FTC Obtains Permanent Ban of E-Commerce Business Opportunity Scheme Operator

The owner of a business opportunity scheme will be permanently banned from selling business opportunities in settlement of Federal Trade Commission allegations that he and his company deceptively guaranteed consumers income through online storefronts. Additionally, FBA Machine (formerly Passive Scaling) and its owner Bratislav Rozenfeld (also known as Steven Rozenfeld and Steven Rozen) will be required to turn over the contents of multiple financial accounts and any funds realized upon the sale of real estate property. The proceeds will be used for consumer redress.

In June 2024, the FTC filed suit against FBA Machine and Rozenfeld alleging that, in a business opportunity scheme, they falsely guaranteed that consumers could make money operating online storefronts using AI-powered software. The defendants allegedly failed to deliver on the promised earnings claims and defrauded consumers out of over $15 million.

The FTC also added Amanda Peremen, Rozenfeld’s wife, as a relief defendant in the case. The amended complaint alleged that, though not directly involved in the scheme, she received proceeds from it.

As a result of the FTC’s complaint, a federal court issued an order temporarily halting the scheme and putting it under the control of a receiver. The proposed order bans FBA Machine and Rozenfeld from:

• advertising, marketing, distributing, promoting, or offering for sale, or assisting others in any business opportunity;
• making the specific misrepresentations alleged in the complaint or any material misrepresentations in the sale of any product or service; and
• offering, attempting to enforce, or asserting the validity of any contract provision that is prohibited by the Consumer Review Fairness Act

The proposed order includes a total monetary judgment of $15.7 million, which is partially suspended based on the defendants’ inability to pay the full amount. If the defendants are found to have lied to the FTC about their financial status, the full judgment would be immediately payable.

The Commission vote approving the stipulated final order was 3-0. The FTC filed the proposed order in the U.S. District Court for the District of New Jersey. Stipulated final orders have the force of law when approved and signed by the District Court Judge.

The lead staff attorneys on this matter were Frances Kern and Colleen Robbins.