US Federal Trade Commission (FTC) v. FBA Machine / Passive Scaling (Bratislav Rozenfeld)

Decided by

U.S. District Court for the District of New Jersey

Parties

Federal Trade Commission v. Bratislav Rozenfeld

Remedy

A federal court issued an order temporarily halting the scheme and putting it under the control of a receiver.

Appeal

Appeal status not stated

Key holdings

1. The FTC alleged that Passive Scaling and FBA Machine deceived consumers with false promises of guaranteed income from AI-powered online storefronts.

   “cost consumers more than $15.9 million based on deceptive earnings claims that rarely, if ever, materialize.” — FBA Machine section, paragraph 1

2. The operator rebranded the scheme to FBA Machine and marketed tools claiming to use AI to price products and maximize store profits.

   “The rebranded marketing materials claim that FBA Machine uses “AI-powered” tools to help price products in the stores and maximize profits.” — FBA Machine section, paragraph 2

3. The federal court issued an order halting the operation and placing it under receivership control pending litigation.

   “a federal court issued an order temporarily halting the scheme and putting it under the control of a receiver.” — FBA Machine section, paragraph 4

In plain English

The Federal Trade Commission took law enforcement action against a business opportunity scheme operating under the names Passive Scaling and FBA Machine, as well as its operator Bratislav Rozenfeld, also known as Steven Rozenfeld and Steven Rozen. The Federal Trade Commission alleged that the scheme deceptively promised consumers guaranteed earnings through online storefronts utilizing artificial intelligence tools. According to the agency, the operation cost consumers more than $15.9 million based on deceptive income claims that rarely materialized. The scheme initially operated as Passive Scaling starting in 2021. After facing consumer complaints, refund requests, and lawsuits, Rozenfeld rebranded it as FBA Machine in 2023. Marketing materials claimed that FBA Machine used artificial intelligence tools to price products and maximize profits, promising consumers a 7-figure business and citing claims of clients generating over $100,000 per month in profit. Sales representatives falsely claimed the business was risk-free and offered money-back guarantees on investments ranging from tens of thousands to hundreds of thousands of dollars. The Federal Trade Commission filed its complaint in the U.S. District Court for the District of New Jersey following a unanimous 5-0 vote. In response, a federal court issued an order temporarily halting the scheme and placing it under the control of a receiver while litigation continues.