Arise Ordered To Pay $7 Million to Consumer Due To FTC Settlement

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The Federal Trade Commission is taking action against gig work company Arise Virtual Solutions for misleading consumers about the money they could make on Arise’s platform and marketing its business opportunity without complying with the FTC’s Business Opportunity Rule, including the requirement to truthfully disclose the basis for earnings claims to consumers.

On July 2, 2024, the FTC provided a statement about the proposed settlement. Per the press release, Arise would be required to pay $7 million, which will be refunded to consumers harmed by its misconduct, and must be able to back up any earnings claims it makes in the future.

FTC Chair Lina M. Khan said, “Arise lured in workers with false promises about what they could earn while requiring them to pay out-of-pocket for essential equipment, training, and other expenses. Operating in the ‘gig’ economy is no license for evading the law, and the FTC will continue using all its tools to protect Americans from unlawful business practice.”

In its complaint against Arise, the FTC charges that the company regularly used misleading advertisements saying that consumers who signed up with Arise would have access to jobs that paid “up to $18/hour” doing remote customer service work for major companies. Arise heavily promoted this business opportunity online, targeting stay-at-home mothers and others who might be looking for opportunities to support their families by working from home. A recent report shows, that the majority of the gig workers Arise recruited were Black Women.

According to the complaint, when Arise began citing the $ 18.00 per hour figure in 2020, its internal documents showed that the average pay for jobs on its gig work platform was just $12.00 per hour. Also, from 2019 to 2022 99.9% of the consumers who joined the Arise platform made less than $18.00 per hour in hourly base pay. Arise overinflated earnings claims were effective in drawing consumers to their platform. Per Arise’s market testing reports, showed more consumers responded to these specific claims than those simply advertising “extra income.”

Arise continued running ads promoting earnings of up to $18.00 per hour even after receiving a Notice of Penalty Offenses from the FTC regarding false and unsubstantiated earnings claims in money-making opportunities in 2022.

In addition to the fact that consumers’ pay was nearly always below the levels Arise advertised, the complaint alleges that the company’s earnings claims did not factor in the substantial fees consumers faced when joining and using the Arise platform.

According to the complaint, consumers who join the Arise platform are required to make hundreds of dollars in equipment purchases like computers and headsets, including some equipment that is purchased from and financed by Arise. Per the FTC press release, until July 2022, Arise charged consumers as much as $250 for training programs that were required before consumers could begin money-earning jobs, and only stopped charging for that training after learning of the FTC’s investigation.

Arise also has failed to provide the documents and disclosures required by the FTC’s Business Opportunity Rule. This is the first case where the Commission has charged a company in the gig economy with violating the Business Opportunity Rule, which requires that prospective workers receive key disclosures about earnings claims and other important information before they decide to invest their time and money in a business opportunity.

The Start-Up Costs:

Did you know Arise also charges workers on its platform nearly $40 each month in mandatory fees? This reduced consumers’ effective earnings. When consumers left the Arise platform after discovering that their pay was not sufficient or equal to what Arise promised, their expenses were not refunded.

The Proposed Settlement:

In addition to the $7 million payment, Arise will be permanently prohibited from making any earnings claims to consumers without being able to substantiate those claims as part of the proposed settlement. In addition, Arise will be prohibited from making any false or misleading claims generally and will be required to provide the disclosures mandated by the Business Opportunity Rule.