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Online Marketers Accused of Swindling Consumers in $450M Scheme

The Federal Trade Commission has filed a complaint against an online operation that allegedly raked in more than $450 million from consumers in the United States and overseas by luring them into “free“ or “risk-free“ offers, and then charging them for products and services they did not agree to buy.

“The defendants used the lure of a “˜free' offer to open an illegal pipeline to consumers' credit card and bank accounts,“ said David C. Vladeck, director of the FTC's Bureau of Consumer Protection. ““˜Free' must really mean “˜free' no matter where the offer is made.“

FTC collaborated with Canadian law enforcement, including the Alberta Partnership Against Cross Border Fraud, in investigating this global scheme that impacted consumers round the world, including Australia and New Zealand.

“Internet fraud is a global problem that requires an international enforcement response,“ said Lisa Campbell, deputy commissioner of competition for the Competition Bureau of Canada. “International cooperation ensures that fraudsters can't hide behind borders.“

The FTC complaint alleges Jesse Willms and 10 companies he controls used deceptive tactics in offering “free trials“ for a wide array of products and services, including acai berry weight-loss pills, teeth whiteners, work-at-home scheme, free credit reports and penny auctions.

When consumers signed up for these with bogus “free“ or “risk-free“ trial offers, they were often charged a monthly recurring fee, typically $79.95. Although the defendants offered a money-back guarantee, consumers were often unsuccessful in canceling the charges or getting refunds, and the process involved time-consuming phone calls and other steps that made the deals far from risk-free, the complaint said.

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