The FTC reports that threats of death were made to a negative online reviewer who criticized a product's promise of "passive income" on Amazon.

• The Federal Trade Commission is intensifying its scrutiny of companies that automate the launch and management of online businesses for customers in exchange for an initial investment.
• An e-commerce money-making scheme operated by Ascend Ecom, primarily on Amazon, is the subject of the latest case.
• Companies such as Ascend have been accused by the FTC of misrepresenting themselves and making false earnings claims.

In May of last year, Jamaal Sanford received a threatening email from someone claiming to be part of a "Russian shadow team." The message contained Sanford's home address, social security number, and his daughter's college information.

If Sanford, a resident of Springfield, Missouri, wants to ensure his safety, he must remove the negative online review.

"Cooperate with the reviews," the email advised. "You have nothing to gain by not playing tough guy and everything to lose by not cooperating."

Sanford had left a scathing review for an e-commerce "automation" company called Ascend Ecom on the rating site Trustpilot months earlier. The company's purported business was launching and managing storefronts on behalf of clients, who would pay money for the service and the promise of earning thousands of dollars in "passive income."

According to a Federal Trade Commission lawsuit unsealed on Friday, Sanford invested $35,000 in a scheme but never recouped the money and is now in debt.

The FTC's lawsuit against Ascend hinges on his experience, which alleges that Ascend made false claims about earnings and business performance and threatened or penalized customers for posting honest reviews, among other violations. The FTC seeks monetary relief for Ascend customers and to permanently bar the company from conducting business.

The FTC has been cracking down on e-commerce money-making schemes on popular marketplaces like Amazon and eBay since mid-2023. The agency has filed at least four lawsuits against automation companies, accusing them of deceptive marketing practices and falsely promising customers they could earn passive income.

The FTC is intensifying its enforcement against companies that employ AI to enhance deceptive or unfair practices that harm consumers. The agency cited Ascend as an example of a company it took action against due to its assertions that it utilized AI to optimize clients' business outcomes.

The FTC has vowed to take action against companies that attempt to conceal unfavorable reviews online under recently introduced guidelines aimed at combating false reviews.

Ascend, like other automation businesses, advertises their "easy money" opportunities on social media platforms such as Instagram, TikTok, and YouTube. However, their promises are often unfulfilled, and their storefronts are frequently shut down due to violating policies related to dropshipping or counterfeits.

In 2021, Ascend, a business formed in that year, was accused by the FTC of defrauding consumers of at least $25 million through a scheme involving co-founders Will Basta and Jeremy Leung. The company has conducted business under various entity names and has registered its operations in states such as Texas, Wyoming, and California.

The threats against Sanford intensified, with a text message sent two days after the initial email containing an image of a severed head and demanding the removal of the negative review.

"Your husband has angered some people with his ignorance, which he does not wish to do."

Sanford soon purchased a security system for his home.

In an interview, Sanford stated that Ascend had guaranteed his Amazon storefront would generate enough revenue to cover the cost of inventory purchased monthly. Despite this, his store accumulated a diverse range of products, including LED lights and vitamins, sourced from retailers such as Macy's and Home Depot, and sold on Amazon. The company employed the dropshipping model, which frequently resulted in store suspensions on Amazon.

Amazon prohibits merchants from dropshipping unless they are the seller of record, meaning their name is on the invoice, packing slip, and other materials.

'Depleted bank accounts'

Sanford's sales declined and his debts increased, prompting him to complain to Basta and Leung. However, when his complaints were ignored, he posted negative reviews. Later, Ascend proposed refunding him $20,000 in exchange for removing the review, but Sanford refused.

He stated that he had resigned himself to not receiving his money back and now all he desired was accountability.

Karl Kronenberger, a lawyer representing Ascend, stated that the company never threatened customers and always aimed to resolve disputes fairly.

Kronenberger stated that we are examining if a rival of Ascend is the source of some of the accusations in the case.

The company claimed that its proprietary artificial intelligence tools could help customers quickly earn thousands of dollars in sales on Amazon and other platforms by identifying top-selling products.

Amazon's third-party marketplace is increasingly being utilized by e-commerce automation companies, with millions of merchants and over half of all goods sold on the site being hosted on this platform.

Amazon didn't provide a comment for this story.

The FTC stated that Ascend marketed its scheme as "risk-free" due to its buyback guarantee, which promised to compensate clients if they failed to recover their investment within 36 months.

The regulator stated in its complaint that consumers experience no gains after investing, resulting in empty bank accounts and high credit card bills.

The FTC stated that Ascend falsely claimed it had been featured in media outlets such as Forbes, Yahoo! Finance, and Business Insider. Its primary advertising efforts were focused on social media platforms like TikTok, X, YouTube, and Instagram.

The FTC announced that Ascend is facing two lawsuits in California, including allegations of breach of contract and other claims. In January, an arbitration action was filed against Ascend in Florida on behalf of 30 customers. However, Nima Tahmassebi, an attorney representing the Ascend customers, informed CNBC that the clients withdrew their claim once they became aware of the FTC case.

Tahmassebi stated that he has received requests for legal aid from hundreds of people who "almost pleaded" for assistance after losing money due to using Ascend's automation services.

"Tahmassebi stated, "I'm conversing with individuals who claimed I wouldn't receive Christmas presents this year due to my circumstances with them." "They spent money that could have been used for their child's college tuition. Now, they're perplexed and have no idea what to do.""

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