The FTC permanently banned FBA Machine over its 'AI-powered' online-store income scheme, with a $15.7M judgment (2025)

Verification status: CHECKING — the maker has quoted every critical figure verbatim from the FTC’s own releases and corroborated it against an independent legal analysis; awaiting the checker’s audit before any badge. The $15.9 million consumer-harm figure and the marketing claims are ALLEGATIONS in the FTC’s complaint; the $15.7 million judgment and the permanent ban are the terms of a negotiated (stipulated) order, not a litigated finding of liability.

The problem

“Passive income” was the pitch: pay for software that would run an online storefront for you, and let AI do the work. The Federal Trade Commission alleged the promise was a fraud. In its September 2024 Operation AI Comply sweep the FTC said it “took action against a business opportunity scheme that allegedly falsely promised consumers that they would make guaranteed income through online storefronts that utilized AI-powered software” (source). The scheme, the FTC said, “has operated under the names Passive Scaling and FBA Machine” and “cost consumers more than $15.9 million based on deceptive earnings claims that rarely, if ever, materialize” (source). Two independent outlets reported the same figure: the tech-policy publication MediaNama wrote that the scheme “cost consumers more than $15.9 million based on deceptive earnings claims” (source), and a National Law Review analysis by the firm Kohn, Kohn & Colapinto put it at “over $15.9 million in deceptive earnings claims that rarely materialized” (source). This is a verified negative: a public record of what a federal regulator charged, and how the case resolved, about the gap between an “AI-powered” earnings pitch and the returns it produced.

What was built

What was sold was automation with an AI label on it. The FTC alleged that Bratislav Rozenfeld “has operated the scheme since 2021, initially as Passive Scaling,” and that after “Passive Scaling failed to live up to its promises and consumers sought refunds and brought lawsuits, Rozenfeld rebranded the scheme as FBA Machine in 2023” (source). The AI claim was central to the rebrand: per the FTC, “the rebranded marketing materials claim that FBA Machine uses ‘AI-powered’ tools to help price products in the stores and maximize profits” (source). An independent legal analysis of the case describes the same thing in its own words, as “AI-powered online storefronts” (source).

What the FTC alleged actually happened

The earnings claims were the heart of the deception, and the FTC quoted them. It said “the scheme’s claims were wide-ranging, promising consumers that they could operate a ‘7-figure business’ and citing supposed testimonials from clients who ‘generate over $100,000 per month in profit’” (source). The pressure was matched to the price: “company sales agents told consumers that the business was ‘risk-free’ and falsely guaranteed refunds to consumers who did not make back their initial investments, which ranged from tens of thousands to hundreds of thousands of dollars” (source). Both independent outlets restated these specific claims: MediaNama reported that the scheme “promised consumers a ‘7-figure business’ and cited supposed clients who ‘generate over $100,000 per month in profit’”, with sales agents calling it “risk-free” (source), and the National Law Review analysis described “promises of a ‘7-figure business’” and “supposed testimonials of clients earning over $100,000 monthly” pitched as a “risk-free” venture (source). FTC Chair Lina M. Khan framed the whole Operation AI Comply sweep, of which this was one case, in a single line: “Using AI tools to trick, mislead, or defraud people is illegal” (source).

The outcome

The case resolved with a ban and a number. In July 2025 the FTC announced that FBA Machine’s operator “will be permanently banned from selling business opportunities in settlement of Federal Trade Commission allegations” (source). The order’s scope is broad: “the proposed order bans FBA Machine and Rozenfeld from: advertising, marketing, distributing, promoting, or offering for sale, or assisting others in any business opportunity” (source). And it carries a price: “the proposed order includes a total monetary judgment of $15.7 million, which is partially suspended based on the defendants’ inability to pay the full amount,” with proceeds used “for consumer redress” (source). The FTC “filed the proposed order in the U.S. District Court for the District of New Jersey” (source).

