Business Blog
FTC settlement suggests Lurn didn’t learn from Penalty Offense Notice about money-making claims
By
Lesley Fair
The people behind online business coaching outfit Lurn promised that consumers could become “Stay-At-Home Millionaires.” But according to the FTC, Lurn, Inc., CEO Anik Singal, Tyrone Cohen, and David Kettner are now Stay-At-Home Defendants in an FTC law enforcement action challenging their deceptive money-making representations. What’s more, the complaint alleges even after receiving FTC Notices of Penalty Offenses concerning Money-Making Opportunities and Endorsements, Lurn and Singal continued to use deceptive advertising claims to bilk consumers out of millions.
The FTC says Rockville, Maryland-based Lurn lured consumers in with a variety of purported money-making opportunities. For example, promotions for its Email Startup Incubator Program claimed that consumers could “Make More Than $13,700 Per Day” by using the “exact steps” that CEO Singal used “to generate millions of dollars online by using just an email and other people’s products.” Ads featured testimonials from supposedly satisfied customers who were raking in big bucks, leaving their 9-to-5 jobs, traveling the world, helping those in need, and “living in a very, very nice house with his Jaguar and Aston Martin . . . working about three hours a day.” According to the complaint, ads invited consumers to a “FREE training workshop,” but it wasn’t long before the defendants wanted $1,995 for their “Time-Tested & Proven Step-By-Step System.”
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Another one of Lurn’s promotions – the $947 Kindle Cashflow University course – featured defendant Tyrone Cohen, who claimed to teach consumers a “tried, tested and proven step by step system that’s backed by ten plus years of teaching thousands of successful students of all backgrounds and ages across the planet how to make life changing money.” So how did the “system” work? The defendants directed consumers to find a successful book on Amazon, emulate its contents in a 10-35 page document, and then sell it on Amazon for an “evergreen” and “passive” source of income.
Then there was the $1,588 Printable Profits course, advertised in a video in which defendant Singal interviewed defendant David Kettner about an opportunity that would give consumers a “very good chance at a six-figure income.” According to Kettner, Printable Profits’ “simple easy and proven system” involved looking for mugs that have sold well on Amazon and using an app to create and sell similar designs. Kettner further claimed that even if 98% of the designs weren’t successful, 2% success meant that consumers can still make $11,453 per month based on the amount of overall mug sales made online.
And the company didn’t stop there. Once Lurn and Singal had people on the hook, the defendants often followed up by having telemarketers contact consumers to pitch pricey “consulting programs” that went by names like “Digital Business Accelerator,” “Digital Empire,” and “Marketplace Mastery,” and cost consumers as much as $10,000. Following a Lurn script, telemarketers asked consumers how much money they would like to make. Regardless of their answer, the telemarketer responded that “I’m 100% confident we can help you” get the results the person wanted.
The complaint outlines the allegations in detail, but the big-picture point is that the defendants’ money-making claims were false or misleading. The complaint also describes just how the FTC says Lurn and Singal violated established legal principles both before and after receiving the FTC Notices of Penalty Offenses.
The lawsuit charges that the defendants’ earnings claims violated the FTC Act, and that Lurn and Singal violated the Telemarketing Sales Rule by mispresenting material aspects of investment opportunities. Furthermore, based on the Notice of Penalty Offenses Concerning Money-Making Opportunities, the FTC charged that Lurn and Singal knew it was “is an unfair or deceptive trade practice to make false, misleading or deceptive representations concerning the profits or earnings that may be anticipated by a participant in a money-making opportunity” and yet continued to make illegal earnings claims.
The proposed settlements with Lurn, Singal, Cohen, and Kettner include broad injunctive provision to protect consumers in the future. The proposed order against Lurn and Singal also requires them to be turn over $2.5 million to be used for consumer refunds and to notify consumers who bought a course from them since May 1, 2019, of the FTC’s law enforcement action.
Even if you don’t sell money-making opportunities, the case conveys two important messages to advertisers.
An FTC Notice of Penalty Offenses gives rise to potential civil penalty liability, so law violations could have serious financial consequences. Under Section 5(m)(1)(B) of the FTC Act, the FTC can seek civil penalties if it establishes that: 1) the company knew the conduct was unfair or deceptive, in violation of the FTC Act; and 2) the FTC had already issued a written decision that the conduct in question is unfair or deceptive. Of course, the FTC still has to prove its case, but for companies that knowingly engage in conduct an FTC decision has declared to be illegal, the cost of non-compliance could be high.
