Scam artists used Google brand to bilk victims, Feds say
Under a settlement agreement with the FTC, the defendants, which did business under names such as "Google Money Tree," "Google Pro," and "Google Treasure Chest," are barred from making misleading or unsupported claims while marketing or selling any product or service, and have been forced to surrender cash and other assets exceeding $3.5 million.
The defendants also are forbidden from marketing products via "negative option" transactions – a classic marketing scheme in which companies use fine print to trick victims into unwittingly agreeing to pay for a product or service for which they are billed on a regular basis until they cancel.
The FTC first took action against the defendants, Infusion Media, Inc., West Coast Internet Media, Inc., Two Warnings, LLC and Two Part Investments, LLC, in July 2009 as part of "Operation Short Change," an ongoing crackdown against scammers taking advantage of the recession to prey upon vulnerable consumers.
By using Google's household name and logo and falsely promising consumers could earn $100,000 in six months, the defendants lured consumers into providing their financial information to pay a small shipping fee for a work-at-home kit, according to the complaint.
What consumers didn't realize, thanks to the fine print, was that purchasing the useless work-at-home kit automatically triggered monthly charges of $72.21 for another product which continued until they took steps to cancel.
The complaint charged that the defendants violated the FTC Act by failing to adequately disclose that consumers would be subjected to monthly charges; by making false or unsupported claims that consumers were likely to earn substantial income; and by falsely claiming they were affiliated with Google Inc.
The defendants also violated the Electronic Fund Transfer Act and Regulation E by debiting consumers' bank accounts on a recurring basis without obtaining written authorization, the FTC charged.
The settlement includes a $29.5 million penalty against defendants Jonathan Eborn; Michael McLain Miller; Tony Norton; Infusion Media, Inc.; West Coast Internet Media, Inc.; Two Warnings, LLC; Two Part Investments, LLC; and Platinum Teleservices, Inc. A fourth defendant, Stephanie Burnside, is subject to a $741,900 fine.
The defendants have relinquished cash and other assets including two cars, a boat and a gun collection totaling approximately $3.5 million. The remaining $26 million has been suspended due to the defendants' inability to pay, but the full $29.5 million will be due if it's found the defendants lied about their finances.