Markets Wired

An online marketer that falsely claimed ties to Google Inc. has been forced to stop operations as part of a Federal Trade Commission action that charged the defendants with marketing an allegedly bogus work-at-home scheme and charging hidden monthly fees to consumers’ credit card and bank accounts.  Under a settlement agreement reached with the FTC, the defendants are banned from selling products through “negative option” transactions ­– in which the seller interprets consumers’ silence or inaction as permission to charge them.  The defendants also are barred from making misleading or unsupported claims while marketing or selling any product or service, and will give up cash and other assets exceeding $3.5 million.

As part of “Operation Short Change” – a crackdown on scammers taking advantage of the economic downturn to bilk vulnerable consumers through a variety of schemes – the FTC announced a complaint in July 2009 against several defendants that allegedly sold a bogus work-at-home product under names including “Google Money Tree,” “Google Pro,” and “Google Treasure Chest.”  By using the name and logo of the Internet search company Google and falsely promising that consumers could earn $100,000 in six months, the defendants lured consumers into divulging their financial account information to pay a modest shipping fee for a work-at-home kit.  The defendants failed to disclose adequately, however, that buying the product would trigger automatic monthly charges of $72.21 for another product, and that those charges would continue until the consumer took steps to cancel, according to the FTC complaint. 

The complaint charged that the defendants violated the FTC Act by failing to adequately disclose that consumers would be subjected to monthly charges; by making false or unsupported claims that consumers were likely to earn substantial income; and by falsely claiming that they were affiliated with Google Inc.  The defendants also violated the Electronic Fund Transfer Act and Regulation E by debiting consumers’ bank accounts on a recurring basis without obtaining written authorization, according to the complaint.

The settlement includes a $29.5 million judgment against defendants Jonathan Eborn; Michael McLain Miller; Tony Norton; Infusion Media, Inc.; West Coast Internet Media, Inc.; Two Warnings, LLC; Two Part Investments, LLC; and Platinum Teleservices, Inc.  A fourth defendant, Stephanie Burnside, is subject to a judgment of $741,900.  The defendants will give up cash and other assets that include two cars, interests in a Harley Davidson motorcycle and a boat, and a gun collection – which total approximately $3.5 million, in partial satisfaction of the judgment.  The unpaid portions of these judgments are suspended based on the defendants’ inability to pay, but the full amounts will become due if the defendants have misrepresented their financial condition.

The Commission vote authorizing the staff to file the stipulated final order against the Google Money Tree defendants was 5-0.  The FTC filed the proposed settlement in the U.S. District Court for the District of Nevada.  It was signed by the judge on October 4, 2010.

NOTE:  A stipulated final order is for settlement purposes only and does not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the documents related to these cases are available from the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.  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 1,800 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.

(FTC File No. X090062)