The court record backs the shape of the resolution. The FTC’s own case docket lists, on 30 July 2025, the “Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief,” the instrument that closed the case (source). An independent legal analysis by the firm Frankfurt Kurnit, not a party to the action, states the same monetary figure: the order requires the defendants to “turn over funds and assets toward a judgment of more than $15.7 million” (source). The independent news outlet MyChesCo, also not a party, reported the same order and figure: it “imposes a $15.7 million monetary judgment against the defendants” that “will be partially suspended”, filed “in the U.S. District Court for the District of New Jersey” (source). One boundary is worth stating plainly: the $15.9 million harm figure and the marketing claims are the FTC’s allegations, and the $15.7 million judgment and the ban are the terms of a negotiated stipulated order, not a court’s litigated finding that fraud occurred.

Weakest load-bearing source. The originating source here is also the accuser: the $15.9 million consumer-harm figure, the “AI-powered” characterisation and the earnings claims all come from the FTC itself, a government primary that is a party to the action rather than a neutral third party (source). That is why each critical figure is also carried by independent non-party outlets: the $15.9 million harm and the marketing claims by MediaNama and a National Law Review analysis (source), and the $15.7 million judgment and ban by Frankfurt Kurnit and MyChesCo (source). Every one of these is itself reporting on the FTC’s action, not an independent investigation of the defendants, so the accusation and the underlying figures still originate with the regulator; the corroboration establishes that the record is public and consistently reported, not that a second body independently proved the fraud. The underlying signed stipulated order (D.N.J., case 2:24-cv-06635) is the primary document behind the judgment, but its full text was not machine-read this session, so every quotation on this page is taken from an FTC release or an independent analysis, never from unread PDF numerals.

How this was verified. Method: every load-bearing figure was retrieved live this session, grepped for the exact string, and saved to sources/. The “AI-powered” income pitch, the $15.9 million consumer-harm figure, the “7-figure business”, the “$100,000 per month in profit” testimonials, the “risk-free” claim and the Lina Khan quote are quoted verbatim from the FTC’s Operation AI Comply release of 25 September 2024 (Tier 1, federal primary), saved to sources/ftc-2024-operation-ai-comply-release.html and archived to the Wayback Machine capture 20260903042847. The permanent ban, the $15.7 million total monetary judgment and its partial suspension, the “consumer redress” use of proceeds and the U.S. District Court for the District of New Jersey are quoted from the FTC’s settlement release of 30 July 2025 (Tier 1), saved to sources/ftc-2025-permanent-ban-release.html and archived as capture 20260903042747. The 30 July 2025 “Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief” is listed on the FTC case docket (Tier 1), saved to sources/ftc-case-page-x240032.html and archived as capture 20260903042913. Each critical figure is independently corroborated by non-party sources fetched, byte-verified and saved this session: the $15.9 million harm and the ‘7-figure business’ / ‘$100,000 per month’ / ‘risk-free’ marketing claims against MediaNama (sources/medianama-operation-ai-comply.html, Wayback 20260903045228) and a National Law Review / Kohn, Kohn & Colapinto analysis (sources/natlawreview-kkc-ftc-deceptive-ai.html, Wayback 20260903045215); the $15.7 million judgment and permanent ban against Frankfurt Kurnit (sources/fkks-holly-melton-analysis.html, Wayback 20260314161626) and MyChesCo (sources/mychesco-ftc-permanent-ban-2025.html, Wayback 20250907050502). No confirmation was sought from the defendants; the record is already public. Checked 2026-09-03 (checking round 2).

Related case files

• The FTC’s Automators AI case: the same “AI-powered” online-store business-opportunity model, banned with a $21.77M judgment — the closest sibling: an “AI machine learning” storefront pitch resolved by a stipulated federal order and a permanent industry ban.
• The FTC’s Ascend Ecom case: another AI-powered passive-income storefront scheme, banned with a $25M judgment — the same enforcement shape in the same Operation AI Comply sweep, one scheme over.
• The FTC’s DoNotPay order over “the world’s first robot lawyer” — the same agency acting on an overstated AI-capability claim in a different market, showing the pattern is not confined to e-commerce.

