The Cresto brother created a false perception of success for their clients and portrayed their flashy lifestyle. Trouble started when Amazon started suspending the client accounts for policy violations.
The Federal Trade Commission (FTC) has recently cracked down on two individuals – John and Roman Cresto – who falsely positioned themselves as e-commerce “experts” on Amazon and Walmart. The duo reportedly made millions of dollars by selling teaching consultations by promising regular consumers and investors some success by selling on e-commerce platforms.
They flaunted extravagant vacations and luxury cars on their social media profiles, crafting an illusion of multimillion-dollar success. The federal regulators now assert that the duo built the perception of success upon falsehoods and deceit.
This case is the most recent illustration of the Federal Trade Commission’s crackdown on deceptive e-commerce consulting firms that target consumers and fledgling online businesses. As more retailers transition to the online realm and marketplaces on platforms like Amazon and Walmart thrive, a robust sector of consultants and agencies, often referred to as “coaches” or “gurus”, has emerged.
These consultants frequently assert that they’ve achieved substantial success in e-commerce and promise to share their expertise with users who pay for costly courses, despite the absence of a guarantee of success.
On Tuesday, August 22, the FTC also asked the judge to bar the Cresto brothers from doing business, temporarily. This was in connection with the lawsuit filed earlier this month in the US District Court for the Southern District of California.
Cresto Brothers and Their Dealings
According to the complaint, the Cresto brothers operated through companies like Empire Ecommerce. The duo further pledged to expertly oversee the operations of automated online stores on both Amazon and Walmart. They purportedly handled everything from product sourcing to order fulfillment. The FTC alleges that they charged consumers between $10,000 and $125,000 for the initial investment and an additional $15,000 to $80,000 as working capital.
The complaint also states that the Cresto brothers claimed a 35% share of profits from the e-commerce stores of their “partners”. By June 2022, it’s alleged that less than 10% of the stores managed by Empire generated any sales. Amazon reportedly suspended or terminated most of these stores by October 2022 for policy violations, including intellectual property issues and the dropshipping business model. As for Empire’s Walmart storefronts, many were either never activated or terminated due to policy violations, as per the FTC.
Despite these suspensions, the FTC alleges that Empire continued to falsely promote its success through affiliate marketers, using splashy videos that claimed significant passive income. Through this affiliate marketing approach, Empire attracted over 60 new clients and made more than $1.5 million in commission fees.
The Cresto brothers have allegedly accumulated over $22 million from their clients. They spent part of this money on luxury items such as high-end cars, vacations, and even a lavish wedding in Italy. After selling Empire earlier in the year, they launched a new venture called Automators AI, which claims to teach consumers how to utilize artificial intelligence for becoming online sellers. This scheme, according to the FTC, is ongoing and reportedly defrauding consumers of substantial amounts of money.