FTC settlement bans marketers from using deceptive tactics to sell business opportunities

ID-100128578Two men just got spanked by the FTC for their part in a marketing scheme that allegedly used deceptive tactics to sell business opportunities.

In 2010, the Federal Trade Commission filed a complaint against an operation known as I Works, which allegedly ripped off consumers for more than $275 million through “trial” memberships for bogus government grant and money making schemes.

Bryce Payne and Kevin Pilon, two key players in the scheme, have now agreed to settle FTC charges that they violated federal law. Also named in the 2010 FTC complaint were Jeremy Johnson and seven others.  The court later froze the assets of Johnson and 61 corporate defendants. The money will be returned to consumers if the case is resolved in the FTC’s favor.

The order bans Payne from selling, owning or having a financial interest in any business that sells grant-related products; investment opportunities; products with negative-option features or continuity programs; or “forced upsells” (extra products automatically bundled with a purchase).

The order restricts Payne from taking a management role in any business he doesn’t control, participate in or have knowledge of its daily operations. The order also permanently prohibits him from making any of several types of material misrepresentations.

The settlement order bans Pilon from selling, owning or having a financial interest in any business that uses forced upsells. It restricts him from taking a management role in any business he doesn’t control, participate in or have knowledge of its daily operations. He is also permanently banned from making  any of several types of material misrepresentations.

Both defendants are prohibited from selling or otherwise benefiting from consumers’ personal information, and failing to dispose properly of any customer information. They are prohibited from making misrepresentations in order to obtain account services from payment processors, banks, and other third parties, and from failing to disclose material information about a merchant account.

Payne and Pilon received judgments of $289 million and $7.5 million, respectively. These were suspended based on inability to pay. However, certain assets must be turned over to the FTC, including $20,000 from Payne and $1,000 from Pilon. If they are found to have misrepresented their financial condition, the full judgments will become due immediately. The FTC lawsuit against Johnson and his 61 companies is ongoing.

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