FTC Cracks Down on AI-Powered 'Passive Income' Scheme: Click Profit Accused of Defrauding Investors

FTC Takes Action Against Click Profit's AI-Powered 'Passive Income' Scheme

The Federal Trade Commission (FTC) has filed a lawsuit against Click Profit, an e-commerce company accused of defrauding consumers through a "passive income" scheme that promised to leverage artificial intelligence for guaranteed profits 1

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. The case highlights the growing concern over e-commerce "automation" services that exploit AI hype to lure unsuspecting investors.

The Alleged Scam

Click Profit, operating under various names including FBALaunch and Automation Industries, claimed to build "massively profitable e-commerce stores" on platforms like Amazon, Walmart, and TikTok 2

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. The company charged consumers between $45,000 to $75,000 for initial investment, plus additional fees for inventory, promising returns that would outperform traditional investments.

False Claims and Misrepresentations

The FTC's complaint alleges that Click Profit made several fraudulent claims:

1. AI Supercomputer: The company boasted of a $5 million "super computer" using AI to identify profitable products, allegedly generating "around $100 million in sales" 2

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2. Brand Partnerships: Click Profit falsely claimed partnerships with major brands like Nike, Disney, and Colgate 3

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3. Guaranteed Income: Investors were promised $150,000 in "guaranteed" sales and the potential for their stores to be bought out by venture capital firms 2

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The Reality Behind the Promises

According to the FTC:

• Approximately 95% of Click Profit's stores were suspended or terminated by Amazon for violating seller policies 2

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• Over 20% of the stores earned no money, while another third earned less than $2,500 in gross lifetime sales 2

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• Most consumers were unable to recoup their investments, with some left burdened by credit card debt and unsold inventory 2

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Legal Action and Consumer Protection

The FTC has obtained a court order halting Click Profit's operations and is seeking to permanently prohibit the company from doing business 4

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. The lawsuit alleges violations of the FTC Act, Consumer Review Fairness Act, and Business Opportunity Rule 2

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Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, stated, "Click Profit misled consumers by falsely promising them guaranteed passive income using cutting-edge AI technology and exclusive brand partnerships" 4

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Broader Implications

This case is part of a larger FTC crackdown on "automation" companies that exploit the allure of AI and passive income. Similar actions have been taken against companies like Ascend Ecom and Empire in recent years 3

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The FTC's action serves as a warning to consumers about the risks of investing in purported AI-powered business opportunities and highlights the need for increased scrutiny of companies leveraging AI claims in their marketing strategies.