Federal and state law enforcement agencies are cracking down on scammers who promise fake business opportunities or easy money schemes.
The Federal Trade Commission, the Department of Justice, the U.S. Postal Inspection Service and 11 state attorneys general today announced more than 90 enforcement actions in “Operation Empty Promises.” The target: those who falsely promise guaranteed jobs and opportunities to “be your own boss” to vulnerable consumers.
“In these difficult times, fraudsters find their window of opportunity,” said Tony West, assistant attorney general for the Civil Division of the Department of Justice, speaking during a press conference today at the FTC. “We will catch them, hold them accountable and put them out of business.”
North Carolina Attorney General Roy Cooper added, “Consumers often think they’re buying into a great way to make a living, but often they’re paying out far more than they’ll ever make,” he said. “It’s the golden rule: If something sounds too good to be true, it probably is.”
David Vladeck, director of the FTC’s Bureau of Consumer Protection, shared examples of recent cases, including one against Ivy Capital Inc. and 29 co-defendants. The defendants allegedly took more than $40 million from people who paid thousands of dollars believing the company would help them develop their own Internet businesses and earn up to $10,000 per month.
Vladeck said the company’s promised products and services were without value, and advice from so-called “expert” coaches was “worthless babble.” The Web site-building software didn’t work, and the lawyers and accountants the defendants said would provide assistance were nonexistent, he said.
The FTC sued Ivy in U.S. District Court for the District of Nevada, and on Feb. 22 the agency obtained an order that temporarily halted Ivy Capital’s unlawful practices, froze assets and appointed a receiver to take control of the corporate defendants.
Vladeck also described the case against National Sales Group, which allegedly advertised nonexistent sales jobs with good pay and benefits on CareerBuilder.com and other online job boards.
The FTC alleged that the defendants charged fees they said covered background checks and other services, and often overcharged, taking $97 from consumers who had agreed to pay $29 or $38. They also charged some consumers recurring fees of $13.71 or more per month without their consent.
The FTC sued in the U.S. District Court for the Northern District of Illinois, again winning an order on Feb. 22 to shut down the company and freeze its assets.
White-collar specialist Jeff Ifrah of Ifrah PLLC in Washington called the crackdown “definitely a warning shot.” He added: “In future cases, I expect the FTC will be more aggressive, because everyone is on notice.”
Ifrah said his clients in the past complained about the “lack of information about what the FTC considered subject to enforcement,” and that this initiative helps clarify what’s over the line.
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