FTC releases complaint and court’s TRO against an allegedly deceptive e-commerce scheme

Federal Issues FTC FTC Act Courts eCommerce

On October 21, the U.S. District Court for the Southern District of Florida granted the FTC’s motion for a temporary restraining order (TRO) against several companies and individuals (the defendants) engaged in an allegedly deceptive e-commerce investment scheme. The court found the FTC likely to prevail on the merits after accusing the defendants of using deceptive earnings claims to lure consumers into investing over $12.1 million in e-commerce automation business opportunities. The TRO included an asset freeze, the appointment of a temporary receiver, and immediate access to the defendants’ business premises, among other obligations.

The TRO stemmed from an October 15 complaint the FTC filed against the companies and their principals for alleged violations of Section 5(a) of the FTC Act and the FTC’s Trade Regulation Rule. The FTC’s complaint outlined eight counts against the defendants, including making false or unsubstantiated earnings claims, misrepresenting refund guarantees, and failing to provide mandatory disclosures required by the Trade Regulation Rule.

The complaint highlighted the ongoing risk of harm, noting that the defendants continued their deceptive practices despite numerous consumer complaints and lawsuits. The FTC seeks various forms of relief, including a permanent injunction, monetary relief, and an asset freeze to prevent further consumer harm.

The TRO mandated several actions to prevent further harm, including prohibiting the defendants from making any earnings claims or misrepresentations and requiring them to provide detailed financial disclosures. The court scheduled a preliminary injunction hearing for November 4 to determine whether the temporary measures should be extended.