FTC shuts down fraudulent scheme aimed at Amazon sellers

By Hank Schultz contact

- Last updated on GMT

FTC shuts down fraudulent scheme aimed at Amazon sellers
The US Federal Trade Commission has moved to shut down a fraudulent scheme that purported to show how to make more money selling products on Amazon.

The action was taken in concert with the State of Minnesota. It charged the defendants, doing business as Sellers Playbook, with defrauding people looking to do business on Amazon by inducing them to sign up for an expensive system that purported to show them how to make thousands of dollars of profit a month selling on the platform.

The company used false and unsubstantiated claims, including “make $20,000 a month” and “Potential Net Profit: $1,287,463.38.” According to FTC, few, if any, of the people or entities that signed up for the system achieved these results, and most lost money.

Utah office participates in action

There was no immediate word from FTC if potential sellers of dietary supplements had been taken in by the scheme. But the Utah Division of Consumer Protection was one of the stakeholders that cooperated in the action. Utah is a hotbed of activity in the dietary supplement industry, with entrepreneurs spinning out of the major companies there on a regular basis.

Among the other entities that cooperated in bringing the action were US Marshals Service for the District of Minnesota, Amazon.com, Inc., and the Better Business Bureau of Minnesota and North Dakota. The FTC complaint made of point of saying that the alleged fraudulent scheme is not affiliated with Amazon in any way.

The defendants are Sellers Playbook Inc., Exposure Marketing Company (also doing business as Sellers Online and Sellers Systems), and Jessie Conners Tieva and Matthew R. Tieva, who have owned and managed these companies. According to the FTC and the Minnesota Attorney General’s Office, the defendants took in more than $15 million from consumers from April 2017 to May 2018. Many consumers paid them more than $32,000.

Amazon’s position in industry

Amazon is becoming an ever greater player in the sales of dietary supplements. When the company launched its own private label brand of supplements, called Amazon Elements, more than a year ago​, Dr Kurt Jetta, founder of CPG analytics company TABS Analytics, had this to say:

“Private label supplements carry extremely high margins, and Amazon needs to find ways to improve their margins in e-commerce. Private label has major traction with vitamin customers already (over 20% of sales) and e-commerce is a significant and growing piece of the vitamin category (over 15% of dollars, with Amazon controlling about 35% of that).”

Similar scheme shut down with $10.8 million fine

Jessie Conners Tieva and Exposure Marketing Company previously promoted, sold and benefited from a similar scheme, known as FBA Stores, which ceased operation in March 2018 as a result of an FTC enforcement action​. In June 2018, its key operators were banned from selling business opportunities and business coaching services, and required to surrender approximately $10.8 million for return to consumers. The defendants in the case announce today were not defendants in the FBA Stores case.

The defendants are charged with violating the FTC Act, the Business Opportunity Rule, the Minnesota Prevention of Consumer Fraud Act, and the Minnesota Uniform Deceptive Trade Practices Act. They are also charged with violating the Consumer Review Fairness Act through contracts that improperly sought to restrict consumers’ right to review the products and services they purchased.

The Commission vote approving the complaint was 5-0. The US District Court for the District of Minnesota entered a temporary restraining order against the defendants​ on July 30, 2018, and a preliminary injunction hearing is currently scheduled for August 13, 2018.

Related news

Show more

Follow us

Featured Events

View more

Products

View more

Webinars