The Federal Trade Commission and the State of Minnesota have recently announced that they have charged Sellers Playbook, Inc. with operating a business opportunity scheme.
The FTC and Minnesota AG allege the defendants’ marketing of business opportunities violates the FTC Act, the Business Opportunity Rule, the Consumer Review Fairness Act, the Minnesota Uniform Deceptive Trade Practices Act and the Minnesota Prevention of Consumer Fraud Act.
According to the plaintiffs, the defendants lure consumers into purchasing expensive business opportunities by deceptively offering consumers a “full-service, turnkey package” for getting their “piece of the $400 Billion Amazon Pie.” They allegedly represent that purchasers are likely to earn thousands of dollars a month by implementing defendants’ “customized system to perfect the individual’s ability to sell on Amazon effectively and profitably.”
According to the regulatory agencies, defendants’ earnings claims are false and unsubstantiated. Defendants allegedly fail to furnish prospective purchasers with required disclosure documents and use form contract provisions that restrict individual consumers’ ability to review defendants’ products, services, or conduct.
The FTC Act prohibits unfair or deceptive acts or practices in or affecting commerce. The FTC also enforces the Business Opportunity Rule. The Business Opportunity Rule addresses common deceptive or unfair practices engaged in by fraudulent business opportunity sellers, such as inducing consumers to pay significant sums of money by means of false or unsubstantiated earnings claims.
Additionally, the FTC enforces the CRFA. The CRFA prohibits the offering of provisions in form contracts that restrict individual consumers’ ability to communicate reviews, performance assessments, and similar analyses about a seller’s products, services, or conduct.
Contact an FTC advertising compliance and defense attorney to discuss complying with the FTC Act, the Business Opportunity Rule, the Consumer Review Fairness Act and state UDAP laws.
Plaintiffs allege that the defendants make earnings claims in connection with the offer for sale, sale, and promotion of the business opportunities. For example, according the Complaint, in their advertising and marketing of Sellers Playbook, the defendants represent that consumers who purchase and deploy that business opportunity are likely to profit by selling products on Amazon.com and through other channels online. Typical earnings claims made in defendants’ advertising and marketing allegedly include the following:
- “There are 100,000 Amazon Sellers with sales of $100,000 or more in 2016.”
- “We’re going to talk about some strategies this afternoon that’s [sic] going to show you how to make 15 to 30 percent. Tomorrow, I’m going to go through more wholesaling, and I’m going to teach you guys how to start making anywhere from 20 to 35, 40 percent. On Sunday, we’re going to talk about private labeling. Private label, we start making anywhere from 40 to 60 percent. And I’ve seen a lot of our people making over 70 percent. Now, is 70 percent a good rate of return?”
- “Holy cow, guys. That’s when you start seeing the returns of what we want you to have, $20,000 a month.”
- “Potential Net Profit: $1,287,463.38.”
- “Starting with $1000 .. . 1 year later over $210,000.”
Defendants’ earnings claims regarding the business opportunities, according to the plaintiffs are false or unsubstantiated.
The defendants are Sellers Playbook Inc., Exposure Marketing Company (also doing business as Sellers Online and Sellers Systems), and individuals that have allegedly owned and managed these companies.
According to the FTC and the Minnesota Attorney General’s Office, the defendants have no affiliation with Amazon.com and took in more than $15 million from consumers from April 2017 to May 2018. Many consumers reportedly paid them more than $32,000.
The Complaint can be seen, here.
Richard B. Newman is a digital media and data privacy compliance law attorney at Hinch Newman LLP focusing on advertising and digital media matters. You can follow him on LinkedIn or on Facebook at FTC Defense Lawyer.
Informational purposes only. Not legal advice. Always seek the advice of an attorney. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.