�鶹��ý

Two key players in the I Works scheme that allegedly took more than $275 million from consumers via deceptive “trial” memberships for bogus government-grant and money-making schemes have agreed to settle �鶹��ý Trade Commission charges that they violated federal law.

Bryce Payne and Kevin Pilon, along with Jeremy Johnson and seven others, were named in a complaint the FTC filed against the operation in December 2010. The court subsequently froze the assets of Johnson and 61 corporate defendants, and appointed a receiver over their assets to help ensure that money can be returned to consumers if the case is resolved in the FTC’s favor.

The settlement order against Payne bans him from selling, and from owning or having a financial interest in any business that sells: grant-related products; investment opportunities; products with negative-option features or continuity programs; or forced upsells (extra products automatically bundled with a purchase). The order also bans him from being an officer, director, or manager of any business, or acting as a signatory on any account for any business, or applying for any merchant account for any business, unless he controls, participates in, or has knowledge of the daily operations of the business.

In addition, the order permanently prohibits Payne from:

• making any of several types of material misrepresentations, including misrepresenting the total cost to buy a product, or any associated risks;
• debiting consumers’ bank accounts without first obtaining their express verifiable authorization;
• failing to make any of several key disclosures about material information, including the total cost to buy a product;
• misrepresenting that an endorser is an independent, ordinary consumer; and
• failing to disclose any material connection, when one exists, between an endorser and any individual or entity involved in the manufacture, advertising, sale, or distribution of the product or service being endorsed.

The settlement order against Pilon bans him from selling, and from owning or having a financial interest in any business that sells “forced upsells.” It also bans him from being an officer, director, or manager of any business, or acting as a signatory on any account for any business, or applying for any merchant account for any business, unless he controls, participates in, or has knowledge of the daily operations of the business.

The order also permanently prohibits Pilon from misrepresenting material facts about any product, and from making any of several types of specific misrepresentations, including misrepresentations:

• related to the total cost to buy a product, or any associated risks;
• related to the income or sales volume likely to come from an investment opportunity;
• that government grants are available to pay personal expenses, that consumers can find such grants using materials provided by Pilon, or that consumers who buy an investment opportunity from him are likely to make money; and
• related to any material aspect of a negative-option feature or continuity program.

In addition, the order prohibits Pilon from failing to make the same disclosures required in the order against Payne, and from failing to disclose all material terms and conditions of any negative-option feature or continuity program.

The orders also prohibit Payne and Pilon from selling or otherwise benefitting from consumers’ personal information, and failing to dispose properly of any customer information in their possession.  The settlement orders also prohibit them from making misrepresentations in order to obtain account services from payment processors, banks, and other third parties, and from failing to disclose to them any material information about a merchant account.

The settlement orders against Payne and Pilon impose monetary judgments of more than $289 million and $7.5 million, respectively.  The judgments will be suspended based on their inability to pay, provided they surrender certain assets to the FTC, including $20,000 from Payne and $1,000 from Pilon. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition. The FTC’s lawsuit against Johnson and his 61 companies is ongoing.

The Commission vote approving the proposed consent judgments was 4-0.  The judgments were entered by the U.S. District Court for the District of Nevada on October 21, 2013.

NOTE: Consent judgments have the force of law when approved and signed by the District Court judge.

The �鶹��ý Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides .  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.