FTC wins $478M judgment vs infomercial marketers
WASHINGTON (AP) — Federal regulators have won a $478 million court judgment against the infomercial marketers of three "get-rich-quick" schemes said to have caused losses for nearly all the million or so consumers who bought the programs.
The Federal Trade Commission announced Thursday that the judgment was awarded by a federal court in Los Angeles against companies and individuals who marketed the schemes, titled "John Beck's Free & Clear Real Estate System," ''John Alexander's Real Estate Riches in 14 Days," and "Jeff Paul's Shortcuts to Internet Millions." The infomercials deceived consumers with phony claims of easy money, the FTC alleged in its case.
The agency said it was the largest judgment it had ever obtained in litigation. The money will go toward restitution for people victimized by the schemes, the FTC said.
Consumers paid $39.95 to buy a system, and additional personal coaching services cost up to $14,995. In addition, consumers were not told that when they bought the systems they'd be automatically enrolled in "membership plans" costing $39.95 a month, and were charged that amount every month unless they acted to cancel it.
In addition, the order issued by U.S. District Judge Jacqueline Nguyen permanently bars from the infomercials business three of the defendants, Douglas Gravink, Gary Hewitt and Family Products LLC. Gravink, Hewitt, Family Products and Mentoring of America LLC are banned from the telemarketing industry.
The other defendants are John Beck Amazing Profits LLC, Shortcuts to Millions LLC, John Beck, Jeff Paul and John Alexander. The companies are based in California.
The action is a reminder to consumers that they should be skeptical about easy-money claims, the FTC said.
"This huge judgment serves notice to anyone thinking of using phony get-rich-quick schemes to defraud consumers," Jeffrey Klurfeld, director of the agency's western region, said in a statement. "The FTC will come after you if you violate the law."