In a second lawsuit, filed under seal in June in New Jersey federal court, the FTC targeted an opportunity scheme that operated under the names Passive Scaling and FBA Machine, which allegedly cost customers around $16 million or more based on deceptive claims of guaranteed income through online storefronts that purportedly used AI-powered software.
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In a third lawsuit, filed in Pennsylvania federal court, the FTC accuses Ecommerce Empire Builders of “falsely claiming to help consumers build an ‘AI-powered Ecommerce Empire’ by participating in its training programs that can cost almost $2,000 or by buying a ‘done for you’ online storefront for tens of thousands of dollars,” the agency said.
As with the other two lawsuits, a judge has put the scheme under the control of a receiver, according to the FTC.
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In a regulatory complaint, the FTC targeted the company Rytr, which offers for sale an AI writing assistant, which among other things generated testimonials and customer reviews.
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The FTC said that the service “generated detailed reviews that contained specific, often material
details that had no relation to the user’s input, and these reviews almost certainly would be false for the users who copied them and published them online.”
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“In many cases, subscribers’ AI-generated reviews featured information that would deceive potential consumers who were using the reviews to make purchasing decisions,” the agency said.
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Rytr has agreed to settle the case through a consent order, which would bar the company from offering or selling services generating consumer reviews or testimonials.
So many potential Sellers believed this would work. I don’t understand how or why, but I hate that they were exploited by grifters and scammers like this. So I’m going to name and shame the trade names in the first 3 of these 4 FTC lawsuits (because the company in the fourth lawsuit, Rytr, was clear that it offered fake AI-generated customer reviews–an obvious no-no):
This business and its principal Peter Prusinowski (Peter Pru) has been shut down, all assets forfeited, and banned from future ecom guru activities.
In its complaint against the operation, the FTC alleged that EEB offered training programs that cost nearly $2,000, as well as “done for you” online storefronts that cost consumers as much as $35,000. The company promised consumers profits of $10,000 each month, but the complaint charged that these profits never materialized, and in many cases left consumers with significant losses. The complaint charged that Prusinowski used consumers’ money to enrich himself while failing to deliver on the scheme’s promises.
And what was the “done for you” business model? Ding ding ding if you guessed drop shipping!
In both their self-study and business opportunity programs, Defendants promote a “dropshipping” business model. In the dropshipping model, an online store is created and offers products without keeping them in stock. When a shopper purchases the product from the online store, the product is then ordered from a third-party and shipped directly to the shopper. Defendants instruct clients to find cheap products from Chinese dropshipping companies and then market and sell them to shoppers at a higher price through the stores Defendants build for their clients.
>The owner of a business opportunity scheme will be permanently banned from selling business opportunities in settlement of Federal Trade Commission allegations that he and his company deceptively guaranteed consumers income through online storefronts. Additionally, FBA Machine (formerly Passive Scaling) and its owner Bratislav Rozenfeld (also known as Steven Rozenfeld and Steven Rozen) will be required to turn over the contents of multiple financial accounts and any funds realized upon the sale of real estate property. The proceeds will be used for consumer redress.
So many potential Sellers believed this would work. I don’t understand how or why, but I hate that they were exploited by grifters and scammers like this. So I’m going to name and shame the trade names in the first 3 of these 4 FTC lawsuits (because the company in the fourth lawsuit, Rytr, was clear that it offered fake AI-generated customer reviews–an obvious no-no):
