FTC Cracks Down on Ecommerce Empire Builders in Deceptive AI Scheme
The Federal Trade Commission (“FTC”) recently filed charges against Ecommerce Empire Builders (“EEB”), a company that falsely promised to help consumers create profitable online businesses powered by artificial intelligence. According to the FTC’s complaint, the company lured consumers into paying up to $2,000 for training programs or tens of thousands of dollars for “done for you” online storefronts, all while making false claims about potential earnings. EEB marketed these opportunities as a quick path to generating substantial income, often promising monthly profits of $10,000. However, the FTC argues that these earnings never materialized for most consumers, leaving them with little more than financial losses.
The complaint also accuses EEB’s CEO, Peter Prusinowski, of using consumers’ payments to enrich himself, with some consumers paying up to $35,000 for online stores that produced little or no revenue. Even worse, many customers reported that their requests for refunds were ignored or only partially honored. The FTC claims that EEB violated the FTC Act and the Business Opportunity Rule, particularly by failing to provide the required disclosures about the risks involved in the business opportunities they sold. On top of that, the company allegedly made clients sign contracts that prohibited them from posting negative reviews, a practice that violates the Consumer Review Fairness Act.
In response to these deceptive practices, a federal court temporarily halted EEB's operations and placed the company under the control of a receiver. This temporary action aims to prevent further harm to consumers while the case continues. The FTC's charges come as part of their broader effort, dubbed Operation AI Comply, to curb the use of artificial intelligence in business schemes that exploit consumers with false or exaggerated promises.
This case highlights the importance of vigilance when considering business opportunities that promise quick and easy profits, especially those involving emerging technologies like AI. The FTC continues to send a strong message to other companies that rely on deceptive advertising.
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