The Federal Trade Commission today announced it has finalized an updated version of its Endorsement Guides, which provide agency guidance to businesses and others to ensure that advertising using reviews or endorsements is truthful.

The Endorsement Guides advise businesses on what practices may be unfair or deceptive in violation of the FTC Act, and they were last revised in 2009. In May 2022, the FTC announced it was seeking public comments on proposed updates to the Guides to reflect the ways advertisers now reach consumers to promote products and services, including through social media and reviews.

The final revised guides announced today take the public comments received into consideration and make a number of revisions including: 1) articulating a new principle regarding procuring, suppressing, boosting, organizing, publishing, upvoting, downvoting, or editing consumer reviews so as to distort what consumers think of a product; 2) addressing incentivized reviews, reviews by employees, and fake negative reviews of a competitor; 3) adding a definition of “clear and conspicuous” and saying that a platform’s built-in disclosure tool might not be an adequate disclosure; 4) changing the definition of “endorsements” to clarify the extent to which it includes fake reviews, virtual influencers, and tags in social media; 5) better explaining the potential liability of advertisers, endorsers, and intermediaries; and 6) highlighting that child-directed advertising is of special concern.

The FTC also issued an updated version of a guidance document that answers frequently asked questions about the Endorsement Guides. Primarily addressing when and how to disclose material connections, the document is entitled, FTC’s Endorsement Guides: What People are Asking. Last revised in 2017, the new version includes 40 additional questions and updates dozens of other answers. It adds specific guidance for influencers on when and how to disclose material connections across different kinds of platforms, and it gives FTC staff’s views about brand monitoring of influencers and platform disclosure tools. The new version also includes more guidance relating to online reviews, addressing issues such as incentives and treatment of negative feedback.

The Commission vote approving publication of the final revised Endorsement Guides was 3-0. The primary staff member on this matter is Michael Ostheimer in the FTC’s Bureau of Consumer Protection.

As a result of a Federal Trade Commission lawsuit, Publishers Clearing House (PCH) has agreed to a proposed court order that will require it to pay $18.5 million to consumers who spent money and wasted their time, and make substantial changes to how it conducts business online.

In a complaint against PCH, the FTC charges that the company uses “dark patterns” to mislead consumers about how to enter the company’s well-known sweepstakes drawings and made them believe that a purchase is necessary to win or would increase their chances of winning, and that their sweepstakes entries are incomplete even when they are not. The FTC also charges that the company has added surprise shipping and handling fees to the costs of products, misrepresented that ordering is “risk free,” used deceptive emails as part of its marketing campaign, and misrepresented its policies on selling users’ personal data to third parties prior to January 2019.  Many consumers affected by these practices are older and lower-income.

“Today’s action requiring PCH to overhaul its user interface, compensate consumers for lost time, and stop surprise fees should send a clear message that manipulative design techniques are a no-go under our laws,” said Samuel Levine. “This is our second dark pattern lawsuit over the last week. Firms that continue to deploy deceptive design techniques are on notice.”

The FTC charges that PCH used dark patterns—manipulative phrasing and website design—to  convince consumers that they needed to buy a product of some kind to enter the company’s sweepstakes or increase their chances of winning.

According to the complaint, the deception starts from the company’s homepage, where consumers complete an “Official Entry Form” with a large button with phrasing like “WIN IT!” or “Win for Life!” This form, however, does not enter them in the sweepstakes.

Instead, the complaint charges, consumers enter an arduous journey through pages of advertisements and sales pitches before they can actually enter the sweepstakes. The advertisements allegedly use tricky wording that conflates ordering and entering to lead consumers to believe they must make a purchase to enter, or that purchasing will increase their chances of winning a sweepstakes, neither of which is true.

Once consumers have navigated through the pages to reach the actual entry form and complete their entry, though, the complaint charges that PCH begins sending emails making them believe that they must complete a “final” or “last” step to complete their entry.

The FTC alleges that while the emails often make it seem as though consumers must immediately click to ensure they can enter the sweepstakes, when consumers click on the links in these emails to finalize their entry, they instead re-enter the cycle of pages and pages of dark patterns and deceptive sales pitches. The pages they land on have all-caps messages like “$1,000 per week for life AT STAKE!” and “JUST ONE ORDER IS ALL IT TAKES.”

The FTC’s complaint charges that where PCH included disclaimers or clarifying information on shopping pages, it was in small, light font, below the “call to action” buttons, and overlooked by consumers.

