FTC Crackdown on Get Rich Quick, Work From Home, and Biz Op Schemes, Sends Message

Who thinks screwing consumers is a smart thing to do. Only the scammers.

The Federal Trade Commission is concentrating efforts to protect consumers from fraudulent business opportunity programs and stomping on some of them very hard.

As part of a coordinated attack on deceptive or bogus business opportunity programs, stated and federal agencies have been participating in Operation Lost Opportunity.

“The scam artists the FTC shut down lied to people trying to make an honest buck, and robbed them of their money as well as their hopes,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “We brought these cases on behalf of millions of people who wanted to jumpstart their incomes and rebalance their budgets – people who placed their hopes in a business opportunity so they could better provide for their families.”

The defendants in the FTC cases announced today allegedly committed multiple violations of the FTC Act, including misrepresenting how much money people could make through the business opportunity. The defendants in six of the cases* also allegedly violated the amended Business Opportunity Rule.

The FTC has announced the following enforcement actions:

Shopper Systems, LLC; Revenue Works, LLC, also doing business as Surplus Supplier; EMZ Ventures, LLC; The Veracity Group, LP; Brett Brosseau; Michael Moysich; and Keith R. Powell allegedly sold the business of providing mystery shopping services to retailers, offering lists of merchants seeking mystery shoppers in the buyer’s area. According to the FTC’s complaint, consumers who agreed to buy were lured into buying another business opportunity – operating a webstore – that did nothing but draw them into negative-option programs (the seller interprets consumers’ silence or inaction as permission to charge them) with unforeseen, recurring monthly charges to their credit cards. Using text messages, phone calls, websites, ads in periodicals, and ads on online employment websites, the defendants allegedly falsely claimed people could earn an average of $50 per mystery shopping assignment with no limit to the number of assignments. They offered training for $2.95 and a seven-day trial period for the mystery shopping program, and subsequently charged $49.95 per month for a list of interested merchants, with an option to cancel at any time without further obligation. The defendants charged $3.95 for the webstore opportunity, with a 14-day trial period and $49.95 per month, and often enrolled consumers without their awareness. Consumers who canceled the mystery shopper membership were still billed monthly $49.95 charges and were later told they had to cancel both programs, which is how many consumers first learned they had been enrolled in the second program.

On October 31, 2012, the court issued a temporary restraining order that halted the defendants’ deceptive practices, froze assets, and put the companies into receivership temporarily. At a recent hearing, the Court indicated that it would continue these provisions as to defendants Shopper Systems, LLC, Surplus Supplier, and Michael Moysich. Defendants EMZ Ventures, LLC and Brett Brosseau agreed to a preliminary injunction that also continues the terms of the order.

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American Business Builders LLC; ENF LLC, also doing business as Network Market Solutions; UMS Group LLC; United Merchant Services LLC; Universal Marketing and Training LLC; Unlimited Training Services LLC; Shane Michael Hanna, also known as Shane Michael Romeo; and Stephen Spratt took tens of thousands of dollars from consumers, falsely promising that they would set up a profitable credit card processing business for the consumers. According to the FTC’s complaint, the defendants told consumers that, for a fee typically ranging from $295 to $495, they could operate a home-based business selling the defendants’ payment processing services, credit card terminals, and merchant cash advances to merchants in the consumers’ local communities. The defendants claimed consumers would earn substantial income from this business opportunity in several ways, including by earning a commission on each payment processing terminal sold or leased, a percentage of each merchant cash advance, and a percentage of each merchant’s monthly sales volume. The defendants also sold consumers merchant leads for the consumers’ businesses, promising they would conduct telemarketing sales campaigns on the consumers’ behalf that would generate customers and income for the business. The defendants typically charged $10 per lead, with some consumers paying up to $40,000. The FTC alleged that the defendants did not obtain customers for consumers, and that consumers did not earn any income.

