An Australian man has agreed to pay the Federal Trade Commission more than $17 million for creating what the agency alleges was a bogus business scheme.
Matthew Lloyd McPhee started the U.S. operation of My Online Business Education, or MOBE, in December 2014. The company, based in Malaysia, promised that it's 21-step system could teach people how to make money from home, according to court documents filed by the FTC in Florida. Instead, consumers were pressured into shelling out thousands of dollars, with most of them losing money as a result, according to regulators.
MOBE used online ads, social media and live events to lure American customers, the FTC claimed. Once customers paid for the system, MOBE officials allegedly transferred the funds to offshore bank accounts.
"Consumers who pay the initial $49 entry fee for the 21-step program are bombarded with sales pitches for membership packages that cost thousands of dollars," the FTC claimed in the complaint.
The FTC said the service worked like this: While customers watched pre-recorded videos from McPhee, MOBE sales agents and customer testimonials, they were repeatedly asked to purchase additional packages that cost as much as $30,000 to complete the 21-step program. The product promised customers they would learn to generate substantial income, but most lost money.
MOBE, on the other hand, earned $125 million through its program, the FTC claimed.
"Consumers lost millions of dollars as a result" of the sales pitch, Andrew Smith, FTC's consumer protection bureau director, in a statement.
Banned from coaching
To settle the case, McPhee will give the FTC millions of dollars from his personal and company accounts as well as his ownership shares of resorts in Fiji and Costa Rica. He is also banned from selling business coaching or investment opportunities.
"With this action, we've put an end to the MOBE scheme, but consumers should be on guard for any work-at-home pitch promising substantial income," Smith said.
The FTC also settled with two MOBE employees. Russell Whitney, a Florida resident who worked as MOBE's event sales director, was ordered in December to forfeit $1.3 million worth of assets. Susan Zanghi, who worked as MOBE's finance manager, settled in December 2018 and is banned from selling or marketing business coaching or investment opportunities. She also had to surrender $33,400.
The MOBE settlement marks one of two online business education companies the FTC has targeted in recent years. In March 2019, four executives at a company called Digital Altitude settled with the FTC over allegations the business had deceived consumers by claiming they could earn "six figures in 90 days."