The Federal Trade Commission (FTC) announced in February that it “has sued the California-based investment training scheme Online Trading Academy” for using “false or unfounded earnings claims to sell ‘training programs’ costing as much as $50,000.”
Misrepresenting a Patented ‘Strategy’
The Online Trading Company (OTA) considers itself the “leading provider of financial education” that provides “professional instruction in all of our state-of-the-art teaching facilities around the world, as well as a wide array of home study materials.”
Despite this claim, the FTC filed a lawsuit against OTA for “misrepresenting that it has a patented ‘strategy’ that anyone can use to generate substantial income from trading in the financial markets.”
It also obtained a temporary restraining order. This forced the company to shut down and freeze its assets while the lawsuit proceeds.
Scamming Money and Providing False Testimonies
The FTC claims OTA used “false or unfounded earnings claims to sell ‘training programs’ costing as much as $50,000.” They had “collected more than $370 million from consumers nationwide within the last six years” on false pretenses through their worldwide seminars.
The FTC also reported that OTA touts its “instructors” as successful traders who have “amassed substantial wealth using OTA’s strategy.” It’s believed that these testimonies are false and therefore mislead those who have invested in the company’s strategy.
Additionally, customers who request a refund were required to sign a contract that would prevent them from leaving negative feedback on public forums or reporting them to law enforcement.
According to Andrew Smith, the Director of the FTC’s Bureau of Consumer Protection, “It is illegal to make earnings claims in marketing investment opportunities or training unless the seller has a reasonable basis to make such claims. OTA has used unfounded earnings claims to bilk Americans out of their savings.”
An Example of an OTA ‘Seminar’
Contributing editor at Kiplinger, Thomas Anderson, attended several seminars recently. OTA hosted one of them. He did this to find out if these “outfits delivered on their promises to help people become successful traders.”
Anderson discovered that OTA’s first rule-of-thumb was to not trust Wall Street with your money. They also talked about technical analysis and how it can be used by OTA students “to make money regardless of what the market does.”
However, the instructors merely talked about technical analysis and never demonstrated how it worked. In Anderson’s words, “the seminar quickly evolved from a round of Wall Street bashing to a pitch to enroll in the company’s $4,990 Pro-Trader class.”
He added, “I wanted to learn how to trade and all I got was a sales pitch. It was time to hit the road.”