It was only after they’d sunk $40,000 and nine months of precious nights and weekends that Jordan McDowell and William Bjork realized how hard it is to make a passive income selling things on Amazon.
The couple had hoped to strike it rich—or at least quit their day jobs—buying goods from China and reselling them on the e-commerce site. Instead, they lost their savings. For that, they blame Matt Behdjou and Mike Gazzola.
In late 2016, McDowell and Bjork stumbled across a podcast hosted by Behdjou and Gazzola, normal guys who claimed they were making thousands of dollars working less than two hours a day on Amazon. The pair promised that anyone could do the same—all they needed to do was pay $3,999 for three months of coaching that would teach them everything they needed to know about the business. They’d learn how to source and ship a product from China, how to list it for an attractive markup on Amazon’s third-party marketplace, how to advertise it to consumers, and how to get them to leave good reviews. Amazon would take care of the logistics of storing and shipping, for a fee, through its Fulfillment by Amazon program. Behdjou and Gazzola even provided class participants with a manufacturing contact in China, and organized paid tours of Chinese merchandise markets.
At the time, the couple was living in a tiny New York apartment, struggling to make rent. McDowell was working a job she hated. Behdjou and Gazzola were offering a way out, and they seemed credible. They even posted screenshots showing the money they had made from selling supplements on Amazon. Bjork emailed a few people who had taken the class, all of whom said they were happy with their experience.
So the couple put the class fee on their credit card, started attending Monday night webinars, and picked their first two products: a glass wine decanter and plastic wine aerator, both sourced from China. Following Behdjou and Gazzola’s advice to purchase the minimum mass order possible, they ordered 3,000 decanters and 1,500 aerators and had them shipped directly to Amazon warehouses across the country, from which the company would send them directly to consumers.
Six months later, they had sold only about 100 decanters and a few hundred aerators. Customs taxes and shipping costs were starting to add up. The aerators kept breaking, and so Bjork and McDowell had to pay for returns. Amazon charged a seller fee of $39.99 a month, a per-piece fulfillment cost of a few dollars a unit, and a storage fee of 70 cents per cubic foot that increased during the holiday season. Then there was the cost of advertising, which they needed to actually get their product noticed amid the thicket of other people also selling wine accessories, also bought cheap from China, also on Amazon.
Maybe worst of all, the couple told me they were left alone to deal with all these headaches: Though their payment guaranteed them three months of coaching, they couldn’t reach Behdjou after the first few days, they say. (Behdjou disputes that he and Gazzola disappeared, writing in an email that all students get a response within 24 hours Monday through Friday.)
Within six months, McDowell and Bjork had spent nearly $40,000, with almost nothing to show for it. So they auctioned off what inventory they could, paid Amazon to destroy the rest, and got out of the business. “It’s not a passive income; [it’s] a ton of work,” McDowell told me. “We lost all our savings—everything we had.”
They’re frustrated with Amazon, which they say is making money off the failures of people like them. But they’re even angrier with Behdjou and Gazzola and their company, which was, at the time, called Amazon Secrets. “It’s a scam,” McDowell said. “They take your money and don’t deliver.”
Behdjou and Gazzola deny these allegations. They say that one of the first things they teach students is to make sure the product will be profitable, and that anyone who loses money simply isn’t following their advice. Losing $40,000, Gazzola told me, would be very difficult following their methods. In an email, Behdjou told me that nearly 1,000 students have paid to receive training from him, with only a “small handful of complaints.” People are quick to complain when they aren’t making money, yet are less forthcoming when they succeed, he said. Some, he said, generate more than $200,000 a month in revenue.
Behdjou and Gazzola declined to put me in touch with any of their clients, even happy ones. But I spoke with 34-year-old Travis Tolman, who sells a travel product—he didn’t want me to say what specifically, in case competitors tried to copy him. He makes roughly $4,000 a month, he said—enough to allow him, his wife, and four children to leave Houston after Hurricane Harvey and travel throughout Southeast Asia for four months, working just an hour or two a day.
