March 28, 2001, 12:00 AM

Bigsmart pyramid promoters settle FTC charges

Bigsmart.Com will provide up to $5 million in consumer redress and post a $500,000 performance bond before engaging in any new multi-level marketing activity.

Operators of an Internet-based business opportunity that promised easy income for investors in an Internet shopping mall network have agreed to settle Federal Trade Commission charges that their scheme was an illegal pyramid operation. Under the terms of the settlement, Bigsmart.Com L.L.C. and principals Mark and Harry Tahiliani will provide up to $5 million in consumer redress and post a $500,000 performance bond before engaging in any new multi-level marketing activity.

The FTC says Mesa, Ariz.-based Bigsmart marketed Internet theme malls that it claimed would enable investors to earn substantial income from commissions on products purchased through the Internet. The malls were a collection of links to retail sites maintained by independent third-party merchants, such as MarthaStewart.com, and to a Superstore maintained by Bigsmart. Traffic was directed to the malls through the personalized Bigsmart welcome pages that members bought access to for a $10 application fee and a $99.95 hosting fee. Although Bigsmart claimed that members would make substantial amounts of money, the scheme was structured in such way that to realize continued financial gains, would depend on "the continued, successive recruitment of other participants," not on retail sales of products and services to the public, the FTC says. The FTC charged that the claims that consumers who invested in Bigsmart would make substantial income were false; that promotional materials that made the false and misleading claims provided the means for others to deceive consumers; and that Bigsmart was actually a pyramid scheme. All three were violations of the FTC Act.

 

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