EDMONTON - An Alberta-based Internet salesman accused of defrauding consumers of millions of dollars has agreed to a massive settlement with the U.S. Federal Trade Commission.
Jesse Willms, 24, based out of Sherwood Park, agreed to a $359-million judgment that will be suspended upon Willms’s surrender of bank account funds and proceeds from the sale of his house, personal property and corporate assets, including a Cadillac Escalade, fur coat and artwork, according to a trade commission press release.
The trade commission press release notes that the settlement does not equal an admission on Willms part of illegal activity.
The order also imposes a permanent ban on Willms and his companies from what the trade commission calls “negative-option” marketing, which interprets consumers’ inaction as permission to charge them.
It’s alleged that as early as 2007, Willms used various Internet sales schemes to lure customers with free or risk-free trials and offers for products such as weight-loss supplements, colon cleansers and teeth whiteners.
After customers signed up using their credit or debit card information, they were typically charged for the free trial in addition to recurring monthly fees, usually $79.95, unless they opted out, according to the commission.
“The fact that almost four million consumers fell prey to the lure of these free trial offers is a stark reminder that ‘free’ offers can come at a huge price,” said David Vladeck, director of the FTC’s Bureau of Consumer Protection. “The FTC has stopped about $1 billion in online marketing fraud during the past two years by shutting down operations. But consumers still need to beware because scam artists are constantly coming up with new ways to deceive people online.”
Willms commented on the settlement on his blog Thursday.
“Today, in co-operation with the U.S. Federal Trade Commission, we are announcing an agreement that helps us put past issues behind us,” he wrote. “We have resolved issues relating to past marketing practices for products that our company no longer sells. Through this process, we also have assured that our current business practices are in full compliance with the law.”
The commission filed a complaint in May alleging Willms used Internet-based marketing schemes to defraud consumers in Canada, the U.S., Australia, New Zealand and the United Kingdom.
The U.S. agency claimed about $450 million was gained through fraudulent practices. None of the allegations have been proved in court.