The Federal Trade Commission has won a lawsuit against the marketers of a massive infomercial scam that tricked an estimated 1 million consumers nationwide into shelling out money, purportedly to learn how to strike it rich on real estate deals or over the Internet.
But it's not clear whether consumers will ever get any of their money back.
The case is part of the FTC's ongoing effort to stop scams that prey on financially distressed consumers.
A federal judge in California, which granted the agency's request for a summary judgment, will now decide on the penalties. The FTC is seeking some $450 million to return to consumers nationwide caught up in the scam.
The marketers are no longer running the infomercials, FTC spokesman Frank Dorman said.
The judgment involves infomercials for "John Beck's Free & Clear Real Estate System," "John Alexander's Real Estate Riches in 14 Days" and "Jeff Paul's Shortcuts to Internet Millions."
The court found that the infomercials misled consumers and that despite the claims of easy money, nearly all consumers who bought the $39.95 instruction kits lost money.
In the case of the John Beck program, for instance, the court found the marketers falsely represented that consumers could purchase homes at tax sales in their own area for pennies on the dollar and could make money easily with little financial investment.
Besides making false claims, the marketers failed to adequately disclose that people who purchased the systems would be automatically enrolled in a program that cost an extra $39.95 per month, the FTC said.
In addition, the court found that the marketers sold personal coaching systems for up to $14,995 by falsely claiming that consumers would quickly earn back the cost of the program and that it would substantially enhance the chances of making money.
Even if the agency is successful at winning a monetary judgment, that doesn't necessarily mean consumers will get refunds.
Typically in these types of cases, the perpetrators don't come up with much money, Dorman said.
"All too often, what happens is they've squandered it or hidden it or whatever," he said.