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Fraud Busters, INC.

Fraud Busters, INC.


By Harry T. Brundidge

So you’ve been gypped!

Were you suckered into buying some of those “penny” get-rich-quick uranium stocks which are as phony as a three-dollar bill? Did you go for the “free” deep-freeze racket? Were you hooked by a bait-’em-and-switch-’em gent on a vacuum cleaner or sewing machine?

Few of those gypped called the police, but many did call the Better Business Bureau in their cities.

Tear some 48 years from the pages of the calendar. Sam Dobbs, sales manager of an expanding company, sat in the little courtroom in a southern town on a hot day, listening to testimony in a law suit against his firm. Dobbs heard his own firm’s attorney plead with the judge: “All advertising is exaggerated and nobody really believes even half of what the advertiser states.” Dobbs, who grew up on a Georgia farm and was as honest as a silver dollar, was shocked.

Making inquiries, he ascertained that the general idea expressed by the attorney was prevalent. He was indignant and decided to do something about it. And so began a one-man crusade against deceptive advertising.

Elected president of the Associated Advertising Clubs of America, Dobbs made his campaign nationwide. This organization was already dedicated to a fight for “honest advertising,” and Dobbs traveled 50,000 miles, from coast to coast, from border to border, damning dishonest advertisers by name and urging an organized fight against all such.

In 1911, Dobbs brought about the establishment of a National Vigilance Committee to battle advertising abuses. He soon learned there was something wrong with this Committee. It was the word “vigilance” which seemed to suggest old Judge Lynch, tar-and-feathers and night-riding. At an Advertising Club meeting in Indianapolis, the need for a new name was discussed. A young man, just there for the luncheon, listened to the discussions, and then walked up to the blackboard and wrote three little words: Better Business Bureau. Bowing to the cheers he walk back to his guests’ table. The name caught like a prairie fire.

Today there are over 100 local Bureaus in cities of the United States and Canada, policing values to assure fair play for the more than 110,000,000 customers in protected areas. And there is another Bureau– The National Better Business Bureau, Inc.– with headquarters in New York, characterized as the watchdog of national advertising. The National Bureau, among other things, flashes warnings not only to the local BBB but to some 700 Chambers of Commerce. The theory of the NBBB’s operation is making friends for business. It is a non profit corporation, supervised by a board of directors elected by the membership and serving, without profit. It cooperated with 103 local BBB’s and serves them on national problems affecting their communities. However, each local BBB is autonomous, operating independently, and independently financed and governed.

The BBB’s aims are to: (a) prevent and eliminate justified causes of consumer complaints against business; (b) foster the establishment of high standards of business practice in the public interest; and (c) promote a better knowledge of business by the public so that consumer-business relations may be based on mutual understanding and confidence.

Requests for information or assistance from business and the public are now reaching the Bureau at the rate of nearly 1,000 each week. The number of individuals served, however, is much larger. For example, a single inquiry about advertising copy from a magazine publisher often starts weeks of investigation, and the result may benefit millions of readers. Yet the sum total of such work is recorded in the statistics as a single instance of service.

Some 53 percent of all inquiries and complaints in the past 12 months have emanated from business firms and organizations and have included many from national advertisers and advertising agencies seeking information or advice about the propriety of copy claims in advance publication.

During the last twelve months, the NBBB has handled more than 16,000 inquiries and complaints concerning the myriad appeals to business for financial support– and this figure does not include the countless thousands of inquiries made by local BBB’s. Reports were issued on national health and welfare agencies; educational funds; groups existing for the purpose of fostering “free enterprise” and other economic welfare movements; unordered merchandise schemes; labor organs; veterans groups organized to promote legislative projects; subversive and disloyal organizations; and many other agencies seeking financial support from business.

“Commerce and industry are the backbone of private philanthropy in this country,” the NBBB reports. Most organizations believe that charity dollars well spent are an integral part of a sound public and industrial relations program. Their basic problem is to see that their charity dollar is spent wisely. However, for any one company to develop the facts needed to evaluate all the solicitations it receives would involve an enormous expenditure of time, money and effort. By making a single investigation on behalf of its members, the Bureau renders one of its most useful services to business.”

