Netvertise, Inc. and owner Elliot Krasnow were banned for life from promoting or selling franchises or business opportunities by the Federal Trade Commission.
The FTC alleges the company violated federal law by selling franchises for Website design, promotion services, and SEO software under false claims.
In addition to the ban, Netvertise will have to return $160,000 to its customers, as part of a settlement, which is not technically an admission of guilt.
The FTC claims the company inflated the earnings customers would make with their services and Netspace SEO software to lure franchise buyers.
In addition, the FTC was none to pleased to learn that Krasnow, who’d been in trouble with them before, back in 1990, for misrepresentations about rare coins he was selling, didn’t disclose his checkered past to franchisees as required by law.
The rare coins mess 17 years ago cost Krasnow $400,000.
And now, he and his company are banned offline and on the Web from promoting or selling franchises or business opportunities.
Netvertise sold its franchises for between $20,000 and $100,000, offering various Web services to small- and medium-sized businesses, including the construction and promotion of Websites, use of email marketing, and off-site data protection.
The franchise also included Netspace’s SEO software, which Netvertise promised would create Websites that ranked on the first page of search engine results pages.
The FTC says Krasnow’s company misrepresented franchise incomes with unsubstantiated earnings claims, overstated the value of the Netspace software, and that the Netvertise provided consumers with “defective” disclosure documents.
No earnings claim documents were provided to franchisees.
The lifetime ban from the franchise and promotion business is covered under the Franchise Rule and the Business Opportunity Rule.
The FTC brought similar charges against Netfran Development Corp., also run by Krasnow, but the defendant was dismissed on May 9 of this year.