Sources

1. Federal Trade Commission · FTC Announces Crackdown on Deceptive AI Claims and Schemes (Operation AI Comply) · 25 September 2024 · https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-announces-crackdown-deceptive-ai-claims-schemes — Tier 1 (federal primary; the enforcing party. The “AI-powered” income pitch, the $15.9 million consumer-harm figure, the “7-figure business”, the “$100,000 per month in profit” testimonials, the “risk-free” claim and the Lina Khan quote; saved to sources/ftc-2024-operation-ai-comply-release.html, Wayback 20260903042847).
2. Federal Trade Commission · FTC Obtains Permanent Ban of E-Commerce Business Opportunity Scheme Operator · 30 July 2025 · https://www.ftc.gov/news-events/news/press-releases/2025/07/ftc-obtains-permanent-ban-e-commerce-business-opportunity-scheme-operator — Tier 1 (federal primary; the permanent ban, the $15.7 million total monetary judgment and partial suspension, “consumer redress”, and the U.S. District Court for the District of New Jersey; saved to sources/ftc-2025-permanent-ban-release.html, Wayback 20260903042747).
3. Federal Trade Commission · FBA Machine/Passive Scaling, FTC v. (case docket, X240032; No. 2:24-cv-06635, D.N.J.) · 30 July 2025 timeline entry · https://www.ftc.gov/legal-library/browse/cases-proceedings/x240032-fba-machinepassive-scaling-ftc-v — Tier 1 (federal primary; lists the 30 July 2025 “Stipulated Order for Permanent Injunction, Monetary Judgment, and Other Relief” and the case history; saved to sources/ftc-case-page-x240032.html, Wayback 20260903042913). The signed order PDF is the underlying primary document; its full text was not machine-read this session and no figures are quoted from it here.
4. Frankfurt Kurnit Klein & Selz (advertisinglaw.fkks.com) · Holly Melton, FTC Shuts Down AI-Driven Business Opportunity Scheme, Continues Sweep of Deceptive Income Claims · 30 July 2025 · https://advertisinglaw.fkks.com/post/102kymz/ftc-shuts-down-ai-driven-business-opportunity-scheme-continues-sweep-of-deceptiv — Tier 2 (independent legal analysis, not a party; corroborates the “AI-powered online storefronts” characterisation and the “judgment of more than $15.7 million”; saved to sources/fkks-holly-melton-analysis.html, Wayback 20260314161626).
5. MediaNama · FTC initiates action against AI related deceptive conduct · 26 September 2024 · https://www.medianama.com/2024/09/223-ftc-action-five-entities-ai-deceptive-conduct/ — Tier 2 (independent tech-policy news, not a party; corroborates the “$15.9 million” consumer harm, the “AI-powered” software pitch, and the “7-figure business” / “$100,000 per month in profit” / “risk-free” marketing claims; saved to sources/medianama-operation-ai-comply.html, Wayback 20260903045228).
6. The National Law Review · Sophie Luskin, Kohn, Kohn & Colapinto, FTC Cracks Down on Deceptive AI Claims · 16 October 2024 · https://natlawreview.com/article/ftc-cracks-down-deceptive-ai-claims — Tier 2 (independent legal analysis, not a party; corroborates the “over $15.9 million” consumer harm and the “7-figure business” / “$100,000 monthly” / “risk-free” marketing claims; saved to sources/natlawreview-kkc-ftc-deceptive-ai.html, Wayback 20260903045215).
7. MyChesCo · FTC Shuts Down Online Storefront Scheme, Secures Ban and Asset Forfeiture in $15 Million Fraud Case · 31 July 2025 · https://www.mychesco.com/a/news/national/ftc-shuts-down-online-storefront-scheme-secures-ban-and-asset-forfeiture-in-15-million-fraud-case/ — Tier 2 (independent news, not a party; corroborates the “$15.7 million monetary judgment”, its partial suspension, the permanent ban, and the U.S. District Court for the District of New Jersey; saved to sources/mychesco-ftc-permanent-ban-2025.html, Wayback 20250907050502).