Category: FTC

FTC Takes Down DK Automation — Does Your Crypto Business Stand a Chance?

In the latest news, the Federal Trade Commission (FTC) takes action against DK Automation LLC (AMZDFY) and its owners, David Shawn Arnett and Kevin David Hulse, due to false claims of earnings potential, false reviews, and lack of disclosure for consumers. It’s estimated that nearly $575 million of consumer money was lost due to their business practices. The company will be taken to federal court in the coming weeks.

DK Automation claimed to provide turnkey services that allowed its customers access to Amazon business packages and use a trading bot on crypto exchanges to make money overnight, all while backing their offerings with false testimonials and suppressing all negative reviews via contracts. Essentially, the company was caught deceiving consumers and now they’re paying the price.

Samuel Levine, the Director of the Bureau of Consumer Protection says, “DK Automation ripped off consumers by manipulating reviews and making empty promises of big returns on cryptocurrency investment schemes and bogus business programs.”

DK Automation is a done-for-you type of business. They do it all on your behalf, completely hands-off. But that’s not a sustainable way for any customer to make money, especially with cryptocurrency.

Crypto is taking a hit as of late, and this recent takedown doesn’t help. Is your crypto business still profitable or sustainable?

The FTC Is Serious About Its Requirements

It’s easy to write of fake reviews to tout your own products and services. In fact, I’d wager that most business (especially in the beginning) do this to create a sense of security for potential customers. But the FTC.gov does investigate, and when they do those businesses are going down.

False claims aren’t just a crypto thing, they also—and mainly—affect supplement sellers. Even if you’re familiar with the rules and regulations for a particular industry yet you operate in a different one, that doesn’t give you free rein. That’s where trouble begins.

Don’t make false claims. Don’t force clients to sign contracts that prevent them from providing a fair analysis of your business. Don’t knowingly redact information that sways a customer’s monetary judgment. Instead, here’s what you should do.

Your Crypto Business Can Be Sustainable

Crypto isn’t just money. It’s not only about trading or making big gains or getting in on a new coin that skyrockets and exiting just before it crashes. There’s longevity to crypto, if you have the right business model and the right understanding.

Let’s look at a few crypto business opportunities and models that can function as long-term business.

Crypto Trading Bots Can Line Your Pockets

Most people understand crypto as a monetary thing. Trading, spending, etc. It’s a digital currency that more and more businesses are using to accept as payment.

I see so many new startups promising to triple your initial investment within a month. BUT WAIT!

That’s great news, if it works. But remember the FTC requirements? It’s a terrible idea to put a time limit on anything. You cannot lose 10 pounds in 10 days. You cannot double your money in a week. Is it possible? Yes. Is it likely? Not really.

Bots are an easy, hands-off way of making money. Day traders have been using bots for decades now and they make bank. It can also work for crypto. But an algorithm isn’t everything. While the industry is stable, customers are likely to make money. But an industry as volatile as crypto cannot make that promise.

You need to rethink your marketing strategy. You can talk about long-term gains while staying aware of market volatility. Give customers what they really want: a hands-off way to earn. Will they make $100k overnight? No. But small gains add up. Give them the promise of that security with an automation solution that simply works.

Crypto’s Underdog Feature Is Security

The blockchain. That is the future. We need to find ways to implement it in our daily lives. Secure not only our finances but our documents, transactions, trades, ideas. There is so much potential.

The crypto market overall is crashing, but not Ethereum. That’s because of it’s underlying security tech. Use that to your advantage.

Build a business on the blockchain and market it as futuristic security. Think about how that can help ecommerce retailers. They can avoid scams, chargebacks, and fraud of any kind. It essentially eliminates risk. The best part? No one has to use crypto as a currency to use it. Business can build on top of the tech, securing not only their own business but customer data as well.

Security is the future. Sell security with crypto, not a get-rich-quick scheme.

Coaching Is Big

The biggest downside of crypto is the lack of understanding around it. People just don’t get it. They don’t know how to use it, where their money goes, what they can do with it, or—simply—what crypto is for. That’s where you come in to share your knowledge for a price.

Business coaching has always been a big industry. You don’t even have to be an active coach to succeed. You can record lessons and hide them behind a paywall. You can offer 1-on-1 coaching for a higher fee. You can create a community around crypto.

