Charges Filed Vs. Work-at-Home Scams
Thu Jun 20, 3:19 PM ET
By DAVID HO, Associated Press Writer
WASHINGTON (AP) - Law enforcement officials have brought fraud charges or lawsuits against dozens of operations that promise people easy money for work-at-home businesses such as making crafts or stuffing envelopes.
"Business opportunity scams and work-at-home schemes are frauds that can cost consumers their life savings and destroy their dream of owning a successful small business," said Howard Beales, director the Federal Trade Commission's consumer protection bureau.
Such scams cost consumers more than $29 million last year, the agency estimates.
Beales on Thursday announced the results of a sting conducted against 77 such operations by the FTC and Justice Department ( news - web sites) in cooperation with agencies in 16 states.
The sting operation used investigators posing as prospective investors who listened to pitches from those selling the business opportunities. The sellers provided the names of references — former customers who were described as having great success with their home businesses.
"Often the references are shills — liars who are paid to follow a script," Beales said. "Even diligent consumers get taken in by these frauds."
The FTC said that in some of the operations — such as those offering medical billing businesses run from home — the sellers overstated the demand for the services. Some vending machine franchise opportunities and other offers misled consumers about the amount of assistance provided by the sellers, he said.
Most of the business opportunities advertised in newspaper classifieds, but some used television commercials and e-mail, Beales said.
An e-mail ad for one operation — offering a business distributing music albums — promised: "We will show you step by step how to earn $150,000 per year just working a few hours per week. Imagine that!"
Bob Keith, 54, of Philadelphia, said he lost $13,000 after signing up for a business opportunity which promised him a supply of current popular music to sell.
"I got recordings from artists that have been dead for 30 years," he said. Other customers said they were sent CDs of whale songs.
In the last two weeks alone, the FTC has filed 11 cases in various federal courts seeking to stop allegedly fraudulent business opportunity operations.
He said the FTC is seeking refunds for consumers.
In four related cases, promoters of medical billing, paralegal and craft work-at-home schemes have settled FTC charges filed earlier.
The Justice Department said it is seeking civil penalties in another 11 cases and three criminal cases have ended with guilty pleas from the operators.
The 48 actions from state agencies include lawsuits, cease and desist orders, consent agreements and fines.
The states participating in the operation were Alaska, Arkansas, California, Florida, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, North Carolina, North Dakota, Ohio, Texas, Washington and Wyoming.
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