Beyond the company’s deceptive cycle of emails and webpages, though, the FTC’s complaint charges that PCH employed other unlawful practices, including:

• Failing to disclose the true price of goods: The complaint charges that PCH hid from consumers who made purchases on their websites shipping and handling costs – which averaged over 40% of the product costs – until well after the purchase was complete and it was too late for consumers to stop a shipment.
• Deceiving consumers about “no risk” purchases: The complaint charges that PCH promised consumers that purchases from their site were “risk free,” but failed to inform consumers that they would be responsible for paying the return shipping on unwanted products.
• Using misleading email subjects: The complaint charges that PCH used email subject lines that were deceptive, with subject lines like “High Priority Doc. W-34 Issued” or “W-19 Notice – Step 3 of 3 INCOMPLETE,” leading consumers to believe the email was related to a tax form or official requirement. But the documents referred to in these subject lines were complete fictions and nothing in the emails themselves even referred to these forms.  Numerous consumers clicked on these emails and purchased products or lost valuable time clicking through website pages.
• Having misleading statements in its Privacy Policy: The complaint charges that PCH had a statement in the middle of its privacy policy prior to January 2019, which stated that it did “not rent, license, or sell” consumer data to third parties. The complaint charges that, in fact, PCH has shared consumer data with other marketers, advertisers, and publishing companies to target consumers with third-party ads.

PCH agreed to settle the FTC’s charges that it violated the FTC Act and CAN-SPAM Act, and a proposed court order would require the company to turn over $18.5 million to the FTC to be used to refund consumers and make a number of key changes to its email and internet operations:

• Stop deceiving consumers about purchases and sweepstakes: PCH would be prohibited from implying that that a purchase is required to enter a sweepstakes or that a purchase will increase the chances of winning.
• Separate sweepstakes from sales: PCH would be required to clearly distinguish on its entry and order forms information related to entering and ordering.
• Make clear disclosures: PCH would be required to make clear, conspicuous, and unavoidable disclosures on every shopping page that a purchase is not required to enter a sweepstakes and that purchasing will not help a consumer win, and include a link that will take consumers directly to a page where they can enter the sweepstakes without any sales messaging.  And in many cases, the company would be required to obtain a consumer’s express acknowledgement using a checkbox or similar means that ordering will not help them win and will not improve their chances of winning.
• Stopping Surprise Fees: PCH would be required to clearly disclose the full price of any item it lists for sale, along with any additional fees for shipping and handling before a consumer commits to purchasing the item. PCH must also clearly disclose cancellation and return policies.
• Stop deceptive emails: PCH would be prohibited from sending emails with deceptive subject lines and other conduct that violates the CAN-SPAM Act.
• Destroy consumer data: PCH would be required to delete all consumer data that was collected prior to January 1, 2019. PCH would also be prohibited from misrepresenting the extent to which PCH collects and shares consumer data.
• Preserve records: To help prevent further use of dark patterns, the order requires PCH to preserve records of any market, behavioral, or psychological research, or user, customer, or usability testing, including any A/B or multivariate testing, copy testing, surveys, focus groups, interviews, clickstream analysis, eye or mouse tracking studies, or analyses regarding consumers’ impressions of any ads, marketing, or promotions of sweepstakes or products.

The Commission vote authorizing the staff to file the complaint and stipulated final order was 3-0. Chair Khan and Commissioners Slaughter and Bedoya issued a separate statement. The FTC filed the complaint and final order/injunction in the U.S. District Court for the Eastern District of New York.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final injunctions/orders have the force of law when approved and signed by the District Court judge.

The staff attorneys on this matter were Miry Kim, Elsie Kappler and Josh Doan of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission is taking action against a group of Massachusetts- and New Hampshire-based clothing accessories companies, along with their owner, Thomas Bates, for falsely claiming that certain company products were manufactured in the U.S. The FTC’s proposed order would stop the companies and Bates from making deceptive claims about products being “Made in USA” and require them to pay a monetary judgment.

“‘Made in USA’ means what it says,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Falsely labeling products as ‘Made in USA’ hurts consumers and competition, and the FTC will continue to aggressively enforce the law to stop deceptive claims and hold violators accountable.”

According to the FTC’s complaint, the companies—Chaucer Accessories, Bates Accessories, and Bates Retail Group—have frequently advertised their products as being “Made in USA” or “Hand Crafted in USA” in their marketing and sales materials. Additionally, the complaint alleges, the companies sold certain belts labeled as “Made in USA from Global Materials.”

