Alberta internet marketer settles $359M case in US
Sherwood Park man used 'free trial' offers to collect $359 million
Sherwood Park, Alta., internet millionaire Jesse Willms has agreed to a $359-million settlement with the U.S. Federal Trade Commission, forcing him to give up his home and personal property.
Willms's companies allegedly used bogus "free" product offers to deceive consumers in the U.S. and other countries, charging them for products and services they did not want or agree to purchase. He collected $359 million, the FTC said.
Willms was scheduled to go on trial in the U.S. in July.
The settlement does not constitute an admission by Willms that he broke the law, the commission said.
However, the settlement permanently bans Willms and his companies from using "negative-option" marketing, a practice in which the seller interprets consumers' silence or inaction as permission to charge them.
The settlement imposed a judgment of $359 million, an amount that will be suspended once Willms surrenders his bank account funds and proceeds from the sale of his house, personal property and corporate assets, including a Cadillac Escalade, art and a fur coat, said the FTC.
Willms's American assets were frozen by a U.S. judge in September 2011.
FTC worked with Canadian authorities
The FTC worked with law enforcement agencies in Canada, including the Alberta Partnership Against Cross-Border Fraud and the Canada Competition Bureau, in investigating Willms's internet scheme.
According to the FTC's complaint, filed in May 2011, Willms and his companies lured consumers with "free" trial offers for weight-loss pills, teeth whiteners, health supplements, a work-at-home scheme, access to government grants, free credit reports and penny auctions.
Consumers were often charged for the "free" trial, a monthly recurring fee, typically $79.95, and additional monthly recurring fees for so-called "bonus" offers, said the FTC.
Willms also allegedly contracted with affiliate marketers whose banner ads, pop-ups, sponsored search terms, and unsolicited e-mail led consumers to their websites.
The Willms settlement order permanently prohibits Willms and his 11 companies from:
- Debiting consumers' bank accounts without first obtaining their express verifiable authorization.
- Misrepresenting any product or service or the terms and conditions associated with any offer, specifically including claims of "free," "risk-free," or "trial offer."
- Failing to clearly disclose the terms and conditions of any offer, including refund terms, before requesting consumers' payment information.
- Making misleading or unsubstantiated disease-prevention, weight-loss or other health-related claims.
- Using false or deceptive endorsements and testimonials.
- Failing to monitor the activities of marketing affiliates and affiliate networks involved in the marketing of any Willms product or service.
- Making misrepresentations in order to obtain services from payment processors, banks, and other third parties.
In addition to Willms and his companies, five people accused of providing services to Willms have entered into separate settlements with the FTC.
The FTC believes the individuals, along with Willms, provided banks with false or misleading information to obtain accounts through which Willms placed charges on consumers' credit and debit card accounts.
If it's found that Willms or the others misrepresented their financial condition or if they fail to meet the terms of the settlement order, the full judgment in the orders will become due immediately, said the FTC.