Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Operators of get-rich-quick scheme settle FTC allegations, (Jun 15, 2018)

By Peter Reap, J.D., LL.M.

Operators of a get-rich-quick scheme have agreed to a permanent ban on marketing or selling certain types of software as part of settlements with the FTC over allegations that they deceived consumers by falsely claiming they could earn big money working online by using products marketed as "secret codes," the agency announced yesterday. Collectively, the defendants will pay a total of $698,500, in order to suspend the agreed-upon $7 million judgment (FTC v. Montano, FTC File No. 142 3170).

In its complaint, the FTC alleged that Ronnie Montano, Hyong Su Kim (also known as Jimmy Kim), Martin Schranz, and their related companies (Montano Enterprises LLC, JK Marketing LLC and GSD Master AG) 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.

The agency alleged 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.

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 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, according to the charges.

As part of settlements with the FTC, defendants Ronnie Montano, Hyong Su Kim, Martin Schranz and their related companies have agreed to a $7 million judgment that will be suspended upon payment of a total of $698,500, which will be used to refund consumers defrauded by the defendants’ scheme. The defendants also are prohibited from marketing or selling money-making software, from making misrepresentations in the promotion, marketing, or sale of any good or service, from violating the CAN-SPAM Act, and from using any consumer information they collected.

News: ConsumerProtection FederalTradeCommissionNews