December 09, 2012 10:26 AM
On Nov. 15, the Federal Trade Commission, which has refused to surrender its consumer protection turf to the Bureau of Consumer Financial Protection, announced the filing of seven law enforcement actions against companies selling ?business opportunities.? ?
This, according to the FTC, brings to 70 the number of such actions brought by the FTC and its law enforcement partners ? other government agencies participating in something called Operation Lost Opportunity. These other agencies are the Department of Justice, the U.S. Postal Inspection Service and state attorneys general from Indiana, California, Arizona, Ohio and Colorado. The FTC says more than 2 million people have been victims of fraudulent business opportunity sales promotions.
These law enforcement actions are based on allegations of deceptive advertising and violations of the FTC?s Business Opportunity Rule. That rule requires sellers of business opportunities to give prospective purchasers a one-page disclosure form that, among other things, includes information about past legal actions against the seller involving misrepresentation, fraud, securities law violations or unfair or deceptive practices. Sellers who make statements about the amount of money purchasers can earn are required to provide detailed information supporting the claim. The form must also include contact information for 10 people who have purchased a business opportunity from the seller. The form, in bold face type, states: ?You may wish to contact the people below to compare their experience with what [we] told you about the business opportunity.? ?
Not surprisingly, sellers of business opportunities intent on committing fraud have been known to ignore the Business Opportunity Rule. To give you a glimpse of what Operation Lost Opportunity is up against, here?s a brief description of allegations the FTC has made in four of the actions it recently filed:
? The Online Entrepreneur Inc. Customers here were offered a no-risk, money back guaranteed opportunity to earn commission income (up to $15,000/month) by running a website generating sales for ?big companies? such as Prada, Sony, Luis Vuitton and Verizon. The websites didn?t work and refund requests were ignored.
? Shopper Systems Inc. (doing business as ? get this ? The Veracity Group, L.P.). This company sold questionable mystery shopper opportunities and then lured its customers into buying another business opportunity ? operating websites generating unauthorized credit card charges.
? Career Advancement Group. This company ran bogus ads in newspapers for jobs with the U.S. Postal Service.? When people responded to these ads, rather than obtaining employment, they were talked into paying $100 for a booklet containing general job-seeking advice.
? Smart Tools LLC. This company sold a home-based business opportunity (income up to $38,943 a year) as a federal mortgage loan insurance refund processor. Its customers, for a fee, received lists of potentially eligible refund recipients. The Department of Housing and Urban Development offers the same lists online for free.
You can learn more about Operation Lost Opportunity, and other examples of free enterprise run amuck, at www.ftc.gov.
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Jim Flynn is a private attorney at Flynn Wright & Fredman LLC. Reach him at moneylaw@jtflynn.com.?
Source: http://www.gazette.com/articles/money-148220--.html
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