Additional Information for Arise Virtual Solutions, Inc.

As of July 3, 2024

A STIPULATED ORDER FOR PERMANENT INJUNCTION, MONETARY JUDGMENT, AND OTHER RELIEF has been issued in the case with details as follows:

Defendant, Defendant’s officers, agents, employees, and attorneys, and all other Persons in active concert or participation with any of them, who receive
actual notice of this Order, whether acting directly or indirectly, in connection with the advertising, marketing, promoting, offering for sale, or selling of any good or service, are permanently restrained and enjoined from making any Earnings Claims, expressly or by implication, unless:
A. The Earnings Claims are true and non-misleading;
B. At the time the Earnings Claims are made, Defendant:
1. has a reasonable basis for the Claim;
2. has in its possession written materials that substantiate the claimed earnings
and that the claimed earnings are typical for consumers similarly situated to
those to whom the Claim is made; and
3. makes the written substantiation available upon request to the consumer,
potential Purchaser, and the FTC

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, employees, and attorneys, and all other Persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting or offering for sale any good or service, are permanently restrained and enjoined from misrepresenting, or assisting others in misrepresenting, expressly or by implication, any fact material to consumers concerning any good or service, such as: the total costs; any material restrictions, limitations, or conditions; or any material aspect of its performance, efficacy, nature, or central characteristics.

IT IS FURTHER ORDERED that Defendant, Defendant’s officers, agents, employees, and attorneys, and all other Persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with any offer for sale, sale, or promotion of a Business Opportunity, are permanently restrained and enjoined from:
A. Failing to disclose, or disclose adequately, to a prospective Purchaser in writing, material information pertaining to any Business Opportunity at least seven (7) days before the prospective Purchaser either signs a contract in connection with the Business Opportunity sale, or makes a payment or provides other consideration to the Seller, directly or indirectly through a third party, in connection with the Business Opportunity—whichever is earlier—including:
1. basic identifying information of the Seller, including the Seller’s name, business address, and telephone number;
2. identification of any civil or criminal actions against the Seller, affiliates or prior business of the Seller, or any of the Seller’s officers, directors, sales managers, or any individual who occupies a position or performs a function similar to an officer, director, or sales manager of the Seller, for misrepresentation, fraud, securities law violations, or unfair or deceptive practices, including violations of any FTC Rule, within the 10 years immediately preceding the date that the Business Opportunity is offered;
3. a statement of all material terms and conditions of any refund or cancellation policy offered by the Seller, or a statement that the Seller does not offer any refund or cancellation;
4. contact information of at least 10 Purchasers who purchased the Business Opportunity within the last 3 years, including those Purchasers’ name, state,
and telephone number, and, in immediate conjunction with that list, a Clear and Conspicuous statement to prospective Purchasers that, “If you buy a Business Opportunity from the Seller, your contact information can be disclosed in the future to other buyers”;
5. if the Seller makes any Earnings Claims, the Seller must:
a. Comply with Section I of this Order; and
b. furnish to prospective Purchasers an Earnings Claim statement in a single written document that states the following information:
i. the title “EARNINGS CLAIM STATEMENT REQUIRED BY LAW” in capital, bold type letters;
ii. the name of the Person(s) making the Earnings Claim(s) and
the date of the Earnings Claim(s);
iii. the Earnings Claim(s);
iv. the beginning and ending dates when the represented earnings were achieved;
v. the number and percentage of all Persons who purchased the
Business Opportunity prior to the ending date in Section III.A.5.b.iv who achieved at least the stated level of earnings;
vi. any characteristics of the Purchasers who achieved at least the represented level of earnings, such as their location, that may differ materially from the characteristics of the prospective Purchasers being offered the Business Opportunity; and
vii. a statement that written substantiation for all Earnings Claims will be made available to prospective Purchasers upon request.
B. Making any Earnings Claim in the General Media unless the Seller:
1. has a reasonable basis for the Earnings Claim at the time the Claim is made;
2. has in its possession written material that substantiates the Earnings Claim
at the time the Claim is made; and
3. states in immediate conjunction with the Earnings Claim:
a. the beginning and ending dates when the represented earnings were achieved; and
b. the number and percentage of all Persons who purchased the Business Opportunity prior to the ending date in Section III.B.3.a who achieved at least the stated level of earnings.

Judgment in the amount of Seven Million Dollars ($7,000,000) is entered in favor of the Commission against Defendant as monetary relief. This Judgment does not resolve or settle claims brought by any other federal agency, and specifically does not resolve, settle or otherwise impact any claims for restitution or other monetary relief brought by the U.S. Department of Labor against Defendant to compensate consumers for allegedly unpaid training time in the case captioned Su v. Arise Virtual Solutions, Inc., Case No. 23cv61246 (S.D. Fla. filed June 29, 2023).

The parties each reserve their rights regarding whether this Judgment may be used to offset any potential recovery for other types of claims in that case apart from allegedly unpaid training.
B. Defendant is ordered to pay to the Commission Seven Million Dollars ($7,000,000) within seven (7) days of entry of this Order by electronic fund transfer in accordance with instructions previously provided by a representative of the Commission.

