Security & Fraud

FTC Refunds $12M To Consumer Victims Of Bogus Online Trial Memberships

FTC Files Case Against Firm Posing As SBA Lender

More than 147,000 consumers who were scammed by I Works are getting full refunds totaling $12 million, the Federal Trade Commission (FTC) announced Monday (May 18).

The FTC alleged the Utah-based company operated deceptive trial memberships and bogus government grant and money-making schemes in 2010.

The company unlawfully enrolled customers in membership programs without disclosing that it would charge their accounts on a recurring basis until they canceled, the FTC said.

I Works asked consumers to provide their credit or debit card information to pay a $1.99 shipping, handling or processing fee. But when consumers provided the information, I Works routinely charged them a one-time fee of up to $129.95, followed by monthly recurring fees of up to $59.95 for the so-called free offers and other monthly fees for programs that I Works failed to disclose to the consumers.

The FTC said the average refund is $86. Most recipients will get their refunds via check and are advised to deposit or cash their checks within 60 days. Recipients with mailing addresses outside the U.S. will receive their refunds via PayPal.

In 2016, I Works owner and CEO Jeremy Johnson and other defendants in the massive online billing scheme, agreed to settle FTC charges that they took more than $280 million from consumers, according to the FTC.

A federal jury in Utah convicted Johnson and Ryan Riddle of making false statements to a bank on multiple I Works merchant account applications. Johnson was sentenced to 11 years in prison, and Riddle to five years. The FTC’s new interactive dashboards for refund data provide a state-by-state breakdown of FTC refunds.

The orders against Johnson and Riddle ban them from selling grant products, investment opportunities, continuity programs, add-on products bundled with the offered products and from automatically billing a consumer unless the consumer specifically declines the offered product.

In addition, Johnson and Riddle are barred from debiting consumers’ bank accounts without first obtaining their express verifiable authorization, and from misrepresenting material facts about any product, including the total cost or any associated risks.

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