FTC Stops Web Broker Business Scheme

Two Internet-based companies offering Web brokerage services are the latest
to be nabbed in a federal crackdown on illegal business opportunities and
work-at-home schemes.

The Federal Trade Commission (FTC) on Wednesday said Wealth Systems, Inc.,
Ecommerce Network.com, LLC, and their principals, Martin Wilson and Shane
Roach, will pay approximately $80,000 in consumer redress.

A judgment of almost $15 million, representing the amount of consumer
injury, will be suspended due to the defendants’ inability to pay. The
judgment will be imposed if they are found to have misrepresented their
financial condition.

According to the FTC, the two companies claimed that consumers could earn
$20,000 to $50,000 within a year by purchasing Web broker packages priced
from about $300 to $1,400 or more.

The FTC claims consumers responding to the site received a mailing with
testimonials from alleged Web brokers, one of whom claimed to have made over
$300,000 in a little over a year.

The FTC further alleges the defendants offered advertising “coaches” and
advertising packages costing “as low as two dollars” to help purchasers
launch their Web brokerage business.

Once consumers purchased a package, the advertising coaches allegedly used
high-pressure sales tactics to persuade consumers to buy advertising
services from them. The defendants allegedly claimed that one person had
earned more than $12,000 in a month, and another person had invested only
$300 and was receiving his first earnings check for $680.

Some of the advertising packages cost tens of thousands of dollars.

As alleged in the complaint, few, if any, consumers who purchased the
defendants’ business opportunity or advertising services made any money, and
few consumers received refunds.

According to the Commission, the defendants violated the FTC Act and the
FTC’s Franchise Rule by not giving any pre-sale disclosure documents with
information about Wealth Systems, such as names, addresses, and telephone
numbers of Wealth Systems members and their earnings.

In addition, purchasers were not supplied, as required by law, an earnings
claim document stating a reasonable basis for defendants’ earnings claims or
the number and percentage of prior purchasers who had achieved results as
good as or better than the represented earnings.

The stipulated final order against Wealth Systems and Ecommerce Network was
part of Project Biz Opp Flop, a national sweep of bogus business
opportunities conducted by the FTC, the Department of Justice, the Postal
Inspection Service and law enforcement agencies from 14 states.

More than 200 operations were targeted for engaging in fraud and/or
violating consumer protection laws.

News Around the Web