The case of John and Roman Cresto serves as a cautionary tale for consumers and investors in the e-commerce industry. These brothers presented themselves as experts in selling on platforms like Amazon and Walmart, offering courses and services that promised success. However, their success was built on lies and deception, as federal regulators later discovered. This incident highlights the need for tighter regulations and increased awareness of fraudulent practices in the e-commerce consultancy sector.
The Rise of Deceptive E-commerce Consultancies
With the booming growth of online marketplaces, a new industry of e-commerce consultants and agencies has emerged. These individuals, often referred to as “coaches” or “gurus,” claim to have achieved incredible success in e-commerce and offer their expertise to others for a hefty price. The Cresto brothers were among these self-proclaimed experts who capitalized on the increasing demand for guidance in the online retail space.
The Federal Trade Commission (FTC) filed a lawsuit against the Cresto brothers, alleging that they made false promises to their clients. According to the complaint, the brothers offered to manage automated online stores on platforms like Amazon and Walmart, claiming to handle everything from product sourcing to order fulfillment. They charged exorbitant fees ranging from $10,000 to $125,000 for the initial investment and additional funds for working capital. However, the FTC found that their clients’ stores generated little to no sales, leading to financial losses.
By October 2022, Amazon had suspended or terminated most of the Empire-managed stores for various policy violations, including intellectual property infringements and the use of dropshipping. The majority of Empire’s storefronts on Walmart’s marketplace also faced activation issues or termination due to policy violations. Despite these suspensions, the Cresto brothers continued to promote their Amazon businesses by recruiting affiliate marketers to post videos claiming significant income through Empire’s services. This deceptive marketing scheme led to more victims falling into their trap and losing money.
The FTC alleged that Empire’s clients were left in significant debt as a result of the Cresto brothers’ business practices. Many of these clients were forced to pay for inventory on credit cards, leading to financial hardships. Moreover, Empire refused to refund the money paid by these victims or compensate them for the goods sold. The FTC estimated that the Cresto brothers made over $22 million from their clients, which they spent on luxury cars, vacations, and even a lavish wedding in Italy.
Even after selling Empire, the Cresto brothers established a new business called Automators AI, claiming to teach consumers how to use artificial intelligence for selling online. The FTC alleged that this new venture was defrauding consumers of tens of thousands of dollars. The brothers falsely advertised the potential for high monthly sales and used popular AI chatbot ChatGPT to create customer service scripts. This ongoing scheme demonstrates the brothers’ disregard for ethical business practices and their relentless pursuit of financial gain at the expense of others.
As their fraudulent activities came under scrutiny, the Cresto brothers tried to transfer their businesses to another operator, Daniel Cohen. Cohen later sued the Crestos, alleging that they deceived him about the true state of the business and used him as a scapegoat to deflect blame from themselves. Cohen’s claims shed light on the questionable actions of the Cresto brothers and their attempts to avoid accountability for their actions.
The Need for Increased Awareness and Regulation
The Cresto brothers’ case highlights the urgent need for stricter regulations in the e-commerce consultancy sector. Consumers and investors must be cautious when engaging with consultants or agencies that promise guaranteed success and charge exorbitant fees. It is essential to conduct thorough research, verify claims, and seek recommendations before investing in such services.
The story of John and Roman Cresto serves as a glaring example of the deceit and fraud that can occur in the e-commerce industry. Their false promises and deceptive practices have left numerous victims in financial ruin. This case should serve as a reminder to consumers and regulators alike that closer scrutiny and stricter regulations are necessary to protect individuals from falling prey to fraudulent e-commerce consultancies.