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Amazon AI scammers duped investors out of millions with 'passive income' scheme, FTC alleges

Amazon AI scammers duped investors out of millions with 'passive income' scheme, FTC alleges

  • 18.03.2025 17:42
  • msn.com
  • Keywords: Fraud, Investment Scam

The FTC sued Click Profit for allegedly defrauding investors with a "passive income" scheme via Amazon stores, promising high returns but delivering none. The company's founders made false claims about AI and brand partnerships to attract millions.

Amazon NewsAmazon ReportsAMZNsentiment_neutral

Estimated market influence

Click Profit

Negativesentiment_dissatisfied
Analyst rating: N/A

Alleged to have defrauded investors by promising high returns through Amazon storefronts but failed to deliver, leading to financial losses for consumers.

Amazon

Amazon

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Analyst rating: Strong buy

Amazon suspended or terminated 95% of Click Profit's stores due to policy violations. While Amazon was not directly involved in the fraudulent scheme, their actions impacted the operations of Click Profit.

Context

Analysis of Amazon AI Scam Case: Business Insights and Market Implications

Overview

  • Case Details: The FTC filed a lawsuit against Click Profit (operating as FBALaunch, Automation Industries, and PortfolioLaunch) and its co-founders Craig Emslie and Patrick McGeoghean for allegedly defrauding investors in a "passive income" scheme.
  • Investment Scheme: Investors were promised high returns (exceeding stock market performance) by opening and managing Amazon storefronts. Initial investments ranged from $45,000 to $75,000, with additional fees for inventory.

Business Model

  • Revenue Structure:
    • Click Profit charged $45,000–$75,000 upfront for store setup and management.
    • Investors were also required to pay $10,000 or more for inventory.
    • The company took up to 35% of profits from customer stores.
  • Promised Returns: Click Profit claimed "insane returns" and guaranteed wealth generation through AI-driven product sourcing.

Operational Issues

  • Amazon Store Performance:
    • Amazon suspended or terminated 95% of Click Profit's stores for policy violations.
    • Of the remaining stores, 20% earned nothing, and another 33% earned less than $2,500 in lifetime sales.
  • AI Claims: The company falsely claimed to have spent $5 million on a "super computer" to identify profitable products, generating around $100 million in sales.

Consumer Impact

  • Investor Losses:
    • Many investors lost their entire investments and were left with burdensome credit card debt.
    • One investor lost his life's savings and was threatened with legal action after posting a negative review.
  • Refund Practices: Click Profit allegedly refused refunds and intimidated consumers into removing negative reviews.

Competitive Dynamics

  • Misuse of AI and Brand Partnerships: The company falsely claimed partnerships with major brands (e.g., Nike, Disney) and expertise in product sourcing.
  • Marketing Tactics: Emslie appeared in TikTok videos alongside Warren Buffett, creating a false image of legitimacy and prosperity.

Regulatory Implications

  • Legal Violations:
    • Click Profit allegedly violated the FTC Act, Consumer Review Fairness Act, and Business Opportunity Rule.
    • The FTC seeks to permanently prohibit the company from operating and provide monetary relief to victims.

Long-Term Effects

  • Market Trust: The case highlights risks of AI-driven investment schemes and could damage consumer trust in similar business models.
  • Regulatory Scrutiny: May prompt increased oversight of online business opportunities and multi-level marketing schemes.

Strategic Considerations

  • Transparency and Compliance: Businesses must ensure transparency in marketing claims and comply with regulations to avoid legal issues.
  • Consumer Protection: Companies should prioritize ethical practices and provide clear terms of service to build trust.

Key Takeaways

  • The case underscores the dangers of high-investment, low-transparency business models.
  • Misuse of AI and celebrity endorsements can create false credibility, leading to significant financial losses for consumers.