The Securities and Exchange Commission warned investors Tuesday about potentially fraudulent online paid-to-click programs that promise investors a share of the program’s profits in exchange for paying an upfront fee or buying products.
The agency issued an investor alert about the PTC programs Tuesday and also pointed to two recent enforcement cases involving such scams.
The SEC’s investor alert explains that the online advertising programs may have little or no revenue besides membership fees or sales of “ad packs” and may be nothing more than a Ponzi scheme.
Online advertising programs also can target those with something to advertise, promising to display a company’s ads on their network or guaranteeing traffic to a website by simply paying a membership fee or buying ad packs, the SEC said.
“Be skeptical if you are offered high returns for buying advertising products or clicking on online ads,” said Lori Schock, director of the SEC’s Office of Investor Education and Advocacy. “Some paid-to-click programs are actually Ponzi schemes.”
The SEC filed a complaint on Sept. 28 against Miami-based Pedro Fort Berbel and his company, Fort Marketing Group, for allegedly operating a fraudulent internet advertising businesses under such names as Fort Ad Pays, The Business Shop and MLM Shop.
The groups allegedly solicited investors through online posts and videos claiming they could share in the companies’ profits and earn investment returns as high as 120% by purchasing an ad pack for as little as a dollar and clicking on four banner ads per day.
The SEC alleges that Berbel and Fort Marketing Group raised more than $38 million from at least 150,000 investors.
“As alleged in our complaint, these companies had no viable source of revenue besides income from investor membership fees and the sale of ad packs, so this boiled down to an ad packs Ponzi scheme in which the promised investment returns to earlier investors were not possible without using funds from new investors,” said Eric Bustillo, director of the SEC’s Miami Regional Office.
The SEC obtained a court-ordered asset freeze against Berbel and his companies.