FTC reaches settlement with websites offering bogus federal grant information

The Federal Trade Commission said Wednesday that it has reached settlements with the operators of websites that the agency claimed were deceptively touting free government grants for personal expenses and debts.

As part of an investigation into scams related to the financial downturn, the FTC alleged that the operators promised consumers access to a "members only" website that included information on how they could obtain government grants. The defendants named in the case include Ryan Champion, Joseph C. Fleming IV, and In Deep Services, Inc., doing business as Grant$ For You Now.

For access to the information, the websites asked consumers to provide their credit or debit card information to pay for a $1.99 processing fee.

The FTC said in a news release that the federal government does not provide grants to pay off debts or personal expenses and that the information provided on the "members only" site was "full of inaccurate and obsolete information."

In addition, the agency said the operators of the sites did not inform consumers they would be charged recurring monthly fees of up to $95 a month and an additional one time fee of $19.12 and that they falsely offered a 100 percent money back guarantee. The sites were shut down in June 2009 after the FTC sued them and won a temporary restraining order.

As part of the settlement, the operators of the sites were each ordered to pay more than $9 million, which will be suspended if they pay back taxes owed to the Internal Revenue Service and the state of California and surrender their remaining assets to the FTC. If the defendants are found to have misrepresented their finances, they could be ordered to pay the $9 million fine.

In addition, they have been banned from marketing or selling any grant-related products or services or offering any program in which consumers have to opt-out of being charged a recurring fee. The settlement also prohibits the operators from automatically charging a consumer's credit or debit card account without permission.