Amazon FBA Management Ecommerce Scams

This year, the Federal Trade Commission has prosecuted several scams that sell Amazon ecommerce store management services. The fraudsters typically tell their victims that it is possible to make hundreds of thousands of dollars in passive income by owning successful online Amazon stores and stocking them with inventory. The victims then pay the fraudsters a large sum of money — often over $30,000 — to set up and manage an Amazon store and give the profits (or a share of the profits) to the victim. The fraudsters, however, never provide meaningful store management services to the victim; they instead pocket most of the money the victim sends them.

The Federal Trade Commission has brought several lawsuits against other entities allegedly perpetrating identical scams this year, including: (1) FTC v. Automators LLC, Case No. 3:23-cv-01444 (S.D. Cal. 2023); (2) FTC v. Empire Holdings Group, LLC, Case No. 24-cv-4949 (E.D. Penn. 2024); (3) FTC v. THEFBAMACHINE Inc., Case No. 24-cv-06635 (D.N.J. 2024); (4) FTC v. Ascend Capventures Inc., Case No. 24-cv-07660 (C.D. Cal. 2024); (5) FTC v. Ecom Genie, Case No. 24-cv-23976 (S.D. Fla. 2024). Below, we briefly summarize the specific facts of each of those cases.

FTC v. Automators LLC (2023)

In August 2023, the Federal Trade Commission (FTC) filed a lawsuit against Automators LLC and associated entities, alleging they operated a deceptive business opportunity scheme. The defendants promised consumers substantial returns by investing in online stores purportedly enhanced by artificial intelligence (AI). They claimed that their AI tools would ensure success and profitability for investors. However, the FTC contended that these promises were unfounded, leading consumers to invest approximately $22 million without realizing the advertised profits.

In February 2024, the owners of Automators LLC agreed to a settlement with the FTC. As part of the agreement, they surrendered millions in assets to provide refunds to affected consumers. Additionally, the businesses and two of their owners were permanently banned from selling business opportunities or coaching programs related to e-commerce stores.

FTC v. Empire Holdings Group (2024)

In September 2024, the Federal Trade Commission (FTC) filed a lawsuit against Empire Holdings Group LLC, operating as Ecommerce Empire Builders and Storefunnels.net, along with its CEO, Peter Prusinowski. The FTC alleged that the defendants engaged in deceptive practices by marketing business opportunities that falsely promised consumers substantial income through “AI-powered” e-commerce stores. Consumers were encouraged to invest in training programs costing nearly $2,000 or to purchase “done-for-you” online storefronts for tens of thousands of dollars, with assurances of potential earnings reaching millions. However, the FTC contended that these profits rarely materialized, leaving consumers with little to no return on their investments.

The FTC’s complaint also highlighted that the defendants failed to provide required disclosure documents, included non-disparagement clauses in their contracts to suppress negative reviews, and challenged consumers who sought refunds. These actions were alleged to violate the FTC Act, the Business Opportunity Rule, and the Consumer Review Fairness Act.

As a result of the FTC’s action, a federal court issued a temporary restraining order halting the scheme and appointed a receiver to take control of the business operations. The case remains pending, with the FTC seeking a permanent injunction and monetary relief to prevent further consumer harm.

FTC v. THEFBAMACHINE Inc. (2024)

In June 2024, the Federal Trade Commission (FTC) initiated legal action against TheFBAMachine Inc., Passive Scaling Inc., and associated entities, alleging that they operated a deceptive business opportunity scheme. The defendants purportedly promised consumers guaranteed income through online storefronts enhanced by artificial intelligence (AI) tools. They claimed that their AI-powered software would ensure substantial passive income for investors. However, the FTC contended that these promises were unfounded, leading consumers to invest significant sums without realizing the advertised profits.

The FTC’s complaint highlighted that the defendants made false or unsubstantiated earnings claims and failed to provide required disclosure documents. Additionally, they included non-disparagement clauses in their contracts to suppress negative reviews and challenged consumers who sought refunds. These actions were alleged to violate the FTC Act, the Business Opportunity Rule, and the Consumer Review Fairness Act.

As a result of the FTC’s action, a federal court issued a temporary restraining order halting the scheme and appointed a receiver to take control of the business operations. The case remains pending, with the FTC seeking a permanent injunction and monetary relief to prevent further consumer harm.

FTC v. Ascend Capventures Inc (2024)

In September 2024, the Federal Trade Commission (FTC) filed a lawsuit against Ascend Capventures Inc., also operating under names such as Ascend Ecom, Ascend Ecommerce, ACV Partners, and ACV Nexus. The FTC alleged that the company, led by William Basta and Kenneth Leung, engaged in deceptive practices by promoting a business opportunity scheme that falsely promised consumers substantial passive income through AI-powered online stores on platforms like Amazon, Walmart, Etsy, and TikTok. Consumers were charged tens of thousands of dollars to start these online stores and were required to invest additional funds in inventory. Despite assurances of significant earnings, most consumers did not realize the promised profits and were left with considerable financial losses.

The FTC’s complaint also highlighted that Ascend Capventures failed to provide required disclosure documents, included non-disparagement clauses in their contracts to suppress negative reviews, and challenged consumers who sought refunds. These actions were alleged to violate the FTC Act, the Business Opportunity Rule, and the Consumer Review Fairness Act.

As a result of the FTC’s action, a federal court issued a temporary restraining order halting the scheme and appointed a receiver to take control of the business operations. The case remains pending, with the FTC seeking a permanent injunction and monetary relief to prevent further consumer harm.

FTC v. Ecom Genie (2024)

In October 2024, the Federal Trade Commission (FTC) filed a lawsuit against Ecom Genie Consulting LLC and associated entities, alleging they operated a deceptive business opportunity scheme. The defendants promised consumers substantial profits by selling goods through online platforms like Amazon and Walmart, charging tens of thousands of dollars to start these e-commerce businesses. However, the FTC contended that the promised earnings rarely materialized, leading most consumers to lose significant amounts of money.

The scheme operated under various names, including Lunar Capital Ventures, Ecom Genie, and Profitable Automation, and was previously known as Valiant Consultants Inc. The FTC’s complaint highlighted that the operators used enticing but bogus claims to lure consumers, failing to provide the required disclosures mandated by the FTC’s Business Opportunity Rule.

As a result of the FTC’s action, a federal court temporarily shut down the operations of the scheme, which had taken more than $12 million from consumers. The court also appointed a receiver to take control of the business operations. The case remains pending, with the FTC seeking a permanent injunction and monetary relief to prevent further consumer harm.

FTC v. AWS, LLC (2018)

In 2018, the Federal Trade Commission (FTC) took legal action against AWS, LLC, FBA Stores, and related entities for promoting a deceptive business opportunity scheme known as the “Amazing Wealth System.” The defendants falsely claimed that consumers could earn substantial income by purchasing their system to sell products on Amazon.com. However, most participants did not achieve the advertised earnings and often faced issues with their Amazon seller accounts, including suspensions.

The FTC’s complaint led to settlements that banned the defendants from marketing and selling business opportunities and business coaching services. Additionally, they were required to surrender funds and assets for consumer redress. In August 2020, the FTC distributed over $9.1 million in refunds to consumers affected by the scheme.

Banks Law Office has brought a class action lawsuit against Wealth Assistants (the case is called “Hough v. Carroll”) for perpetrating a similar scam.

Banks Law Office is currently investigating several entities that may be perpetrating similar Amazon store-management frauds, including:

• Ecom Authority, which is run by Daniel Cohen.
• Alluvium, which is run by Samantha Segrest.

If you have any information about these scams or similar ones, please contact us.