It seems every industry under the sun is expected to change drastically with the rise of artificial intelligence.
That list now includes illegal activities like fraud, according to the Federal Trade Commission.
The agency said last month that three young entrepreneurs – Andrew Chapman and relatives John and Roman Cresto – stole millions from clients looking for ways to grow their online retail businesses using platforms like Amazon and Walmart.
FTC attorneys secured a temporary restraining order and asset freeze against the business in August.
Chapman and the Crestos allegedly set up multiple companies using names like Automators AI, Empire Ecommerce and Onyx Distribution to promise clients profit margins of 8 to 20% each month. Empire was based in West Hollywood, while the other businesses were listed as being in Las Vegas, San Diego, Encinitas and Tennessee.
These businesses “claimed to use artificial intelligence to ensure success and profitability for consumers who agreed to invest with” them, though in reality, they garnered about $22 million “using unfounded claims about income and profits,” the FTC said in a news release.
“Empire LLC offered consumers various ‘automated’ packages of ecommerce stores that typically cost between $10,000 to $125,000 for the initial investment, and an additional $15,000 to $80,000 for working capital. It falsely claimed that purchasers were likely to make monthly profit margins between 8 to 20 percent and claimed to use ‘AI machine learning’ to maximize revenues,” FTC attorneys said in a compliant filed in federal court.
The entrepreneurs also “claim to coach consumers to use Chatgpt to create customer service scripts.”
However, partnering with the Crestos and Chapman often left these businesses worse off than they were before, the FTC said.
“In truth, virtually all purchasers did not earn the advertised income. Most lost their entire investment and got saddled with hefty credit card debts. Moreover, nearly all the online stores that Empire LLC established and managed for its clients on Amazon.com and Walmart.com got suspended, and ultimately terminated, by those platforms for policy violations, leaving many clients banned from selling on those platforms,” the agency explained.
They also promoted themselves through fawning press releases, one of which praised Roman Cresto as a wunderkind.
“By only the age of 20, he was generating more than most would in a lifetime,” the release said.
Media reports indicate the men flaunted their affluence.
“The Cresto brothers, having allegedly pocketed over $22 million from their clients, displayed their wealth openly,” according to a report on the financial news website Benzinga. “Extravagant cars, lavish holidays, and even a grand wedding in Italy were funded by these proceeds, as evidenced by FTC findings and various social media glimpses.”
The FTC, however, had a much different interpretation of the men’s earnings.
“FTC says ‘AI’ stands for ‘allegedly inaccurate,'” attorney Lesley Fair titled her post on the agency’s blog.