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Consumer Fraud Alert: Consumer Scheme Allegedly Took Millions

Consumer Fraud Alert: Consumer Scheme Allegedly Took Millions

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FTC Alleges Deceptive Claims in Get-Rich-Quick Scheme Whose Operators Claimed Consumers Could Earn Big Money Using “Automatic Money Systems” & “Secret Codes”

On December 28, 2017, the Federal Trade Commission announced that it charged the operators of a get-rich-quick scheme with deceiving consumers by falsely claiming they could earn big money working from home by using products marketed as “secret codes” that were actually generic software products.

FTC Files Complaint for Permanent Injunction & Other Equitable Relief

FTC v. RONNIE MONTANO, individually and as owner of MONTANO ENTERPRISES LLC; HYONG SU KIM, a/k/a JIMMY KIM, individually and as owner of JK MARKETING LLC; MARTIN SCHRANZ, individually and as owner and officer of GSD MASTER AG, MONTANO ENTERPRISES LLC, a New Jersey limited liability company; JK MARKETING LLC, a Nevada limited liability company; GSD MASTER AG, a Swiss limited company

Defendants Allegedly Bilked Consumers Out of Millions by Falsely Promising Consumers Could Earn Hundreds to Thousands of Dollars a Day

The FTC’s announcement states that the complaint, filed in United States District Court, Middle District of Florida, alleges that Ronnie Montano, Hyong Su Kim (also known as Jimmy Kim), Martin Schranz and their related companies bilked consumers out of millions of dollars by falsely promising they could earn hundreds to thousands of dollars a day using the defendants’ Mobile Money Code products. In reality, the Mobile Money Code products were generic software applications that could help the user make mobile-friendly websites.

FTC’s Complaint Alleges Defendants Contacted Consumers with Spam E-Mail

The complaint alleges that the defendants primarily contacted consumers with spam emails sent by affiliate marketers.  For example, some emails cited in the complaint claimed that the products were a “secret method folks are using to make thousands of dollars per day (seriously!)” or that users can start “generating 60k a month on 100% autopilot.” The defendants allegedly sold their products through a variety of websites such as mobilemoneycode.com, automobilecode.com and secretmoneysystem.com.

Misleading Spam E-Mail Subject Headings, No Clear Way to Opt Out, False Testimonials & Failure to Honor “Money Back Guarantee”

In addition to the deceptive earnings claims, the defendants allegedly used misleading subject headings in the spam email they sent to consumers and failed to include a clear means to opt out of future messages. Consumers who went to the defendants’ websites were met with more deceptive claims, including online videos that featured individuals who claimed they made hundreds to thousands of dollars per day using the defendants’ products. In reality, these individuals were actors hired by the defendants to provide false testimonials.

Consumers who tried to exit the websites without purchasing a product were allegedly blocked with a series of pop-up messages. Even those consumers who agreed to make an initial purchase were asked to make additional purchases through upsells and add-ons, according to the complaint.

The FTC’s complaint also alleges that the defendants did not honor their “60-day hassle-free money back guarantee” and made it extremely difficult, if not impossible, to obtain a full or partial refund.

The FTC alleges that the defendants violated the FTC Act’s prohibition against deceptive practices and the CAN-SPAM Act, which requires that a commercial e-mail contain accurate header and subject lines, identify itself as an ad, include a valid physical address, and offer recipients a way to opt out of future messages.

FTC v. Ronnie Montano, Individually and as Owner of Montano Enterprises LLC, et al

The FTC’s complaint summarized the action against the Defendants as follows:

Since 2013, Defendants conducted a business opportunity scheme that established multiple affiliate marketing programs and used them to deceptively market a series of software products and upsell/add-on products and services (the “Mobile Money Code Products”) to consumers looking to make money from home. Defendants marketed the Mobile Money Code Products through a network of affiliates that primarily used unsolicited commercial email (spam) to attract consumers to Defendants’ marketing websites. Defendants (and their affiliates) deceptively marketed the Mobile Money Code Products as risk-free, “automatic money systems” and “secret codes” that could generate hundreds to thousands of dollars each day for users. Based upon such false representations, consumers typically paid Defendants for an initial product purchase and up-sell/add-on products and services, ranging from $49 to several hundred dollars. Only after receipt of the Mobile Money Code Products did some consumers realize that they had purchased generic software applications and commonplace information for creating mobile-friendly websites, and nothing akin to “automatic money systems” or “secret codes.” Defendants made false and unsubstantiated earnings claims, misrepresented the nature of the Mobile Money Code Products, and falsely promised a 60-day, hassle-free, money back guarantee, thereby defrauding consumers of not less than $7 million.

The FTC, according to the complaint, filed the case against the Defendants “. . . under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b), and Section 7(a) of the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM Act”), 15 U.S.C.§ 7706(a), to obtain permanent injunctive relief, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief for Defendants’ acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the CAN-SPAM Act, 15 U.S.C. §§ 7701-7713.

Click here to view the FTC’s Consumer Information blog post regarding the alleged “get-rich-scheme.”

Kehoe Law Firm, P.C.