Promises of ‘passive income’ on Amazon led to death threats for negative online review, FTC says

The message, whose sender claimed to be part of a “Russian shadow team,” contained Sanford’s home address, social security number and his daughter’s college. “Do not play tough guy,” the email said. “You have nothing to gain by keeping the reviews and EVERYTHING to lose by not cooperating.” Months earlier, Sanford had left a scathing review for an e-commerce “automation” company called Ascend Ecom on the rating site Trustpilot. Ascend’s purported business was the launching and managing of Amazon storefronts on behalf of clients, who would pay money for the service and the promise of earning thousands of dollars in “passive income.” Sanford had invested $35,000 in such a scheme. His experience is a key piece of the FTC’s suit, which accuses Ascend of breaking federal laws by making false claims related to earnings and business performance, and threatening or penalizing customers for posting honest reviews, among other violations. It’s the latest sign of the FTC’s crackdown on e-commerce money-making schemes on top of some of the internet’s leading marketplaces, like Amazon and Airbnb. On Wednesday, the agency said it’s stepping up enforcement against companies that use artificial intelligence “as a way to supercharge deceptive or unfair conduct that harms consumers.” The agency pointed to Ascend as a company that it took action against in part because of its claims that it used AI “to maximize clients’ business success.” The FTC has also pledged to go after companies that try to suppress negative reviews online as part of new rules issued this year targeting fake reviews. Two days after the initial email, Sanford’s wife’s phone lit up with a text message containing an image of a severed head that again urged the removal of the unflattering review. “Your husband has angered some people with his ignorance,” the text message said. Months went by and his store amassed a “smorgasbord” of items, from LED lights to vitamins, which Ascend purchased from other retailers like Macy’s and Home Depot and then sold on Amazon, Sanford said. The company used the dropshipping model, Sanford said, which often led to the stores getting suspended on Amazon. ‘Depleted bank accounts’ As Sanford’s sales sputtered and his debts swelled, he made a series of complaints to Basta and Leung. Sanford said Ascend eventually offered to refund him $20,000 if he would take down the review, but he declined. “I think I’m resigned to the fact that I won’t be getting my money back and now I just want accountability,” he said. Karl Kronenberger, a lawyer for Ascend, said in a statement that the company denies ever threatening customers and it attempted to resolve any disputes “in good faith.” “We are investigating whether a competitor of Ascend may be the driving force behind some of the allegations in the case,” Kronenberger said. Ascend’s marketing pitch claimed customers could quickly earn thousands of dollars from sales generated on Amazon, Walmart and other platforms. E-commerce automation companies are increasingly exploiting Amazon’s third-party marketplace, which now hosts millions of merchants and accounts for more than half of all goods sold on the site. Ascend promoted the scheme as “risk free,” the FTC said, because of its buyback guarantee, which effectively committed to make clients whole if they didn’t recoup their investment within 36 months. “After consumers invest, the promised gains never materialize, and consumers are left with depleted bank accounts and hefty credit card bills,” the regulator wrote in its complaint. Nima Tahmassebi, an attorney representing the Ascend customers, told CNBC that the clients chose to withdraw the claim once they learned of the FTC case. Tahmassebi said he has been contacted by more than 100 individuals who “all but begged for legal assistance” because they lost money after paying for Ascend’s automation services. “I’m talking to people who said I can’t get Christmas gifts this year because of my situation with them,” Tahmassebi said. – This Summarize was created by Neural News AI (V1). Source: https://www.nbcnews.com/business/business-news/promises-passive-income-amazon-led-death-threats-negative-reviews-rcna172871