The best part about coaching is that you can update your information as things change. It’s such a new industry that new features, tech, and coins are popping up daily. This gives customers the incentive to stick with you.

Future-proof Your Crypto Business

Don’t ignore the news, but find a way to use it to your advantage. And don’t make a bogus business program or hide details in small-print disclaimers! These crashes don’t have to affect your high-quality business. You can offer stability, security, and so much more. FTX and DK Automation are good examples of bad crypto companies. Make yours work for you and your customers.

In order to be successful, you’ll need to get a crypto merchant account. That’s where DirectPayNet can help. We’ll set you up with an account that backs your crypto business for right now and the future without worry. Get set up today and start raking in customers for life.

December 5, 2022
The FTC Lost Against AMG – What’s That Mean for Your Business?

By now, you’ve probably heard news about the AMG Capital Management, LLC v. FTC case. If not, we have a quick recap below. This isn’t a breaking news story or legal banter about regulatory changes and related directives or future directives. Rather, we’re looking at this case and how it potentially affects you, a merchant.

Over the past few months, the FTC has been sending notices to traditionally high-risk businesses across the states, regardless of whether they deal with loans or financial services. Should you be worried? Are you wondering what’s going to happen to your business? Do you even know or care about what’s going on? You should care, but you shouldn’t necessarily worry. Using some industry expertise, here’s a bit of insight into the matter.

Summing Up the AMG Capital Management, LLC v. Federal Trade Commission Case

If you haven’t been keeping up, the AMG case against the FTC was a big deal for several reasons. Here’s a quick summary to get you up to speed.

First, the case is regarding Scott Tucker and his businesses, which includes AMG Capital Management, LLC, about deceptive payday lending. So if you’ve been ignoring this case thinking it won’t affect you and your high-risk business is in the finance sector, then you should study up to fortify yourself against any potential downfalls.

Second, the complaint against the FTC is not just about a scammer wanting to run off with “their” money. It’s a real challenge to the FTC’s authority, which has previously been something of an unstoppable force when it came to punishing businesses in a monetary sense.

To go back just a few steps further, this case started because AMG was ordered to pay $1.27 billion for deceptive practices, but the FTC sought equitable monetary relief after the Ninth Circuit affirmed the District Court’s ruling in Washington, D.C. AMG wanted to check the FTC’s authority in making this move by taking it way up to the Supreme Court.

Historically, the FTC used Section 13b of the FTC Act (Federal Trade Commission Act; FTCA) conservatively, stating in a 2003 Policy Statement, that restitution and disgorgement are not “routine remedies for antitrust cases”. But then in 2012, they retracted that policy. In summary, the section focuses on prospective relief, not retrospective relief.

That’s exactly what the Supreme Court of the United States (SCOTUS) ruled, unanimously voting against the FTC commissioners. The US supreme court’s decision was that the FTC was using Section 13(b) in recent years to punish harmful businesses though the term “preliminary injunction” found in that section does not refer to monetary relief. Instead, the FTC’s ability is to seek injunctive relief like temporary restraining orders, administrative proceedings that aid preliminary injunctions, or even permanent injunctions in proper cases. And they often obtain billions of dollars in monetary remedies. We should note that there’s also Section 5(I) and Section 19 that provide equitable remedies including refunds and returns.

Obviously, scamming consumers during something as terrible as a pandemic is something no business owner should do. For that reason alone, the FTC’s enforcement actions are understandable. But, playing devil’s advocate a little, he FTC’s power and authority were abused regarding how businesses are punished. Sure, that punishment hastens the refund of money and property for consumers, but the argument we have now is if one agency should hold all of the power or if it should be broken up. Many consumers rely on such relief, but it’s also possible to obtain it through proper cases.

The argument is now politically charged: democrats want to undo federal court’s ruling through Consumer Protection and Recover Act; republicans want the FTC permanently stripped of this type of power. While Section 19 and 5(I) exist, they aren’t fast-acting enough to benefit consumers and prevent them from spiraling downward further into debt.

And consumer debt is no good thing for merchants (unless you’re a payday loan provider). You need consumers to have active credit cards, funds in their bank, and a willingness to spend freely to keep your online businesses running.

What You, as a Merchant, Can Expect in the Coming Months

You don’t need to be part of the political debate. That’s just a taste of what’s happening now regarding the case in terms of government officials. What you should do now is expect a big fat letter to show up in your mailbox from the FTC.

