Promises of ‘passive income’ on Amazon led to death threats for negative online review, FTC says
Packages move along a conveyor belt at an Amazon Fulfillment center on Cyber Monday in Robbinsville, New Jersey, on Nov. 28, 2022.
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Jamaal Sanford received a disturbing email in May of last year. The message, whose sender claimed to be part of a “Russian shadow team,” contained Sanford’s home address, social security number and his daughter’s college. It came with a very specific threat.
The sender said Sanford, who lives in Springfield, Missouri, would only only be safe if he removed a negative online review.
“Do not play tough guy,” the email said. “You have nothing to gain by keeping the reviews and EVERYTHING to lose by not cooperating.”
Months earlier, Sanford had left a scathing review for an e-commerce “automation” company called Ascend Ecom on the rating site Trustpilot. Ascend’s purported business was the launching and managing of Amazon storefronts on behalf of clients, who would pay money for the service and the promise of earning thousands of dollars in “passive income.”
Sanford had invested $35,000 in such a scheme. He never recouped the money and is now in debt, according to a Federal Trade Commission lawsuit unsealed on Friday.
His experience is a key piece of the FTC’s suit, which accuses Ascend of breaking federal laws by making false claims related to earnings and business performance, and threatening or penalizing customers for posting honest reviews, among other violations. The FTC is seeking monetary relief for Ascend customers and to prevent Ascend from doing business permanently.
It’s the latest sign of the FTC’s crackdown on e-commerce money-making schemes on top of some of the internet’s leading marketplaces, like Amazon and Airbnb. Since mid-2023, the agency has sued at least four automation companies, alleging deceptive marketing practices and falsely telling customers that they could generate passive income.
The FTC isn’t just focused on e-commerce automation businesses. On Wednesday, the agency said it’s stepping up enforcement against companies that use artificial intelligence “as a way to supercharge deceptive or unfair conduct that harms consumers.” The agency pointed to Ascend as a company that it took action against in part because of its claims that it used AI “to maximize clients’ business success.”
The FTC has also pledged to go after companies that try to suppress negative reviews online as part of new rules issued this year targeting fake reviews.
Automation businesses like Ascend promote their easy money opportunities on Instagram, TikTok and YouTube. But their promises go mostly unfulfilled, and often the storefronts get shut down for violating policies around dropshipping — the selling of products to customers without ever stocking inventory — or counterfeits.
The FTC’s complaint against Ascend accused co-founders Will Basta and Jeremy Leung of defrauding consumers of at least $25 million through their scheme. Formed in 2021, Ascend has done business under several entity names with operations registered in states including Texas, Wyoming and California.
Lina Khan, Chair of the Federal Trade Commission (FTC), testifies before the House Appropriations Subcommittee at the Rayburn House Office Building on May 15, 2024 in Washington, DC.
Kevin Dietsch | Getty Images News | Getty Images
The filing shows that the threats against Sanford grew more menacing. Two days after the initial email, Sanford’s wife’s phone lit up with a text message containing an image of a severed head that again urged the removal of the unflattering review.
“Your husband has angered some people with his ignorance,” the text message said. “The type he does not wish to anger.”
Sanford soon purchased a security system for his home.
Sanford said in an interview that Ascend had promised his Amazon storefront would generate enough revenue to cover the cost of inventory the company bought each month on his behalf. Months went by and his store amassed a “smorgasbord” of items, from LED lights to vitamins, which Ascend purchased from other retailers like Macy’s and Home Depot and then sold on Amazon, Sanford said. The company used the dropshipping model, Sanford said, which often led to the stores getting suspended on Amazon.
Amazon prohibits merchants from dropshipping unless they identify themselves as the seller of record, meaning their name is listed on the invoice, packing slip and other materials.
‘Depleted bank accounts’
As Sanford’s sales sputtered and his debts swelled, he made a series of complaints to Basta and Leung. When they went unanswered, he left the negative reviews. Sanford said Ascend eventually offered to refund him $20,000 if he would take down the review, but he declined.
“I think I’m resigned to the fact that I won’t be getting my money back and now I just want accountability,” he said.
Karl Kronenberger, a lawyer for Ascend, said in a statement that the company denies ever threatening customers and it attempted to resolve any disputes “in good faith.”
“We are investigating whether a competitor of Ascend may be the driving force behind some of the allegations in the case,” Kronenberger said.
Ascend’s marketing pitch claimed customers could quickly earn thousands of dollars from sales generated on Amazon, Walmart and other platforms. The company said it had developed proprietary artificial intelligence tools that it used to identify top-selling products.
E-commerce automation companies are increasingly exploiting Amazon’s third-party marketplace, which now hosts millions of merchants and accounts for more than half of all goods sold on the site.
Amazon didn’t provide a comment for this story.
Ascend promoted the scheme as “risk free,” the FTC said, because of its buyback guarantee, which effectively committed to make clients whole if they didn’t recoup their investment within 36 months.
“After consumers invest, the promised gains never materialize, and consumers are left with depleted bank accounts and hefty credit card bills,” the regulator wrote in its complaint.
To add an air of legitimacy, Ascend falsely claimed it had been featured in media outlets like Forbes, Yahoo! Finance and Business Insider, the FTC said. It primarily advertised its business on social media platforms TikTok, X, YouTube and Instagram.
