Markets Wired

The operators of a business coaching scheme will pay at least $1.2 million to settle Federal Trade Commission charges that they targeted people who were trying to start new businesses online and used deception to sell them bogus marketing products and services.

According to the FTC’s complaint, Position Gurus and Top Shelf Ecommerce, and their owners Aaron Poysky, Stacy Griego and Samuel Cohen Brown, targeted consumers who were looking for ways to make money by starting retail businesses on the Internet. The defendants found many of their targets by purchasing consumers’ contact information from other online business coaching operations that had already deceived the targets.

“If you’re starting an online business, there’s no quick and easy path to success,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Companies that charge you big up-front fees and make big promises about earnings are likely scams that offer nothing of value in building a profitable business.”

The defendants would call consumers, the complaint alleges, in some cases falsely claiming to be associated with the coaching companies consumers had prior dealings with. The defendants then made high-pressure sales pitches for marketing assistance, claiming it would drive more customers to consumers’ online stores and drastically increase sales and earnings.

The defendants also asked consumers for detailed financial information under the guise of determining whether the consumers would “qualify” for their products and services, but instead allegedly used this information to determine how much they could charge consumers.

The defendants then pressured consumers to pay up to thousands of dollars for their marketing products and services. The defendants often encouraged consumers to use their credit cards, or “other people’s money,” that they could later pay off with their supposed earnings. But the complaint alleges that, in many instances, defendants’ marketing products and services did not increase sales or result in the promised earnings of thousands of dollars per month. Many consumers requested refunds and were dissatisfied, but the defendants’ contracts included language prohibiting them from posting negative reviews or complaining about their experiences online.

The complaint alleges that the defendants violated the FTC Act, the Telemarketing Sales Rule (TSR), and the Consumer Review Fairness Act (CRFA). Under the terms of the settlements, the defendants will be prohibited from marketing or selling any business coaching services, from misleading consumers in the sale of any goods and services or to get access to their financial information, and from further violations of the TSR. The settlements with Position Gurus, LLC; Top Shelf Ecommerce, LLC; Poysky; and Griego also prohibit further violations of the CRFA.

The settlement with Position Gurus, LLC; Top Shelf Ecommerce, LLC; and Poysky includes a monetary judgement of $16,331,011, which is partially suspended due to an inability to pay. The defendants will be required to surrender more than $931,000, along with the proceeds from the sale of Poysky’s 2017 Range Rover and the contents of a number of remaining merchant accounts used by the companies.

The settlement with Brown includes a monetary judgment of $11,053,852, which is partially suspended due an inability to pay. Brown will be required to surrender $123,096 as well as the proceeds from the sale of his 2014 Porsche Panamera.

The settlement with Griego includes a monetary judgment of $16,331,011, which is partially suspended due to an inability to pay. Griego will be required to surrender $234,600.

If any of the defendants are found to have misrepresented their financial condition or ability to pay, then the full amounts of the monetary judgments would become due immediately.

The Commission vote authorizing the staff to file the complaint and stipulated final orders was 5-0. The FTC filed the complaint and final orders in the U.S. District Court for the Western District of Washington.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.