Settlement With Amazon Tricksters Bars Them From Banning Bad Reviews

Defendants Kevin David Hulse and David Arnett, operating under an entity called DK Automation, agreed to pay $2.6 million within seven days to settle FTC allegations they lured consumers into buying business opportunities that promised them windfall profits as Amazon merchants (see 2211170071), said a stipulated order signed Thursday by Senior U.S. District Judge Paul Huck for Southern Florida in Miami and posted Friday in docket 1:22-cv-23760. Hulse and Arnett “neither admit nor deny any of the allegations,” said the order.

Hulse and Arnett must forfeit to the FTC 60% of each payment they receive from customers, and must do so within three business days, said the order. The defendants must notify the commission in writing every 15 days about “the status of the payments received and provide documentation showing any payments received and payments made” to the agency, it said.

Hulse and Arnett are “permanently restrained and enjoined” from making any earnings claims to consumers unless they are “non-misleading” and are backed by “written substantiation available upon request to the consumer, potential purchaser, and the FTC,” said the order. The settlement includes prohibitions against “consumer complaint suppression,” it said.

The FTC’s investigation found that purchasers were forced to agree not to post negative reviews about the programs they were sold, and that Hulse and Arnett “threatened or harassed some purchasers for posting negative reviews.” The defendants are barred from prohibiting purchasers from “speaking about or publishing truthful or non-defamatory negative comments or reviews” about the programs or from imposing “any precondition, penalty, or fee on purchasers speaking about or publishing any comments or reviews,” said the order. The defendants are responsible for their own attorney’s fees, it said.

Hulse and Arnett within seven days must email notice of the settlement to all who purchased their goods or services since May 2019, said the order. Within 15 days, the defendants must send the notice via first-class mail “to the last known mailing address of any intended email recipient whose emailed message delivery fails,” it said. The defendants are obligated within a year to submit a compliance report to the FTC, “sworn under penalty of perjury,” it said.