Ascend faces two lawsuits in California that allege breach of contract and other claims, according to the FTC. In January, an arbitration action was filed against Ascend in Florida on behalf of 30 customers. Nima Tahmassebi, an attorney representing the Ascend customers, told CNBC that the clients chose to withdraw the claim once they learned of the FTC case.
Tahmassebi said he has been contacted by hundreds of individuals who “all but begged for legal assistance” because they lost money after paying for Ascend’s automation services.
“I’m talking to people who said I can’t get Christmas gifts this year because of my situation with them,” Tahmassebi said. “People took money they could have applied to their kid’s college tuition. Now it’s gone, and they’re left bewildered.”
WATCH: How Amazon became 2023’s top apparel and footwear seller
The X logo appears on a phone, and the xAI logo is displayed on a laptop in Krakow, Poland, on April 1, 2025. (Photo by Klaudia Radecka/NurPhoto via Getty Images)
Nurphoto | Nurphoto | Getty Images
Elon Musk‘s xAI Holdings is in discussions with investors to raise about $20 billion, Bloomberg News reported Friday, citing people familiar with the matter.
The funding would value the company at over $120 billion, according to the report.
Musk was looking to assign “proper value” to xAI, sources told CNBC’s David Faber earlier this month. The remarks were made during a call with xAI investors, sources familiar with the matter told Faber. The Tesla CEO at that time didn’t explicitly mention any upcoming funding round, but the sources suggested xAI was preparing for a substantial capital raise in the near future.
The funding amount could be more than $20 billion as the exact figure had not been decided, the Bloomberg report added.
Artificial intelligence startup xAI didn’t immediately respond to a CNBC request for comment outside of U.S. business hours.
The AI firm last month acquired X in an all-stock deal that valued xAI at $80 billion and the social media platform at $33 billion.
“xAI and X’s futures are intertwined. Today, we officially take the step to combine the data, models, compute, distribution and talent,” Musk said on X, announcing the deal. “This combination will unlock immense potential by blending xAI’s advanced AI capability and expertise with X’s massive reach.”
Read the full Bloomberg story here.
— CNBC’s Samantha Subin contributed to this report.
Alphabet CEO Sundar Pichai during the Google I/O developers conference in Mountain View, California, on May 10, 2023.
David Paul Morris | Bloomberg | Getty Images
Alphabet‘s stock gained 3% Friday after signaling strong growth in its search and advertising businesses amid a competitive artificial intelligence environment and uncertain macro backdrop.
“GOOGL‘s pace of GenAI product roll-out is accelerating with multiple encouraging signals,” wrote Morgan Stanley‘s Brian Nowak. “Macro uncertainty still exists but we remain [overweight] given GOOGL’s still strong relative position and improving pace of GenAI enabled product roll-out.”
The search giant posted earnings of $2.81 per share on $90.23 billion in revenues. That topped the $89.12 billion in sales and $2.01 in EPS expected by LSEG analysts. Revenues grew 12% year-over-year and ahead of the 10% anticipated by Wall Street.
Net income rose 46% to $34.54 billion, or $2.81 per share. That’s up from $23.66 billion, or $1.89 per share, in the year-ago period. Alphabet said the figure included $8 billion in unrealized gains on its nonmarketable equity securities connected to its investment in a private company.
Adjusted earnings, excluding that gain, were $2.27 per share, according to LSEG, and topped analyst expectations.
Alphabet shares have pulled back about 16% this year as it battles volatility spurred by mounting trade war fears and worries that President Donald Trump‘s tariffs could crush the global economy. That would make it more difficult for Alphabet to potentially acquire infrastructure for data centers powering AI models as it faces off against competitors such as OpenAI and Anthropic to develop largely language models.
During Thursday’s call with investors, Alphabet suggested that it’s too soon to tally the total impact of tariffs. However, Google’s business chief Philipp Schindler said that ending the de minimis trade exemption in May, which created a loophole benefitting many Chinese e-commerce retailers, could create a “slight headwind” for the company’s ads business, specifically in the Asia-Pacific region. The loophole allows shipments under $800 to come into the U.S. duty-free.
Despite this backdrop, Alphabet showed steady growth in its advertising and search business, reporting $66.89 billion in revenues for its advertising unit. That reflected 8.5% growth from the year-ago period. The company reported $8.93 billion in advertising revenue for its YouTube business, shy of an $8.97 billion estimate from StreetAccount.
Alphabet’s “Search and other” unit rose 9.8% to $50.7 billion, up from $46.16 billion last year. The company said that its AI Overviews tool used in its Google search results page has accumulated 1.5 billion monthly users from a billion in October.
Bank of America analyst Justin Post said that Wall Street is underestimating the upside potential and “monetization ramp” from this tool and cloud demand fueled by AI.
“The strong 1Q search performance, along with constructive comments on Gemini [large language model] performance and [AI Overviews] adoption could help alleviate some investor concerns on AI competition,” Post wrote in a note.
WATCH: Gemini delivering well for Google, says Check Capital’s Chris Ballard
CNBC’s Jennifer Elias contributed to this report.
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