FTC strikes down misleading Raging Bull tax returns
For people trying to get a foothold financially, the promise of “$10,000 a week” is a weighty representation. But too often, they end up losing their savings to the promoters of bogus investment plans. The FTC just announced a $2.425 million settlement in its lawsuit against RagingBull.com, an organization the agency says has exploited people’s dreams of economic security while often leaving them financially roped and trapped. in hard-to-cancel subscriptions.
Filed in 2020 in federal court in Maryland, the lawsuit against Raging Bull.com alleged that the defendants offered expensive subscriptions that allegedly gave people access to the firm’s investment “gurus” who could “double or triple” subscriber trading accounts in a week. The defendants’ promotions also featured testimonials from subscribers claiming to have earned $500 in 15 minutes and $6,500 in 20 minutes.
The complaint, which named (among others) RagingBull.com, LLC, Sherwood Ventures, LLC, Jason Bond, LLC, Jeff Bishop and Jason Bond, alleged that the defendants’ boasts were not typical of the results subscribers actually achieved. Additionally, the FTC claims that Raging Bull did not track customer trading results, so defendants had no way to back up their claims about how much subscribers would earn. According to the lawsuit, the defendants’ customer service record was also shoddy. Raging Bull was paid for by recurring charges on customers’ credit cards, but people who tried to cancel experienced long waits, phone hang-ups and other roadblocks that kept them from saying “Enough! “
To settle the charges brought against them by the FTC, Raging Bull and its owners will pay more than $2.4 million, which will be used to reimburse customers. Among other things, the order prohibits them from making claims about potential earnings without written evidence that such claims are typical for consumers. They will also need to obtain people’s express informed consent before signing them up for a recurring subscription plan and they must provide an easy way to cancel. The FTC’s action against defendant Kyle Dennis remains pending.
We usually end messages like this with a warning to would-be entrepreneurs to protect themselves from the trap of high-priced peddlers. But today we want to speak directly to people who make a living promoting investments, coaching seminars, franchises, work from home programs, MLM, e-commerce offerings and gig economy, and other lucrative businesses. In case you haven’t noticed, the FTC has shown a keen interest in the type of revenue companies pass on to consumers. The FTC has filed new cases challenging misleading financial representations. And more than 1,100 companies starting money-making ventures have received notices of criminal offenses advising them that misleading claims could result in steep civil penalties.
What should these developments tell you? First, if you are claiming how much people are likely to earn with your product or service, you need to have written documentation that backs up what you are saying. Now is the time to perform a compliance check to ensure that any tax returns you or your agents make are backed by verifiable evidence, not just hot air and hype. Second, consumers tend to interpret clients’ tax returns as typical of what other people will do. So don’t mislead people by picking your successes. Verify the accuracy of what endorsers claim and make sure their experience reflects the results others can expect. The third, if you sell subscription services online, provide consumers with an easy mechanism to cancel. Don’t force people to call and then put them on hold. And definitely don’t subject them to more sales pitches while they wait.