A U.S. district court has shut down several Web sites that falsely promised they could help consumers get free government grants, the U.S. Federal Trade Commission announced.
The Web sites advertised an "easy to use" program called Grant Connect that supposedly would help people "instantly find the grant that's right" for them. The sites used pictures of U.S. President Barack Obama, Vice President Joe Biden and the American flag to give the false impression that they were connected to the government, the FTC said.
The FTC charged the companies with using bogus testimonials, failing to disclose the actual cost of their products, bundling multiple products together for sale without adequate disclosures and debiting consumers' bank accounts on a recurring basis without permission.
Instead of connecting customers to government grants, the Web sites provide "outdated, useless" information and "worthless" grant-writing tools, the FTC said. Few grants are available to consumers who sign up for the program, and those that are available require applicants to meet strict eligibility requirements, the agency said.
The U.S. District Court for the District of Nevada issued a temporary restraining order July 28. Since then, five of the 12 defendants in the case agreed to a preliminary injunction halting these practices until the matter is decided at trial, the FTC said.
The court has scheduled a preliminary injunction hearing for the remaining defendants for Sept. 11. The FTC is seeking to permanently stop these practices and force the companies to return their ill-gotten gains so the funds can be used to reimburse consumers.
The Web site operators sell several products, including Grant Connect, which they describe as "a unique, consumer-friendly U.S. government grant program that delivers all of the tools for the consumer to search multiple databases, write grant proposals, and deliver polished plans." The companies said customers would be charged less than US$3, but by bundling other products and services, such as identity theft protection services, credit offers and purported health benefits plans with their offer, they charge customers as much as $70 per month, the FTC said.
Using an affiliated network of Web sites, including Grantconnectoffer.com and others, the operators made claims such as, "Grant Connect -- $15 Billion of Free Money Available"; "Over $10 Billion Issued in 2009 Already"; and "EASY TO USE PROGRAM: Instantly find the Grant that's right for you!"
The Grant Connect site features supposed testimonials, including photos of people who supposedly got grants from the company, including one that states, "It's so easy! I got my first grant for $300,000. All I have to do is search and click."
For a time, the site featured a photo of Obama and Biden standing in front of an American flag, next to the Grant Connect logo and a caption that read, "CHANGE Is Here! $15 BILLION in FREE Government MONEY for you!"
The Web sites contain some disclosure language about other products in small type, the FTC said. Few consumers realize they will be charged monthly for services such as "SmartHealth Gold medical and lifestyle benefits" and "VComm International and Long Distance Calling Service" unless they cancel these memberships, the FTC said.
The FTC charged the Grant Connect defendants with violating federal law by making deceptive representations regarding Grant Connect; failing to adequately disclose the material terms and conditions of their offers; and violating the U.S. Electronic Funds Transfer Act by debiting consumers' bank accounts on a recurring basis without their authorization.
The FTC complaint named the companies Grant Connect, Global Gold, Horizon Holdings, O'Connell Gray, Pink, Vantex Group and Vertek Group, as well as Rachel Cook, manager of Vantex and Vertek; James Gray, managing member of Grant Connect, Horizon Holdings and O'Connell Gray; Steven Henriksen, president and owner of Global Gold; Juliette Kimoto, owner of Vertek and general partner of Pink; and Randy O'Connell, managing member of Horizon Holdings and O'Connell Gray.
The five defendants who agreed to the preliminary injunction entered by the court on Tuesday are Grant Connect, Horizon Holdings, O'Connell Gray, James Gray and Randy O'Connell.