In spite of those claims, the complaint charges that the companies sold certain products that were wholly imported or incorporated significant imported components. The complaint also charges that belts labeled “Made in USA from Global Materials” consisted of belt straps imported from Taiwan with buckles attached in the U.S.

The FTC’s order against the companies and Bates, which the respondents have agreed to, includes a number of requirements about the claims they make:

• Restriction on unqualified claims: the companies and Bates will be prohibited from making unqualified U.S.-origin claims for any product, unless it can show that the product’s final assembly or processing—and all significant processing—takes place in the U.S., and that all or virtually all ingredients or components of the product are made and sourced in the U.S.
• Requirement for qualified claims: the companies and Bates are required to include in any qualified Made in USA claims a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing.
• Requirement for assembly claims: the companies and Bates must also ensure, when claiming a product is assembled in the U.S., that it is last substantially transformed in the U.S., its principal assembly takes place in the U.S., and U.S. assembly operations are substantial.
• Monetary judgment: The order includes a monetary judgment of $191,481, which the companies and Bates will be required to surrender to the FTC.

The FTC is committed to ensuring that “Made in USA” claims are truthful. The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides guidance on making non-deceptive “Made in USA” claims. In addition, the FTC’s Made in USA Labeling Rule went into effect on Aug. 13, 2021. Companies that violate the Rule from that date forward may be subject to civil penalties.

The Commission vote to issue the administrative complaint and to accept the consent agreement was 3-0. The lead staff attorney on this matter was Julia Solomon Ensor in the Bureau of Consumer Protection.

The Federal Trade Commission filed a friend-of-the-court (amicus) brief in the U.S. Court of Appeals for the Seventh Circuit challenging a district court ruling that invalidated a key anti-discrimination rule in the Equal Credit Opportunity Act (ECOA).

The case, CFPB v. Townstone Financial and Barry Sturner, relates to a Chicago-based mortgage lender and its owner, which the CFPB alleged violated Regulation B, the rule that implements ECOA. The CFPB alleged that the defendants took steps to discourage Black consumers from applying for loans, violating Regulation B’s anti-discouragement rule. The district court ruled that the anti-discouragement provision was invalid and that ECOA protects only those consumers who have already applied for credit.

In its brief, the FTC argues that the district court’s ruling was incorrect. The Commission’s brief notes that the anti-discouragement rule—which has stood for nearly 50 years—is authorized by the plain language of ECOA, which mandates that regulators further ECOA’s “purpose” and prevent its “evasion.”

The FTC also argues that the district court’s ruling would have “profoundly negative consequences” for consumers, emboldening discriminatory lenders to openly discourage consumers from applying for loans. For example, the brief points to the possibility that a lender could display a “Whites Only” sign or turn away Black consumers as they walk in the door. The brief notes that the FTC receives thousands of complaints from consumers each year related to discriminatory lending practices.

The Commission vote approving the filing of the amicus brief was 3-0.

The Federal Trade Commission is taking action against Amazon.com, Inc. for its years-long effort to enroll consumers into its Prime program without their consent while knowingly making it difficult for consumers to cancel their subscriptions to Prime.

In a complaint filed today, the FTC charges that Amazon has knowingly duped millions of consumers into unknowingly enrolling in Amazon Prime. Specifically, Amazon used manipulative, coercive, or deceptive user-interface designs known as “dark patterns” to trick consumers into enrolling in automatically-renewing Prime subscriptions.

Amazon also knowingly complicated the cancellation process for Prime subscribers who sought to end their membership. The primary purpose of its Prime cancellation process was not to enable subscribers to cancel, but to stop them. Amazon leadership slowed or rejected changes that would’ve made it easier for users to cancel Prime because those changes adversely affected Amazon’s bottom line. 

“Amazon tricked and trapped people into recurring subscriptions without their consent, not only frustrating users but also costing them significant money,” said FTC Chair Lina M. Khan. “These manipulative tactics harm consumers and law-abiding businesses alike. The FTC will continue to vigorously protect Americans from “dark patterns” and other unfair or deceptive practices in digital markets.”

For now, the FTC’s complaint is significantly redacted, though the FTC has told the Court it does not find the need for ongoing secrecy compelling. Nevertheless, the complaint contains a number of allegations related to the company’s decision not to make changes to prevent nonconsensual enrollment in Prime and the difficulties consumers faced in attempting to unsubscribe from the service. Specifically, the complaint charges that Amazon used so-called “dark patterns” to cause consumers to enroll in Prime without their consent, in violation of the FTC Act, and the Restore Online Shoppers’ Confidence Act.

