The orchestrators of a dubious money-making scheme, claiming to leverage AI for ecommerce success, have been ordered by the US Federal Trade Commission (FTC) to surrender $21.7m in assets as a settlement.
The settlement also enforces a lifetime prohibition on the businesses involved and two key figures from engaging in the sale of business opportunities or coaching programs related to ecommerce stores.
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The ecommerce sector has been using AI since the early 2000s and industry giants like Amazon, eBay, and Alibaba have used AI in their operations for years.
Using AI, ecommerce companies can learn a lot about shoppers’ preferences and behaviours. This knowledge allows them to develop targeted strategies and personalised offerings to differentiate and increase revenues.
The case, started in August 2023, targeted Roman Cresto, John Cresto, and Andrew Chapman, alongside their controlled entities such as Automators AI, Empire Ecommerce, and Onyx Distribution.
The FTC alleged that the defendants deceived consumers with baseless assurances of “passive investment income” from AI-powered online storefronts.
Director of the FTC’s Bureau of Consumer Protection, Samuel Levine, stated, “The defendants lured consumers into investing millions in online stores supposedly powered by artificial intelligence and made empty promises that they could coach consumers into achieving success and profitability.”
According to the FTC’s complaint, the defendants enticed consumers with promises of substantial returns from profitable e-stores and offered to educate them on setting up and managing e-stores on platforms such as Amazon and Walmart using a purportedly “proven system” and AI capabilities.
The FTC alleged that the majority of the defendants’ clients did not achieve the promised earnings, with many failing to recoup their substantial investments.
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By GlobalDataAmazon and Walmart frequently took punitive actions, including suspensions, blocks, or terminations, against the stores operated by the defendants for repeated policy violations.
