FTC Takes Action against DK Automation over Amazon Marketplace Scam Scheme

The Federal Trade Commission is taking action against DK Automation and its owners, Kevin David Hulse and David Shawn Arnett for using unfounded claims of big returns to entice consumers into moneymaking schemes involving Amazon business packages, business coaching, and cryptocurrency. The FTC’s complaint alleges that the defendants promised consumers that they could “generate passive income on autopilot” when the truth was that few consumers ever made money from these schemes.
“DK Automation ripped off consumers by manipulating reviews and making empty promises of big returns on cryptocurrency investment schemes and bogus business programs,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “They ignored warnings that these practices were illegal, and now they are paying the price.”
A proposed court order would require the defendants to turn over $2.6 million to be used to refund consumers harmed by their deception, as well as requiring them to stop their deceptive earnings pitches and follow the law.
The FTC’s complaint notes that the defendants continued to use deceptive earnings claims even after they received Notices of Penalty Offenses regarding money-making opportunities and endorsements from the agency.
The defendants sold their Amazon programs under a number of different names, including AMZDFY, Amazon Done For You, and Amazon Done With You. According to the complaint, they promised consumers a “100% turnkey” business selling products on Amazon and charged consumers as much as $100,000 for the program. Their marketing and sales pitches were filled with fake consumer reviews touting huge profits.
In addition to the Amazon business packages, the defendants also pitched supposed cryptocurrency investment services that included their “#1 secret passive income crypto trading bot,” which they claimed could “generate profits for you even while you sleep.” The complaint alleges that they charged consumers thousands of dollars for the supposed service. A June 2022 FTC data spotlight showed that in one 15-month period, consumers reported losing $575 million to cryptocurrency investment scams.
The FTC’s complaint alleges that the defendants in the case harmed consumers by:
- Deceiving them about potential earnings: DK Automation and its owners made multiple claims about the supposed huge profits consumers could make with their programs, using testimonials that did not reflect the experience of any consumer in the FTC’s investigation. When they included disclaimers, the complaint alleges that they were in such small type or removed from the claims that they were essentially useless to consumers.
- Suppressing Negative Reviews: In many cases, the company manipulated online reviews by falsifying positive reviews and flagging negative reviews that resulted in their removal. In addition, the company agreed to provide refunds to consumers on the condition they remove their complaints. Finally, the FTC charged that defendants threatened to sue a dissatisfied consumer who spoke about his negative experience with the company and added language to their contracts to prevent consumers from leaving negative reviews.
- Not providing required disclosures: The defendants regularly failed to give consumers the information that is required by the FTC’s Business Opportunity Rule when selling their programs. These required disclosures include key information that can help consumers have a full picture about the opportunity being sold to them.
Enforcement Action
The defendants have agreed to a proposed court order that would require them to:
- Back up their claims: The defendants would be prohibited from making earnings claims to consumers that are deceptive, and they would be required to have information in writing to back up their claims.
- Stop deceiving consumers: They would also be prohibited from misleading consumers about the nature of any good or service they sell, including the likelihood of profits, whether testimonials are reflective of a normal consumer’s experience, or any other key information.
- Stop interfering with reviews and complaints: The defendants would be prohibited from taking actions that restrict consumers’ ability to file complaints or leave negative reviews, including requiring consumers to sign contracts that limit their ability to complain.
- Provide money for refunds: The defendants would be required to provide at least $2.6 million to the FTC to be used to refund consumers.
The order includes a total monetary judgment of nearly $53 million, which was partially suspended due to an inability to pay. If the defendants are found to have lied about their financial condition, then the full amount of the judgment would be immediately due.
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The United States Patent & Trademark Office is being swamped by trademark applications (about 900,000/year, or 3x the level 20 years ago). Many of these applications are solely concerned with getting trademarks for Amazon sellers … and not just because of Amazon’s hundreds of millions of customers. Amazon’s own policies have a lot to do with it.
How so? Amazon incentivizes sellers and manufacturers to trademark their brands to join Amazon Brand Registry, which not only grants IP protection but also unlocks special marketing powers including Amazon stores, analytics, special advertising programs, and more.
Many of the brands flooding USPTO for trademark requests are Amazon sellers from China.
Most of the Amazon brands are filing trademark applications to take advantage of Amazon Brand Registry marketing programs, and do it by following the law (even if the brands seem a little odd, like SDITLF or MUWRIL). But some FBA sellers are breaking the rules, aided by sketchy lawyers and overwhelmed USPTO staff. There was a case earlier this year in which someone from China registered GENERIC as a trademark … and promptly kicked off thousands of sellers selling generic items on Amazon.
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Amazon is trying to make sellers use their new ocean freight service for FBA shipments from China

Today, Amazon e-mailed their third party sellers to promote a new service called Amazon Global Logistics (AGL) aimed to offer reasonably priced shipments.
According to the announcement, Amazon Global Logistics (AGL) offers FBA Sellers end-to-end shipping services via ocean transportation options from CN into EU and US fulfilment centres and/or SPs’ own warehouses that can be conveniently booked through Seller Central or Shipper Central. AGL shipping services includes shipment pick-up in origin, palletization (if required), export/import customs clearance, and domestic delivery in the destination country.
This is the first time Amazon started offering AGL directly to sellers. It will also include the option of shipping to your own warehouse through our Ship-to-Storage (STS) program. STS allows you to ship ocean full-container-load (FCL) cargo with Amazon Global Logistics (AGL) from China to your designated, non-Amazon storage facility.
Here you can view a screenshot of the full announcement from agl1-eu-sales-team@amazon.com:

