In a lawsuit filed earlier this year, the FTC accused online trading academies of making huge, unsubstantiated promises about their purported investment training programs. According to the complaint, as well as the defendants’ own data, for most OTA customers, the only time they saw large sums of money was when money flew from their hands into the defendants’ pockets. Under the terms of the settlement, OTA founder Eyal Shachar and others will pay millions of dollars to refund consumers. In addition, OTAs must forgive the debt of thousands of customers who took courses through financing.
Among other things, the settlement prohibits defendants from making express or implied revenue claims unless those claims are not misleading and are supported by written materials substantiating their representations—which must be made in accordance with the requirements of consumers, potential purchasers, and the Federal Trade Commission. provided upon request.
Addressing alleged violations of the Consumer Review Fairness Act, the order prohibits the use of contract terms that limit consumers’ ability to review defendants’ products and services. It also prohibits defendants from imposing contractual terms that limit consumer communications with the FTC and any other law enforcement agency. For consumers whose contracts contain these terms, defendants must contact them personally with a notice titled “Your right to make honest comments and make a complaint.”
For consumers who took out loans to pay for training, the settlement requires OTA to provide debt relief to consumers for whom OTA currently holds debt. In addition, the settlement agreement requires defendant Shachar to pay at least $8.3 million. He also must turn over a Cessna, Bentley, Escalade, RV and six minivans. Shachar’s required payments will be reduced by 70 cents for every dollar of debt relief consumers receive, up to a maximum of $4 million. Darren Kimoto must pay $736,300 and surrender a 2017 Land Rover. Samuel R. Seiden must pay $158,000. Cash and proceeds from the sale of the property will be used for consumer refunds.
Consumers who qualify for debt relief will receive emails and letters from the defendants explaining the application process. Looking for more information about the settlement? The Federal Trade Commission has more information.
