FTC Charges Stock Tip Website With Deceptive Advertising
The Federal Trade Commission has recently filed a lawsuit in Maryland federal court against subscription stock trade advice website Raging Bull.
The FTC alleges that the company purports to offer market tips and COVID-10 “plays” but uses deceptive marketing tactics. Regulatory agencies, not just the FTC, have been particularly interested in advertising that unlawfully leverages COVID-19-related vulnerabilities.
According to the FTC, some of the individual co-defendants who operate Raging Bull are touted in the company’s marketing as “experts” who are self-made millionaires but in reality have not done well in the market. The FTC also alleges that those that operate the company have the majority of their income derived from Raging Bull’s subscription fees.
The FTC has charged Raging Bull and its operators of making false or unsubstantiated earnings claims, misrepresentations regarding Raging Bull’s services, and violations of the Restore Online Shoppers’ Confidence Act.
“The majority of consumers do not beat the market or make the kinds of returns advertised,” the FTC said. “Many consumers have lost substantial sums of money in the stock market following defendant’s strategy or trade recommendations; some consumers have even lost tens of thousands of dollars on just a few trades. When consumers try to cancel their subscriptions, many find they cannot do so easily.”
The defendants Raging Bull, companies affiliated with it and various individuals allegedly use aggressive online advertising and marketing based on their purported success at online trading and testimonials of consumers claiming to have made significant money using the company’s products.
According to the FTC, however, there is little evidence to substantiate either the defendants’ alleged success in market trading. Additionally, mouseprint in the company’s terms of services and disclaimers are often contradictory of other claims made.
The FTC is seeking among other things a permanent injunction to prevent future violations of the FTC Act and the Restore Online Shoppers’ Confidence Act, possible restitution to consumers, and disgorgement of ill-gotten gains.
Federal Trade Commission v. RagingBull.com LLC et al. (Maryland).
Richard B. Newman is an FTC compliance attorney at Hinch Newman LLP.
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