Here is a copy of the full text:
Onboard now with Amazon Global Logistics for global ocean shipping! Dear Seller, Amazon Global Logistics (AGL) offers FBA Sellers end-to-end shipping services via ocean transportation options from CN into EU and US fulfilment centres and/or SPs’ own warehouses that can be conveniently booked through Seller Central or Shipper Central. AGL shipping services includes shipment pick-up in origin, palletization (if required), export/import customs clearance, and domestic delivery in the destination country. We also give you the option of shipping to your own warehouse through our Ship-to-Storage (STS) program. STS allows you to ship ocean full-container-load (FCL) cargo with Amazon Global Logistics (AGL) from China to your designated, non-Amazon storage facility. What are the benefits of AGL services · Save Time: Deliver products faster by shipping directly from SPs’ manufacturers in China to fulfillment centers and/or 3rd party warehouses. · Reduce Costs: Lower inventory handling costs through a more efficient supply chain management. · Ship with confidence: Book shipments with predictable and efficient shipping schedules at competitive rates. · Simplify operations: Use a single portal to create, book, track, and pay for shipments. How to get started There are three simple steps to get started. Set up your payment method choosing the currency in which you wish to pay The second step is to create your Importer of Record (IOR) profile. You will need to create an Importer of Record profile for each country you would like to import to. Please select the following links based on the destination country you plan to ship to; (Portal Link: UK, DE, FR, IT,ES). Once your IOR profile has been approved, you will be able to place your first booking. You can find our latest booking guides by marketplace here; (Booking Guide Link: UK, DE, FR, IT, ES). Helpful resources: Download our Getting started guide Download our Container Checklist guide here Kind regards, The Amazon Global Logistics Team Amazon.com | EU agl1-eu-sales-team@amazon.com |
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This week, Amazon e-mailed their third party sellers regarding FBA inventory stored in the AFW1 warehouse, which was damaged due to severe weather causing structural damage to that facility, forcing it to close. It is expected to remain closed until at least the end of April 2023.
According to the notice, Amazon will be soon reimbursing sellers for any lost and damaged inventory, adjusting their IPI Score or refunding storage fees.
Here you can read a copy of the full announcement:
Important update regarding your inventory at AFW1 Hello, Our records indicate that you have inventory at, or on the way to, our AFW1 fulfillment center. On December 13, 2022, severe weather caused structural damage to that facility and we were forced to close. We expect to remain closed until at least the end of April 2023. We understand this has affected your business and will work to provide the most up-to-date information. Below are other important updates for your inventory stored at AFW1. 1. While AFW1 is closed, we are unable to fulfill customer orders with inventory stored there. Once AFW1 is operational again, we will evaluate the condition of your inventory to determine if it is sellable. We expect the fulfillment center to remain closed until at least the end of April 2023 and will communicate further details on sellable inventory as we know more in the coming weeks. Inventory will be evaluated based on the inventory adjustments policy (https://sellercentral.amazon.com/help/hub/reference/external/G200453260). If you don’t agree with the Amazon valuation of a unit, you can file a claim using the Contact Us page in Seller Central within 90 days after we issue the reimbursement. If we determine your inventory was damaged by this incident, we will reimburse you per our FBA inventory reimbursement policy (https://sellercentral.amazon.com/help/hub/reference/external/G200213130). You will be able to track your refund by accessing your Reimbursements report (https://sellercentral.amazon.com/reportcentral/REIMBURSEMENTS/0). 2. We will refund the storage fees for any inventory affected by this closure. Storage fees from December and January will be reimbursed by March 15. You may see storage fees associated with affected inventory from February-April, which will be refunded on a monthly basis until AFW1 is operational. 3. For shipments already sent to AFW1, Amazon will continue to redirect them to a nearby fulfillment center at our cost. 4. For any inventory that has been redirected or is currently available in other fulfillment centers, those listings will remain sellable and we will fulfill customer orders with the available units. Any new shipments will go to a fulfillment center that can currently fulfill customer orders. If stranded inventory impacted your ability to sell, we will contact you with additional information and details. 5. If your Inventory Performance Index (IPI) score is being affected by this closure, we will ensure your capacity limit is not negatively affected and will allow you extra capacity if necessary, beginning now and for at least 13 weeks after AFW1 is reopened. We’re aware that the stranded inventory can impact your IPI score and this incident was out of your control. We will share further details in the coming weeks to help navigate this situation. Action requested: If you have created shipments planned for AFW1, but have not sent them yet, please delete these shipments and re-create them. A new shipping destination will be automatically assigned during the creation of the new shipment. For additional details, go to “FAQ for the AFW1 closure”: https://sellercentral.amazon.com/help/hub/reference/external/G5HFTYE2FWA3N7G6 We are still actively investigating this incident and will update this page and share more details with impacted sellers as we have more information. We apologize for the inconvenience, and thank you for your understanding and patience. The Fulfillment by Amazon team |
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Regarding Amazon Seller Performance, you can always participate in our Amazon Seller Performance – Friendly Advice – Worldwide group, where you will be very welcome.
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In case you are an Amazon Seller who needs help with Seller Identity Verification on Amazon, please feel free to watch my most detailed video on the subject, addressing all common questions:
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