FTC settlement bars defendants from selling business coaching or development services to consumers trying to start an online business from home
The owners of four companies that allegedly bilked consumers trying to start online businesses from home have been banned from selling purported business coaching or development services under court-approved settlements with the Federal Trade Commission. The settlements, which resolve an FTC case brought in the District of Utah, also require the corporate defendants to turn over the remaining funds in their bank accounts to the FTC.
According to the FTC complaint, the scheme took $8.4 million from consumers interested in starting an online business. The defendants bought the contact information of these consumers and then tried to sell them a series of business coaching and related services, each of which cost thousands of dollars. In lengthy phone calls, the complaint alleges the defendants’ sales representatives sold the high-priced services by promising consumers they could make thousands of dollars a month online. In one call, a salesman touting a program that cost $10,000 claimed it was “almost impossible” to make less than $3,000 to $5,000 a month using defendants’ foolproof methods: “[W]e don’t have any students we’ve built the business for that have ever failed. There’s just – there’s literally no way to fail.” The FTC submitted an audio file to the court that contains this portion of the call.
According to the complaint, consumers often received little more than basic information about how to list products on websites like eBay as part of defendants’ programs. As a result, according to the complaint, most of the consumers who purchased these programs did not end up with a viable business, earned little or no money, and ended up heavily in debt.
After consumers purchased the series of business coaching sessions, the defendants often tried to sell them an additional business development program. According to the FTC’s complaint, one way the defendants pushed these sales was by falsely claiming they had special access to lenders who could provide consumers with corporate credit for which they would not be personally liable. Instead of getting business loans, the FTC’s complaint alleges consumers who bought these programs were often subjected to more sales calls from companies that simply helped consumers apply for personal credit cards. In the recording the FTC submitted to the court, the salesman claimed new businesses could obtain a line of corporate credit in three to four weeks. The FTC submitted an audio file to the court that contains this portion of the call.
On Oct. 25, 2018, the U.S. District Court for the District of Utah approved both settlements in the case. One settlement imposes an $8.4 million judgment against defendants Jared Rodabaugh, Vision Solution Marketing LLC, and Ryze Services, LLC. The other settlement imposes a $6.75 million judgment on defendants Justin Larsen, VSM Group LLC, and Specialized Consulting Solutions LLC. According to the FTC’s complaint, defendants Rodabaugh and Larsen are the owners of the corporate defendants. Both judgments will be partially suspended after defendants surrender certain assets, including the remaining funds in the corporate defendants’ bank accounts, to the FTC.
The scheme began in 2014 and was run out of various offices near Salt Lake City, Utah. All the defendants have been prohibited from offering business coaching or development services since May 2018, when the FTC filed its complaint and the defendants stipulated to temporary restraining orders that were entered by the court. Now those prohibitions are permanent.
The defendants in this case called consumers using contact information obtained from two separate operations that were the subject of recent FTC enforcement actions: Internet Teaching and Training Specialists, LLC, or ITT, and Bob Robinson, LLC. In January 2018, the FTC entered into a settlement in the ITT case in the District of Nevada, and in December 2017, the FTC entered into a settlement in the Bob Robinson, LLC, case in the Southern District of Texas.
The Commission vote approving the agreed-upon settlements was 5-0.
The FTC acknowledges the invaluable assistance provided by the Utah Department of Commerce’s Division of Consumer Protection in this case.