The Federal Trade Commission is going after an e-commerce company that allegedly took millions of dollars from consumers as part of a \u201cpassive income\u201d scheme, which spun up Amazon storefronts on their behalf and promised \u201cinsane returns\u201d that were higher than the stock market.<\/p>\n
The FTC said Tuesday it filed a lawsuit against the company, called Click Profit; its co-founders Craig Emslie and Patrick McGeoghean; and two other business associates. It also asked a judge to bar the parties from doing business temporarily.<\/p>\n
The case is the latest example of the FTC cracking down on e-commerce \u201cautomation\u201d services. These companies launch and manage online storefronts on behalf of clients, who pay money for the services and the promise of earning tens of thousands of dollars in \u201cpassive income.\u201d The companies often make extravagant claims about potential earnings and the use of artificial intelligence technology to guarantee profits. Despite their assurances, consumers frequently end up losing money.<\/p>\n
Click Profit, which also operated under the names FBALaunch, Automation Industries and PortfolioLaunch, promised investors they would \u201cbuild you a massively profitable e-commerce store from the ground up\u201d by selling products on Amazon, Walmart and TikTok, according to the FTC.<\/p>\n
The company charged consumers between $45,000 to $75,000 for the initial investment, plus an additional $10,000 or more to pay for inventory, the FTC alleged in its complaint, which was filed in the U.S. District Court for the Southern District of Florida. Click Profit took up to 35% of any profits from their customers\u2019 stores, the complaint states.<\/p>\n
The company claimed the business opportunity was \u201csafe, secure and proven to generate wealth,\u201d according to marketing materials referenced in the FTC\u2019s complaint. They posted screenshots of purportedly successful Amazon storefronts, including one they claimed generated product sales of over $540,000 in one month.<\/p>\n
Emslie often appeared in TikTok videos and other online ads to pitch prospective consumers. In one ad, he said that \u201cthe stock market, real estate or precious metals will never be able to offer you\u201d the level of security offered through investing in Click Profit, according to the FTC\u2019s complaint. Other TikTok videos show him appearing alongside an image of Warren Buffett while \u201cfanning himself\u201d with wads of cash, per the complaint.<\/p>\n
Click Profit talked up its expertise by claiming it had product sourcing partnerships with legitimate brands, including Nike, Disney, Dell, Colgate and Marvel, the complaint alleges. It also claimed to have spent $5 million to build a \u201csuper computer\u201d and other AI technologies to locate the \u201cmost profitable products,\u201d claiming the super computer had generated \u201caround $100 million in sales,\u201d per the complaint.<\/p>\n
The company even implied that investors\u2019 online store could be bought out by venture capital firms connected with Click Profit \u201cat a 3-6x multiple,\u201d the FTC alleged.<\/p>\n
\u201cIn reality, the highly touted AI technology and brand partnerships do not exist, and the promised earnings never materialize,\u201d the FTC said in its complaint.<\/p>\n
Amazon suspended or terminated about 95% of Click Profit\u2019s stores after they violated Amazon\u2019s seller policies, the FTC alleged. After accounting for Amazon\u2019s fees, more than one-fifth of Click Profit\u2019s stores on the platform earned no money at all, while another third earned less than $2,500 in gross lifetime sales, the FTC stated.<\/p>\n
As a result, most consumers were unable to recoup their investments and \u201csome are saddled with burdensome credit card debt and unsold products,\u201d according to the FTC, which also said that Click Profit often refused to refund victims their investments and threatened them with legal action if they posted publicly about their experience.<\/p>\n
One unnamed consumer mentioned in the lawsuit invested \u201chis life\u2019s savings\u201d in Click Profit and was later terminated as a client \u201cwith nothing to show for his payments,\u201d the complaint states. He posted a negative review online and was allegedly approached by Emslie\u2019s attorney, who threatened to sue the consumer and \u201ctake everything he and his wife owned,\u201d per the complaint.<\/p>\n
The consumer took the reviews down, then asked Emslie whether he could receive a partial refund, according to the FTC.<\/p>\n
\u201cThe attorney told the consumer that Emslie had responded, \u2018F*** off,\u2019\u201d the FTC alleged.<\/p>\n
Representatives for Emslie and Click Profit didn\u2019t immediately respond to a request for comment.<\/p>\n
The FTC alleges Click Profit violated the FTC Act, the Consumer Review Fairness Act and the Business Opportunity Rule. It seeks to permanently prohibit Click Profit from doing business, as well as monetary relief for the victims.<\/p>\n<\/p>\n
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