iworks gets pwned by FTC... again. - WickedFire - Affiliate Marketing Forum

Jon · 12-22-2010, 02:48 PM

Haven't gotten hold of the actual FTC docs on this yet, but its no secret that the AZ/UT AG's & FTC have been investigating iworks for the last few months.

Here is a press release that's been making its rounds. Will post link to the FTC official doc as soon as its confirmed.

FTC sues iworks - FTC sues Jeremy Johnson & co.

Quote:

FTC sues Internet companies for credit card, debit card scam
Scam led to hundreds of thousands of customers to seek chargebacks, suit alleges

By Steve Green
Tue, Dec 21, 2010 (5:37 p.m.)

The Federal Trade Commission sued scores of interrelated Internet companies operating mainly out St. George, Utah, and Las Vegas on Tuesday saying they victimized hundreds of thousands of consumers by charging their credit cards and debit cards without authorization.

The suit, filed in U.S. District Court in Las Vegas, says the network of companies — including dozens of shell companies around the county — was organized by defendant Jeremy Johnson of St. George, Utah. A message for comment was left for Johnson.

"The defendants in this case operate a far-reaching Internet enterprise that deceptively enrolls unwitting consumers into memberships for products or services and then repeatedly charges their credit cards or debits funds from their checking accounts without consumers’ knowledge or authorization for memberships the consumers never agreed to accept,'' the government agency charged in the suit. "This scam has caused hundreds of thousands of consumers to seek chargebacks — reversals of charges to their credit cards or debits to their banks accounts.

"The high number of chargebacks has landed the defendants in VISA’s and MasterCard’s chargeback monitoring programs, resulted in millions of dollars in fines for excessive chargebacks, and led to the termination of numerous of defendants’ merchant accounts through which they had been billing their victims.

"Yet, rather than curing their deceptions, defendants have employed a variety of stratagems to continue and expand their scam, thereby causing unreimbursed consumer injury to mount'' to millions of dollars since 2006, the lawsuit says.

For instance, in 2009 the defendants incorporated more than 50 shell companies using maildrop addresses and straw-figures as owners and officers because they knew that it was unlikely they could obtain additional merchant accounts using existing companies, due to these companies’ negative chargeback histories, the suit says.

The defendants then applied through intermediary payment processors for new merchant accounts in the names of the front companies in order to continue processing the credit and debit card charges for the online memberships the defendants sell, the government alleged.

"They have also attempted to drive down their chargeback rates by threatening to report consumers who seek chargebacks to an Internet consumer blacklist they operate called `BadCustomer.com' that will `result in member merchants blocking [the consumer] from making future purchases online!' And they have attempted to counter the large number of complaints about their conduct by flooding the Internet with supposedly independent positive articles and other web pages,'' the FTC complaint says.

The websites operated by the defendants claim to offer free or risk-free information about what the government says are dubious products and services such as government grants to pay personal expenses and Internet-based money-making opportunities.

The defendants, who have not yet answered the allegations, include several Johnson companies:

•Cloud Nine Marketing Inc., Internet Economy Inc. and Network Agenda LLC of Las Vegas

• Market Funding Solutions Inc. of Reno

• I Works Inc., Elite Debit Inc. and Success Marketing Inc. of St. George, Utah

• CPA Upsell Inc. of Santa Monica, Calif.

Also sued were:

• Anthon Holdings Corp. of St. George, Utah

• Duane Fielding, owner of Anthon and co-owner of Network Agenda

Other defendants, some alleged to be shell companies, are based in California, Delaware, Nevada, New York, Oklahoma and Utah. They include: Employee Plus Inc., Big Bucks Pro Inc., Blue Net Progress Inc., Blue Streak Processing Inc., Bolt Marketing Inc. and Bottom Dollar Inc.

Also, Bumble Marketing Inc., Business First Inc., Business Loan Success Inc., Cold Bay Media Inc., Costnet Discounts Inc., CS Processing Inc., Cutting Edge Processing Inc., Diamond J Media Inc., EBusiness First Inc., EBusiness Success Inc., eCom Success Inc. and Excess Net Success Inc.