During Amazon’s online checkout process, consumers were faced with numerous opportunities to subscribe to Amazon Prime at $14.99/month. In many cases, the option to purchase items on Amazon without subscribing to Prime was more difficult for consumers to locate. In some cases, the button presented to consumers to complete their transaction did not clearly state that in choosing that option they were also agreeing to join Prime for a recurring subscription.

The FTC charges that Amazon put in place a cancellation process designed to deter consumers from successfully unsubscribing from Prime. Previous reporting about the process in the media has noted that Amazon used the term “Iliad” to describe the process, which the reporting cites as an allusion to Homer’s epic poem set over twenty-four books and nearly 16,000 lines about the decade-long Trojan War.

Consumers who attempted to cancel Prime were faced with multiple steps to actually accomplish the task of cancelling, according to the complaint. Consumers had to first locate the cancellation flow, which Amazon made difficult. Once they located the cancellation flow, they were redirected to multiple pages that presented several offers to continue the subscription at a discounted price, to simply turn off the auto-renew feature, or to decide not to cancel. Only after clicking through these pages could consumers finally cancel the service.

The complaint notes that Amazon was aware of consumers being nonconsensually enrolled and the complex and confusing process to cancel Prime that the company’s executives failed to take any meaningful steps to address the issues until they were aware of the FTC investigation. In the complaint, the FTC also alleges that Amazon attempted to delay and hinder the Commission’s investigation in multiple instances.

The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the Western District of Washington.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The staff attorneys on this matter are Jonathan Cohen, Olivia Jerjian, Max Nardini, and Evan Mendelson of the FTC’s Bureau of Consumer Protection.

The staff of the Federal Trade Commission’s Bureau of Consumer Protection filed a comment today with the U.S. Department of Education regarding the U.S. Department of Education’s proposed regulations to protect postsecondary students in the education marketplace.

In the comment FTC staff stresses its support of the Education Department’s proposed regulations, noting that prohibiting misrepresentations and deceptive recruitment practices would help curb the very type of harm that the FTC has encountered in its cases.

“Cracking down on predatory schools requires a whole-of-government approach, and we welcome the Department of Education’s renewed efforts to protect students,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We will continue to work closely with our partners across the government to ensure fairness for student borrowers and accountability for those who cheat them.”

Staff’s comment also notes that, given the importance and expense of education, the FTC has prioritized protecting consumers from unfair and deceptive practices in this space. It highlights the Commission’s history of enforcement, including cases involving deceptive claims by for-profit schools, deceptive lead generation practices, and bogus student loan debt relief services. The comment endorses the Education Department’s effort to protect consumers from the harms caused by such practices in the education marketplace.

The Commission vote authorizing staff to file the comment was 3-0.

The Federal Trade Commission has sent letters to 50 online marketplaces nationwide notifying them about their obligation to comply with the new Integrity, Notification, and Fairness in Online Retail Marketplaces for Consumers Act – or the INFORM Consumers Act – as soon as it takes effect on June 27.

“The INFORM Consumers Act requires online marketplaces to protect consumers from counterfeit, unsafe, and stolen goods by verifying their high-volume third-party sellers’ identities, and making it easier for consumers to report suspicious marketplace activity,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The Commission will enforce the Act to the fullest extent possible and will collaborate with our state partners to hold online marketplaces accountable.”

The letters announced today enclose a copy of the act, highlight the responsibilities the act places on online marketplaces, and urge that businesses carefully review the statute and take all steps necessary to fully comply by June 27. In the letters, FTC staff also urge online marketplaces to communicate with their third-party sellers about the information the act requires to be collected, verified, and disclosed.

Finally, the letters emphasize that a violation of the act may be treated as a violation of an FTC rule, and thus noncompliant online marketplaces may face enforcement that could result in civil penalties of $50,120 per violation. The letters are informational and the FTC is not publicly releasing the names of the recipients.

Understanding Compliance Obligations

As part of the FTC’s effort to fully inform the public about the provisions of the INFORM Consumers Act and to put businesses on notice of their obligations as of June 27, it has developed business education materials that are available on the agency’s website. “Informing Businesses About the INFORM Consumers Act,” summarizes how online marketplaces can comply with the act when it goes into effect at the end of the month with links to the act itself.