Neither the NBBB nor the local BBB’s recommend or endorse. But they do provide fact on which the prospective donor may base his own evaluation and decision. The soliciting organization is asked to answer a carefully prepared questionnaire. Supplementary data is obtained from numerous collateral sources and report of past performance recorded in NBBB files. These files include over 175,000 names of persons and organizations.

However, both the NBBB and all local BBB’s try to pin down one item: What part of the contribution will the professional fund-raiser take for himself? Many charities hold fund-raising costs down to five or ten cents out of each dollar. Yet investigations have disclosed that some promoters pocket as much as 90 cents out of each dollar. (In many states promoters can keep 95 cents out of a dollar without violating the law.)

The Bureaus also have fought a constant and relentless fight against unordered merchandise promotions put on in the name of sweet charity. The have exposed many such promotions, providing that the “charity” was for the promoters alone. And here’s a hot tip about this and other unordered merchandise: You not only can keep it, for free, but you can charge the sender for storage space, and collect!

Last year the local BBB offices in the United States and Canada received 2,005,288 complaints and inquiries. More than 125,000 had to do with fund-raising appeals. Americans are now contributing close to $4,000,000,000 annually to charities and telephone solicitors have become such a problem that all Bureaus are broadcasting tips on how to handle the slickers, whether it’s a phone call at an office, or in your home.

Here’s the low-down on how to handle a telephone solicitor. Just say:

“I never make contributions, buy tickets or advertising space in programs, or special editions over the telephone. Write me a letter so I check all the facts with my BBB.”

If a letter is received (and the odds are 100 to 1 against it) refer the letter to your BBB.

Before going back to the NBBB, let’s take another look at the activities of the local Bureaus. Denver, Colorado, until three years ago, was a capital for smooth-tongued, slick-advertising bandits. As Don Wharton wrote in Nation’s Business:

Promoters of crooked correspondence schools and shady mail-order outfits had made it their home. The rackets were siphoning off consumer purchasing power. Their competition in some fields was so unfair that even good stores were forced to low levels of advertising, particularly of floor coverings, shoes, furs and jewelry. They were creating some distrust of all business.

The day the Denver BBB opened, there were 250 inquiries and complaints. Early results were that seven sharpies using telephones to solicit funds from sucker lists left town; four correspondence schools were closed; a $500,000 insurance racket was cleaned up; a doubtful vending machine promotion was curbed.

The Bureau helped raise the advertising tone in field after field by getting merchants to agree on standards. When TV came to Denver in July 1952, the Bureau established an information center to protect the public– for instance, against unloading obsolete sets. That August alone it handled 7,000 inquiries. Then the Bureau set out to make a Colorado pound 16 ounces. The whole state had been a dumping ground for short-weight merchandise. Moreover, inspectors in other states had to check anything shipped out of Colorado.

“Tackling Denver first, the Bureau sent shoppers out to buy meats, groceries and other merchandise, and found that more than half the scales in the city were off. Then a specially loaded truck was sent around the state to test scales at coal yards, livestock loading platforms, grain elevators. Shopping crews were dropped off the truck in towns and villages to buy just about everything sold from scales for re-weighing on honest scales. It was found that faulty scales were costing Coloradans at least $12,000,000 a year– and the legislature quickly passed a new weights-and-measures law to control them.

Some of the recent spectacular activities of local BBB’s, activities which overshadow their continuous work with legitimate business, were:

A. Campaigns in the Midwest against debt pooling, or “budget service” companies. Legislation has been introduced in several states to put these concerns out of business. Quoting from a bulletin of the Columbus (Ohio) BBB:

Debt poolers, through their advertisements, persuade worried debtors to purchase their service of liquidating debtors’ accounts. The idea is to use the money paid in by the debtor (usually each week) and distribute the same to the various creditors. One of the most recent experiences reported to the Columbus Bureau showed that out of $90 paid in by a debtor, $39 was deducted for service, $37 was allegedly paid to certain creditors, leaving a $14 unaccounted-for discrepancy. The debtor withdrew from the deal and started to look after his accounts himself, sadder but wiser.

