The Federal Trade Commission (FTC) has stepped in to squash a business opportunity scheme that promised unsuspecting consumers exorbitant returns on investments in online stores.
An FTC-led lawsuit has prompted a U.S. District Court for the Southern District of California to temporarily shut down Automators AI, which bills itself as a consulting service that helps people start and scale e-commerce businesses. The scheme led consumers to invest a collective $22 million in stores hosted on digital marketplaces like Amazon.com and Walmart.com in hopes of earning significant income and profits.
In addition to luring consumers into becoming passive investors in existing stores, Automators offered them corporate coaching and consulting to teach them how to set up and manage their own e-commerce stores. It touted its “proven system” for success, which included proprietary “AI machine learning.” According to the FTC, Automators’ claims that those assets would pave the way to profits were unfounded. The defendants made “baseless” claims about the power of their AI tools, promising that one-on-one coaching sessions would help consumers generate over $10,000 per month in sales, the suit said.
“The defendants preyed on consumers looking to provide for their families with promises of high returns and the use of AI to power such returns,” director of the FTC Bureau of Consumer Protection Samuel Levine said. “Their lies caused consumers to lose tens of thousands of dollars, with many losing their life savings.” Automators coerced consumers into making initial investments of $10,000 to $125,000, and providing tens of thousands of dollars of additional funding for working capital.
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The FTC complaint names defendants Roman Cresto, John Cresto, Andrew Chapman and Automators AI (previously known as Empire E-commerce as well as Onyx Distribution). It alleges that most of the company’s clients didn’t even recoup their investments, much less earn the massive sums that were promised, like $4,000-$6,000 in consistent monthly net profits, or up to $200,000 in one month alone. On the contrary, most of Automators’ clients lost significant amounts of money in the scheme, with Walmart and Amazon systematically shutting down stores for policy violations.
Automators’ operators also claimed that their firm was backed by “venture capital,” though no money was invested by any such firm, the FTC said. An affiliate marketer connected with the firm publicly stated sales and profit numbers that the Crestos and Chapman knew to be false. “In truth, the affiliate marketer’s e-store was losing money and got shut down,” the FTC wrote.
Numerous consumers submitted complaints to Automators about the losses they incurred, but instead of being refunded for their investments, they were offered new storefronts on other platforms. They were pressured not to share their negative experiences with Automators publicly through non-disparagement agreements.
Chapman and the Crestos used Instagram and similar platforms to further their scheme. One video showed Roman Cresto falsely claiming to be a “leading eight-figure Amazon entrepreneur and creator of industry leading wealth-generation systems.” Other posts depict the defendant’s lavish fast-cars-and-cigars lifestyle, including vacations in Switzerland and Italy. “He states in his videos that he is a college dropout who, at 20 years old, was able to purchase a McLaren Spider sportscar for himself and a Tesla for his mother and travel the world,” the complaint said.
Now, Levine said the FTC is working to hold the defendants accountable, secure compensation for those who were victimized, and shut down Automators for good. The commission’s complaint charges the firm with violating the FTC Act, the Business Opportunity Rule, and the Consumer Review Fairness Act, and prevails upon the court to permanently dissolve the company’s operations.