million representing the amount of consumer injury was also made but will be suspended due to the defendants’ inability to pay. The judgment will be imposed if they are found to have misrepresented their financial condition.
The order, filed in U.S. District Court in Arizona, does not constitute an admission of a law violation by the defendants.
The settlement was part of “Project Biz Opp Flop,” a criminal and civil crackdown on promoters of illegal business-opportunity and work-at-home schemes by the FTC, the U.S. Department of Justice, the U.S. Postal Inspection Service and law enforcement agencies from 14 states.