A Federal court has issued a restraining order temporarily shutting down Automaters, a supposedly AI powered business opportunity scheme that lured consumers to invest $22 million in online stores, using unfounded claims about income and profits according to a lawsuit filed by the FTC.
Automators, which previously used the names Empire and Onyx Distribution, also claimed to use artificial intelligence to ensure success and profitability for consumers who agreed to invest.
In addition to offering theoretically high return “passive investments” in profitable e-stores and also classes in how to successfully set up and manage e-stores using a “proven system” and the powers of artificial intelligence.
Samuel Levine, Director of the FTC’s Bureau of Consumer Protection said:
The defendants preyed on consumers looking to provide for their families with promises of high returns and the use of AI to power such returns. Their lies caused consumers to lose tens of thousands of dollars, with many losing their life savings.
The FTC is working to hold defendants accountable and to secure redress for their victims.
The FTC’s complaint named defendants Roman Cresto, John Cresto, and Andrew Chapman, through their companies Automators AI, Empire Ecommerce and Onyx Distribution, and alleges the vast majority of clients did not make the promised earnings or even break even on their investments.
Instead, most users racked up significant losses and their accounts were typically suspended or terminated by Amazon and Walmart due to repeated policy violations.
The complaint charges that the Crestos and Chapman deceived consumers about the scheme in numerous ways, including by making false claims about:
- Their own background: The Crestos and Chapman falsely claim to have a proven record of helping numerous consumers make money in online stores. In one video, Roman Cresto falsely claims he is a “leading 8-figure Amazon entrepreneur and creator of industry leading wealth-generation systems.”
- Lavish promises of success: The scheme relied on numerous false or baseless projections and stories of supposed success, including “$4k-$6k consistently monthly net profit,” and “$200k in one month and 100% ROI (return on investment) in 8 months.”
- Endorsements and affiliate marketing: The complaint cites an example in which an affiliate marketer of Automator made claims on social media about his success with Automators, pointing to sales and profit numbers that the Crestos and Chapman knew were false. In truth, the affiliate marketer’s e-store was losing money and got shut down.
- Artificial intelligence: Defendants claimed to use “AI machine learning” to maximize revenues, such as “We’ve recently discovered how to use AI tools for our 1 on 1 Amazon coaching program, helping students achieve over $10,000/month in sales!”
- Venture capital backing: Defendants claimed that Empire was backed by “venture capital,” when in fact no money was ever invested into Empire by a venture capital firm.
Numerous consumers complained to defendants about their losses and, the complaint charges, instead of being offered refunds they were offered new online storefronts on different platforms. In addition, defendants pressured such consumers to sign non-disparagement agreements to prevent them from posting reviews about defendants and their services.
The complaint charges that the defendants violated the FTC Act, the Business Opportunity Rule, and the Consumer Review Fairness Act, and it asks the court to permanently shut down the company’s operations.
The Commission vote authorizing the staff to file the complaint was 3-0. The complaint was filed in the U.S. District Court for the Southern District of California. The court entered the temporary restraining order against the defendants on August 11, 2023.
Rob Freund Law shared some deeper commentary on the case on Twitter.
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