The U.S. Federal Trade Commission has filed a complaint against an Alberta-based "online operation" that has allegedly bilked customers out of nearly half a billion dollars.
In a statement issued earlier this week, the FTC said the complaint centres on 10 online marketing companies controlled by Jesse Willms, a 23-year-old Alberta man.
The FTC has accused those companies of defrauding customers in the U.S., Canada, the United Kingdom, Australia and New Zealand out of more than US$450 million.
That allegation has not been proven in court, and Willms has not faced any charges.
According to the complaint, which was filed May 16, Willms' companies operate a scam in which customers are offered "free" or "risk-free" trials and are then charged for products or services they never agreed to buy.
The free trials, advertised through spam and pop-up ads, were for items such as acai berry weight-loss pills, teeth whiteners, health supplements, free credit reports, access to government grants and a work-at-home plan.
Once customers had signed on, the FTC alleges that they often incurred unauthorized monthly charges, typically for $79.95. The complaint also alleges that customers had problems cancelling the charges or securing a refund, despite a money-back guarantee.
"The defendants used the lure of a ‘free' offer to open an illegal pipeline to consumers' credit card and bank accounts," said David C. Vladeck, director of the FTC's Bureau of Consumer Protection, in the statement.
"‘Free' must really mean ‘free' no matter where the offer is made."
The complaint seeks to stop the alleged illegal scam and to force the companies to repay their customers for money earned through "deceptive tactics."
Willms has at least half a dozen websites devoted to his activities. Most tout his philanthropic work.
One site describes him as "a true Canadian success story." It also includes a statement denying the FTC's allegations.
"We believe our business practices are compliant with the law and are working to resolve this disagreement with the appropriate government agencies," Willms wrote. "Our companies give consumers the opportunity to buy a variety of products and services at significant savings."
Willms also wrote that he has hired James Kaminski, a Washington-based lawyer who used to work for the FTC "to try to resolve this matter quickly."
A number of Canadian authorities including the RCMP, the Alberta Partnership Against Cross Border Fraud and the Competition Bureau of Canada have been assisting in the investigation, the FTC said.
The companies facing allegations include Circle Media Bids, Coastwest Holdings, Farend Services, JDW Media, Net Soft Media, Sphere Media and True Net. All are registered in Canada.
