The U.S. Federal Trade Commission has launched a civil lawsuit against a 24-year-old Canadian businessman and several online marketing companies he owns for allegedly scamming consumers out of more than $450 million.

In a complaint filed with the United States District Court in Seattle this week, the FTC alleges Alberta-born Jesse Willms, several business partners, and 10 companies controlled by Willms, lured consumers in the U.S., Canada, the U.K., Australia and New Zealand into bogus “free” or “risk-free” online trial offers for products, such as acai berry weight-loss pills, teeth whiteners, colon-cleansing products, work-at-home schemes, and health supplements.

Once consumers provided their credit or debit card numbers, they were charged on a recurring basis for products and services they did not agree to purchase, the suit alleges. The FTC is seeking refunds for consumers and an injunction to stop the alleged illegal practices of the marketers.

None of the allegations have been proven in court.

The FTC complaint follows a lengthy cross-border investigation involving the Canadian Competition Bureau, RCMP and the Alberta Partnership Against Cross Border Fraud.

“We believe our business practices are compliant with the law and are working to resolve this disagreement with the appropriate government agencies,” Willms said in a statement provided to the Star.

“Our companies give consumers the opportunity to buy a variety of products and services at significant savings. Our business is based on the loyalty and longevity of our customer relationships. For example, we are proud to report that a large percentage of our customers continued to use our products after twelve months of use — a tremendous achievement given the global competition in the Internet marketplace. This loyalty, in part, is earned through compliant business practices and disclosures that are both clear and conspicuous.”

The FTC alleges the defendants inadequately disclosed or failed to disclose the actual terms and conditions governing the so-called free offers, often displaying information “critical” to consumers’ decisions to hand over their financial details in small fonts and in pale colours difficult to read. The suit also alleges that the use of streaming video, graphics and false claims stressing the limited availability of the offer served to distract consumers from disclosures about cost, recurring charges or refund limitations.

The recently passed U.S. Restore Online Shoppers’ Confidence Act states that Internet retailers must “clearly and conspicuously” disclose all material terms of the transaction before obtaining a consumer’s billing information, obtain a consumer’s informed consent before charging their credit or debit card, and provide easy ways for a consumer to stop recurring charges from being placed on their credit or debit card.

“The terms and conditions of the offers were clearly and conspicuously disclosed, and consistent with the FTC standard for the evaluation of disclosures,” James A. Kaminski, lawyer for the defendants, said in a statement provided to the Star.

The FTC suit further alleges that the defendants made false claims about the efficacy of the weight loss and colon-cleansing products they sold, and used fake endorsements from celebrities such as Oprah Winfrey and Rachael Ray.

In August 2009, Harpo Inc., the Chicago-based company that owns the Oprah brand, along with Dr. Mehmet Oz, the host of “The Dr. Oz Show,” filed a trademark infringement complaint against 40 Internet marketers who were allegedly using the names Oprah Winfrey and Dr. Oz without permission to promote acai berry dietary supplements and other products. Some of the websites referenced in the complaint were allegedly associated with JDW Media, one of the defendant companies named in this week’s FTC suit. JDW Media, according to the FTC, is controlled by Willms.

The Oprah Winfrey and Dr. Oz case has since been settled.

Weight loss products offered by Willms and his companies go by many names, including AcaiBurn, AcaiBurn Plus, AcaiEdge Max, Detox AcaiBurn and Wuyi Tea, while their colon cleansing products include PureCleanse, PureCleanse Max, and Nature PureCleanse, the FTC alleges. The Commission charges the defendants led consumers to their websites through banner ads, pop-ups, sponsored search items and unsolicited emails created by affiliate marketers.

The FTC claims that the defendants also marketed penny auctions through sites called SwipeBids.com and SwipeAuctions.com and lured consumers into providing their credit and debit card numbers by offering free “bonus” bids. Consumers were hit with charges as high as $150 for introductory “bonus” bids and $11.95 a month for ongoing “bonus” bids, the FTC charges.

“We allege in each one of these operations, the mode of doing business was to tease people with a free trial offer or a very cheap introductory price, but then in the fine print indicate they were going to be enrolled in a monthly plan where they were going to be billed a certain amount a month for the right to continue to use whatever the product or service was,” Robert Schroeder, director of the Seattle FTC Office, told the Star.

“There are some people who would find the small print, but you have to be pretty vigilant, you have to look pretty hard to see what all the charges are,” he added.

While the defendants claimed to offer money-back guarantees with their products, the FTC alleges consumers were often unsuccessful in obtaining refunds thanks to time-consuming phone calls and convoluted processes.

Schroeder said the FTC issued civil investigative demands to Visa and Mastercard to determine how much money the defendants had charged customers. He estimated that anywhere between two and four million consumers could have been affected.

JesseWillms.com, the “Official Blog of Jesse Willms” describes Willms as “a true Canadian success story” who started his first company when he was just 16 years old.

A welcome message from Willms that greets readers when they first click on the site states: “I consider myself to be a hard worker, I understand there are no shortcuts in life, and I believe that fundamentally every successful business must focus on product value and customer satisfaction.”

Defendants named in the FTC complaint include Jesse Willms, Peter Graver, Adam Sechrist, Brett Callister, and Carey L. Milne, as well as three numbered Alberta companies, one of which does business as Terra Marketing Group, SwipeBids.com and SwipeAuctions.com.