The Federal Trade Commission Tuesday filed a complaint against an Internet enterprise that allegedly lured consumers into signing up for "trial" memberships to obtain information about "bogus" government grants and other money-making schemes.
The FTC claims that I Works, controlled by Jeremy Johnson and nine other individuals, advertised on various websites that they could provide "free" information about fictitious government grants consumers can obtain to pay personal expenses and other money-making schemes. In exchange, consumers were required to provide credit or debit card information to pay a shipping and handling fee of $1.99. Consumers were then charged one-time fees of as much as $129.95 and also were billed monthly fees of up to $59.95 for the grant-making programs and others that consumers say they did not sign up for.
"No consumer should be sucker-punched into making payments for products they don't know about and don't want," said FTC Chairman Jon Leibowitz said in a statement.
In response to these charges, many consumers have sought "charge backs" or a reversal of the charges from their credit or debit cards, prompting Visa and MasterCard to place the defendants on their chargeback monitoring programs that bar them from getting access to credit and debit card billing information, according to the FTC. Once this occurred, the FTC alleges the defendants created new shell companies to keep their scam going.
The FTC has accused the defendants of violating the FTC Act by misrepresenting the availability of the government grants and that they can provide information to help consumers obtain such grants, as well as for failing to tell consumers they would be charged the hefty fees for the monthly plans.