Recently, the FTC announced that it had reached a settlement with defendants of a multi-million dollar business coaching company to resolve claims that they deceived consumers by claiming they could earn “six figures in 90 days.” As part of the settlement, the defendants agreed to entry of a $54,000,000 judgment which will be suspended pending compliance with the other terms of the settlement. Included among these terms, the defendants must turn over money and other assets totaling approximately $1.9 million.
In its complaint, the FTC alleged that the defendants persuaded consumers to pay for various tiered memberships, each costing more than the previous, promising consumers that the memberships would lead to the consumers learning how to earn substantial incomes with online businesses. In addition to making false claims about the amount of money people could earn, the company falsely promised to provide individualized coaching from successful marketers, who in fact were simply just salespeople selling additional membership tiers, according to the FTC.
In total, the FTC alleged that the defendants took in millions of dollars though the scheme. Consumers, on the other hand, did not fare as well with most never earning the promised income and losing more than tens of millions dollars and some losing more than $50,000. The individual defendants were former executives of the company. This settlement comes on the heels of an earlier settlement with three other defendants involved in the same alleged coaching scheme. The Commission voted 5-0 to approve the settlements.
These settlements serve to highlight an important lesson: violating FTC rules and guidelines can have substantial consequences for a business. The cost of an FTC investigation can be high but the financial penalties the FTC can impose can be much higher. FTC penalties routinely run into the millions and can force a company out of business forever.
But even when the FTC does not impose crushing financial penalties, an FTC investigation can be a major distraction costing both time and money and taking you away from being able to run your business. For these reasons, if you or your business ever find yourselves the target of an FTC investigation or an investigation by a state attorney general, it is always advisable to retain an experienced FTC defense attorney to represent you and your business during such an investigation.
Even better than having an experienced attorney represent your business during an FTC investigation is to avoid such an investigation altogether. An attorney can help with this by reviewing your advertising and marketing materials for compliance before they are disseminated to consumers. An FTC attorney can review these materials to determine whether they are free from deceptive or unsubstantiated claims. And you should also always be certain to maintain proper substantiation for claims made in your advertising. Doing this will go a long way in the event the FTC initiates a compliance investigation.
Lubin Austermuehle’s Chicago consumer fraud and business fraud defense lawyers assist businesses accused of fraud defend lawsuits or actions or the target of investigation by the Illinois Attorney General or the FTC.
Our Chicago business lawyers have more than thirty-five years of experience helping business clients on unraveling complex business fraud and breach of fiduciary duty cases. Our Chicago consumer fraud and FTC investigation defense lawyers represent companies in Illinois Attorney General and FTC consumer fraud investigations and prosecution. Our Chicago business dispute attorneys also represent individuals, family businesses and enterprises of all sizes in a variety of legal disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. From offices in Elmhurst and Wilmette, near Waukegan, and Oak Brook, we serve clients throughout Illinois and the Midwest.
If you’re facing a business or class-action lawsuit, Illinois Attorney General or FTC investigation, or the possibility of one, and you’d like to discuss how the experienced Illinois consumer fraud defense attorneys at Lubin Austermuehle can help defend your business, we would like to hear from you. To set up a consultation with one of our Naperville and Chicago business law attorneys and class action and consumer trial lawyers, please call us toll-free at 630-333-0333 or contact us online.