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FTC Hammers Operators of Money-Making Opportunity Telemarketing Scheme

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The Federal Trade Commission has charged numerous individuals and an interrelated network of companies with selling worthless money-making opportunities via an alleged phony grants program.

According to the FTC’s complaint, the defendant telemarketers misrepresent to seniors, veterans and indebted consumers that they represent Amazon and offer – for hundreds or thousands of dollars – to create a website for them linked to Amazon.com.  In doing so, according to the FTC, the defendants claim that consumers will earn thousands of dollars every month in commissions for sales via the website and falsely offer to advertise the website via multiple means.

The Commission also alleges that the defendant telemarketers phone consumers from various call centers and falsely claim to represent the government, telling consumers that they can obtain government and corporate grants to help pay for home repairs, medical costs and debt reduction.

To allegedly determine the amount for which consumers are eligible, the defendants ask for information regarding income, employment, age, veteran status, home value and equity, savings and retirement funds, debt, drivers’ license and credit and debit card numbers.

According to the FTC, the defendants seek thousands of dollars, up-front, and falsely promise that consumers will receive grants worth tens of thousands of dollars within 60-90 days.

According to the FTC, the defendants also attempt to extract even larger payments from many of these same consumers using a tactic known as “reloading” – offering to sell them additional phony grants and typically promising that they can qualify for larger grants by forming a limited liability company.

The FTC alleges that consumers receive no money from these schemes and are not provided refunds.

The action has been brought under the Federal Trade Commission Act, and the Telemarketing and Consumer Fraud and Abuse Prevention Act.  The Commission seeks injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of alleged ill-gotten monies, the appointment of a receiver, an asset freeze, and other equitable relief for defendants’ purported practices.

The TSR prohibits sellers and telemarketers from misrepresenting, directly or by implication, in the sale of goods or services, any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer.

Likewise, the TSR prohibits sellers and telemarketers from making any false or misleading statements to induce a person to pay for goods or services.

A violation of the TSR constitutes an unfair or deceptive act or practice in or affecting commerce, in violation of the FTC Act.

Contact an FTC defense lawyer if you are the subject of a regulatory enforcement investigation or action, or if you are interested in implementing preventative compliance measures.

Richard B. Newman is an advertising compliance lawyer at Hinch Newman LLP focusing on internet marketing and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns across all media channels, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

Richard B. Newman is an advertising law and regulatory defense attorney at Hinch Newman LLP focusing on Internet marketing compliance and digital media matters. His practice involves conducting legal compliance reviews of advertising campaigns across all media channels, regularly representing clients in high-profile investigative proceedings and enforcement actions brought by the Federal Trade Commission and state attorneys general throughout the country, advertising and marketing litigation, advising on email and telemarketing best practice protocol implementation, counseling on eCommerce guidelines and promotional marketing programs, and negotiating and drafting legal agreements.

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