FTC cracks down on 'be-your-own-boss' scams - East Valley Tribune: Business

FTC cracks down on 'be-your-own-boss' scams

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Posted: Saturday, March 12, 2011 2:00 pm

With the nation's unemployment rolls obstinately high, the Federal Trade Commission has been cracking down on swindlers peddling fraudulent work-at-home schemes, worthless job listing and bogus business opportunities.

The agency's latest effort, dubbed Operation Empty Promises, led to nearly 100 enforcement actions and dozens of criminal actions, and highlighted how unscrupulous operators prey on people struggling with debt.

"The victims of these frauds are our neighbors -- people who are trying to make an honest living," David Vladeck, director of the FTC's Bureau of Consumer Protection, said in unveiling a list of perpetrators and their cons last week.

The unemployed are particularly vulnerable to enticing pitches that offer desperately needed income for little work and no experience.

The FTC said one company it sued, Ivy Capital Inc., took more than $40 million from people who paid up to $20,000 believing the company would help them develop their own Internet-based businesses.

Ivy telemarketers asked people how much credit they had on their credit cards and then, using high-pressure sales tactics and promises of big profits, persuaded them to use a large portion to buy a "worthless" business coaching program, according to the FTC's complaint. A court order in February temporarily halted the company's operations.

Another company ordered last month to cease operations, National Sales Group, is accused of advertising fake sales jobs with good pay and benefits on CareerBuilder.com and other online job boards.

That company's telemarketers claimed to be recruiters for Fortune 1000 employers and charged fees for purported background checks and other services, defrauding consumers of at least $8 million, the FTC said. After more than 17,000 complaints about the company to law enforcement agencies, CareerBuilder.com dropped the listings from its website, the FTC said.

Another company being sued by the FTC, Business Recovery Services LLC, purportedly charged up to $499 for products and services that it claimed would help people recover money they lost in phony business opportunity and work-at-home schemes.

The company is accused of misrepresenting the nature and effectiveness of its services and of breaking the law by charging its fees in advance of any recovery.

The FTC said one classic sign of a fraud is creating a sense of urgency to accept the offer.

"They want you to give up your bank or credit card information before you've had an opportunity to look into their claims," FTC attorney Daniel Hanks said. "If someone is creating a high-pressure atmosphere, you should walk away and do your research before you buy."

Another hallmark of a con is being vague about the specifics for earning big money.

"They may tell you that you don't need to know these details because they are going to take care of everything," Hanks said. "Don't trust those claims."

People should never rely on a refund policy or money-back guarantee as a substitute for researching the offer, he said. "We hear from consumers over and over who tell us that mere minutes after they gave someone their credit card information, they did a simple Internet search and they found stories that made them break out in a cold sweat."

Even if the FTC or other law enforcement steps in, recovering money for fraud victims is difficult because typically the perpetrators have already spent it.

Some of the other operations snared recently by the FTC include:

- Darling Angel Pin Creations Inc., which the agency said promised consumers they could earn up to $500 per week assembling angel pins. Consumers paid up to $45 to get started and sometimes hundreds more for supplies Consumers would make money only if the company bought the pins -- but nearly all pins were rejected, regardless of quality, the FTC said. A proposed settlement bans the operators from selling work-at-home offers and imposed a $3.5 million judgment for the amount lost by consumers. The judgment is to be suspended because the operators can't pay, the agency said.

- Abili-Staff Ltd., Equitron LLC, which allegedly sold work-at-home opportunities online promising that in return for a $89.99 fee, consumers would have unlimited access to more than 1,000 job listings. According to the FTC's complaint, the company exaggerated the number of jobs listed, blocked customers from accessing its website before their membership expired, and ignored refund requests. The operators agreed to pay $830,000 of a $3.6 million judgment, with the balance suspended because of inability to pay, the FTC said.

To avoid being taken in a job-related scam, see www.ftc.gov.

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