Also, Fiscal Fidelity Inc., Fitness Processing Inc., Funding Search Success Inc., Funding Success Inc., GG Processing Inc., GGL Rewards Inc., Highlight Marketing Inc., Hooper Processing Inc., Internet Business Source Inc., Internet Fitness Inc., Jet Processing Inc., JRB Media Inc., Lifestyles For Fitness Inc., Mist Marketing Inc., Money Harvest Inc., Monroe Processing Inc. and Net Business Success Inc.

Also, Net Commerce Inc., Net Discounts Inc., Net Fit Trends Inc., Optimum Assistance Inc., Power Processing Inc., Premier Performance Inc., Pro Internet Services Inc., Razor Processing Inc., Rebate Deals Inc., Revive Marketing Inc., Simcor Marketing Inc., The Net Success Inc., TranFirst Inc., Tran Voyage Inc., Unlimited Processing Inc., Xcel Processing Inc. and Summit Processing Inc.

Besides Johnson and Fielding, individuals sued were: Andy Johnson, Jeremy Johnson's brother and alleged owner of some of the defendant companies; Lloyd Johnston, an I Works manager; Scott Leavitt, an I Works manager; Scott Muir, uncle to Jeremy and Andy Johnson and owner of some of the defendant companies; Bryce Payne, an I Works manager; Kevin Pilon, an I Works employee and alleged owner of companies I Works works with; Ryan Riddle, formerly general manager at I Works; and Terrason Spinks; described as a business associate of Jeremy Johnson.

The FTC in its lawsuit asks the court for an injunction barring future violations of the Federal Trade Commission act as well as unspecified redress for consumers harmed by the alleged scams.

Jon · 12-22-2010, 02:51 PM

On a personal note, I feel for a few of those guys whom I know and are friends. Especially the ones who were able to get out before the shit truly hit the fan.

However, if any of them were really doing what the feds are alleging, well, that's some fucked up shit and they should get some really good lawyers and find God, because they'll need it. So I truly hope its not true. :/

Gonzo · 12-22-2010, 04:58 PM

Damn. I'd like to see the exact charges are going to be. The credit card charge back scam didn't turn out to well for this guy:

25 years? shiiiiit.

eVandals · 12-22-2010, 05:09 PM

man o man...

can't say I didn't see something like this coming for them though

barman · 12-22-2010, 05:14 PM

HOW CAN THE FEDS GO AFTER SUCH AN UPSCALE MAN?

eVandals · 12-22-2010, 05:19 PM

Quote:

Originally Posted by Jon

However, if any of them were really doing what the feds are alleging, well, that's some fucked up shit and they should get some really good lawyers and find God, because they'll need it. So I truly hope its not true. :/

Is it illegal to use placeholder nominees on your merchant apps?

Jon · 12-22-2010, 06:09 PM

Quote:

Originally Posted by eVandals

Is it illegal to use placeholder nominees on your merchant apps?

It's illegal to bill people's credit cards without their authorization.

Sohan · 12-23-2010, 01:31 AM

Quote:

FTC Charges Massive Internet Enterprise with Scamming Consumers Out of Millions Billing Month-After-Month for Products and Services They Never Ordered
Defendants Allegedly Created 51 Shell Companies to Carry Out Deception
The Federal Trade Commission is taking legal action against a far-reaching Internet enterprise that allegedly has made millions of dollars by luring consumers into “trial” memberships for bogus government-grant and money-making schemes, and then repeatedly charging them monthly fees for these and other memberships that they never signed up for. The FTC seeks to stop the illegal practices and make the defendants pay redress to consumers and give up their ill-gotten gains.

“No consumer should be sucker-punched into making payments for products they don’t know about and don’t want,” said FTC Chairman Jon Leibowitz.

The FTC’s complaint alleges that the defendants offer consumers bogus money-making and government-grant opportunities. They claim that the offers are “free” or “risk-free,” and that they will charge customers only a small shipping and handling fee.

According to the FTC’s complaint, the operation, doing business under the name I Works and controlled by Jeremy Johnson and nine other individuals, uses websites that tout the availability of government grants to pay personal expenses or pitch various money-making programs. The websites offer “free” information at no risk and ask consumers to provide their credit or debit card numbers to pay for a small shipping and handling fee such as $1.99. When consumers provide their billing information, though, I Works proceeds to charge them hefty one-time fees of up to $129.95 and monthly recurring fees of up to $59.95 for the grant or money-making programs. I Works charges them additional monthly fees for one or more unrelated programs that consumers did not agree to.