The lead staff attorneys on this matter are Carl Settlemyer and Tiffany Woo in the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission charged that the genetic testing firm 1Health.io left sensitive genetic and health data unsecured, deceived consumers about their ability to get their data deleted, and changed its privacy policy retroactively without adequately notifying and obtaining consent from consumers whose data the company had already collected.

As part of a proposed settlement with the FTC, 1Health will be required to strengthen protections for genetic information and instruct third-party contract laboratories to destroy all consumer DNA samples that have been retained for more than 180 days.

“Companies that try to change the rules of the game by re-writing their privacy policy are on notice,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC Act prohibits companies from unilaterally applying material privacy policy changes to previously collected data.”

California-based 1Health.io Inc., also known as Vitagene, Inc. before changing its name in October 2020, has sold DNA health test kits and used DNA test results, along with information consumers supplied, to provide the consumers with reports about their health, wellness, and ancestry as part of product packages that cost between $29 and $259. The health reports include personal information about a consumer’s health and genetics, such as their level of risk for developing health problems based on their genotype data.

In its first case focused on both the privacy and security of genetic information, the FTC said in a complaint that Vitagene deceived consumers about its privacy and security practices. On its website, the company prominently touted its privacy and security, claiming to offer “Rock-solid security” and promised users that it “collects, processes, and stores your personal information in a responsible, transparent and secure environment.” From 2017-2020, the company also said it would only share consumers’ sensitive health and other personal information in limited circumstances such as providing information to a customer’s doctor or with the lab doing genetic testing.

Vitagene also claimed on its website that it did not store DNA results with a consumer’s name or other identifying information; that consumers could delete their personal information at any time and that such data would be removed from all of the company’s servers; and that it would destroy DNA saliva samples shortly after they have been analyzed.

But the FTC said Vitagene failed to keep these promises. Beginning in 2016, the company did not implement a policy to ensure that the lab that analyzed the DNA samples had a policy in place to destroy them. And in 2020, the company changed its privacy policy by retroactively expanding the types of third parties that it may share consumers’ data with to include, for example, supermarket chains and nutrition and supplement manufacturers—without notifying consumers who had previously shared personal data with the company or obtaining their consent to share such sensitive information, according to the complaint.

In addition, Vitagene’s security failures put consumers’ sensitive data at risk, the FTC said. Vitagene stored in publicly accessible “buckets” on Amazon Web Service’s (AWS) cloud storage service nearly 2,400 health reports about consumers and raw genetic data of at least 227 consumers sometimes accompanied by a first name—despite promising users its security practices would exceed industry-standard security practices. Vitagene did not encrypt that data, restrict access to it, log or monitor access to it, or inventory it to help ensure its security, according to the complaint.

Over a two-year period, Vitagene was warned at least three times that the company was storing unencrypted health, genetic, and other personal information in publicly accessible data buckets, according to the complaint. After a security researcher contacted the company in June 2019, the company finally investigated the issue and notified its customers whose data it had exposed publicly.

As part of the proposed order, 1Health.io, which Vitagene is now known as, must pay $75,000, which the FTC intends to use for consumer refunds. In addition to the DNA deletion requirement, under the proposed order the company:

• Will be prohibited from sharing health data with third parties—including information provided by consumers before and after its 2020 privacy policy change—without obtaining consumers’ affirmative express consent;
• Must ensure any company that purchases all or parts of 1Health’s business agrees by contract to adhere to provisions of the order;
• Must notify the FTC about incidents of unauthorized disclosure of consumers’ personal health data; and
• Must implement a comprehensive information security program addressing the security failures outlined in the complaint.

The Commission voted 3-0 to issue the proposed administrative complaint and to accept the consent agreement with the company.

The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $50,120.

This action follows on a biometric policy statement the Commission issued last month that warned against the misuse of biometric information that could harm consumers.

The lead FTC attorneys on this matter are James Trilling and Elisa Jillson from the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission is sending payments totaling more than $3.3 million to consumers who were harmed by Arete Financial Group, a student loan debt relief operation that tricked consumers into making illegal upfront payments by pretending to be affiliated with the U.S. Department of Education and falsely promising student loan debt relief. In reality, the scammers pocketed customers’ payments and never provided the promised relief.

The FTC is sending checks to more than 37,800 consumers. Recipients should cash their checks within 90 days, as indicated on the check. Consumers who have questions about their payment should contact the refund administrator, JND Legal Administration, at 855-678-0558, or visit the FTC website to view frequently asked questions about the refund process. The Commission never requires people to pay money or provide account information to get a refund.

