Internet Scam Cracked Open in Oprah’s Name

SEATTLE (CN) - A federal judge threw the brakes on several online businesses run by a Canadian man accused of cheating consumers out of more than $467 million and faking endorsements from Oprah Winfrey and Rachael Ray.

The Federal Trade Commission requested the preliminary injunction and asset freeze against Jesse Willms, who allegedly conceived a number of Internet scams that "varied widely, from teeth whiteners and quick weight loss products to work-at-home schemes and penny auctions." Tuesday's injunction also applies to five alleged co-conspirators and 10 companies that Willms either owns or controls.

Regardless of the product or service offered, Willms and the others "induce customers to enter their credit or debit card information by making false claims about the nature of the offer, including the total cost to the consumer, recurring monthly charges that the Willms defendants make to the consumer's account, and the availability of refunds," according to the FTC's amended complaint.

The commission also said Willms gets consumers' credit card numbers by obscuring critical information about the terms and conditions of supposedly free offers. Such text "is displayed in small fonts, using pale colors that are difficult to view," and "the information hidden in lengthy and dense prose that is difficult to understand," according to the complaint.

As in other "free trial" scams, consumers who did not cancel their trial offer within a certain time period were hit with unexpected monthly fees.

Despite "money-back guarantees," consumers only received refunds after complaining to law enforcement or the Better Business Bureau, according to the FTC. Even in those cases, they allegedly received only partial refunds.

Some of Willms' websites for acai weight-loss products display pictures of Oprah Winfrey and Rachael Ray, claiming that the celebrities gave their endorsements.

U.S. District Judge Marsha Pechman said the FTC submitted ample evidence to support an injunction and prove that Willms and others likely violated the Fair Trade Practices Act with their past and current websites.

The judge rejected the defendants' argument that their current websites are not deceptive, pointing to ample evidence from the FTC that the sites still do not disclose the charges.

Among other things, the injunction prohibits Willms and others from offering any products or services as a "free trial" or "bonus." They also cannot misrepresent costs or make claims about any product's performance, benefits or safety.

Since the FTC found email exchanges showing that "funds were likely transferred from Willms' accounts to Cyprus and possibly for the purpose of hiding assets," Pechman said she had a strong basis to freeze Willms' assets.

The first page of Google search results for "Jesse Willms" shows a number of apparently self-created blogs about his alleged charity work and views on Internet ethics, with page titles such as "The Truth about Jesse Willms" and "Jesse Willms Headlines." On one such page, he refers to himself as an "Internet Good Guy."

"I understand there are no shortcuts in life, and I believe that fundamentally every successful business must focus on product value and customer satisfaction," the introduction to JesseWillms.com reads. "The key is combining innovative ideas and relentless hard work, while always keeping a customer service focus."

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