Packages move along a conveyor belt at an Amazon fulfillment center on Cyber Monday in Robbinsville, New Jersey, on November 28, 2022.
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Jamaal Sanford received a disturbing email in May of last year. The message, whose sender claimed to be part of a “Russian shadow group,” contained Sanford’s home address, social security number and his daughter’s college. He came with a very specific threat.
The sender said Sanford, who lives in Springfield, Missouri, would only be safe if he removed a negative online review.
“Don’t play tough,” the email said. “You have nothing to gain by keeping the reviews and EVERYTHING to lose by not cooperating.”
Months earlier, Sanford had left a scathing review of an e-commerce “automation” company called Ascend Ecom on the review site Trustpilot. Ascend’s purported business was launch and management Amazon storefronts on behalf of clients, who would pay money for the service and the promise of earning thousands of dollars in “passive income.”
Sanford had invested $35,000 in such a plan. He never recovered the money and is now in debt, according to a Federal Trade Commission lawsuit unsealed Friday.
His experience is a key part of the FTC’s lawsuit, which accuses Ascend of violating federal laws by making false claims about profits and business performance and threatening or punishing customers for posting honest reviews, among other violations. The FTC is seeking monetary relief for Ascend’s customers and to permanently bar Ascend from doing business.
It’s the latest sign of the FTC’s crackdown on e-commerce monetization schemes over some of the Internet’s top marketplaces, including Amazon and Airbnb. As of mid-2023, the agency has sued at least four automations companiessupporting deceptive marketing practices and falsely telling customers that they could produce passive income.
The FTC isn’t just targeting e-commerce automation businesses. On Wednesday, the agency said it is strengthening enforcement against companies that use artificial intelligence “as a way to charge for misleading or unfair behavior that harms consumers.” The agency singled out Ascend as a company it took action against in part over claims it used AI “to maximize clients’ business success.”
The FTC is also committed to go after companies trying to suppress negative reviews online as part of new rules issued this year targeting fake reviews.
Automation businesses like Ascend promote easy money opportunities on Instagram, TikTok and YouTube. However, their promises are mostly not fulfilled and storefronts are often closed for violating dropshipping policies – selling products to customers without ever having any stock – or for counterfeits.
The FTC’s complaint against Ascend accused co-founders Will Basta and Jeremy Leung of defrauding consumers of at least $25 million through their scheme. Founded in 2021, Ascend has operated under various entity names with operations registered in states such as Texas, Wyoming and California.
Lina Kahn, Chair of the Federal Trade Commission (FTC), testifies before the House Appropriations Subcommittee at the Rayburn House Office Building on May 15, 2024 in Washington, DC.
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The affidavit shows the threats against Sanford became more threatening. Two days after the original email, Sanford’s wife’s phone lit up with a text message containing an image of a severed head that again requested the removal of the unflattering review.
“Your husband has pissed some people off with his ignorance,” the text message said. “The guy who doesn’t want to get angry.”
Sanford soon bought a security system for his home.
Sanford said in an interview that Ascend had promised his Amazon storefront would generate enough revenue to cover the cost of the inventory the company bought each month on his behalf. Months passed and his store amassed a “smorgasbord” of items, from LED lights to vitamins, which Ascend bought from other retailers like Macy’s and Home Depot and then sold to Amazon, Sanford said. The company used the dropshipping model, Sanford said, which often resulted in stores being suspended on Amazon.
Amazon bans merchants from dropshipping unless they are identified as sellers of record, which means their name appears on the invoice, packing slip and other materials.
“Exhausted Bank Accounts”
As Sanford’s sales swelled and his debts ballooned, he made a series of complaints to Basta and Leung. When they went unanswered, leave the negative reviews. Sanford said Ascend eventually offered to refund him $20,000 if he would remove the review, but he refused.
“I think I’m resigned to the fact that I’m not going to get my money back and now I just want to be held accountable,” he said.
Karl Kronenberger, an attorney for Ascend, said in a statement that the company denies ever threatening customers and has tried to resolve any disputes “in good faith.”
“We are investigating whether a competitor of Ascend may be the driving force behind some of the allegations in the case,” Kronenberger said.
Ascend’s marketing pitch claimed that customers could quickly earn thousands of dollars from sales made on Amazon, Walmart and other platforms. The company said it had developed proprietary artificial intelligence tools that it used to identify best-selling products.
E-commerce automation companies are increasingly taking advantage of Amazon’s third-party marketplace, which is now home to millions of merchants and accounts for more than half of the products sold on the site.
Amazon did not comment for this story.
Ascend promoted the program as “risk-free,” the FTC said, because of its buyback guarantee, which essentially pledged to make customers whole if they didn’t recoup their investment within 36 months.
“After consumers invest, the promised profits never materialize and consumers are left with depleted bank accounts and large credit card bills,” the regulator wrote in its complaint.
To add an air of legitimacy, Ascend falsely claimed to have been featured in media outlets such as Forbes, Yahoo! Finance and Business Insider, the FTC reported. She mainly advertised her business on social media platforms TikTok, X, YouTube and Instagram.
Ascend faces two lawsuits in California alleging breach of contract and other claims, according to the FTC. In January, an arbitration lawsuit was filed against Ascend in Florida on behalf of 30 customers. Nima Tahmassebi, an attorney representing Ascend’s clients, told CNBC that the clients chose to drop the claim once they learned of the FTC case.
Tahmasebi said he has been contacted by more than 100 people “out there begging for legal help” because they lost money after paying for Ascend’s automation services.
“I’m talking to people who said I can’t get Christmas presents this year because of my situation with them,” Tahmassebi said. “People took money that they could have applied to their child’s college tuition. Now they’re gone and they’re stumped.”
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