Negative option marketer Scott Roix was charged and plead guilty to orchestrating a negative option fraud scheme that utilized multiple merchant accounts to scam consumers out of millions of dollars. The USA Herald has reported on other negative option marketers that have had ties to allege scams that utilized similar merchant processing schemes to the bank fraud system that Scott Roix used.
Beginning on or about July 1,2017 and continuing until on or about August 1,
2018, in the Eastern District of Tennessee and elsewhere, the defendants Mr. Roix and
HEALTHRIGHT, did knowingly, intentionally, and unlawfully combine, conspire, confederate,
and agree with other persons and entities to commit wire fraud against the United States, that is:
The object of the conspiracy was to obtain large sums of money for defendants
Mr. Roix and HEALTHRIGHT, and their co-conspirators, by fraudulently inducing
consumers to pay for consumer products through misrepresentations about the products themselves the charges that would be imposed on consumers’ credit cards
HEALTHRIGHT’s willingness to cancel payments and provide refunds as part of HEALTH RIGHT’s telemarketing operations, Mr. Roix and his co-conspirators knowingly and willfully devised call scripts that were designed to deceive consumers, in that the call scripts contained claims that were materially false, misleading, and omitted material information that induced consumers to allow credit card charges to HEALTHRIGHT, for the financial benefit of HEAL THRIGHT, Mr. Roix, and his coconspirators.
HEALTHRIGHT’s telemarketers made numerous false and deceptive claims to
consumers about a variety of consumer products they sold.
For example, pursuant to the above-described call scripts, HEALTHRIGHT’s
telemarketers falsely claimed that a product called “Pure Garcinia Cambogia” would “prevent fat from being made” and “increase serotonin levels which helps you feel fuller longer, helps maintain healthy stress hormone cortisol that can decrease belly and thigh fat and most importantly it’s all natural and stimulant free weight loss with no known side effects.”
In addition, pursuant to the above-described call scripts, HEALTHRIGHT’s
telemarketers falsely claimed that a product called “SkinTensive Xcel” “uses a clinically proven formula that features acetyl hexapeptide 8, a material that mimics the effect on deep wrinkles of Botox.”
Mr. Roix and others under his direction trained HEALTHRIGHT’s telemarketers to dissuade consumers from doing independent research on the products for fear they would discover these false claims in the call scripts. When consumers told HEALTHRIGHT’s telemarketers that they wanted to conduct further research, HEALTHRIGHT’s telemarketers falsely told consumers “I am the best resource for your research. I can give you more information and more specific responses to the questions you need answered than a website.”
HEALTHRIGHT’s sales scripts for many of its products lured consumers into
purchasing products, falsely assuring consumers that HEALTHRIGHT’s offers were risk-free
and promising excellent customer service.
To induce initial sales of consumer products, HEALTHRIGHT’s telemarketers
enrolled consumers in a 14- or 30-day “trial” that was promised to be “risk-free.” For consumers to receive their initial shipment of products, HEALTHRIGHT telemarketers told consumers that they needed to provide their credit card information to cover what HEAL THRIGHT’ s telemarketers described as only minor “shipping costs” for the initial shipment. Despite this assurance of a “risk-free” trial, HEALTHRIGHT enrolled consumers who accepted an initial shipment of products into a monthly subscription for the product that billed the consumers’ credit cards on a monthly basis. HEALTHRIGHT’s telemarketers deceptively assured consumers that if, for any reason, they wanted to avoid that monthly charge, they simply needed to call HEALTHRIGHT’s customer service department, and upon speaking with representatives in that department, they could easily cancel their subscription and receive a full refund for any products returned unopened.
In fact, HEALTHRIGHT’s representations about its customer service were false.
HEALTHRIGHT’s customer service was in actuality an arm of its telemarketing operation, and was designed to delay or otherwise hinder refunds, returns, and cancellations so that
HEALTHRIGHT could charge as many monthly subscription fees as possible. Customers
calling or emailing to cancel recurring monthly charges or demand refunds were not called back, put on hold, or otherwise stalled, and, on the occasions that consumers did speak to someone at HEALTHRIGHT, they were run through a gauntlet of scripted rebuttals that used many similar deceptive or unfounded claims that HEALTHRIGHT used to market the products in the first place, for the sole purpose of delaying the consumers’ cancellation as long as possible.
For example, HEALTHRIGHT “customer service” representatives would deceptively convince
consumers demanding cancellations and refunds that
“the product is said to work best over time, and was sold to you at a highly discounted rate offers a full 30-day satisfaction guarantee to give you enough time to try the product and begin to see the results, OK?”
HEALTHRIGHT’s telemarketers also concealed HEALTHRIGHT’s corporate identity,
identifying themselves as calling on behalf of the brand themselves, for example,
“Hi. This is ____ calling on behalf of Pure Garcinia Cambogia,” never providing HEALTHRIGHT’s name specifically.
Because HEALTHRIGHT’s telemarketers used fraudulent claims to charge the
credit cards of thousands of consumers each month, credit card chargebacks often exceeded numerical caps set by financial institutions. In order to conceal or otherwise minimize the risk of chargebacks to HEALTHRIGHT’s consumer products telemarketing business, Mr. Roix and his co-conspirators established a series of corporate entities, each of which was assigned a separate credit card merchant identification number (“MID”) through which HEALTHRIGHT passed payments and chargebacks. In cases where chargebacks exceeded or risked exceeding a relevant numerical cap, Mr. Roix and his co-conspirators moved payment settlements from one MID to another. This diffused the risk that chargebacks in a given time period would reach or exceed a number that might result in financial institutions halting settlements, prolonging HEALTHRIGHT’s ability to work with financial institutions. This, in turn, enabled its misrepresentations and charges to consumer credit cards to continue.
On or about October 9, 2017, HEALTHRIGHT sold SkinTensive Xcel to 1.B. of
Roan Mountain, Tennessee, using a script that claimed that the product
“uses a clinically proven formula that features acetyl hexapeptide 8, a material that mimics the effect on deep wrinkles of Botox;”