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The people behind online business coaching outfit Lurn promised that consumers could become “Stay-At-Home Millionaires.” But according to the FTC, Lurn, Inc., CEO Anik Singal, Tyrone Cohen, and David Kettner are now Stay-At-Home Defendants in an FTC law enforcement action challenging their deceptive money-making representations. What’s more, the complaint alleges even after receiving FTC Notices of Penalty Offenses concerning Money-Making Opportunities and Endorsements, Lurn and Singal continued to use deceptive advertising claims to bilk consumers out of millions.

The FTC says Rockville, Maryland-based Lurn lured consumers in with a variety of purported money-making opportunities. For example, promotions for its Email Startup Incubator Program claimed that consumers could “Make More Than $13,700 Per Day” by using the “exact steps” that CEO Singal used “to generate millions of dollars online by using just an email and other people’s products.” Ads featured testimonials from supposedly satisfied customers who were raking in big bucks, leaving their 9-to-5 jobs, traveling the world, helping those in need, and “living in a very, very nice house with his Jaguar and Aston Martin . . . working about three hours a day.” According to the complaint, ads invited consumers to a “FREE training workshop,” but it wasn’t long before the defendants wanted $1,995 for their “Time-Tested & Proven Step-By-Step System.”

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Another one of Lurn’s promotions – the $947 Kindle Cashflow University course – featured defendant Tyrone Cohen, who claimed to teach consumers a “tried, tested and proven step by step system that’s backed by ten plus years of teaching thousands of successful students of all backgrounds and ages across the planet how to make life changing money.” So how did the “system” work? The defendants directed consumers to find a successful book on Amazon, emulate its contents in a 10-35 page document, and then sell it on Amazon for an “evergreen” and “passive” source of income.

Then there was the $1,588 Printable Profits course, advertised in a video in which defendant Singal interviewed defendant David Kettner about an opportunity that would give consumers a “very good chance at a six-figure income.” According to Kettner, Printable Profits’ “simple easy and proven system” involved looking for mugs that have sold well on Amazon and using an app to create and sell similar designs. Kettner further claimed that even if 98% of the designs weren’t successful, 2% success meant that consumers can still make $11,453 per month based on the amount of overall mug sales made online.

And the company didn’t stop there. Once Lurn and Singal had people on the hook, the defendants often followed up by having telemarketers contact consumers to pitch pricey “consulting programs” that went by names like “Digital Business Accelerator,” “Digital Empire,” and “Marketplace Mastery,” and cost consumers as much as $10,000. Following a Lurn script, telemarketers asked consumers how much money they would like to make. Regardless of their answer, the telemarketer responded that “I’m 100% confident we can help you” get the results the person wanted.

The complaint outlines the allegations in detail, but the big-picture point is that the defendants’ money-making claims were false or misleading. The complaint also describes just how the FTC says Lurn and Singal violated established legal principles both before and after receiving the FTC Notices of Penalty Offenses.

The lawsuit charges that the defendants’ earnings claims violated the FTC Act, and that Lurn and Singal violated the by mispresenting material aspects of investment opportunities. Furthermore, based on the Notice of Penalty Offenses Concerning Money-Making Opportunities, the FTC charged that Lurn and Singal knew it was “is an unfair or deceptive trade practice to make false, misleading or deceptive representations concerning the profits or earnings that may be anticipated by a participant in a money-making opportunity” and yet continued to make illegal earnings claims.

The proposed settlements with Lurn, Singal, Cohen, and Kettner include broad injunctive provision to protect consumers in the future. The proposed order against Lurn and Singal also requires them to be turn over $2.5 million to be used for consumer refunds and to notify consumers who bought a course from them since May 1, 2019, of the FTC’s law enforcement action.

Even if you don’t sell money-making opportunities, the case conveys two important messages to advertisers.

An FTC Notice of Penalty Offenses gives rise to potential civil penalty liability, so law violations could have serious financial consequences. Under Section 5(m)(1)(B) of the FTC Act, the FTC can seek civil penalties if it establishes that: 1) the company knew the conduct was unfair or deceptive, in violation of the FTC Act; and 2) the FTC had already issued a written decision that the conduct in question is unfair or deceptive. Of course, the FTC still has to prove its case, but for companies that knowingly engage in conduct an FTC decision has declared to be illegal, the cost of non-compliance could be high.

Don’t play fast and loose with earnings “disclaimers” – or any other form of disclaimer. Despite the attention-grabbing headlines and express big-money representations, the defendants’ websites and presentations sneaked in statements like this: “Many of our products and promotions provide information about potential income you may earn. These representations are not intended to describe a certain outcome or even a typical outcome, but rather actual results from those who have had exceptional success. . . . Lurn offers no guarantee or warranty that you will realize the amount of income or revenue referenced in the promotions or the courses themselves.” Ineffective, says the FTC: “Defendants’ disclaimers directly contradict the messages conveyed repeatedly in their marketing – that purchasers are likely to earn substantial income utilizing Defendants’ program.” The key take-away is that what matters is the net impression conveyed to consumers. An advertiser can’t negate its primary marketing message with a pro forma “d�����������������.”