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FTC Action Stops Business Opportunity Scheme That Promised Its AI-Boosted Tools Would Power High Earnings Through Online Stores

As a result of a Federal Trade Commission lawsuit, a federal court has temporarily shut down  a business opportunity scheme that lured consumers to invest $22 million in online stores, using unfounded claims about income and profits. The operators of Automators also claimed to use artificial intelligence to ensure success and profitability for consumers who agreed to invest with Automators.

In addition to offering consumers high return as “passive investors” in profitable e-stores, Automators, which previously used the names Empire and Onyx Distribution, also offered to teach consumers how to successfully set up and manage e-stores themselves using a “proven system” and the powers of artificial intelligence.

“The defendants preyed on consumers looking to provide for their families with promises of high returns and the use of AI to power such returns,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Their lies caused consumers to lose tens of thousands of dollars, with many losing their life savings. The FTC is working to hold defendants accountable and to secure redress for their victims.”

The FTC’s complaint  against defendants Roman Cresto, John Cresto, and Andrew Chapman, through their companies Automators AI, Empire Ecommerce and Onyx Distribution, claims that the vast majority of defendants’ clients did not make the promised earnings or even recoup their investment.  Instead, most clients lost significant amounts and Amazon and Walmart have routinely suspended or terminated the stores that defendants operated for repeated policy violations.

The complaint charges that the Crestos and Chapman deceived consumers about the scheme in numerous ways, including by making false claims about:

  • Their own background: The Crestos and Chapman falsely claim to have a proven record of helping numerous consumers make money in online stores. In one video, Roman Cresto falsely claims he is a “leading 8-figure Amazon entrepreneur and creator of industry leading wealth-generation systems.”
  • Lavish promises of success: The scheme relied on numerous false or baseless projections and stories of supposed success, including “$4k-$6k consistently monthly net profit,” and “$200k in one month and 100% ROI (return on investment) in 8 months.”
  • Endorsements and affiliate marketing: The complaint cites an example in which an affiliate marketer of Automator made claims on social media about his success with Automators, pointing to sales and profit numbers that the Crestos and Chapman knew were false. In truth, the affiliate marketer’s e-store was losing money and got shut down.
  • Artificial intelligence: Defendants claimed to use “AI machine learning” to maximize revenues, such as “We’ve recently discovered how to use AI tools for our 1 on 1 Amazon coaching program, helping students achieve over $10,000/month in sales!”
  • Venture capital backing: Defendants claimed that Empire was backed by “venture capital,” when in fact no money was ever invested into Empire by a venture capital firm.

Numerous consumers complained to defendants about their losses and, the complaint charges, instead of being offered refunds they were offered new online storefronts on different platforms. In addition, defendants pressured such consumers to sign non-disparagement agreements to prevent them from posting reviews about defendants and their services.

The complaint charges that the defendants violated the FTC Act, the Business Opportunity Rule, and the Consumer Review Fairness Act, and it asks the court to permanently shut down the company’s operations.

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 Southern District of California.  The court entered the temporary restraining order against the defendants on August 11, 2023.

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 Colleen Robbins and Christopher Brown of the FTC’s Bureau of Consumer Protection.

Official news published at https://www.ftc.gov/news-events/news/press-releases/2023/08/ftc-action-stops-business-opportunity-scheme-promised-its-ai-boosted-tools-would-power-high-earnings

Images courtesy of PixaBay

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