B. Fights throughout the nation– with many successful prosecutions– against all types of “bait” advertising, which the NBBB characterizes “as probably the worst advertising abuse of today.”

Example: You’ll read a TV service ad featuring home service at from $1.40 to $3, whereas a national survey has indicated that it costs the average television service contractor over $4 just to get a man to your front door. A previous BBB investigation in Detroit disclosed that 10 out of 11 local advertisers checked were using low-price home service as “bait”. They subsequently sold Bureau “shoppers” who called them to their homes unnecessary parts, often at padded prices, or actually charged for fictitious “repairs.” As a result, a “bait” advertising amendment to the false advertising ordinance was enacted in Detroit.

C. Warnings against fly-by-night contractors who move into devastated areas following cyclones, tornados or hurricanes, with contracts for repairs and fountain pens in their hands. They can make killings– but quick.

Example: A tornado hit Worcester, Massachusetts in June 1953. On the wings of the storm a predatory army of fly-by-night contractors moved in with fresh-filled fountain pens and contracts with small-print clauses to pick the bones of the victims of the catastrophe. Telephone lines were down, and so were great trees. High tension wires sparkled in the streets.

Mrs. Josephine Pierce, manager of the Worcester BBB, finally received a telephone call from the Providence, Rhode Island, BBB office.

“They’re moving in on you.” Providence warned.

“Who’s moving in?” asked Mrs. Pierce.

“The fly-by-night contractors.”

“Thanks– I’ll get busy.”

First, Mrs. Pierce set up a clearance bureau for contractors. Quickly she arranged with newspapers to refuse advertisements by contractors who had not been cleared. She got the police to agree to give no passes admitting contractors to the disaster area until they received her okay. With power restored, Mrs. Pierce got four radio stations to sound warnings every hour around the clock– warnings against making deals with unqualified contractors.

Some 35 contractors, set to make killings, were shut out of the disaster area, saving Worcester residents countless hundreds of thousands of dollars.

D. A transportation racket was broken wide open following BBB investigations. Dishonest travel bureau agencies were operating behind blind classified ads, such as “Going to California? Will take three or four passengers, and luggage.” The suckers who answered did not know that the drivers were making a living out of this racket. Many of the drivers were dope peddlers and many had prison records. They’d pick up passengers in a nice new car, drive to the edge of town– and transfer them to a heap. Often the passengers were dumped at a gasoline station for a “rest stop”– and left there. Robbery and rape were products of the scheme.

E. What about home freezers and frozen food plans? The BBB’s have established the fact that they will not pay for themselves, nor even reduce food bills. Investigations by the BBB’s and law-enforcement agencies forced confessions from some of the worst frozen-food-plan organizations and caused virtually the entire industry to revise its appeal propaganda to the buying public.

In this drive of the BBB to protect the public from being lured into costly contracts through false claims, T. Vincent Quinn, district attorney in Queen’s County, New York, obtained indictments against a freezer-food-plan organization that netted more than $500,000 yearly from the metropolitan New York area. This firm, according to Mr. Quinn, took freezers selling at $235, replaced the manufacturers’ nameplates with their own, and then charged $599.95 plus $18 sales tax and $94 finance charges in a hook-up with their frozen food plan. Their advertised “free stock of food worth from $100 to $125″ with each purchase, proved to be worth about $60, according to Mr. Quinn.

During 1954, 56 bulletins relating primarily to national advertising and advertisers were sent to periodical publishers and broadcasting networks. In addition to these special bulletins to advertising media, the NBBB sent to local Bureaus and Chambers of Commerce more than 200 bulletins covering a wide variety of subjects ranging from arthritis remedies to vending machines.

As a matter of fact, the total 1954 distribution of bulletins and booklets published by the NBBB was 1,626,000.

It was back in the old days– a quarter of a century ago– that the Cleveland BBB coined a slogan:

“BEFORE YOU INVEST, INVESTIGATE.”

Source: The American Mercury, Volume 81, 1955

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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