Calif. AG targets 'get rich' Internet schemes

Legal News Line Mar. 17, 2009, 12:31pm

Jerry Brown (D)

VENTURA, Calif. (Legal Newsline) - California Attorney General Jerry Brown and Ventura County District Attorney Gregory Totten have reached a settlement with two Internet companies that "falsely promised" to help customers "get rich."

The settlement involves Imergent, Inc. and Stores On Line for alleged false promises that customers could earn full-time equivalent incomes selling products online," the attorney general's office said Tuesday.

"These companies falsely promised customers that they could get rich by selling merchandise over the Internet," Brown said. "In reality, many customers were left in deep debt, paying high up-front costs, and never earning a dime from their Web sites. This agreement allows these customers to get back some of their losses."

The companies sell Internet "stores" for between $2,700 and $6,000.
According to the terms of the settlement, the companies will pay about $150,000 in restitution to consumers who have complained to the attorney general's office or the Ventura County district attorney. An addition $200,000 will be paid to those who complain within the next 90 days.

Further, any customer that complains or has complained can have their financing contracts canceled, according to the attorney general's office.

Other terms of the settlement include forcing the companies to send letters to customers offering them the right to break their deal, particularly senior citizens. Brown believed the company targeted seniors with limited online experience and downplayed the skills needed to conduct business.

One victim used the inheritance left by her father to purchase six Web sites, in hopes that they would help supplement her income after retirement," the AG's office said. "The victim spent over $10,000 in set up costs. Of the six Web sites the victim bought, only one has been set up, and it continues to cost more than it brings in."

The company cloaked its true product in misleading ads, Brown said, that advertised a connection to eBay's $3.2 billion in annual revenue. The companies advertised free "eBay Entrepreneur Training" seminars and conferences.

This is the second time these two companies have been sued by the California Attorney General's office and the Ventura District Attorney. In 2006, both companies settled a previous lawsuit with similar violations. The second lawsuit, "was brought in 2007 to enforce the prior judgment, and to seek penalties, restitution, and an injunction," according to the attorney general's office.

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