The Federal Trade Commission says it has permanently shut down an online scam that lured consumers into signing up for phony "free government grants" and debited their bank accounts without their permission.
The FTC settlement involves In Deep Services, Inc. of California and its principals, Ryan Champion and Joseph C. Fleming IV, which did business under the names Grant$ For You Now, Grant One Day, and Easy Grant Access.The settlement is part of "Operation Short Change," a federal crackdown launched in July 2009 against scams targeting financially-strapped consumers. Free government grant schemes have been around for years, and have proliferated during the Great Recession.
The FTC said In Deep Services operated websites that deceived consumers by promising them free government grant money to cover personal expenses and pay off debt -- even though no such federal government grants exist.
According to the FTC complaint, the defendants requested consumers' credit or debit account information to process a $1.99 fee that allowed access to "members only" sections of their websites, which supposedly contained information on how to apply for federal government grants.
In reality, the "members only" portion of the site was chock full of inaccurate and obsolete information.
The FTC also accused the defendants of failing to disclose that consumers who signed up for their bogus service were hit with recurring monthly charges of $72 to $95, as well as a one-time charge of $19.12. All of the defendants' websites falsely offered a "100% No Hassle Money Back Guarantee."
The defendants' sites were first shut down in June 2009, when an FTC lawsuit resulted in a temporary restraining order.
The FTC settlement bans the defendants from marketing or selling any grant-related product or service, or "negative option" program in which consumers have to opt-out in order to prevent being charged.
The defendants are also barred from automatically debiting consumers' accounts without authorization and misrepresenting facts that would influence consumers' decisions about whether to participate in a program.
The settlement imposes In Deep Services, Ryan Champion and Joseph C. Fleming IV,
a fine of $9,042,070 each. The judgments will be suspended if the defendants pay back taxes owed to the IRS and the state of California, and surrender their remaining assets to the FTC.
If the court determines the defendants lied about their finances or if they fail to pay back taxes, the full amount of the penalty will be due.
Feds Shut Down 'Free Government Grants' Scam