The FTC lost and they’re mad about it. To prove they’re still an all-powerful agency, businesses in high-risk industries have been receiving cease and desist orders in via snail mail. It feels more official and threatening that way.

Businesses that sell money-making opportunities have recently been targeted. This feels the most fitting, seeing that they lost against AMG, a company that handed out payday loans (i.e., dealt directly with consumer money). They want you to know they’ve got a watchful eye on you and your “scam” business.

But is your business actually a scam? Can your previous and current customers vouch for you through ratings and testimonials? Do you have a real product/service that works?

If the answer is yes, then you have nothing to worry about. Expect a letter, but don’t let it scare you.

The FTC Targets More High-Risk Industries

The same is happening for dietary supplement sellers. They’re on the hunt for businesses in high-risk industries because these industries are linked to higher fraud rates. That also makes a lot of sense. Why would they go for low-risk businesses?

Again, is your supplement business a scam? Are you honest with your products’ ingredients and expected outcomes? What do subscribers have to say about you?

Being bitter about losing a case and sending out threats is a childish reaction for an agency that’s been around since 1914. But there is some benefit to their actions. The letters they’ve been sending out haven’t been entirely empty threats. Those dietary supplement sellers were required to submit a response within 15 days.

The request weeds out sellers who aren’t operating up to legal par. Also, it’s not only coming from the FTC. It’s a join effort from them and the FDA. Supplement sellers need to be FDA-compliant in order to sell their goods. Part of that compliance involves adhering to the FTC’s strict outline for product descriptions and labeling. Essentially, supplement sellers cannot claim a product absolutely does something unless it’s gone through clinical trials and the drugs involved are approved. Sellers who make too grand of claims in the marketing are coming under fire.

Knowing this, now is the time to make sure you aren’t saying anything absolute. We aren’t guaranteeing that you’ll get a notice in the mail, but if you do, you want to be prepared to respond without panic.

Other industries might be next. This is speculation now, but we expect the coaching and advice (e.g., business, fortune-telling, non-therapy advice, etc.) industries to come under fire soon, too. These industries are particularly vulnerable to poor community reputation because the outcome of service is entirely dependent on how receptive the client is. In this age of COVID where government agencies are cracking down on scammers and fraudulent business practices, those are two industries that might want to be on the lookout.

None of this means that your business in particular will be notified, penalized, or shut down. If you’re operating legally and staying on the legal level, then there won’t be an issue and you can continue doing business as usual. We aren’t trying to scare you into panicking until the next FTC overhaul.

Securing a Merchant Account for High-Risk Businesses Can Help You Stay Out of the FTC’s Line of Fire

We prepare high-risk businesses every day with the information and tools they need to meet strict regulation through industry expertise and consultations. If you have a question, speak with our high-risk merchant account representatives to clarify any issues you have and, of course, get set up with payment processing built for your industry.

The FTC is ramping up to dole out civil penalties via the Penalty Offense Authority that hasn’t (yet) passed through congress, but it’s looking more and more likely. Afterall, lawmakers did slip in a civil penalty for COVID scammers into one of the more recent stimulus bills.

High-risk merchant accounts from DirectPayNet help mitigate chargebacks and fraud, which keeps you out of the line of fire from the FTC. If fraud is what they’re after most right now, then don’t give them any fuel for the fire. Speak with us today and sta

November 26, 2021
FTC regulations are tough on coaching businesses. Here’s how you can stay compliant.

The FTC has been cracking down on online coaching businesses for years with new case studies uploaded to their own blog each week. But coaching businesses are lucrative, especially when it’s the passion of the business owner and in no way, shape, or form is being an online coach illegal.

The problem the Federal Trade Commission (FTC) has for these types of businesses involves the high potential for scams, false advertising, and financial harm to customers. As long as you can stay above these three main issues and show how valid your business is, then you’ll be compliant with the FTC. Here’s how you can do it.

FTC Compliance Requirements for Coaching Businesses

No matter what type of online coaching business or coaching niche you have—life coaching, business coach, relationship coach, wellness coaching, career coaches—you must follow the same rules listed below.

Coaching Certification and Licensing

The coaching industry is highly unregulated, but that’s changing. Some states require certifications to be a coach in your field, other states view your business as online advice and leave the professionalism up to reputation.

