Blanca embarked on her financial journey with $60,000 saved and a meticulously developed strategy. Her aim was to enhance her income from her full-time employment, enabling her to devote more time to her creative interests while also creating lasting wealth for her family. She was convinced that passive income, derived from diverse investments, could pave the way to realizing her aspirations.
By the year 2023, while employed at a startup, Blanca had dabbled in cryptocurrency and exchange-traded funds, in addition to researching real estate investments. One day, she stumbled upon online advertisements promoting a concept known as Amazon automation.
The idea seemed simple: you engage a seasoned ecommerce management firm to run an Amazon store for you. They take care of everything—from sourcing and purchasing inventory to storage and shipping—while you supply the funds. Profits are then divided between you and the firm.
“I found it fascinating,” Blanca stated, now at the age of 29. “It felt like a fair exchange for not having to lift a finger.” (For confidentiality, Blanca requested that only her first name be used.)
After conducting extensive research, Blanca eliminated companies that appeared dubious and at last selected one named Ascend Ecom, which she found through an online advertisement. She performed comprehensive due diligence, including in-depth conversations with a salesperson who claimed to operate an Amazon store managed by the firm. Feeling assured in her decision, Blanca transferred $60,000 to Ascend Ecom to get her store off the ground.
Even with her efforts to steer clear of scams, Blanca fell prey to a sophisticated con. As stated in a lawsuit filed by the Federal Trade Commission (FTC), Ascend Ecom, known as Ascend CapVentures Inc. and later rebranded as ACV, allegedly swindled customers out of at least $25 million. Mashable examined Blanca’s sworn statement to the FTC.
The FTC’s inquiry uncovered that Ascend CapVentures Inc. routinely assured clients of five-figure monthly incomes within a two-year timeframe—assertions the agency determined to be false and misleading. Instead of utilizing client investments to manage their stores, the company purportedly misappropriated the funds for personal benefit.
Jonathan D. Herpy, an attorney representing Ascend CapVentures Inc., commented that the company “takes all of these regulatory matters with utmost seriousness and is intent on full adherence to the FTC guidelines.” Nonetheless, Mashable’s efforts to reach the company’s legal team for additional commentary were unanswered. In October, the company’s lawyers submitted a response in federal court, denying all allegations.
The FTC has also initiated actions against two additional ecommerce management firms—Ecommerce Empire Builders and FBA Machine—for comparable fraudulent behaviors. These cases underscore the hazards linked to what many consumers view as lucrative ecommerce opportunities, including launching Amazon, Walmart, TikTok, or Etsy stores.
For many individuals, the appeal of passive income is heightened by online shopping trends that surged post-pandemic and the glamorous success narratives frequently highlighted on social media. However, the FTC’s case against Ascend CapVentures Inc. emphasizes the possible traps and provides important lessons for consumers to avoid becoming victims of similar scams. Mashable engaged in discussions with alleged victims, FTC specialists, and consumer advocates to compile a list of warning signs and strategies for recognizing potential frauds.
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### **Guidelines to Evade Ecommerce Scams**
#### **1. Exercise Caution with Passive Income Claims**
While passive income options are not novel, they have adapted in the digital era, stated Colleen Robbins, a lawyer with the FTC’s Bureau of Consumer Protection. Scammers tend to promise assured income, substantial returns, or “proven systems” to entice clients. Robbins recommends an attitude of skepticism towards any business opportunity making such assertions.
#### **2. Familiarize Yourself with Your Legal Rights**
The FTC’s **Business Opportunity Rule** offers protections for consumers, mandating that firms disclose vital information before any payment is made. This encompasses information about the business, its operators, legal proceedings, and substantiation of earnings assertions. Absence or inadequacy of disclosures should be regarded as warning signs.
#### **3. Steer Clear of Large Initial Payments**
Scott Gardner, another victim of Ascend CapVentures Inc., laments his decision to spend $30,000 to set up an Amazon store. Fraud prevention specialists suggest avoiding business ventures that necessitate significant upfront investments, particularly if paired with aggressive sales tactics.
#### **4. Be Skeptical of Flashy Advertising**
Social media is filled with influencers showcasing luxurious lifestyles and promoting passive income ventures. John Breyault of the National Consumers League cautions that such marketing often hides the real expenses of running an ecommerce store, like inventory and overhead costs. Even more understated marketing materials can mislead consumers regarding profitability.
#### **5. Do Not Depend on Buyback Guarantees**
Jamaal Sanford, who lost $35,000 to Ascend CapVentures Inc., was attracted by the firm’s “buyback guarantee,” which promised to buy back stores from clients who failed to recover their investments. Nevertheless, the FTC concluded that these guarantees were mostly illusory, rendering refunds almost impossible to obtain.
#### **6. Consult with Actual Clients**
Before making any commitments, potential