Don’t play fast and loose with earnings “disclaimers” – or any other form of disclaimer. Despite the attention-grabbing headlines and express big-money representations, the defendants’ websites and presentations sneaked in statements like this: “Many of our products and promotions provide information about potential income you may earn. These representations are not intended to describe a certain outcome or even a typical outcome, but rather actual results from those who have had exceptional success. . . . Lurn offers no guarantee or warranty that you will realize the amount of income or revenue referenced in the promotions or the courses themselves.” Ineffective, says the FTC: “Defendants’ disclaimers directly contradict the messages conveyed repeatedly in their marketing – that purchasers are likely to earn substantial income utilizing Defendants’ program.” The key take-away is that what matters is the net impression conveyed to consumers. An advertiser can’t negate its primary marketing message with a pro forma “disclaimer.”
Tags:
- Consumer Protection
- Bureau of Consumer Protection
- Franchises, Business Opportunities, and Investments
- Advertising and Marketing
- Telemarketing
- Advertising and Marketing Basics
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Consumer Alert
Not all business coaches are trying to help you
By
Ari Lazarus
Consumer Education Specialist, FTC
Starting your own small business is a big deal, so you might hire a business coach to help you. But sometimes, these business coaches are only looking to help themselves — at your (literal) expense. Read on to learn how to spot these scams.
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Scammers like to make you feel confidentabout your investment. That’s why they advertise their systems as “tested” and “proven” to make you lots of money quickly.
And that’s what the FTC says Lurn, a business coaching company, did. The FTC sued Lurn for claiming people who bought their programs could easily make six figure incomes through email marketing, selling eBooks, or customizable mugs — even though that wasn’t true.
So if you or someone you know is trying to start their own business and considering signing up for a coaching program, here are some things to keep in mind.
- Be wary of promises that you’ll make quick money. No one can guarantee you’ll make lots of money with little to no risk. Anyone who does is a scammer.
- Take your time and talk to someone you trust. Scammers will pressure you to get involved now or “risk losing out.” Get a second opinion about the business offer or coaching program from someone who has your best interests in mind.
- Read success stories and testimonials with skepticism. They might not be true or typical. Glowing stories of success could be fake or misleading, and positive online reviews may have come from made-up profiles.
Have you spotted a business you think is a coaching scam? Tell the FTC at ReportFraud.ftc.gov.
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For Release
Federal Trade Commission Partners with Latin American Countries to Combat Fraud
Multilateral agreement enhances consumer protection cooperation with Chile, Colombia, Mexico, and Peru
Tags:
- Consumer Protection
- Office of International Affairs
- cross-border
- International Consumer Protection and Enforcement Network (ICPEN)
- international cooperation
- Government
The Federal Trade Commission signed a cooperation agreement with the consumer protection authorities of the four Latin American countries —Chile, Colombia, Mexico and Peru – to combat fraud both inside and outside the United States.
The Multilateral Memorandum of Understanding (MMOU) promotes cooperation across Latin America, including information-sharing to further investigations and policy development, as well as other types of assistance on cross-border enforcement matters.
“This multilateral MOU with our partners from Chile, Colombia, Mexico and Peru sends a message of our shared commitment to protect consumers from cross-border fraud, deception, and other illegal practices,” said Maria Coppola, Director of the FTC’s Office of International Affairs. The MOU also offers a blueprint for extending cooperation even further through the region by providing a mechanism for others to join this MOU, which will bolster our efforts to fight fraud wherever it might occur.”
Low-cost online communications allow scammers to target consumers regardless of where they live. The increasingly global nature of commerce—and fraud—poses an enforcement challenge for consumer protection authorities around the world. From 2019 to 2022, fraud reports against companies in these Latin American countries more than doubled, from 6,103 to 12,869. At the same time, total losses reported by consumers skyrocketed—from $39.4 million in 2019 to $237.9 million in 2022. Reports about online shopping were the top complaint during this same period, with losses increasing from $3.8 million in 2019 to $49.5 million in 2022. Social media was the top contact method consumers cited at 41 percent of reports in 2022.
