This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
Federal regulators are suing three Utahns for allegedly taking part in an illegal operation that took in $467 million from consumers in at least five countries.
The Federal Trade Commission filed its action this week in Seattle naming an Alberta, Canada, man and the trio for allegedly using deceptive Internet marketing tactics to strip money from customers in the United States, Canada, the United Kingdom, Australia and New Zealand.
Named along with Jesse Willms of Sherwood Park in Alberta, were Utahns Peter Graver of JDW Media LLC and Sphere Media LLC, Orem; Brett Callister of True Net LLC, Payson; and Carey L. Milne of Net Soft Media LLC of Herriman. Also named was Adam Sechrist of Circle Media Bids and Sphere Media, York, Penn.
The lawsuit is the latest federal action that has targeted a number of Utah companies involved in what's called the Upsell Industry. In this scheme, companies allegedly use sales techniques to get customers' credit card or debit card numbers with lures of free products for only a minor handling and shipping charge, then assess monthly fees for products or services that the buyers are not aware they had agreed to pay.
"Regardless of the specific product, program or service offered which has varied widely, from teeth whiteners and quick weight-loss products to work-at-home schemes and penny auctions the Willms defendants induce consumers to enter their credit or debit card information by making false claims about the nature of the offer, including the total cost to the consumer, recurring monthly charges that the Willms defendants make to the consumer's account and the availability of refunds," according to the lawsuit.
With "risk-free" trial offers, some consumers were typically charged an additional $79.95 a month for products, while others ended up paying a "membership" fee for access to products for a year, the FTC said. The websites included "penny auction" sites, where new customers ended up paying monthly charges of about $150 for 300 "introductory bonus bids" and then faced $11.95 monthly charges for other bonus bids.
Jesse Willms failed to disclose information about the monthly charges on websites, nor was it placed close to where consumers were asked to fill in credit and debit card information.
Graver, Callister, Milne and Sechrist sold services to Willms, according to the complaint. The Utahns could not be reached for comment Tuesday.
Graver established JDW Media to assist Willms' operations, while Callister's True Net was a penny auction site featured on Selloffauctions.com that was used to help secure banking and merchant processing services, the lawsuit said. Milne's Net Soft Media also allegedly operated penny auctions, including SwipeBids.coms.
The three Utah companies "have submitted inaccurate information to financial institutions and manipulated sales data reported to the credit card processing system in order to obtain and retain access to merchant processing accounts through which consumers' credit and debit cards may be charged," the lawsuit said.
The suit asks for a freeze of the defendants' assets, injunctions to prohibit continuing violations of federal laws and orders for refunds to consumers and the forfeiture of "ill-gotten monies."
Utah appears to be a hub of sorts for the Upsell Industry. St. George businessman Jeremy Johnson was sued in December by the FTC, which alleged he took in $275 million from U.S. consumers for using the same types of tactics as outlined in the Seattle lawsuit.
JDW Media also was named in a lawsuit, along with other Utah companies that include Pacific WebWorks, filed in 2010 by search giant Google for misusing its name in selling work-at-home opportunities to consumers. That suit was settled, with the companies agreeing not to misuse Google's name.
People named in FTC lawsuit
Jesse Willms, of Sherwood Park, Alberta, Canada; Peter Graver, Orem; Brett Callister, Payson; Carey L. Milne, Herriman; and Adam Sechrist, York, Pa.
List of companies. > E4