How depressing is it that financial sextortion – the threat of publishing a nude or sexual image of individuals unless they pay to stop it -- is so prevalent that it’s given rise to an industry of scammers promising to help victims?  

The problem is bad enough that it gave rise to an FTC complaint, filed in the Northern District of Ohio. The complaint alleges that a company, Digital Forensics, along with its owner and several affiliated companies, bilked victims of sextortion out of at least $60 million by falsely claiming that it would provide sextortion assistance services.  Praying on these uniquely vulnerable targets “in a state of panic,” defendants placed search-based ads on various platforms that would appear when consumers searched for help with an ongoing sextortion attack. Once victims contacted the company, the company then engaged them in a protracted and extensive scheme to sell them services.

Defendants’ alleged scheme entailed defendants falsely portraying themselves as digital forensics experts, able to “track and identify sextortionists, prevent the spread of explicit material, and coordinate with law enforcement to bring criminals to justice.” According to the complaint, defendants would pressure victims to purchase expensive "Phase l" sextortion assistance services costing between $1,499 and $20,000, promising to stop the sextortion attack, take over communications with the sextortionist, trace the sextortionist's location through a "tracking campaign," produce a detailed investigative report, send a cease-and-desist letter to the sextortionist, and report the sextortionist to law enforcement.  Defendants, though, did none of these things. However, they would then allegedly pressure the victim to buy “Phase 2” services, services which defendants also didn’t perform.  Not surprisingly, these actions led to consumers complaining to defendants, demanding refunds, and not getting them.

And (in the words of former FTC lawyer, the great Lesley Fair), but wait, there’s more!

Not only did defendants allegedly pray on vulnerable consumers, promise services they didn’t provide and refuse to issue refunds, they also suppressed negative reviews and generated positive fake reviews. They even created and operated fake Better Business Bureau websites, sending links to those when customers complaint, to ensure that their negative reviews would not reach the real BBB. Defendants also coerced customers into removing negative reviews by conditioning partial refunds on signing non-disparagement agreements. 

And, in a truly novel act (to me, anyway), they allegedly hired ride share drivers in cities across the country to stage and post fake reviews: according to the complaint, the drivers would be instructed to pick up paperwork, drive to an unoccupied office building nearby, and take a photo holding up the paperwork, showing "Digital Forensics Corporation" on the top page, with the office building in the background. Then, the driver would post a fake positive Google review about the defendants' services and include the photo, to create the false impression that the driver was a satisfied customer leaving a meeting at one of defendants' locations.

In addition to the allegations against the various companies, the complaint names a company principal, charging him with liability for creating and implementing the defendants' business model. The complaint also alleges that the individual defendant was “solely responsible” for drafting the deceptive telemarketing scripts, and devising and orchestrating the ride share driver and BBB schemes.

The counts in the complaint include violations of the FTC Act; the Telemarketing Sales Rule; the Review and Testimonials Rule; and, interestingly (though not without precedent), the Gramm-Leach-Bliley Act for making material misrepresentations to induce consumers to disclose their bank account and credit card numbers. 

Dear readers, I know none of you are in this business, so why should any of this matter to you? Well, as marketers and advertising lawyers, it’s always good for us to know the expansiveness of the FTC’s interests; the tools and theories it is using; and the fact that the individuals who mastermind a company’s deceptive acts and practices are going to be in the FTC’s line of fire too.