If you can, you should absolutely become a licensed or certified coach, even if it’s not required in your particular state. For one, being licensed allows you to sell your coaching services in states that do require it. A wider reach is always a perk for extending who’s in your target audience. The license also helps the FTC see your own business as less risky.

Form Your Business Entity

Speaking of legality, you need to register your business. Sole proprietorship or incorporating as an LLC are easy to do and take less time than other entity registration procedures. It seems a lot of individuals think they can become a life coach without going through the legal hoops because it’s person-to-person coaching. Pick the company type that fits yours best and register it to ensure your coaching business is compliant with the FTC.

Publish Disclosures

As a new coach, you cannot promise results. This is one of the biggest compliance issues with the FTC, which usually takes shape in the form of advertising. For example, if you have a health coaching startup business, you likely want to build up hype and momentum for your service and say things like, “you will lose 10lbs, guaranteed” or “I promise with my 10-week course you’ll be a happier, more confident you!”

Phrases like this are catchy and motivating, but they’re wrong and illegal. You cannot promise that someone will see results. You can only imply great results if a customer sticks to your regime. Here’s where disclosures come in. Have your customers sign a disclosure agreement that makes sure you both are seeing eye-to-eye when it comes to expected results. You also most disclose in your promotional material if you’re not licensed as a healthcare professional, and you 100% cannot make definite claims.

Protect Your IPP

Intellectual property protections (IPP) aren’t exactly part of FTC regulations, but they do factor into compliance. IPP includes registering trademarks, copyrights, and legal rights to your non-tangible properties. It’s a coaching business, so you generally don’t have many physical items, it’s all intellectually based. We’ll get more into why this matters from a payments perspective later, because it is equally important to keep your business running. But even something as small as your domain name or business name should be registered. All of this acts as a symbol of your entrepreneurship and represents your brand and the unique service you provide to your ideal clients.

When you have IPP, you’ve confirmed that what you’re selling is unique, it’s not being used elsewhere, and whatever materials your new clients receive are of value. That’s how it affects compliance: having IPP demonstrates value for your business.

Make Your Customers Sign Contracts

Contracts can be the life or death of your business. As a business owner, making customers sign contracts takes disclosures to the next left. You’re not just informing them of expectations, you’re making them understand exactly what they’re getting into from a legal standpoint.

Contracts should include detailed services provided, termination and refund terms, liability concerns, disclaimers, deadlines, coaching sessions–whether it’s private coaching or group coaching, webinars, and anything else you feel is important. With these binding terms, it will be more difficult for customers to request a refund from their bank (causing chargebacks for you) and the FTC will be hard-pressed to take action against you since everything is outlined and signed.

Privacy Policy and Terms of Service

Every website should have both of these. For an online coaching business, it’s especially important. The FTC and personal lawyers will scan your site from top to bottom if a customer decides to take legal action or complains about your business being fraudulent. Making sure your site doesn’t make any extreme claims, has a privacy policy, terms of service, and clearly outlines what customers receive will keep you compliant.

Keep Your CRM Up to Date

Last but not least, your CRM (Customer Relationship Manager) should be updated with every interaction you make with a customer. You should store interactions, payments, agreements, contracts, and everything else possible. You never know when you need to pull up proof.

What Affects Your Coaching Business Negatively in a Compliance Sense

There are a few pillars of negativity that not only affect your own sales but your compliance status with the FTC. Stay on top of these points and you’ll steer clear of any unwanted legal action.

Negative Testimonials

Reputation is a crucial factor is the success of an online business. Replying to reviewers, especially those who leave negative remarks, is beneficial to your business.

As you can imagine, negative reviews can harm your company tremendously. Those same reviews can be used against you if the FTC gets involved. To maintain FTC compliance for your online coaching business, you need to have a clout team taking care of all reviews. When you respond to a negative review in a meaningful way (e.g., apologizing, offering a discount, providing contact information), it makes your business look more professional. It also makes it look like you have genuine concern that one of your coaching clients didn’t enjoy the service.

Take care of negative testimonials. Your reputation and sales depend on it.

Social Advertising Done Wrong

Social media is a powerful tool with incredible advertising power. The FTC has guidelines for advertising online, social media endorsements, and business posting. They also team up with local law enforcement to monitor online advertising in certain areas. That should give you a clear idea of how important online and social advertising is from a legal perspective. Though each platform has its own audience, they all generally follow the same guidelines from a legal standpoint. LinkedIn, Facebook, Twitter, Instagram–they’re all playing by the same rules.

