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FTC Nails Business in a Box and Crypto Investment Recycled Schemes. Here We Go Again.

The Federal Trade Commission is taking action against DK Automation and its owners, Kevin David Hulse and David Shawn Arnett, for using unfounded claims of significant returns to entice consumers into moneymaking schemes involving Amazon business packages, business coaching, and cryptocurrency. The FTC’s complaint alleges that the defendants promised consumers that they could “generate passive income on autopilot” when the truth was that few consumers ever made money from these schemes.

“DK Automation ripped off consumers by manipulating reviews and making empty promises of big returns on cryptocurrency investment schemes and bogus business programs,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “They ignored warnings that these practices were illegal, and now they are paying the price.”

proposed court order would require the defendants to turn over $2.6 million to be used to refund consumers harmed by their deception, as well as requiring them to stop their deceptive earnings pitches and follow the law.

The FTC’s complaint notes that the defendants continued to use deceptive earnings claims even after they received Notices of Penalty Offenses regarding money-making opportunities and endorsements from the agency.

The defendants sold their Amazon programs under a number of different names, including AMZDFY, Amazon Done For You, and Amazon Done With You. According to the complaint, they promised consumers a “100% turnkey” business selling products on Amazon and charged consumers as much as $100,000 for the program. Their marketing and sales pitches were filled with fake consumer reviews touting huge profits.

In addition to the Amazon business packages, the defendants also pitched supposed cryptocurrency investment services that included their “#1 secret passive income crypto trading bot,” which they claimed could “generate profits for you even while you sleep.” The complaint alleges that they charged consumers thousands of dollars for the supposed service. A June 2022 FTC data spotlight showed that in one 15-month period, consumers reported losing $575 million to cryptocurrency investment scams.

The FTC’s complaint alleges that the defendants in the case harmed consumers by:

  • Deceiving them about potential earnings: DK Automation and its owners made multiple claims about the supposed huge profits consumers could make with their programs, using testimonials that did not reflect the experience of any consumer in the FTC’s investigation. When they included disclaimers, the complaint alleges that they were in such small type or removed from the claims that they were essentially useless to consumers.
  • Suppressing Negative Reviews: In many cases, the company manipulated online reviews by falsifying positive reviews and flagging negative reviews that resulted in their removal. In addition, the company agreed to provide refunds to consumers on the condition they remove their complaints. Finally, the FTC charged that defendants threatened to sue a dissatisfied consumer who spoke about his negative experience with the company and added language to their contracts to prevent consumers from leaving negative reviews.
  • Not providing required disclosures: The defendants regularly failed to give consumers the information that is required by the FTC’s Business Opportunity Rule when selling their programs. These required disclosures include key information that can help consumers have a full picture about the opportunity being sold to them.

Enforcement Action

The defendants have agreed to a proposed court order that would require them to:

  • Back up their claims: The defendants would be prohibited from making earnings claims to consumers that are deceptive, and they would be required to have information in writing to back up their claims.
  • Stop deceiving consumers: They would also be prohibited from misleading consumers about the nature of any good or service they sell, including the likelihood of profits, whether testimonials are reflective of a normal consumer’s experience, or any other key information.
  • Stop interfering with reviews and complaints: The defendants would be prohibited from taking actions that restrict consumers’ ability to file complaints or leave negative reviews, including requiring consumers to sign contracts that limit their ability to complain.
  • Provide money for refunds: The defendants would be required to provide at least $2.6 million to the FTC to be used to refund consumers.

The order includes a total monetary judgment of nearly $53 million, which was partially suspended due to an inability to pay. If the defendants are found to have lied about their financial condition, then the full amount of the judgment would be immediately due.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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