Amazon is accusing two California men of swindling aspiring third-party sellers with promises of learning the secrets of making a “passive income” on the tech giant’s e-commerce platform.
In a new lawsuit, Amazon accuses Michael Gazzola, Matthew Behdjou and several related companies of perpetrating a scheme that includes chains of fake reviews, dishonest marketing, infringement of Amazon’s trademarks and more. Amazon has aggressively sought to stamp out fraud on its platform, and this case contains many of the elements the tech giant is trying to control.
Gazzola and Behdjou were featured in a January 2019 story in The Atlantic, “How to Lose Tens of Thousands of Dollars on Amazon.”
“Defendants improperly exploit Amazon’s name, intellectual property, and reputation to sell their get-rich-quick scheme to unwitting entrepreneurs around the country,” Amazon wrote in the lawsuit filed in federal court in Seattle. “These victims pay up to tens of thousands of dollars to Defendants based on Defendants’ false portrayal of an affiliation with Amazon, relying on these misrepresentations to start a business selling on Amazon.”
The defendants use a series of websites, videos and podcasts to draw in potential customers. Heavy use of Amazon’s logos makes the programs appear to be affiliated with the company in some way, according to the lawsuit. Once customers sign up to learn more, the defendants call them and send emails to get them to attend seminars and participate in the program.
Gazzola and Behdjou worked together on a site called Amazon Secrets from 2016 to 2018, before they split up to build their own “coaching” businesses. However, Amazon says they continue to collaborate.
One of the businesses named in the complaint, Online Secrets, charges students between $5,000 and $10,000 for programs ranging from three months to one year, Amazon alleges. The programs purport to show customers how to set up their own Amazon businesses, sell goods purchased from China on the e-commerce marketplace at a profit, advertise to consumers and get customers to leave positive reviews.
Amazon alleges that once people join the program they are “instructed to exchange reviews in an effort to increase the prominence of their product listing on Amazon’s stores,” according to the complaint. Participants in the program allegedly buy products from one another, review the items, then get those purchases refunded via a service like PayPal or Venmo.
The reviews appear legitimate, and that helps those sellers gain more prominence on the site. This creates what Amazon calls a “perpetual cycle of rigged reviews.”
GeekWire hasn’t been able to reach Gazzola and Behdjou for comment on the suit this week. But their work isn’t exactly flying under the radar. Their videos and podcasts are easy to come by, and some have risen to the top of the charts.
In its story about Gazzola and Behdjou earlier this year, The Atlantic spoke to people who poured tens of thousands of dollars into the program with little to show for it. However, The Atlantic also found one case of a successful student, who made enough on Amazon to travel with his family.
They separately told The Atlantic that the program has helped thousands of sellers succeed, and they pushed back against the notion that their strategies amount to a get-rich-quick scheme. Behdjou even invited Atlantic reporter Alana Semuels to attend one of his seminars.
The sites feature testimonials from successful students, with several of them overlapping between sites. However, the sites also include a disclaimer warning that future earnings are not guaranteed.
Gazzola and Behdjou are not the only self-proclaimed Amazon coaches the company has taken to court. Amazon and the Washington State Attorney General in 2017 sued a group that claimed an affiliation with the retail giant and offered costly seminars focused on making money as a third-party seller. The U.S. Federal Trade Commission later joined in, and the matter was eventually settled for up to $102 million.
Amazon has also cracked down on product reviews, banning most reviews done in exchange for free and discounted items and suing numerous groups it believes authored fake reviews. Earlier this year, the FTC filed first-ever charges against a company for paying for fake reviews on Amazon.
Here’s the full lawsuit: