FTC Announces Tax Club Refund

The Federal Trade Commission (FTC) is now offering refunds to consumers who were members of Tax Club, a company that falsely advertised services would help individuals’ home businesses succeed. Qualifying consumers will have until Oct. 30, 2015, to file a claim in order to receive their portion of the Tax Club settlement.

This lawsuit was brought against Tax Club Inc. by the FTC, the State of Florida and the State of New York, alleging the company employed deceptive practice to exploit consumers hoping to succeed in starting and running a home business.

Jessica Rich, the Director of the FTC’s Bureau of Consumer Protection, advises consumers: “Before you put money into a work-at-home business opportunity, ask questions to determine if it is legitimate.”

The Tax Club lawsuit was filed in January 2013, alleging the company called consumers in order to falsely claim they were affiliated with other companies whose products and/or services had already found a consumer market. The FTC’s complaint claims Tax Club’s telemarketing peddling several business development services to consumers, including business coaching services, corporate formation services, and credit development services, allegedly telling would-be home business owners that Tax Club’s services were essential to running successful businesses.

Furthermore, after the initial sales call, Tax Club’s telemarketers would reportedly place multiple follow up calls to the consumers to push more “essential” business services. These Tax Club services typically cost consumers several thousand dollars per service offered, on top of a substantial initial fee and small, monthly Tax Club “membership” payments. The FTC claims that Tax Club falsely marketed these business services as essential to consumers and later did not even provide many of these services as promised.

On June 24, Tax Club agreed to a settle the matter, agreeing to surrender assets worth more than $15 million. Additionally, the company has been prohibited from selling their business coaching services and Tax Club work-at-home opportunities, though this ban is subject to certain exemptions. Tax Club has also been banned by the FTC from misrepresenting facts about their home business products and services, selling and/or profiting from consumers’ personal information, violating the Telemarketer Sales Rule, and neglecting to clearly disclose the purpose of their phone call to sell a good or service and failing to disclose the seller’s identity.

Edward B. Johnson, one of the individual defendants named in the Tax Club lawsuit, has also been banned from selling credit development business planning, and merchant account processing services. According to the Tax Club settlement, the initial $115 million judgment imposed on Johnson will be suspended when he surrenders certain assets (including bank and brokerage accounts, and income from sale of real and personal property) worth about $2.6 million. However, the full, initial judgment will come due to Johnson if he is found to have lied about or misrepresented his finances.

As previously stated, consumers who were allegedly scammed by Tax Club will have until Oct. 30 of this year to submit a valid claim and receive a refund for their purchases of services.

The FTC Tax Club Lawsuit is Federal Trade Commission, et al., v. The Tax Club Inc., et al., Case No. 13-CV-210, in the U.S. District Court for the Southern District of New York.

UPDATE: On Dec. 16, 2016, the FTC announced that it mailed more than 20,000 checks to consumers who applied for The Tax Club refund. If you have questions about the refund, please call 1-855-561-1178.

UPDATE 2: September 2018, the FTC mailed a second round of Tax Club refund checks totaling more than $300,000 to consumers in this settlement. Questions regarding your check can be directed to the refund administrator at 1-855-863-7379.