US agencies target fake business opportunities
(InfoWorld) - Three U.S. agencies have initiated more than 100 law enforcement actions against phony business-opportunity peddlers and work-at-home scams, including respective Internet-based schemes.
The Project FAL$E HOPE$ crackdown, proclaimed Tuesday but in operation for most of the year, targeted scammers in 11 states, including California, Texas, Florida and Maryland. The U.S. Federal Trade Commission (FTC), Department of Justice (DOJ) and Postal Inspection Service worked with law enforcement agencies in those states to take action against the so-called fraudsters.
Project FAL$E HOPE$ includes new cases proclaimed Tuesday, developments in existent cases, criminal convictions, and state actions. The project also proclaimed new education material for advertising sales staff, aimed at helping screen ads for phony business opportunities.
Included in nine cases the FTC proclaimed Tuesday:
-- The Results Group: Working out of what the FTC called a boiler room in Phoenix, the operation charged between $99 and $599 to build and host Web sites "affiliated" with the sites of large retailers such as Amazon.com and Overstock.com, the FTC said. Consumers could supposedly make money when those retailers paid commissions for sales made through the consumers? Web sites. In fact, the large retailers were unaware of any such affiliation, and consumers made no money.
The FTC accused the operation of falsely representing that purchasers would receive substantial income as well as substantial assistance from an expert staff, and using false and misleading statements to encourage consumers to buy the business opportunity.
-- Money Making Secret: These defendants promised "Top 12 Programs to Make Big Money!" and charged consumers between $47 and $129 to access a "members only" Web site with "money-making secrets," the FTC said. The Internet-based programs that were offered varied, including online survey programs, free government grant money programs, mystery shopper programs, and online data-entry programs.
However, these programs did not exist, or did not offer easy money with little time or effort, as promised, the FTC said. The FTC´s complaint charges the defendants with making false and unsubstantiated earnings claims.
The FTC also has new guidance for publishers, offering them help to screen out deceptive ads for business opportunities. The alert, "Ads for Business Opportunities: How to Detect Deception," suggests advertising sales staff to give an extra look at ads that make claims such as: "No risk! Guaranteed" "Quick and Easy!" "Earn $2,000 a month."
The FTC alert warns that legitimate business ventures involve risks, and start-up businesses require a lot of work to get off the ground. The law requires earnings claims in ads be accompanied by the number and percentage of previous purchasers who achieved the income, the FTC said.
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