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The Online Entrepreneur Inc., also doing business as The Six Figure Program and Ben and Dave’s Program; Ben and Dave’s Consulting Associates Inc.; Benjamin Moskel; and David Clabeaux sold consumers a no-risk, money-back guaranteed opportunity to make money via their own website. According to the FTC’s complaint, they claimed that, for a $27 fee, they would enable consumers to affiliate with the websites of “big companies,” including Prada, Sony, Louis Vuitton, Verizon, and earn commissions when Internet users clicked through the consumers’ websites and bought something from the “big” retailers. After buying the programs, consumers found they could use their website only if they purchased a domain name and hosting services, but some consumers who paid the extra money could not get their website to function, and those whose websites did work did not earn the promised income of up to $15,000 per month or at least up to $15 within seven days. Consumers allegedly found it hard to reach the defendants for assistance, and those who sought refunds typically got an automated response saying someone would call them within 24 hours. The FTC alleged that refund requests were often ignored, even after consumers contacted the Better Business Bureau.

Career Advancement Group. According to the FTC’s complaint, the defendants have operated a nationwide job scam by placing ads in classified sections of newspapers and on job search websites that appear to be postings for jobs with the U.S. Postal Service. In fact, however, the defendants’ ads are not a legitimate job opportunity, and consumers who call the defendants to apply for a Postal Service job are tricked into spending over $100 for what turns out to be a booklet of general job-seeking advice, the FTC alleges. The defendants are Career Exams Inc., also doing business as Career Advancement Group; O’Brien Marketing Inc., also doing business as O’Brien Consulting and O’Brien Answers; Jeryn B. Lee; and Derek Jackson.

Smart Tools LLC and Kirstin Hegg sold a home-based business opportunity that promised purchasers they could become “Government Insurance Refund Processors.” According to the FTC’s complaint, Smart Tools and Hegg mailed thousands of postcards falsely claiming consumers could earn up to $38,943 per year – just by finding those eligible for refunds of their mortgage loan insurance premiums and charging them a fee to tell them how to get those refunds. Consumers were persuaded to pay $3.91 for a manual describing how to find people who are owed refunds, in addition to paying a recurring monthly charge of $29.99 (after a free trial period) for access to lists of refund-eligible persons and some refund-processing software. Although Smart Tools and Hegg led consumers to believe that the lists of those eligible for refunds were not available free of charge, they allegedly buried on page 8 of their 31-page manual an inadequate, inconspicuous disclosure that the Department of Housing and Urban Development offers the same lists for free online.

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Rebate Data Processor. Christopher Andrew Sterling, doing business as rebatedataprocessor.com, sterlingvisa.com, and creditcardworker.com, and via links to those websites from other websites, allegedly claimed consumers could earn from $200 to more than $1,000 per day by processing applications for rebates or credit cards offered by certain marketers. In fact, all Sterling allegedly provided, if anything, was information on how to become an affiliate marketer by creating your own Internet ads for credit card offers. The ads would generate income only if someone saw an ad and made a purchase. According to the FTC’s complaint, Sterling promised that, for a minimum fee of nearly $50, he would provide customers for the data processing services. One of his websites stated, “Rebate Processing Jobs – You Can Process Simple Customer Rebates from Home and Earn $15 each GUARANTEED!” His claims included a statement that people could earn “$15,526 in 29 days.” In fact, few, if any, consumers were likely to make the kind of income Sterling claimed, the complaint alleges, because he misrepresented the nature of the business opportunity, because affiliate marketing is complicated and highly competitive, and because Sterling sometimes failed to provide any information in return for a purchase.

The Zaken Corp. and Tiran Zaken used direct mail and a website to sell a plan that, for a fee of $148 or more, supposedly would enable consumers to earn thousands of dollars per month. Consumers would find businesses with excess inventory to sell, and the defendants would find a buyer for the inventory and pay consumers a “finder’s fee” of half the sales price. The defendants’ mailers asked, “What Would You do With an Extra $5,000 (or more) a Month?” and falsely claimed consumers would earn at least $4,000 or more in the first 30 days and, on average, $4,280 per deal. The FTC alleged that consumers did not earn substantial income from this business opportunity.

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