FTC questions online trading academy’s money-making claims

Supplement ads often target baby boomer consumers, but that’s not the only claim being made to retirees. An FTC action alleges that a company called Online Trading Academy has made more than $370 million by making deceptive representations targeting this group of people. Additionally, the complaint alleges violations of the Consumer Review Fairness Act.

According to the FTC, the California-based company, related companies and three individual defendants promoted a “proprietary strategy” that consumers could apply “on any trade, including stocks, options, futures and currencies.” Asset Class” to make big money. They claim their “training program” – priced up to $50,000 – will teach consumers how to “invest like a Wall Street pro.” “No matter your experience and goals,” people were told the defendants’ “proven” strategies “are designed to make money in any market, whether it’s up or down.”

The complaint describes the defendants’ efforts to attract consumers through television and radio advertising, online promotions and direct mail. First up is a live “preview” seminar. Next, people pay $299 for three days of “training.” The defendants urged attendees to sign up for seminars that cost thousands of dollars. The defendants assigned each participant an “educational consultant” – also known as a commission-earning salesperson – to follow up via phone calls or emails. According to the complaint, the defendants trained their educational consultants not to “look, act or sound like traditional salespeople” but instead to play a “role” and guide consumers through a “pain funnel,” with Q&A designed to overcome consumers’ doubt.

To get people to sign up for more seminars, defendants often offered to pay all or part of the fees with 18 percent loans, promising that the interest would be waived if consumers paid off the entire fee within six months. The FTC said that in some cases, the defendants led buyers to believe they could quickly repay their loans with the money they earned using “proprietary tactics.”

So how much money does the Online Trading Academy say consumers can make? The central theme of their promotion is “You don’t have to work on Wall Street to make money like Wall Street.” Buyers in TV ads claim “I made $12,000 in three hours” or “I made $12,000 in less than 7 trading days.” Earned $32,000.” In a YouTube video, a retiree said he “made $40,000 in one trade.” Additionally, a speaker at the live event claimed that consumers “have the potential to earn $50,000 a year with an account size as low as $5,000” because Online Trading Academy has a “patented patent on the fact that it can time the market.” “Can bring you $50,000 in annual income.” We have the ability to know when to enter and when to exit, both in the long and short term. “

Other speakers – including some named defendants – painted a picture of a lavish lifestyle filled with international travel, a “super luxury car” a year and a home for the children with a “live-in nanny, chef, gardener” . One speaker said the money he made using the Online Trading Academy strategy allowed him to live in an enclave so exclusive that a famous Olympic gold medalist neighbor taught his daughter to swim.

But the facts paint a different picture. The FTC alleged that the defendants failed to systematically collect data sufficient to substantiate their revenue claims. But even the evidence they had gave them good reason to know that their statements were deceptive. First, according to the FTC, the defendants knew that few consumers who took out these high-interest short-term loans were able to repay the loans in full within six months. In fact, a significant number of loans that are at least a year old have fallen into default or other nonpayment status—such as bankruptcy.

Additionally, the FTC said the company’s own customer satisfaction surveys belied their huge advertising campaigns. For example, a 2018 survey asked, among other things, “Based on your experience with an online trading academy, do you consider yourself ‘making money’ through trading and investing?” The result: only 3% of respondents Claiming they made “a lot of money,” 31 percent said they made “a little money,” and 66 percent said they made no money at all. Things aren’t much better for those who paid thousands of dollars for the defendants’ Mastermind memberships. The findings were so bad that Online Trading Academy CEO Eyal Shachar banned anyone from taking copies out of the room, according to the FTC. Therefore, the defendants reopened a second investigation, which again showed that few people were making money and many were losing money. In addition, the FTC also claimed that data from a trading platform recommended to students by the Online Trading Academy showed that many consumers did not trade at all, and among those who did trade, nearly 75% lost money.

Buyers were dissatisfied that the defendant’s “strategy” did not achieve the advertised effect and often requested refunds. In many of the cases, corporate defendants and CEO Shachar required consumers who received refunds to sign a pro forma contract that included a no-disparagement clause prohibiting them from making statements about their online behavior to anyone, including law enforcement agencies and the Better Business Bureau. Any negative remarks about Trading Academy. The form specifies “negative” comments on “any blog, online chat room, website, including all forms of social media.”

The FTC lawsuit accuses the defendants of making false or unsubstantiated income claims and challenges their assertion that any consumer — regardless of education, background, capital or time invested in the “strategy” — can earn Get meaningful income. The complaint also alleges that corporate defendants and CEO Shachar violated the Consumer Review Fairness Act by imposing non-disparagement clauses in pro forma contracts.

The case is pending in California federal court.

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