For those trying to get on their feet financially, the promise of “$10,000 a week” is a big deal. But many times, they end up losing their life savings to the promoters of fake investment schemes. The FTC just announced a $2.425 million settlement against RagingBull.com, which the agency said exploited people’s dreams of financial security while often leaving them in financial distress and stuck with subscriptions that were difficult to cancel.
The lawsuit against Raging Bull.com was filed in Maryland federal court in 2020, alleging that the defendants offered high-priced subscriptions that purportedly gave people access to the company’s investing “gurus,” who could trade subscribers’ trading accounts within a week. “Doubled or tripled.” Defendants’ promotions also included testimonials from subscribers who claimed to have made $500 in 15 minutes and $6,500 in 20 minutes.
The complaint, which names, among others, RagingBull.com, LLC, Sherwood Ventures, LLC, Jason Bond, LLC, Jeff Bishop and Jason Bond, alleges that the defendants’ large sums of money are not the typical results that subscribers receive. Actually achieved. What’s more, the FTC said Raging Bull didn’t track the results of its customers’ transactions, so the defendants couldn’t back up their claims about how much revenue subscribers would earn. According to the lawsuit, the defendants’ customer service records were similarly shoddy. Raging Bull gets paid by periodically charging customers’ credit cards, but people who try to cancel their reservations experience long waits, hang-ups and other hurdles that make it difficult to say “enough!”
Raging Bull and its owners will pay more than $2.4 million to settle the FTC’s charges, which will be used to refund customers. Among other things, the order prohibits them from making any representations about potential revenue without documented evidence that those claims are typical for consumers. They must also obtain explicit informed consent from people before adding them to a recurring subscription plan, and must provide an easy way to cancel. The FTC’s lawsuit against defendant Kyle Dennis remains pending.
We usually end posts like this with a warning to potential entrepreneurs to protect themselves from high-price touts. But today we want to speak directly to the people who are making a living by promoting investments, coaching workshops, franchising, work-from-home programs, MLMs, e-commerce and the gig economy, and other money-making ventures. In case you haven’t noticed, the Federal Trade Commission takes a keen interest in the revenue claims companies communicate to consumers. The Federal Trade Commission has filed a new case challenging deceptive financial representations. More than 1,100 businesses promoting profitable ventures have been sent penalty notices, letting them know that misleading statements can result in substantial civil penalties.
What should these developments tell you? first, if you claim how much money people might earn from your product or service, you must have written documentation to support your claim. Now is the time to run a compliance check to ensure that any income claims you or your agent make are backed by verifiable evidence and are not just hot air and hype. second, consumers tend to interpret a customer’s income statement as the typical income of others. So don’t mislead people by cherry-picking your success stories. Verify the accuracy of the endorser’s claims and ensure their experience reflects what others can expect. third, if you sell subscriptions online, provide consumers with an easy cancellation mechanism. Don’t force people to call and then put them on hold. While you’re waiting, never subject them to more sales pitches.