Not just the FTC, social media platforms have their own compliance standards. Most overlap, but not always. For example, you cannot include endorsements or testimonials in your social media ads. The biggest one is false advertising, of course.

Use social media to your advantage, but always stay truthful to maintain compliance.

Extreme Claims

Along the same lines as false advertising, making extreme claims about your service will knock you right down into a legal hellhole. One of the most common claims is about the potential earnings of a customer for business coaches. Of course, you want to sell up your service and let potential clients know what’s possible. Making larger-than-life claims of any kind will get you in legal trouble.

Upselling can also be problematic. If you upsell too much or push a higher ticket item when the first client is purchasing a minimum-cost service, it looks bad on your business. Upselling is not illegal, but be aware of what you upsell and how it’s being done in terms of pricing.

Keep your claims at a realistic level and use the extremes for case studies where it only remains as an example of someone’s real success.

Payment Processing Requires Compliance, Too

The next logical step to starting a coaching business is getting credit card payment processing and a business bank account. Payment processors and acquiring banks stay well-informed of FTC cases. Coaching programs are considered high risk, and banks want to avoid as much risk as possible. You’ll equally have to convince them of your compliance status.

As a high-risk merchant, you also have to worry about how customer’s will be able to make payments for your services. 3rd-party services like PayPal and Stripe are popular, but will quickly shut down your shopping cart and payment gateway once they find out you’re a high-risk seller.

The better solution is to apply for a high-risk merchant account. And before that, you should absolutely become PCI-compliant. PCI (payment card industry) compliance is enforced by credit card companies (e.g., Visa, Mastercard, American Express) to help keep transactions secure. Luckily, PCI-compliance is easy. You can do it online in just a couple of steps and you’re set.

When applying for your merchant account, have a clear business model and subscription template/outline for your online courses and everything else you sell. The processor will do some research on your small business, so negative remarks, scam reports, and bad customer testimonials will factor into your approval. But if you’ve followed the guide above, provide a strong business structure, and have stayed clear of false promises, your online coaching business will stay compliant and get approved for processing.

DirectPayNet Specializes in Providing Merchant Accounts for High-Risk Merchants Like Online Coaching

You need a merchant account to process payments online. DirectPayNet can help. Contact us to apply for your account, for more assistance with compliance, and if you have any other questions. Your successful online coaching business is in sight, let us help you reach it.

September 15, 2021
FTC Compliance: Agora’s Mistakes and How You Can Avoid Them

Agora is making headlines recently regarding its $2 million settlement to the FTC. The Baltimore, Maryland-based publisher is found guilty of scamming senior citizens into making purchases. This is a growing issue during the ongoing pandemic, making it difficult for companies to feel comfortable utilizing financial offers in business practices while maintaining FTC compliance.

You can absolutely stay competitive with financial offers and remain compliant with the Federal Trade Commission (ftc.gov). We’ll show you how by outlining the dos and don’ts so you can stay on top of your compliance efforts and maximize what comes into your sales funnel.

The Breakdown of What’s Going on with Agora Financial LLC

Who Is Agora

First off, Agora is not some small company, it’s a publishing giant that operates out of Baltimore. It’s a parent company that’s also known as Agora Inc, The Agora, and more notably Monument & Cathedral (M&C) Holdings. Beyond these are over 80 affiliate entities that sell books, e-books, pamphlets, newsletters, health advice, financial advice, nutritional supplements, and program subscriptions mainly to senior citizens.

As you may very well be aware of by now, half of those services put Agora in the high-risk merchant category.

What Is the Case About

In February of 2021, five of the more than 80 affiliates agreed to a settlement that amounted to over $2 million paid to the FTC for multiple violations. Those violations include deceptive advertising (including writing false testimonials), and offers of health and income data misrepresentations that were used to trick older consumers into making purchases.

The five entities include Agora Financial, Health Sense Publishing, Health Sense Media, NewMarket Media, and NewMarket Health, LLC. Dr. Richard Gerhauser and Zachary Scheidt are also affiliated with Agora.

The $2 million settlement equates to just 0.4% of the parent company’s annual revenue. The more defining aspect of this settlement is a provision that requires the five mentioned entities as well as M&C, all affiliated entities, and all affiliated persons from using misleading financial representations or health claims.

