FTC, two states go after work-from-home schemes
Two work-from-home schemes that allegedly duped consumers out of millions of dollars were shut down after an investigation by the Federal Trade Commission and the attorneys general of New York and Florida. The FTC announced settlements in both cases today.
The two alleged scams involved allegedly deceptive work-from-home business promotions that operated under the names "The Tax Club" and "American Business Builders."
In The Tax Club case, which the two states also worked on, the ruse involved claims that those who bought in would get services that would help their businesses succeed, including "coaching" and assistance in forming corporations. Those who took the bait paid$1,000 to $3,000 followed by smaller recurring payments to be so-called members of the club. Victims were also subject to a barrage of sales calls to buy additional tools that would supposedly help their home-based businesses.
Defendants in the case agreed to surrender $15 million in assets to settle charges filed against them, without admitting any wrongdoing. Most of the actual settlement, totaling more than $250 million, among the defendants, was suspended due to their inability to pay, the FTC said. The assets forfeited include property, bank accounts and investments, the FTC said. And the defendants were banned running similar operations. Victims will be compensated from the settlement, New York Attorney General Eric T. Schneiderman said.
American Business Builders was accused of pitching consumers on earning money by selling or leasing credit card processing terminals to businesses. It costs $295 to $495 to get started, and then an additional $10 per lead for lists of potential businesses for the terminals.
Some of those who bought in spent up to $40,000, the FTC said. And they neither got viable leads nor made money. Defendants agreed to forfeit a 2013 Cadillac Escalade, some property and bank accounts to satisfy the $5.4 million settlement, much of which will also be suspended due to lack of funds.
The lure of making big money by being your own boss can be a powerful one. That has led to numerous schemes to get consumers to buy into similar programs that make promises but don't deliver.
"Before you put money into a work-at-home business opportunity, ask questions to determine if it is legitimate," said Jessica Rich, director of the FTC's Bureau of Consumer Protection.
Here are several work-from-home schemes the FTC says to watch out for:
- Envelope stuffing: You supposed get paid to stuff envelopes, but instead you find out the business is selling others on stuffing envelopes.
- Rebate processing: You pay money to supposedly learn how to process rebates from home, but you don't actually get any rebates to process.
- Online search: You're told you can earn thousands of dollars a month doing searches on your home computer, if you pay a fee with your credit card, which is what the scammers really want.
- Medical billing: You pay money to learn how to run your own business sending bills for doctors' offices and end up paying for software as well as lists that lead nowhere.
