FTC Alleges Amazon AI Scammers Wasted Millions on Luxury Wedding and Cars
John and Roman Cresto, self-proclaimed e-commerce "experts," are facing allegations from the Federal Trade Commission (FTC) for deceiving consumers and investors. The Cresto brothers, who claimed to possess the secrets to success on Amazon and Walmart, amassed millions of dollars by offering expensive courses and services. However, federal regulators now assert that their extravagant lifestyle, including luxury cars and a lavish wedding in Italy, was funded through falsehoods and deception.
Cracking Down on Deceptive E-commerce Consultancies
The FTC's lawsuit against the Cresto brothers is the latest example of the agency's efforts to combat deceptive e-commerce consultancies that target unsuspecting consumers and fledgling online businesses. The rise of online marketplaces like Amazon and Walmart has led to the emergence of a robust industry of consultants and agencies, often referred to as "coaches" or "gurus," who claim to have achieved great success in e-commerce. These individuals offer expensive courses and services but provide no guarantee of success.
The Allegations and Impact on Clients
According to the FTC complaint, the Cresto brothers promised to expertly manage automated online stores on Amazon and Walmart, charging consumers substantial amounts ranging from $10,000 to $125,000 for the initial investment. They also took a 35% cut from their partners' e-commerce stores. However, by June 2022, less than 10% of the stores managed by their company, Empire, generated sales. Many of these stores were suspended or terminated by Amazon and Walmart for policy violations, leaving Empire's clients in significant debt.
The FTC alleges that Empire continued to falsely promote the success of its Amazon businesses, recruiting affiliate marketers to post videos claiming substantial passive income through Empire's automation services. The agency states that most of Empire's clients lost money, while the Cresto brothers diverted millions for personal expenses.
Legal Disputes and Allegations of Deception
As Empire's fraudulent activities came to light, the Cresto brothers attempted to sell their business to Daniel Cohen, who is now suing them for deception. Cohen alleges that the Crestos misled him about the true state of the business and used him to deflect blame. Numerous complaints from other clients also surfaced, describing alleged negligence and questionable practices.
Cohen's lawsuit reveals emails from clients expressing disappointment and suspicion of being scammed. Stubbs Alderton and Markiles, the defense firm representing the Cresto brothers, allegedly fired Cohen as a client and chose to represent the Crestos instead. This action has raised ethical concerns and prompted Cohen's present attorney to question the firm's actions.
In conclusion, the FTC's allegations against the Cresto brothers shed light on the deceptive practices within the e-commerce consultancy industry. The case serves as a reminder for consumers and aspiring entrepreneurs to exercise caution when engaging with such consultants. It also highlights the importance of regulatory efforts to protect individuals from falling victim to false promises and financial scams in the rapidly growing e-commerce landscape.
Hot Take: The Impact on New Businesses
This FTC lawsuit against the Cresto brothers serves as a stark warning for new businesses entering the e-commerce landscape. The case highlights the potential pitfalls that can arise from engaging with deceptive e-commerce consultancies, which often promise great success but provide no guarantee of results.
For startups and emerging businesses, this situation underscores the importance of due diligence when seeking external advice or services. Businesses must be cautious and discerning when engaging with e-commerce consultants, especially those promising quick success or substantial returns. It's crucial to verify their credibility, track record, and the authenticity of their claims.
Furthermore, the Cresto brothers' case emphasizes the need for businesses to understand the policies and guidelines of online marketplaces like Amazon and Walmart. Violations can lead to suspensions or terminations, as experienced by the clients of Empire, the company run by the Cresto brothers.
In conclusion, while the rise of e-commerce presents significant opportunities for new businesses, it also brings potential risks and challenges. Companies must navigate this landscape with caution, armed with knowledge and a healthy dose of skepticism towards too-good-to-be-true promises. This approach will help protect them from falling victim to financial scams and ensure they build their businesses on a solid and ethical foundation.