The FTC’s complaint was filed in the US District Court in the District of Maryland and approved with a unanimous vote of 4-0.

Why Is Agora Making Headlines Again

Though Agora has come to a settlement agreement, the named affiliates as well as many others have been found to be continuously violating federal court orders. The discovery by TINA.org has led to a collection of hundreds of various pieces of evidence across many companies in Agora’s web that continue to use deceptive marketing tactics. They have even been found to use dark patterns to strengthen their deceptive marketing materials and efforts.

Acting Director of the Bureau of Consumer Protection, Daniel Kaufman, sums up the issue neatly by stating that Agora targeted and preyed upon senior citizens by using false claims regarding a cure for diabetes and free government money.

What Does All This Mean for Your High-Risk Business

You may be worried about using financial offers and success claims in your marketing efforts in light of this heightened state of attention. Let’s look at what the biggest issues are and the solution you can use to keep your business safe.

Income Claims

Problem

Some of the products Agora’s affiliates were (and still are) selling are related to income and finances that equate to money-making schemes. One book is titled Congress’ Secret $1.17 Trillion Giveaway which claims to teach readers how to receive thousands of dollars a government check program. Agora leads viewers to believe they are entitled to something called congressional checks” or “republican checks”.

The seller uses entitlement to persuade seniors to buy these publications. But upon reading, the buyer would have to invest and risk large sums of money into dividend-paying stocks. Agora made false claims in its marketing efforts regarding income which led to many people purchasing their products under false pretenses.

Solution

In the most basic sense, the solution is to not make false claims or twist income-related information to fit your sales tactic. Using their book as an example, congress is certainly not giving away trillions of dollars (and the title leads a viewer to believe they could receive all $1.17 trillion, not just a portion), and naming the product one thing but describing another is something you should stray away from.

If you’re in the business of giving financial advice, then it makes sense that you’ll want to make big claims that draw people in. And you still can, as long as they’re honest. People can become millionaires in a single month by utilizing the stock market, they can claim money from the government with programs designed for senior citizens or when filing taxes, and investment strategies can be risky but not inherently fraudulent. Stay honest with what you’re offering, don’t lead consumers onto promised amounts of income. Instead, make it sound appealing without making over-the-top claims and your business will stay out of trouble.

Unrealistic Expectations

Problem

Using a similar tactic, Agora released a book titled The Doctor’s Guide to Reversing Diabetes in 28 Days. The title alone should raise a red flag for skeptics, but for those suffering from diabetes, a book like this gives them hope for a diabetes cure.

Agora made false medical claims such as the ability to cure consumers’ diabetes (Type 2 Diabetes) in just 28 days with zero changes to lifestyle. Beyond that, they also claimed their solution has a 100 percent success rate, mainstream solutions for diabetics are fraudulent, and diabetes is caused by electronic devices (a wildly false statement).

Solution

High-risk businesses selling supplements, CBD, and other products know all too well the hassle of making claims regarding health benefits. You will obviously need to present some type of benefit towards the health of the consumer if you’re selling dietary supplements. You absolutely cannot make statements related to disease prevention (as is the case with the Doctor’s Guide).

To make disease-related claims, your product would have to undergo FDA testing as a drug to verify its effectiveness. So, if you’re selling CBD oil, then it’s okay to say your product can improve sleep. Or if you’re selling weight loss supplements, it’s okay to say your product can help support weight loss. But you cannot say that your product will make you lose weight, relieve pain, or cure a disease. Consumers can expect dietary changes after consumption, but the range of effects depend on the individual.

High-ticket Promotion

Problem

Upselling is a tactic used by many businesses, both high-risk and low-risk, especially during the checkout process. However, selling small-ticket items for the sole purpose of promoting high-ticket items is a dark pattern-type of sales tactic. It can be labeled under misdirection, manipulative comparison, or bait and switch.

Agora and its affiliates use these tactics to manipulate site visitors into making decisions they otherwise wouldn’t make.

Solution

You are free to upsell your products, it’s a perfectly legal thing to do. But those upsells need to be comparable. You cannot sell a small-ticket item, let’s say one bottle of a multi-vitamin for $5, and then promote your subscription to receive 10 e-books, free online consultations, and 4 bottles of supplements every month for hundreds or thousands more.

