Digital Altitude Scam Shutdown First Report
Back in February, the FTC shutdown the Digital Altitude scam. The first report from the Receiver assigned to Digital Altitude has been released. It looks like Digital Altitude is going to remain shutdown.
The Receiver currently believes that the business cannot be operated legally and profitably.
There is some very interesting information on how this scam was run in the report.
Here are the highlights:
Overview Of Digital Altitude Business Model
The Receiver believes that consumers are induced into purchasing the purported educational materials with the prospect of earning six-figure income in 90 days or less. The Receiver has carefully reviewed the 18-step program and materials that consumers are sold, video presentations by Michael Force that accompany the 18-step program, and has watched recordings of Skype calls involving purported “coaching” sessions. Based on the six-figure income enticement and other misleading representations, consumers sign up for the first level of Digital Altitude products known as the “Aspire” program. Consumers can be either become a “Walker,” “Hiker,” or “Climber” and by paying $37, $67 or $127 on a monthly basis, respectively. This opens to the consumers access to the 18-step educational materials. Each step contains a two or three page handout followed by five or so very easy questions that almost exactly mimic the materials. The materials only take a few moments to read and are of little or no educational value. The title of the first step is “How to Build a 6 figure digital business in 90 days or less.” Consumers also view a video by Michael Force with each step, which are also of no educational value. One simply informs consumers that they can receive their commission payments by ACH, check, or wire in 24 hours to 7 days and that payments are made on the 5th and 25th of each month. There are only two questions for study following the lesson: What method would you like your payment and when are payments made. In the videos Mr. Force is confident, charismatic and speaks softly in a positive and encouraging manner. His presentations provide general advice of an anecdotal nature, rich in cliché, but with no real educational content; only the benefits of selling high ticket “top tier’ products, with little effort. The presentations also tout his career as a marine and family man as well as his personal success and his lavish lifestyle including family trips all around the world. As consumers move through the steps, they obtain access to a one-on-one session with a “coach.” The coaches are excellent sales people but do not appear to have any training as mentors, coaches or business training professionals. They are, by their own admission, sales people. The “coaching” session seems to be merely an avenue to entice consumers to purchase the next level which allows them access to the next steps and, importantly, a higher commission in the event they bring other consumers into the program. At step six, coaches do a “hard sell” to get the consumer to market Digital Altitude’s program to others (rather than pursue their own businesses) in exchange for half of the commission that the consumer coach would earn because the “coaches are doing all the selling for you’ to quote Mr. Force in his video that accompanies step six. Consumers start out with the expectation that they will be educated toward making six-figure incomes in 90 days, but instead they are subjected to high-pressure sales techniques that coerce them into spending more and more money. They are told that, if they do not have the money for increasingly high contributions to Digital Altitude, they should borrow it. All of the materials the Receiver has seen thus far have led him to conclude that the education program is merely a sales technique for recruiting consumers to promote Digital Altitude as a product, when in fact there is no real product (i.e., true coaching/business expertise), only the prospect of making commissions from other unwitting consumers after they themselves purchased the expensive products.
Representations To Consumers Of Great Income Appear To Be False
Over its life, Digital Altitude collected approximately $60,000,000 from 185,000 consumers, 40,000 of those consumers paid $1 each. Of the balance of 145,000 customers who paid $37 or more, 144,167 received no commissions, and 837, or .6%, received commissions. Of these 837 who received commissions, 363 made more in commissions than they paid in member fees and the average gain was $71,162. The remaining 474 lost money with an average loss of $15,345. In the aggregate, the 837 consumers who collected commissions made an average of $22,172 each.
In aggregate, consumers paid $9,222,563 in members fees in order to “earn” $6,035,219 in commissions. Consumers lost money and did not build a six-figure online business.
Many consumers were highly vulnerable and did not have the money to pay the member fees. Coaches exploited these vulnerabilities and encouraged consumers to raise money any way they could, including encouraging consumers to borrow on a credit card, borrow from a bank, use retirement accounts, sell assets, or borrow from family. In one situation, a coach suggested that the consumer sell blood plasma and get a tattoo for advertising revenue. Digital Altitude also factored accounts receivable and referred consumers to a finance company, ABF, that would pay the member’s fee to Digital Altitude and collect installment payments via ACH withdrawals from the consumer’s bank account. In a representative transaction, a consumer would make 12 monthly payments of $270 totaling $3,240, for the $2,197 member fee, thus paying another $1,043 in fees and interest to the financier. In summary, the Receiver does not believe Digital Altitude can be operated lawfully in its current configuration due to:
- Misrepresentations of expected income and profits;
- Misrepresentation of lead conversion ratios;
- Misleading merchant account processors; and
- Encouraging consumers with false enticements to become indebted to pay Digital Altitudes fees.
Here are the total funds the Receiver was able to find for Digital Altitude:
To foster communication with interested parties, the Receiver established the website www.digitalaltitudereceiver.com. Interested parties may sign up to receive emails when the website is updated.
Digital Altitude is nothing special. There are many other scams just like this running on the internet. They use little or no value content to get you to participate in a recruiting scam. You pay so you can recruit others to pay. Outside of recruiting others to pay, the content does not give you the information you need to create your own independent business.