From Passive Scaling to FBA Machine: A Rebranded Storefront Scheme the FTC Says Cost Consumers $15.9 Million

In June 2024, the Federal Trade Commission took action against a business-opportunity scheme that allegedly promised consumers guaranteed income through online storefronts powered by AI software. The FTC says the scheme, which has operated under the names Passive Scaling and FBA Machine, cost consumers more than $15.9 million.DOCUMENTED

The FBA Machine case was announced publicly as part of the FTC's Operation AI Comply sweep in September 2024, alongside four other actions targeting AI-branded deceptive schemes.DOCUMENTED

A rebrand after the refund demands started

According to the FTC's complaint, Bratislav Rozenfeld has operated the underlying scheme since 2021, initially under the name Passive Scaling.DOCUMENTED When Passive Scaling failed to live up to its promises and consumers began seeking refunds and filing lawsuits, Rozenfeld rebranded the operation as FBA Machine in 2023, according to the complaint, with new marketing materials claiming the rebranded venture used "AI-powered" tools to help price products and maximize profits in the online stores it sold.DOCUMENTED

The rebrand pattern — dropping a name once it accumulates public complaints and legal exposure, then relaunching under a new name with an added AI label — is a recognizable feature of business-opportunity fraud that regulators have flagged as a way operators attempt to outrun their own reputational damage rather than fix the underlying product.REVIEWED

The scale of the promises

The scheme's marketing claims were wide-ranging, according to the complaint: consumers were told they could operate a "7-figure business," and sales materials cited supposed testimonials from clients who "generate over $100,000 per month in profit."DOCUMENTED Company sales agents reportedly told consumers the business was "risk-free" and falsely guaranteed refunds to those who did not make back their initial investments — investments the complaint says ranged from tens of thousands to hundreds of thousands of dollars.DOCUMENTED

Court action

As a result of the FTC's complaint, a federal court issued an order temporarily halting the scheme and placing it under the control of a receiver.DOCUMENTED The Commission vote authorizing the staff to file the complaint against Rozenfeld and the companies involved in the scheme was 5-0, and the case was filed in the U.S. District Court for the District of New Jersey, where it remains ongoing.DOCUMENTED

When the original version of the scheme drew lawsuits and refund demands, its operator allegedly rebranded under a new name — adding an "AI-powered" label to the same underlying promises.

The "risk-free" guarantee in practice

A recurring element across the online-storefront business-opportunity cases the FTC has pursued, including FBA Machine, is a guarantee positioned to eliminate a buyer's hesitation at the point of sale — in this case, a promise that the "risk-free" venture would automatically return a customer's investment if the promised profits never appeared.REVIEWED The complaint alleges that guarantee was itself false, meaning consumers who relied on it as their safety net when deciding whether to invest tens of thousands of dollars had, according to the FTC, no real protection at all.REVIEWED

Part of a five-case sweep

FBA Machine's public announcement alongside DoNotPay, Ascend Ecom, Ecommerce Empire Builders, and Rytr reflected the FTC's decision to bundle a set of AI-branded enforcement actions into a single, named initiative rather than announcing them individually over time.REVIEWED FTC officials noted the sweep built on earlier cases involving similar AI-branded storefront schemes, including one called Automators, suggesting the agency views the online-storefront business-opportunity model as a recurring fraud pattern warranting a coordinated response rather than isolated, one-off cases.REVIEWED

The FTC later amended its complaint to add Rozenfeld's wife, Amanda Peremen, as a relief defendant, alleging that although she was not directly involved in operating the scheme, she received proceeds from it — a step regulators commonly take in fraud cases to recover assets that moved through a spouse's accounts.REVIEWED

Following the money through a rebrand

Rebranding a failed business-opportunity scheme is only useful to an operator if the same customer-acquisition channels — social media ads, sales-agent scripts, and testimonial claims — can be redeployed under the new name without meaningfully changing the underlying product.REVIEWED The FTC's complaint suggests that is exactly what happened here: the rebranded FBA Machine marketing reused the same core promises of guaranteed, largely passive income, simply attaching an "AI-powered" descriptor to the pricing tools involved in selecting and pricing inventory.REVIEWED That pattern is one reason enforcement actions in this category often name the individual operator, not just the corporate entity, as a defendant — a court order against a person, unlike an order against a company name, follows that person into whatever new venture they might attempt to launch next.REVIEWED

Consumers who paid into either Passive Scaling or FBA Machine and believe they were defrauded can file a report with the FTC at ReportFraud.ftc.gov and should monitor the agency's case listings for updates on the ongoing litigation and any eventual consumer redress.REVIEWED

The receiver's role while litigation continues

Court-appointed receivers in FTC business-opportunity cases are typically tasked with taking control of a scheme's bank accounts, business records, and other assets to prevent further dissipation of consumer funds while the underlying litigation plays out, and to preserve whatever assets remain for eventual distribution to harmed consumers if the FTC prevails.REVIEWED In cases involving alleged investments ranging up to hundreds of thousands of dollars per consumer, as the complaint describes for FBA Machine, the pool of assets a receiver can recover is often only a small fraction of what consumers actually paid in — a common and difficult reality in fraud enforcement, since operators frequently spend collected funds on marketing, personal expenses, or further recruitment long before any court intervenes.REVIEWED

The FTC's complaint against FBA Machine remains active, and any final judgment — whether reached by settlement or after a trial — will determine both the scope of the ban imposed on Rozenfeld and the amount, if any, ultimately available for consumer redress.REVIEWED

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