Well-known online social media influencers Kevin David Hulse (also known as Kevin David) and David Shawn Arnett have met their match in the Federal Trade commission.
The FTC announced Nov. 16, 2022, that it unanimously voted to take action against DK Automation and its owners, David and Arnett. The agency accuses the defendants of making unfounded claims of big returns to attract consumers into money-making schemes involving Amazon business packages.
The FTC alleges David and Arnett failed to comply with the Business Opportunity rule, violated the Consumer Review Fairness Act, and unfairly skewed consumer reviews. It also claims DK Automation “ripped off consumers” by making “empty promises of big returns on cryptocurrency investment schemes and bogus business programs,” Samuel Levine, director of the FTC’s Bureau of Consumer Protection, said in an FTC news release.
Click here for the proposed settlement filed in U.S. District Court in the Southern District of Florida.
If this proposed settlement is approved by the court, it would require the Florida-based defendants to turn over $2.6 million to be used to refund consumers harmed by their deception.
The order includes a total monetary judgment of nearly $53 million, which was partially suspended due to an inability to pay. If the defendants are found to have lied about their financial condition, then the full amount of the judgment would be immediately due, the FTC said.
Levine said David and Arnett ignored FTC warnings that their practices were illegal “and now they are paying the price.”
The order would also require the defendants to stop their deceptive earnings pitches and comply with the law. It prohibits David and Arnett from misrepresenting any products or services they sell, and bars them from engaging in unfair or deceptive acts or practices, including those related to the advertising, marketing and sale of business opportunities.
The FTC is continuing to pursue restitution for consumers harmed by David and Arnett’s deceptive practices. Those affected can file a complaint with the agency online or via phone at 1-877-FTC-HELP.
This action highlights the importance of consumer protection and the commitment of the Federal Trade Commission to combat deceptive practices. Consumers should never be fooled by offers of big returns, and they should always do their due diligence when it comes to any business opportunity.
Here's what a blog post on the FTC website states about David and Arnett's deceptive business practices:
The defendants sold their Amazon programs under a number of different names, including AMZDFY, Amazon Done For You, and Amazon Done With You. According to the complaint, they promised consumers a “100% turnkey” business selling products on Amazon and charged consumers as much as $100,000 for the program. Their marketing and sales pitches were filled with fake consumer reviews touting huge profits.
In addition to the Amazon business packages, the defendants also pitched supposed cryptocurrency investment services that included their “#1 secret passive income crypto trading bot,” which they claimed could “generate profits for you even while you sleep.” The complaint alleges that they charged consumers thousands of dollars for the supposed service. A June 2022 FTC data spotlight showed that in one 15-month period, consumers reported losing $575 million to cryptocurrency investment scams.
Kevin David is a self-proclaimed “eCommerce expert” and has appeared on television shows such as ABC News Good Morning America and Fox Business. He is also an online influencer with over 2 million followers on social media platforms like YouTube, Instagram, and TikTok.
Arnett is also a well-known online influencer with over 1.5 million followers on social media platforms like YouTube, Instagram, and TikTok.
The FTC’s complaint specifically claims David and Arnett hurt consumers by:
- Deceiving them about potential earnings: DK Automation and its owners made multiple claims about the supposed huge profits consumers could make with their programs, using testimonials that did not reflect the experience of any consumer in the FTC’s investigation. When they included disclaimers, the complaint alleges that they were in such small type or removed from the claims that they were essentially useless to consumers.
- Suppressing Negative Reviews: In many cases, the company manipulated online reviews by falsifying positive reviews and flagging negative reviews that resulted in their removal. In addition, the company agreed to provide refunds to consumers on the condition they remove their complaints. Finally, the FTC charged that defendants threatened to sue a dissatisfied consumer who spoke about his negative experience with the company and added language to their contracts to prevent consumers from leaving negative reviews.
- Not providing required disclosures: The defendants regularly failed to give consumers the information that is required by the FTC’s Business Opportunity Rule when selling their programs. These required disclosures include key information that can help consumers have a full picture about the opportunity being sold to them.
David and Arnett have agreed to a proposed court order that would require them to:
- Back up their claims: The defendants would be prohibited from making earnings claims to consumers that are deceptive, and they would be required to have information in writing to back up their claims.
- Stop deceiving consumers: They would also be prohibited from misleading consumers about the nature of any good or service they sell, including the likelihood of profits, whether testimonials are reflective of a normal consumer’s experience, or any other key information.
- Stop interfering with reviews and complaints: The defendants would be prohibited from taking actions that restrict consumers’ ability to file complaints or leave negative reviews, including requiring consumers to sign contracts that limit their ability to complain.
- Provide money for refunds: The defendants would be required to provide at least $2.6 million to the FTC to be used to refund consumers.
The FTC says its action against David and Arnett should serve as a warning to all online influencers and marketers. If you are making claims about products or services that aren't true, or engaging in any other deceptive practices, the FTC will take action against you. Consumers should always be wary of offers of big returns with little effort and make sure to do their research before investing money into these kinds of schemes.
The FTC provides resources to help consumers protect themselves from deceptive business practices like those cited in the complaint against David and Arnett. Consumers should always be wary of offers of big returns with little effort and make sure to do their research before investing money into these kinds of schemes.
Consumers can learn more about scams and other deceptive practices on the FTC's website and social media accounts. It is important to stay informed and protect yourself from falling victim to false promises from David, Arnett and others like them.
If you think you have been the victim of a scam or deceptive business practice, contact the FTC for help. Consumers should always be aware of potential scams and do their due diligence before signing up for any business opportunity.
The FTC is here to help protect consumers from deceptive practices like Kevin David and David Arnett’s.
The proposed settlement will be subject to public comment before it can be finalized. The Commission vote authorizing the staff to file the complaint and proposed order was 4-0. (FTC File No. 20210110)
I buy and review courses so you don’t have to. Sometimes, I even find courses that are legitimate and worthwhile; and that’s how I accidentally came across one that led me to building a 6-figure business in a little under 5 years. Now, I still review courses because it’s my favorite hobby. 🙂 Learn more about me here.