The FTC’s complaint alleges that this scheme has caused hundreds of thousands of consumers to seek chargebacks – reversals of charges to their credit cards or debits to their banks accounts. The high number of chargebacks has landed the defendants in VISA’s and MasterCard’s chargeback monitoring programs, resulted in millions of dollars in fines for excessive chargebacks, and prevented the defendants from getting access to the credit card and debit card billing systems using their own names. To keep the scam going, the defendants tricked banks into giving them continued access to these billing systems by creating 51 of shell companies with figurehead officers, and by providing the banks with phony “clean” versions of their websites.

The FTC has charged the defendants with violating the FTC Act by misrepresenting that government grants are available for paying personal expenses, that consumers are likely to obtain grants by using the defendants’ program, that users of their money-making products will earn substantial income, and that their offers are free or risk-free. The complaint also alleges that defendants failed to disclose that consumers who pay a nominal shipping and handling fee will be enrolled in expensive plans that charge consumers fees until they cancel, and that the defendants charged consumers’ credit cards and debited their bank accounts without their consent.

In addition, the FTC alleges that defendants posed as ordinary consumers and posted deceptive positive reviews and used deceptive testimonials that misrepresented the benefits of their grant services. Finally, the FTC has charged the defendants with violating the Electronic Fund Transfer Act and Regulation E by debiting consumers’ bank accounts without their signed written consent and without providing consumers with a copy of the written authorization.

As alleged in the complaint, the defendants gained access to the Visa and MasterCard systems through many entities. The banks included Wells Fargo, N.A., HSBC Bank USA, First Regional Bank, Harris National Association, and Columbus Bank and Trust Company. The payment processors the defendants used included First Data, ECHO, Global Payment Systems, Litle & Co., Moneris, Payment Tech, Trident, and Vital, as well as independent sales organizations, including CardFlex, RDK Inc., Merchant eSolutions, Pivotal Payments, PowerPay, and Swipe Merchant Solutions.

The FTC complaint names 10 individuals, 10 corporations, and 51 shell companies as defendants. As alleged in the complaint, the lynchpin of the enterprise is Jeremy Johnson, the sole owner and officer of I Works Inc., which has done business under numerous names. The FTC’s complaint names Johnson and nine other individual defendants: Duane Fielding; Andy Johnson; Loyd Johnston; Scott Leavitt; Scott Muir; Bryce Payne; Kevin Pilon; Ryan Riddle; and Terrason Spinks. In addition, the 10 corporate defendants are: I Works Inc.; Anthon Holdings Corp.; Cloud Nine Marketing Inc.; CPA Upsell Inc.; Elite Debit Inc.; Employee Plus Inc.; Internet Economy Inc.; Market Funding Solutions Inc.; Network Agenda LLC; and Success Marketing Inc.

The 51 shell companies named in the complaint are Big Bucks Pro Inc., Blue Net Progress Inc., Blue Streak Processing Inc., Bolt Marketing Inc., Bottom Dollar Inc., doing business as BadCustomer.com, Bumble Marketing Inc., Business First Inc., Business Loan Success Inc., Cold Bay Media Inc., Costnet Discounts Inc., CS Processing Inc., Cutting Edge Processing Inc., Diamond J. Media Inc., Ebusiness First Inc., Ebusiness Success Inc., Ecom Success Inc., Excess Net Success Inc., Fiscal Fidelity Inc., Fitness Processing Inc., Funding Search Success Inc., Funding Success Inc., GG Processing Inc., GGL Rewards Inc., Highlight Marketing Inc., Hooper Processing Inc., Internet Business Source Inc., Internet Fitness Inc., Jet Processing Inc., JRB Media Inc., Lifestyles For Fitness Inc., Mist Marketing Inc., Money Harvest Inc., Monroe Processing Inc., Net Business Success Inc., Net Commerce Inc., Net Discounts Inc., Net Fit Trends Inc., Optimum Assistance Inc., Power Processing Inc., Premier Performance Inc., Pro Internet Services Inc., Razor Processing Inc., Rebate Deals Inc., Revive Marketing Inc., Simcor Marketing Inc., Summit Processing Inc., The Net Success Inc., Tranfirst Inc., Tran Voyage Inc., Unlimited Processing Inc., and Xcel Processing Inc.

