FTC, Justice Department Take Aim at Business Opportunity, Employment Scams

This posting was written by Sarah Borchersen-Keto, CCH Washington Correspondent.

The Federal Trade Commission (FTC), the Department of Justice, the Postal Inspection Service, and state law enforcement agencies announced a major law enforcement sweep and education effort aimed at targeting bogus business opportunity employment and money-making services.

At a March 2, 2011 briefing, David Vladeck, Director of the FTC’s Bureau of Consumer Protection, outlined “Operation Empty Promises,” the latest effort in an ongoing crackdown on scams that “exploit the misfortune of those who have seen their jobs disappear or their incomes shrink as a result of the economic downturn.”

Promises of Jobs, Business Opportunities

Vladeck said state and federal law enforcement agencies have brought more than 90 actions against alleged scammers targeting financially-strapped consumers with promises of jobs and opportunities to “be your own boss.”

He described one scheme perpetrated by Ivy Capital, whose telemarketers told consumers they could start their own profitable Internet business with the help of the company’s coaches and consultants.

Ivy Capital persuaded people to max out their credit cards to pay the expensive start-up fees, typically thousands of dollars, while promising that they could make between $3,000 to $10,000 per month, Vladeck explained.

Meanwhile, National Sales Group targeted people looking for work by creating a false impression that the company itself was hiring, or was recruiting or recommending employees on behalf of other companies.

“While they were promising work, they were working over their victims,” Vladeck said. The company not only failed to provide jobs, but also regularly made unauthorized charges to people’s credit cards, driving them deeper in debt, Vladeck added.

Increase in Complaints

North Carolina Attorney General Roy Cooper noted that complaints to his office about business opportunity, work-at-home schemes, and other employment related scams were up 11 percent last year. “We’re looking closely at business opportunities that seem to offer false hopes, and also reaching out to educate consumers on how to recognize and avoid fraud,” he said.