Feds Target Work At Home Scams—Part 1: Scambusting



Earlier this week we announced that we’d be starting a new blog series dedicated to helping you sniff out work-at-home and home-based business scams.

We’ll start with some of the diabolical schemes the Federal Trade Commission uncovered in its Project False Hope initiative. While these low-lifes were captured in the sweep, if you’ve been searching for home-based work for any length of time, you’ll undoubtedly recognize that some of their tactics continue to make money by preying on the hopes of others.

Take a look:

• The Results Group – Working out of a boiler room in Phoenix, the operation charged between $99 and $599 to build and host Web sites “affiliated” with the Web sites of Fortune 500 retail companies such as Amazon.com and Overstock.com. Consumers were told they would make money when those retailers paid commissions for sales made through the consumers’ sites. In fact, the large retailers were unaware of any such affiliation, and consumers made no money. The FTC charged that the operation falsely represented that purchasers would receive substantial income as well as substantial assistance from an expert staff, and used false and misleading statements to encourage consumers to buy the business opportunity.

• HBG Publications – Consumers were told that for their $40 “registration fee” they would get everything they needed from HBG to earn $7 for every envelope they stuffed for them, and that their $40 would be refunded after the first 100 envelopes. Instead, consumers received instructions on how to buy their own ads, and to collect $7 from each person who responded. The FTC’s complaint charged that HBG misrepresented that consumers were likely to earn a substantial amount of money and that they would pay consumers $7 for every envelope they stuffed. The court granted the FTC’s request for a temporary restraining order against the defendants, halted their misrepresentations to consumers, and froze their assets.

• EDI Health Claims Network – The FTC alleged that EDI made material misrepresentations when it sold consumers its work-at-home electronic medical billing business opportunity. Consumers reported that EDI promised they would provide them their first medical billing client or a list of potential clients. In addition, EDI told them they could earn $1,200 per month with just one client. Once the consumers paid them almost $6,000, EDI said they had to find their first client on their own, and to start by looking in the yellow pages. The vast majority of purchasers never found a single client, never processed a single claim, and never made a dime. The FTC also alleged that EDI failed to provide interested consumers with information required by the Franchise Rule. The court granted the FTC’s request for a temporary restraining order and asset freeze. Soon after, the defendants agreed to a preliminary injunction that bars EDI from selling its business opportunities.

• Money Making Secret – These defendants put a new spin on an old scam by promising “Top 12 Programs to Make Big Money!” and charging consumers between $47 and $129 to access their “members only” Web site with their “money-making secrets.” The Internet-based programs were varied, including online survey programs, free government grant programs, mystery shopper programs, and online data-entry programs. However, these programs did not exist, or did not offer quick and easy money with little time or effort as promised. The FTC’s complaint charges the defendants with making false and unsubstantiated earnings claims.

• Business Card Experts – BCE claimed in advertisements that consumers could earn $150,000 in their first year, and its sales representatives told consumers they could recoup their initial investment – between $10,000 and $25,000 – within three to five months. The FTC alleged that BCE used false and deceptive earnings claims and phony references to lure consumers into buying the dealerships.

• Wholesale Marketing Group – According to the FTC, the operation promised to pay consumers a substantial income, for stuffing envelopes or mailing brochures, without having to sell anything. After consumers invested $60 to $180, they learned they would be paid only if their mailings resulted in sales (and, even then, consumers never received any income). Four of the seven defendants charged in the complaint have settled the charges, cannot make misrepresentations during the sale or advertising of any product or service, and will give up essentially all of their assets.

• Stefanchik – According to the FTC, this operation deceptively telemarketed and sold a business opportunity. They represented that consumers would quickly earn substantial money in their spare time by using Stefanchik’s method for buying and selling promissory notes. The FTC alleged that, contrary to defendants’ claims, virtually no one made money from the program, regardless of the time and effort they invested. The FTC charged the operation made false and unsubstantiated earnings claims, and falsely told consumers that their personal coaches had experience in the business and would be readily available to assist consumers with the program. Four of the six defendants charged in the complaint have settled the charges, agreeing to an order prohibiting future misrepresentations and violations of the Telemarketing Sales Rule.

• Medical Billers Network – The defendants offered a medical billing business opportunity. The court recently entered a contempt order against all of the defendants. It found them liable for violations of the preliminary injunction and expanded financial discovery was ordered.

• QTX – The defendants offered a work-at-home craft assembly business opportunity building bead houses. The court entered a preliminary injunction against one of the defendants which halted the misrepresentations.

• McLain – A purported former preacher, his two sons, and his companies sold a healthcare business opportunity promising consumers millions of dollars if they participated in an alleged network of Medicaid providers. The FTC charged the defendants’ business model would have required participants to break numerous state and federal laws. In addition, the FTC charged that defendants did not provide consumers the assistance they promised and that they violated the Franchise Rule. The defendants agreed to a preliminary injunction, halting their operations.

• Sun Ray Trading – The defendants sold fraudulent work-at-home envelope stuffing schemes via spam and multiple Web sites. A judgment was entered against two individual defendants barred future misrepresentations and violations of the CAN-SPAM Act, and required them to turn over frozen assets.

• Internet Marketing Group – The defendants offered phone card and Internet kiosk business opportunities. The settlement prohibits future misrepresentations and violations of the FTC Act, the Franchise Rule, and the Do Not Call provisions of the Telemarketing Sales Rule. The corporate defendants turned over all of their remaining assets, and two individual defendants paid more than $197,000.

• World Traders Association – The defendants offered a surplus-goods business opportunity. Consumers paid for access to overstocked or discontinued merchandise, training, and lists of clients who would want to purchase the goods. The FTC charged that the defendants never made good on their promises. Judgments were entered against two of the six individual defendants. The FTC’s case against two of the remaining defendants was stayed pending criminal prosecution.

Grrrrr. Makes your blood boil doesn’t it? Strangle ‘em. Tar and feather ‘em. Whack ‘em where it hurts—in their bank accounts.

Project False Hopes is a good place to start, but given the number of scams out there it’s a bit like putting a Band-Aid over a spurting artery. What’s really needed is a tourniquet on the flow of money that supports these miscreants. As long as people fall for their schemes and scumbags are making money, they’ll continue to exist. So the trick is to separate the wheat from crap, the dough from the dung, the headlines from the horsepucky. In future posts we’ll help you do just that.

Stay tuned each Friday for more in this Work-At-Home Scambusting series.

Future posts will include:

• 22 Ways to Spot a Work-From-Home Scam or Home Business Opportunity RipOff

• 10 Questions To Ask Before You Sign Up for a Home-Based Job or Business

• How to Use the Web to Investigate Prospective At-Home Work

• Getting Even—What to Do If You’ve Been Scammed

If you missed the Scambusting intro post, click here.

And if you haven’t been following our Finding Work At Home series, you can always catch up here:

How To Search For Work At Home Jobs—Intro

Part 1: Finding Work At Home Jobs On Monster.com

Part 2: Finding Work At Home On CareerBuilder.com

Part 3: Finding Work At Home Jobs On Yahoo HotJobs

Future posts in the Finding Work At Home series will include:

• Jobster.com

• Indeed.com

• SimplyHired.com

• MomCorps.com

• DreamJobs.com

• Tjobs.com

• Dice.com

• IT Toolbox.com

• ComputerJobs.com

• Cybercoders.com

• JournalismJobs.com

• Jobs.Problogger.net


Home-based business owners stay tuned for posts about how to make the most of these and other project and freelance job boards:

• Elance.com

• RentACoder.com

• Guru.com

Don’t want to miss out on the latest Work At Home and Home-Based Business advice?

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