The Commission vote to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Nevada.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe”
that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

MEDIA CONTACT:
Office of Public Affairs
202-326-2180
STAFF CONTACT:
Collot Guerard
Bureau of Consumer Protection
202-326-3338
(FTC File No. 1023015)
(I Works)

FTC Charges Massive Internet Enterprise with Scamming Consumers Out of Millions Billing Month-After-Month for Products and Services They Never Ordered

Jon · 12-23-2010, 05:44 AM

Sohan <3

juntao65 · 12-24-2010, 04:07 AM

Quote:

Originally Posted by Jon

It's illegal to bill people's credit cards without their authorization.

When you say that, do you mean they were saying something along the lines of "We need your CC info for verification." and not stating the consumer will be charged anywhere on the site, or the traditional "just pay shipping for your free trial" then hide the fact they get enrolled for a rebill in the T&C? If it's former, that's pretty fucked.

moltar · 12-24-2010, 05:25 AM

Not to be a devil's advocate, but is there a chance that those rebills were simply upsells with terms that people didn't read? In which case wouldn't it be people's fault for not reading the terms or small print?

bigkats · 12-24-2010, 12:53 PM

Quote:

Originally Posted by moltar

Not to be a devil's advocate, but is there a chance that those rebills were simply upsells with terms that people didn't read? In which case wouldn't it be people's fault for not reading the terms or small print?

There is not much difference between shady upsells in the fine print and unauthorized charges. Either way, its obviously unethical and they should have known someone would get pissed eventually

AdAnglerSandra · 01-02-2011, 11:42 PM

They're talking about hundreds of thousands of complaints. I doubt it was a matter of consumers not reading the fine print. This is the kind of stuff that leads to government regulation. Very sad.

kushoffer · 01-20-2011, 09:54 PM

Federal judge freezes assets of St. George businessman - ksl.com

the plot thickens

12-22-2010, 04:58 PM	#3 (permalink)
Gonzo Dollar Dollar Bills Y'all Join Date: Jun 2010 Location: Austin, Texas Posts: 314 iTrader: 10 / 100%	Damn. I'd like to see the exact charges are going to be. The credit card charge back scam didn't turn out to well for this guy: 25 years? shiiiiit. Share Share this post on Digg Del.icio.us Technorati Twitter

12-22-2010, 05:14 PM	#5 (permalink)
barman Join Date: Aug 2006 Location: Internets Posts: 5,987 iTrader: 12 / 100%	HOW CAN THE FEDS GO AFTER SUCH AN UPSCALE MAN? Share Share this post on Digg Del.icio.us Technorati Twitter __________________ Where Affiliate Marketers go for News. and Weed.

12-24-2010, 05:25 AM	#11 (permalink)
moltar Violating Airspace Join Date: Jul 2009 Location: Canada Posts: 851 iTrader: 17 / 100%	Not to be a devil's advocate, but is there a chance that those rebills were simply upsells with terms that people didn't read? In which case wouldn't it be people's fault for not reading the terms or small print? Share Share this post on Digg Del.icio.us Technorati Twitter

01-02-2011, 11:42 PM	#13 (permalink)
AdAnglerSandra Ad Angler Account Manager Join Date: Sep 2010 Location: Florida Posts: 4 iTrader: 0 / 0%	They're talking about hundreds of thousands of complaints. I doubt it was a matter of consumers not reading the fine print. This is the kind of stuff that leads to government regulation. Very sad. Share Share this post on Digg Del.icio.us Technorati Twitter

01-20-2011, 09:54 PM	#14 (permalink)
kushoffer Senior Member Join Date: Sep 2008 Location: in Costa Rica trick Posts: 151 iTrader: 0 / 0%	Federal judge freezes assets of St. George businessman - ksl.com the plot thickens Share Share this post on Digg Del.icio.us Technorati Twitter __________________ -FUCK IT GRAB A BOTTLE-

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