But Behdjou and Gazzola have a growing list of unhappy clients. One, Molly Cox, lost around $40,000 selling meal-prep containers on Behdjou and Gazzola’s advice. Others told me they’re out $4,000, $4,600, $9,000. In a secret Facebook group, dozens of them have gathered to discuss attempts to get their money back and seek advice about how to unload hundreds of unsold jar openers, locking carabiners, and lemon squeezers.
They all thought they’d bet on the right horse: Amazon captures nearly half of all online retail spending in the United States, and more than half of its sales come from third-party sellers. It’s where America shops online.
But if selling things on Amazon is the new internet gold rush, the web abounds with people pledging to help followers find the treasure, for a hefty fee. They have names like Amazing Wealth System and Sellers Playbook, and their pitch is not dissimilar from the various iterations of “make millions working from home” schemes that have cluttered chumboxes since the dawn of the internet. Yet instead of touting shadowy multilevel-marketing schemes or obvious scams, they’re pitching something we can all understand: Amazon, opaque as it is lucrative, and the bottomless appetite of the American consumer, who can’t seem to stop buying wine aerators and meal-prep containers and insulated water bottles. It’s an irresistible sell to a nation that loves the side hustle.
n the first nine months of 2018, 48 consumers filed complaints with the Federal Trade Commission about “business opportunity schemes” regarding Amazon, according to data obtained in a Freedom of Information Act request filed by The Atlantic. That’s up from 18 in 2017, and 14 the year before that. Nearly half of those complainants say they lost more than $35,000. One of them, who described himself as a disabled veteran, lost $45,000 trying to sell a work-out kit on Amazon. Another said he had just lost his job, and used his retirement savings to pay for coaching.
In March, the FTC sued the three men behind Amazing Wealth System, alleging that it made unsubstantiated earnings claims. Vulnerable people—including retirees, students, and non-native English speakers—were lured in through free “Amazon workshops,” where they’d be pitched on a three-day, $1,995 seminar, according to a complaint filed by the Washington State attorney general. After that, the proprietors would offer more “education” packages that cost anywhere from $4,000 to $35,000, and would encourage people to apply for multiple credit cards or obtain third-party financing to pay for the workshops, according to the complaint. A settlement in June required the defendants to pay $10.8 million to the FTC. (In the settlement, the defendants neither admitted nor denied the underlying factual allegations.)
And in July, the agency charged Sellers Playbook, run by the former Apprentice contestant Jessie Conners Tieva and her husband, Matthew Tieva, with making false claims. According to the complaint, the Tievas charged customers up to $32,997 for Amazon coaching sessions, raking in more than $15 million through credit-card payments from April 2017 to May 2018. In November, a Minnesota district court required the defendants to surrender any assets related to the company, requesting $20.8 million in a judgment. (In the settlement, the defendants neither admitted nor denied the underlying factual allegations.)
Neither Matt Behdjou nor Mike Gazzola have been accused of any wrongdoing by the FTC. The agency prohibits deceiving customers about moneymaking potential, and requires that any earnings claims be supported by proof. But it leaves a crucial bit of wiggle room: If sellers say somewhere in tiny print that their method doesn’t work for everyone, they can still promote the stories of their successful clients without mentioning that hundreds of people have lost money. Behdjou and Gazzola both make those disclaimers in their promotional materials.
Amazon declined to provide comment about Behdjou or Gazzola. A spokesperson told me the company worked closely with the FTC to bring both of last year’s cases. Entrepreneurs and small businesses are important to Amazon, according to the spokesperson, “and we aggressively pursue those that attempt to harm their selling experience.”
In 2016 and 2017, Behdjou and Gazzola were a coaching powerhouse—in the summer of 2017, their podcast about earning a passive income on Amazon reached No. 3 on Apple’s charts. But in February, they parted ways, and now offer competing coaching services, Amsecrets.com and Amsecrets.net, respectively. They say they’re both doing well on their own. Gazzola told me his videos have been downloaded “millions” of times and that he’s helped “thousands” of people; Behdjou, meanwhile, told me that he has trained “thousands upon thousands” with his free and paid classes….Read More>>>