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Friday, February 3, 2023

FTC Suit Requires Investment Advice Company WealthPress to Pay $1.7 Million for Deceiving Consumers

As a result of a Federal Trade Commission lawsuit, investment advice company WealthPress has agreed to a proposed court order that would require it to refund more than $1.2 million to consumers and pay a $500,000 civil penalty for deceiving consumers with outlandish and false claims about their services.

The case marks the first time that the FTC has collected civil penalties against a company that received the Notice of Penalty Offenses regarding money-making opportunities sent last October, and the first civil penalties for violations of the Restore Online Shoppers’ Confidence Act. (ROSCA)

“We’ve brought several cases this year against companies making false earnings claims, and we won’t hesitate to bring more,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “WealthPress is now paying the price for deceiving its customers and ignoring our Notice of Penalty Offenses on money-making claims.”

The FTC’s complaint against WealthPress and its owners, Roger Scott and Conor Lynch, alleges that the company used deceptive claims to sell consumers investment advising services—often claiming that the services’ recommendations were based on a specific “system” or “strategy” created by a purported expert. The company charged consumers hundreds or even thousands of dollars for access to these services.

WealthPress sold consumers on their services with false claims about the likelihood consumers would make money by following the recommended trades, when in many cases consumers lost substantial sums of money. One claim noted in the FTC’s complaint, from a promotional video:

  • “I’ll show you how you can potentially make $24,840 dollars—or more—every single week. With quick simple … trades that require zero market knowledge or trading experience.”

Other video ads included Scott implying that profits from the service’s recommendations enabled him to buy a home in Beverly Hills next door to Julia Roberts and Eddie Van Halen, and charter private planes to take him on vacation. Another supposed “expert” claimed his system allowed him “to do whatever I want, whenever I want,” that it has “granted me ultimate freedom,” and he’ll never have to work again.

The complaint alleges that the company’s videos made it seem as though the supposed “experts” whose trading strategies were being sold to consumers had made numerous successful trades. In fact, the trades were often not real, hadn’t been made by the “expert,” and were never sent to consumers.

In addition, the complaint alleges that the company’s disclaimers were often so far removed from the claims the company was making as to be useless to a consumer. Indeed, so many consumers requested refunds or credit card chargebacks that WealthPress was put on a list of problematic merchants by Mastercard.

The FTC’s complaint alleges that by making these and numerous other deceptive claims to consumers, they were in violation of the Notice of Penalty Offenses, which specifically noted claims like these as having been found unlawful by the FTC in prior cases, as well as the Restore Online Shoppers Confidence Act and the FTC Act.

The defendants in the case have agreed to a proposed court order that would require them to:

  • Surrender money: WealthPress, Scott and Lynch would turn over more than $1.2 million to the FTC for use in providing refunds to consumers harmed by their actions. In addition, WealthPress would pay a $500,000 civil penalty.
  • Back up any earnings claims: The defendants would be prohibited from making any claim about earnings without the evidence to back those claims up in writing.
  • Inform consumers about the case: The defendants would be required to give notice to consumers about the case, the court order, and what they should know before buying an investment-related service.

The Commission vote to authorize the staff to file the complaint and the proposed consent decree was 4-0. Commissioner Christine S. Wilson issued a statement. The FTC filed the complaint and proposed consent decree in U.S. District Court for the Middle District of Florida.

NOTE: The Commission authorizes the filing of 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. Consent decrees have the force of law when approved and signed by the District Court judge.

Official news published at https://www.ftc.gov/news-events/news/press-releases/2023/01/ftc-suit-requires-investment-advice-company-wealthpress-pay-17-million-deceiving-consumers

Images courtesy of PixaBay

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