(CN) - A federal judge in Nevada has ordered Grant Connect to pay $29.8 million for various consumer scams, including one program that promises "easy money" through government grants in exchange for $39.95 a month.
In a 2009 lawsuit, the Federal Trade Commission claimed that Grant Connect, several partner websites and their owners used bogus testimonials, hid the actual cost of their products, and repeatedly debited consumers' bank accounts without permission.
U.S. District Court Judge Philip Pro had previously determined that the company used pictures of President Barack Obama, Vice President Joe Biden and the American flag to create the impression that billions of dollars in free government grants were available to individuals for personal use.
But most of the grants that the companies touted cannot be used directly for personal use. They are available only to registered charitable and social organizations.
Advertised as "a unique, consumer-friendly US government grant program that delivers all of the tools for the consumer to search multiple databases, write grant proposals, and deliver polished plans," Grant Connect was actually the entry point to ensnare consumers with so-called negative-option upsells, Judge Pro said.
A negative-option upsell is a marketing ploy that requires a consumer to opt out of receiving products to prevent being charged on a recurring basis, in addition to the main service they ordered.
Unwary Grant Connect customers were thus enrolled for legal-support services; identify-theft-protection services; a medical-discount program and long-distance services. The FTC said none of the programs offered value to the consumer.
In addition to its government grant scheme, Grant Connect also advertised work-at-home business schemes, bogus open credit lines and dietary supplements based on false health claims.
Several defendants settled with the FTC in October, agreeing stop marketing products or services similar to those marketed by Grant Connect. They also agreed to pay much smaller fines than the $29 million in store for the remaining defendants.
"Given defendants' recidivism, extensive misconduct, willingness to flout the law, and highly adaptable scheme," Pro decided to permanently ban Grant Connect and its founders, James Gray and Randy O'Donnell, and the other remaining defendants, from marketing or selling granted-related products and services; credit-related products and services; work-from-home business opportunities; or dietary supplements and nutraceuticals.
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