These four countries represent about 225 million people and combined make up the eighth biggest economy in the world.
In signing the MMOU, the FTC and consumer protection authorities in these countries agreed to cooperate in investigations related to violations of consumer protection laws. Specifically, the MMOU encourages participants to:
- Share complaints submitted by consumers;
- Provide investigative assistance, with appropriate safeguards, including sharing of information relating to defendants, their assets and/or their deceptive conduct;
- Coordinate enforcement actions against cross-border violations of law;
- Provide other practical case assistance, where appropriate, in the enforcement of consumer protection laws, such as gathering evidence;
- Participate in econsumer.gov, which allows consumers from around the world to report fraud and provides consumer protection agencies around the world with access to important data about potential violations; and
- Cooperate on non-investigatory matters such as exchanging approaches to consumer protection policy issues and participating in staff exchanges, joint training programs and workshops.
Notably, the MMOU includes a mechanism for allowing other consumer protection authorities to join in the future.
The Commission voted 4-0 to authorize the FTC Chair to sign the MOU. The Commission vote closed on a date prior to Commissioner Christine S. Wilson’s departure from the agency.
The lead staffer on this matter is Michael Panzera from the FTC’s Office of International Affairs.
The Federal Trade Commission works with counterpart agencies to promote sound antitrust, consumer protection, and data privacy enforcement and policy. For the latest news and resources, follow the FTC on social media, subscribe to press releases and subscribe to the FTC International Monthly.
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Business Blog
How an “expect the unexpected” emergency plan can get help protect your business
By
Lesley Fair
Preparing for an emergency used to be an easier task for small businesses. Coastal companies could plan for hurricane season and northern businesses could expect a blizzard or two every winter. But businesses now face a host of other potentially disruptive disasters – wildfires, power outages, public health emergencies, and cyberattacks, to name just a few. Don’t let National Preparedness Month come to a close without updating your company’s plan for expecting the unexpected.
The good news is that you don’t have to start from scratch. Federal agencies – and offices in your home state – have compiled checklists and resources to help you customize a preparedness plan. The Small Business Administration (SBA) has advice about preparing for emergencies and getting your company back on its feet financially if disaster strikes. Through the Ready Business initiative, the Department of Homeland Security and FEMA have toolkits, business plans, and training exercises for companies of all sizes. The IRS has information in multiple languages about paperless business recordkeeping and continuity of operations in case of a disruption.
In addition, the FTC’s Dealing with Weather Emergencies (also available in Spanish) features actionable advice, videos, infographics, and other resources for your business. Here are just a few points to consider as you’re updating your company’s emergency plan.
- Job #1: Help protect your staff. Good companies look after their people come rain or shine. Sharing preparedness information with your employees can help keep them safe in uncertain times. Dealing with Weather Emergencies is a one-stop shop that covers family emergency preparedness, financial recovery, scam spotting, and links to resources from other government agencies.
- A key part of your back-up plan is to back up your data. How would your business respond if a weather emergency – or even a broken pipe or a fire in your building – were to destroy essential paperwork or damage devices? And what would happen if a cyberattack locks you out of your own network? Work with your IT staff to ensure you’re taking a secure approach to backing up important business records. The FTC’s Cybersecurity Basics for Small Business offers practical advice. Two key steps can help protect you from the unexpected. First, conduct an information inventory to know what data you have and where you have it. In addition to your network, consider what’s stored in file cabinets, office computers, laptops, smartphones, and even employees’ home offices. Second, streamline what you collect and what you retain. Of course, some files you have to hold on to. But it’s easier – and less expensive – to protect a smaller amount of sensitive data. That’s why savvy companies make it a practice to collect information only if they have a legitimate business need for it and to securely dispose of both digital files and paperwork when that business need no longer exists.
- Be part of the solution. Here’s an unpleasant, but inevitable, truth. After an emergency, scammers seem to come out in force. Take advantage of your standing in the business community – and your social media network – to alert people in your locale about the risks of disaster-related fraud: for example, clean-up and repair scams, phony job offers, government impersonators, and solicitations for bogus charities. Dealing with Weather Emergencies features social media shareables to help amplify your voice.
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