Commish: Multiprong effort misrepresented … well, everything
Behind the Curtain
Is there a better get-rich-quick scheme than offering to help other people get rich quick?
The Federal Trade Commission (FTC or Commission) recently lodged a complaint in the Middle District of Florida against three men who it alleged have perfected the art.
Ronnie Montano, Hyong Su “Jimmy” Kim and Martin Schranz are accused of using a fleet of affiliate marketers to push money-making products to consumers – consumers who soon discovered that there wasn’t much there.
The product names themselves seem almost disarmingly forthright: Mobile Money Code, Easy Cash Code, Full Money System and Secret Money System, to name a few. Product marketing promised consumers access to a “secret code” or “money-making machine” that could generate income without effort. The trio charged $49 to $149 for the privilege of earning stunning sums of money.
Claims included “… beginners and normal people just like you, making $4,000 a Day using their cell phones;” “This weekend, you can start your journey to generating 60k a month on 100% autopilot” and “You can make 1,000 to 5,000 a day just by having this app running in the background ...”
Unfortunately, the FTC alleges, the products turned out to be nothing remarkable at all – merely generic apps that helped users build microniche and mobile-friendly websites.
Soup to Nuts
This alleged empty payoff was supported by a complex, comprehensive marketing blitz. The defendants, the FTC claims, lured in consumers with spam emails, pop-up ads and search engine results targeting people who were looking for work-at-home opportunities. They were offered no chance to opt out of future communications.
When consumers arrived at the Money Code sites, the false claims intensified, and consumers who tried to head for the hills were blocked from leaving the site by a stream of pop-up windows promising discounts and further earnings. Disclosure statements containing more realistic information about the promised income were tucked away on remote areas of the webpage, far from the outlandish claims.
Finally, once paying customers entered the site’s exclusive members’ area, the upsell began; extra features and add-on products were touted as the ways to truly succeed with the system. The upsells could build up to hundreds of dollars in charges, but in the end, these extras offered only more generic or useless information.
Moreover, the FTC alleges, the trio misrepresented their refund policy. Those who could even reach a customer service representative were routinely upsold yet again.
Regarding the emails that were sent to potential customers, the Commission also claimed that misleading subject headings were used and that the emails failed to include a clear means to opt out of future messages.
“In all phases of their scheme,” the complaint states, “defendants used a variety of misleading and deceptive tactics that violated the Federal Trade Commission Act, the CAN-SPAM Act, or both.”
The FTC accused Schranz of making millions off the sale of lists of information that Montano gathered on customers who fell for the scheme; Montano was reimbursed by being allowed to hawk the lists as well. Kim was paid handsomely for creating the generic products that customers received.
In response, the FTC is accusing the trio of violations of the Federal Trade Commission Act – misrepresentation of earnings, misrepresentation of the nature of the offered product and misrepresentation of their refund policy – and the CAN-SPAM Act – misleading subject headings, failure to provide an opt-out and failure to provide a physical address.
The Commission seeks a permanent injunction of the above violations, restitution or refund of monies paid, and court costs.
While reputable companies are not involved in fraudulent, get-rich-quick schemes, there are lessons here for all merchants. Namely, be sure to have an accurate refund policy that is followed, and ensure email marketing meets all of the technical requirements of CAN-SPAM.