In November 2019, the FTC alleged Arete Financial and several related companies pretended to be affiliated with the U.S. Department of Education and used radio, television, online ads, and telemarketing calls to promise to enroll consumers in student loan forgiveness, consolidation, and repayment programs. Defendants promised consumers that in exchange for the payment of upfront fees and subsequent monthly fees, they would reduce or eliminate consumers’ student loan balances. However, Arete Financial regularly failed to reduce or eliminate consumers’ loan balances or monthly payments.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of refunds in FTC cases. In 2022, Commission actions led to more than $392 million in refunds to consumers across the country.
 

In response to an action filed by the Federal Trade Commission, a federal court has entered a temporary restraining order against the operators of a Florida-based business opportunity and real estate investment training scheme known as Ganadores Online and Ganadores Inversiones Bienes Raíces. The FTC charges that the companies behind Ganadores, their owners, and key employees targeted Spanish-speaking consumers with brazen and false money-making pitches for online businesses and real estate investments.

Among other requirements, the order prohibits the defendants from making unsupported marketing claims, violating the Business Opportunity Rule and Cooling Off Rule, and from interfering with consumers’ ability to review Ganadores and its products. The court has appointed a temporary monitor over the Ganadores companies, instructed the companies to preserve their assets, and frozen the assets of their owners and principals.

According to the FTC’s complaint, the Ganadores scheme has targeted Spanish-speaking consumers using false or unfounded promises that its “infallible system” can help consumers find financial freedom, replace their day jobs, and give their families financial independence.

“This scheme made grand promises of life-changing returns in Spanish, but hid key terms in English-language contracts that many consumers could not read.” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “They took millions of dollars from Spanish-speaking consumers seeking to better their lives and provide for their families, and it’s time to hold them accountable for the significant injury they have caused.”

The FTC alleges that individuals in leadership positions with Ganadores—Richard Alvarez, Robert Shemin, and Bryce Chamberlain—previously participated in a similar scheme, Zurixx, that was sued by the FTC in 2019. The FTC also alleges that Richard and Sara Alvarez took part in FBA Stores, another similar scheme sued by the FTC in 2018.

The structure of the Ganadores operation closely mirrors those prior schemes.  For example, according to the FTC’s complaint, Ganadores starts with social media and other online advertising touting free “seminars” coming to the viewer’s area where Richard Alvarez and Shemin will share supposed strategies to make big money in real estate.

In fact, the FTC charges, these seminars are nothing but a sales pitch for the company’s three-day workshops, which cost consumers hundreds of dollars to attend. At the seminars, company salespeople claim that those who attend the workshops will learn everything they need to know to make money either running online businesses or investing in real estate.  

The workshops, however, are just another step in a sales funnel that points attendees to pay more than $28,000 for “by the hand” mentoring services that will supposedly result in purchasers making six-figure incomes.

While consumers are promised one-on-one mentoring by experts in online sales or real estate, six-figure incomes, and access to special money-making software, the FTC charges that the “mentoring” rarely delivers on Ganadores’ promises. Customers often interact with mentors in large group calls, are told to use public websites like Google or Zillow in lieu of the company’s often-faulty software, and they do not earn back the money they paid for the mentoring, let alone earn six-figure incomes.

The FTC charges that when consumers realize that Ganadores’ services are not what they promised and seek refunds, the defendants unfairly rely on a clause buried in the sales paperwork that gives consumers only three days to seek a refund. The complaint also charges that while the company’s marketing and sales are conducted largely in Spanish, the company’s contracts with their disclosures are often provided in English, despite the fact that many of their customers have limited to no English fluency.

According to the FTC, Ganadores and its principals, along with the companies behind the scheme (Vision Online, Inc., Ganadores IBR, Inc., Vision Online Digital, LLC, Vision Online English, LLC, Vision Online Latino, LLC) have pocketed millions of dollars from consumers while violating numerous laws, including the FTC Act, the Business Opportunity Rule, the Consumer Review Fairness Act, and the FTC’s Cooling-Off Rule.

The FTC is asking the court to permanently stop Ganadores’ unlawful practices and return funds to consumers injured by the Ganadores scheme.

The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The FTC staff attorneys on this matter are J. Ronald Brooke, Jr. and Virginia G. Rosa of the FTC’s Bureau of Consumer Protection. The FTC would like to thank the Orlando Police Department for their assistance in the matter.