This tactic creates a false sense of urgency and misleads consumers into purchasing something they didn’t intent that’s completely incomparable to their original intention. Instead, upsell similar products and similarly priced products as well as adding those products to the cart instead of replacing the original order. You need to create an environment that welcomes the consumer to make their own decision based on facts, not urgency (or other dark patterns). It’s okay to try and convert one-time buyers into subscribers, but you cannot force it.

What Else You Can Do to Stay Compliant with the FTC

The number one thing you can do to avoid FTC charges and stay compliant is to stay informed about what makes your industry high-risk. High-risk merchants are not treated the same as low-risk merchants and are constantly watched under a microscope. Acquiring banks are waiting for errors, chargebacks, and fraud because those are, unfortunately, part of being a high-risk seller.

But you can stay on top of it with the right merchant account provider. With a high-risk merchant account, you can maintain compliance, keep rates low, avoid fraud, and monitor chargebacks. DirectPayNet will help you stay on top of the legal aspects of your business while allowing you opportunities to improve sales and expand your reach.

Contact our customer support team today and avoid getting your business into Agora-like situations. We’re ready to get you set up for success.

June 30, 2021
Biz-op Merchant Services – How The Most Succesful Business Coaches Are Securing Winning Payment Solutions

Business opportunities (biz-op) sellers are making a comeback. With the COVID pandemic reshaping the world of work, there’s never been a higher demand for business coaches or opportunities to make money from home.

Thousands of budding entrepreneurs who were laid off during the worst months of the pandemic are looking for new opportunities. Business coaches selling programs are in a prime position to help those desperate to learn new skills and work from home. Those selling specific biz-ops also have a crowd of individuals ready to hunker down and learn how to run a new business from anywhere in the world.

But the industry has been tarnished, and multi-level marketing (MLM) opportunities specifically have developed a bad reputation as Ponzi schemes or scams. Payment processors have also traditionally given this industry a wide birth in the wake of several high-profile FTC violation cases.

But a new set of winning strategies has seen many biz-op sellers and business coaches regaining lost ground, securing excellent payment processing solutions, and scaling their businesses. So what’s their secret?

Read on to get the inside track on their tried and trusted methods for success.

Prospering Biz-Op Companies and Business Coaches Reposition Their Products

One of the biggest issues with this industry pre-pandemic was the price of the info products, live in-person events, and training programs sold by leading players within this space. Big ticket-items are problematic for acquiring banks for several reasons. But number one on the list is chargebacks.

Smart merchants selling business opportunities, info products, and business coaching programs have realized that it’s best to stay away from all-encompassing products that cost thousands of dollars.

Instead, those selling biz-ops such as online businesses from home or MLM-based nutraceutical opportunities have realized that the lower the costs, the higher the chance of being accepted for dedicated merchant accounts and credit card processing.

Thus, if you’re a merchant in this vertical, assess your current offering. Are you offering high-ticket coaching programs to budding entrepreneurs that cost as much as $10,000? Can you split up that info product into smaller, more appealing packages with pricing capped at less than a few hundred dollars each?

It’s best to teach would-be business owners about specific skills, such as mastering Facebook Ads or email marketing. That way, you can appease payment processors and underwriters that are nervous about being potentially on the hook for thousands of dollars.

It’s also easier to make objective targets and promises in your marketing. Rather than promising students the chance to earn millions from the comfort of their armchair, you can avoid the wrath of the FTC by merely claiming that you’re teaching skills that could turn into a lucrative opportunity for your customers.

So what should you be focusing on if you need to revamp your offering?

High-Risk Biz-Op & Business Coaching Merchants Should Focus On In-Demand Sectors

The merchants in this space that are killing it are intelligently focusing on the online business world. Business coaches realize that people need a side hustle income to as many households have seen incomes drop due to the COVID pandemic.

Tweak your opportunities to ones that can be attempted from anywhere. For example, a course teaching students how to become six-figure copywriters would be very popular in this current climate. As would teaching people how to create marketing funnels for affiliate marketing. Focus on the gig economy too. It’s one of the only sectors to experience massive growth in the last few years due to the increase in remote workers.

Hundreds of thousands of individuals across the world are looking for a new opportunity. Thus, focus your energy on teaching your students about business models that can make money from anywhere in the world. Not only will this increase the number of potential customers in your country of origin, but it makes it easy to scale your business to other countries if you have a cloud-based biz-op.

