Free Trial International Operation Halted by the FTC

On or about November 14, 2018, in response to the Federal Trade Commission’s motion, a U.S. District Court in California issued an order temporarily halting an alleged Internet marketing scam. The Commission alleged that the defendants marketed “free trial” offers for personal care products and dietary supplements online but charged consumers the full price of the products and enrolled them in negative option continuity plans without their consent. In addition, Apex Capital Group, LLC and the individual defendants also set up shell companies in the United States and the United Kingdom, which they then used as fronts to open merchant accounts. Those merchant accounts allegedly were used to process millions of dollars in consumer payments for the defendants’ products, allowing the defendants to avoid detection by the credit card networks and law enforcement agencies for several years. According to the FTC’s complaint, the operation, run by individual defendants, Phillip Peikos and David Barnett, has conducted its negative option “scam” since early 2014, marketing and selling more than 50 different products to consumers.