FTC orders companies and individuals to turn over millions

Federal Issues FTC Enforcement FTC Act Settlement Business Opportunity Rule

On January 17, the FTC announced two proposed settlements against an independent sales organization and its owners (collectively, “defendants”) for allegedly participating in deceptive and unfair acts and practices. The FTC alleges the defendants violated FTC Act, the Business Opportunity Rule, the Cooling-Off Rule, and the Consumer Review Fairness Act by targeting Spanish-speaking consumers with “false or unfounded earnings claims and other deceptive promises,” relating to business opportunities. According to the complaint, defendants sold business opportunities to Spanish-speaking consumers that used unsubstantiated earnings claims to convince consumers to pay thousands of dollars for its products and services. The complaint also alleged that although defendants’ marketing and sales were conducted largely in Spanish, the company’s purchase agreements that outline the cancellation policy were often provided exclusively in English. Additionally, the complaint alleged that defendants frequently rejected consumers’ refund requests as untimely, and when consumers reported the defendants to law enforcement or the Better Business Bureau, defendants offered partial refunds to those consumers contingent upon their withdrawal of their complaints and agreement to refrain from posting negative reviews about defendants.

The proposed stipulated order, among other things, would (i) permanently ban the defendants from offering any business coaching on ecommerce or real estate; (ii) require the defendants to support their claims about how much consumers can earn using any product or service that the defendants market or sell; (iii) prohibit the defendants from repeating the unlawful practices that formed the basis for the complaint; (iv) require defendants to pay $29,175,000 and surrender all funds and assets of the receivership entities and those additionally listed; and (v) identify repayment obligations of various financial institutions and require the identified financial institution to remit the balance of each identified account to the Commission. The defendants neither admitted nor denied any of the allegations in the complaint.