Feds put the brakes on Internet marketer's 'Free Trial' deception
Lose weight, get whiter teeth, make extra money working from home -- all with a "free trial" offer online. The man the feds say raked in more than 300 million dollars with that scheme is now officially out of business.
Investigators in the US and Canada say Jesse Willms of Alberta tricked nearly 4 million consumers around the world and raked in $359 Million in the process. A settlement filed in the U.S. District Court today forces Willms to pay up, but his victims probably won't see a penny.
Court records name Willms as the man behind dozens of free trial offers on dozens of websites for fat-burning weight loss pills, abs-sculpting health supplements, penny auctions, teeth whiteners and more.
The bait was "free trial" offers where taking the free trial automatically triggered monthly orders that were difficult to cancel, and monthly $80 charges that were nearly impossible to stop after the fact.
It's called negative-option marketing.
"Negative option is a big problem," said FTC Regional Director Bob Schroeder. "It goes hand in hand with free trial offers. There's nothing really free out there for consumers. The pitch is 'This is free, sign up for it,' and what consumers didn't realize is they were signing up for a monthly payment."
As part of the settlement, Willms must surrender his frozen bank accounts and sell his personal property and corporate assets. But the Federal Trade Commission says the money won't be nearly enough to repay the consumers Willms deceived.
"The money that was frozen will either be used to pay legit business expenses, especially taxes in Canada and the US," Schroeder explained. "Our goal in these cases when there isn't enough money to give back to consumers is to make sure the person who stole the money, doesn't get to keep it."
Schroeder says what's left of Willms' liquid assets after legitimate businesses expenses are paid will go to the US Treasury.
The FTC says during the past 2 years, it has stopped nearly $1 billion dollars worth of online marketing fraud by shutting down companies like those run by Jesse Willms.
But scammers are constantly coming up with new, sophisticated ways to trick you online, so you can never let your guard down.