This could be crucial to scaling your company since overseas merchant accounts often have much less strict requirements on applications.

Do you run a business opportunity with an MLM structure? You need to understand that there are going to be obstacles to obtaining a dedicated merchant account. Read our guide here to find out what they are and how to overcome them!

Save Your Best Business Opportunities and Training Materials for Customers You Can Trust

While it’s true that banks hate dealing with high-risk businesses that are accepting credit card payments for amounts totaling more than $1,000, you can reduce the risk and upsell to your most loyal customers.

One of the biggest problems with selling high-ticket coaching programs or biz-ops is that you don’t know who is purchasing your products. A customer could merely be a freeloader looking to gain valuable information and training materials without ever having any intention of paying for it.

However, you can take mitigating steps. For instance, you can limit your premium opportunities or materials to clients who have a long and clean processing history with you. Filtering in this way helps you avoid high-risk payments from so-called “cold” customers who haven’t interacted with your business before.

You can also take steps to ensure your e-commerce transactions are better protected from the twin threats of fraud and chargebacks. You could limit your payment methods to ACH-only for your highest-ticket products and opportunities.

You could also insist on taking those ACH payments over the phone from trusted clients via a virtual terminal, to disarm the threat posed by credit card chargebacks. You can then build a solid processing history to improve your banking relationships and apply for higher monthly sales limits. Once you have scaled, you can then think about bringing in credit and debit card payments.

When it comes to fraud, it makes sense to integrate 3DS2 into your payment gateway solution. It’s been a legal requirement for sales made in the EU since January 2021, and in the US, it shifts the burden of proof concerning chargebacks onto the customer rather than the merchant.

Once you’ve established your brand and are bringing in healthy six-figure revenues each month, you can then start to open up your high-ticket items to more individuals. You can even use the testimonials for your most successful clients to help persuade them of the merits of your biz-op, online course, or coaching program.

Avoid Making Any Specific Claims About Earnings

Another reason so many deceptive companies have gotten into trouble with the FTC is that they have made specific earnings claims. Several companies have been recently on the wrong end of a recent FTC operation known as Operation Income Illusion. Since 2016, $610 million has been scammed out of customers who’ve invested in biz-ops that promised “guaranteed” income figures. The FTC has recently cracked down on the worst offenders.

Once company named 8-Figure Dream Lifestyle promised consumers who followed their “proven business model” that they would earn between $5,000 to $10,000 in just 10 to 14 days and consistently make money within 60-90 days of buying into the program.

Far from experiencing an “8-figure dream lifestyle,” most consumers paid between $2,395 to $22,495 and never earned substantial income. In fact, many people lost money, ending up in an even deeper financial hole by taking out loans and racking up credit card debt.

This case sums up the industry’s problem from the perspective of payment processing services and merchant account providers. Even the most successful MLM companies can’t guarantee those who sign up will make a specific amount, as it’s largely down to the individual.

Therefore, make sure to avoid the same mistake. When making guarantees, refer to the skills or business model you are teaching them, not how much clients could make. Nothing puts off high-risk merchant account providers other than sales copy that doesn’t comply with the law. So don’t waste your time on this exercise. Focus on the non-monetary rewards instead.

By promising the world and delivering very little in comparison, your online payments made via debit cards and credit cards are likely to wind up becoming chargebacks.

Use the Tactics of the Highest-Performing Biz-Op Merchants To Secure the Best High-Risk Payment Processing Solutions

There’s never been a better time to be teaching individuals new skills. Whether your company teaches budding entrepreneurs how to build a home-based tech support business or you train people to become masters of social media marketing, now is the time to scale your biz-op business.

However, you’re going to need to avoid the mistakes made by those that have gone before you. Pay attention to those succeeding in the industry. Small-ticket offers, hyper-specialized training courses, and biz-ops that can be done from home are crushing it right now. Not only are they great business strategies, but they are payment-processing-friendly too.

Here at DirectPayNet, we’ve been helping merchants in the biz-op space for over a decade. We know how difficult it can be to find payment processing for new biz-op offers and coaching programs. But we’ve worked with some of the world’s leading business coaches and have an in-depth understanding of what it takes to succeed with payment solutions well-suited to this high-risk vertical.

So what are you waiting for? If you’re ready to scale up your online biz-op or coaching business to six or seven figures per month, just get in contact with our team of experts to find out how we can help you today!

January 13, 2021