Defendant, Defendant’s officers, agents, employees, and attorneys, and all other Persons in active concert or participation with any of them, who receive actual notice of this Order, are permanently restrained and enjoined from directly or indirectly failing to provide sufficient customer information to enable the Commission to efficiently administer consumer redress. If a representative of the Commission requests in writing any information related to redress, Defendant must provide it, in the form prescribed by such representative, within 14 days.

IT IS FURTHER ORDERED that, within 21 days of entry of this Order:
A. Defendant shall post Clearly and Conspicuously on Defendant’s websites and mobile applications, including www.ariseworkfromhome.com, www.arise.com, www.ariseworkfromhome.com/registration/, register.arise.com, the “Arise on the Go” mobile application, and any other website or mobile application where a consumer registers or signs a contract with Defendant, or makes a payment or provides other consideration to Defendant—whether directly or indirectly—a link to an exact copy of the notice attached hereto as Attachment
A. Defendant shall keep the notice posted on the above-listed websites and mobile applications continuously for a period of 180 days following the date of entry of this Order.
B. Defendant shall send by electronic mail the notice in the form shown in Attachment
A to each email address known to Defendant for all consumers who registered to provide customer support service to Defendant’s clients through Defendant’s online platform or signed any legal agreement with Defendant to provide customer support service to Defendant’s clients through Defendant’s online platform between January 1, 2019, and the date of the entry of this Order. The email shall have the subject line: “What the FTC Settlement with Arise Means for Arise Service Partners and Agents.”
C. Defendant shall not include or add information other than that contained in Attachment A in the notice required by this Section, nor transmit any other materials with the required notice.

LINK: https://ecf.flsd.uscourts.gov/doc1/051127384981

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As of July 2, 2024

FTC Takes Action Against Gig Work Company Arise Virtual Solutions for Deceiving Consumers About Pay in Marketing Its Business Opportunity

Proposed settlement would require Arise to pay $7 million for consumer refunds, provide clear information to consumers

The Federal Trade Commission is taking action against gig work company Arise Virtual Solutions for misleading consumers about the money they could make on Arise’s platform and marketing its business opportunity without complying with the FTC’s Business Opportunity Rule, including the requirement to truthfully disclose the basis for earnings claims to consumers.

Under the proposed settlement, Arise would be required to pay $7 million, which will be refunded to consumers harmed by its misconduct, and must be able to back up any earnings claims it makes in the future.

In its complaint against Arise, the FTC charges that the company regularly used misleading advertisements saying that consumers who signed up on their platform would have access to jobs that paid “up to $18/hour” doing remote customer service work for major companies. The company heavily promoted this business opportunity online, targeting stay-at-home mothers and others who might be looking for opportunities to support their families by working from home. Most of the gig workers Arise recruited were Black, and almost all of them were women.

According to the complaint, when Arise begin citing the $18/hour figure in 2020, its own internal documents showed that the average pay for jobs on its gig work platform was just $12/hour. In fact, from 2019 to 2022, 99.9% of the consumers who joined the Arise platform made less than $18/hour in hourly base pay. The overinflated earnings claims were effective in drawing consumers in; Arise’s market testing showed more consumers responded to these specific claims than those simply advertising “extra income.”

Arise continued running ads touting earnings of up to $18/hour even after receiving a Notice of Penalty Offenses from the FTC regarding false and unsubstantiated earnings claims in money-making opportunities in 2022.

In addition to the fact that consumers’ pay was nearly always below the levels Arise advertised, the complaint alleges that the company’s earnings claims did not factor in the substantial fees consumers faced when joining and using the Arise platform.

According to the complaint, consumers who join the Arise platform are required to make hundreds of dollars in equipment purchases like computers and headsets, including some equipment that is purchased from and financed by Arise. In addition, until July 2022, Arise charged consumers as much as $250 for training programs that were required before consumers could begin money-earning jobs, and only stopped charging for that training after learning of the FTC’s investigation.

Arise also has failed to provide the documents and disclosures required by the FTC’s Business Opportunity Rule. This is the first case where the Commission has charged a company in the gig economy with violating the Business Opportunity Rule, which requires that prospective workers receive key disclosures about earnings claims and other important information before they decide to invest their time and money in a business opportunity.

Beyond the startup costs, Arise also charges workers on its platform nearly $40 each month in mandatory fees, which further reduced consumers’ effective earnings. When consumers left the Arise platform after discovering that their pay was not sufficient or equal to what Arise promised, their expenses were not refunded.

In addition to the $7 million payment, Arise will be permanently prohibited from making any earnings claims to consumers without being able to substantiate those claims as part of the proposed settlement. In addition, Arise will be prohibited from making any false or misleading claims generally and will be required to provide the disclosures mandated by the Business Opportunity Rule.

Arise also faces concurrent litigation with the U.S. Department of Labor in the U.S. District Court for the Southern District of Florida over separate allegations that it misclassified its workers as independent contractors.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. Stipulated final orders have the force of law when approved and signed by the District Court judge.

LINK: https://www.ftc.gov/news-events/news/press-releases/2024/07/ftc-takes-action-against-gig-work-company-arise-virtual-solutions-deceiving-consumers-about-pay?utm_source=govdelivery