Especially in a tough economic climate, it’s an attractive claim. But as demonstrated by Operation Empty Promises — a multi-agency law enforcement initiative announced today — many companies promoting online opportunities, steady employment, or home business success promise the golden goose, but deliver a goose egg.
Operation Empty Promises includes three new FTC cases and developments in seven other matters, 48 criminal actions by the Department of Justice (many of which were brought with the help of the U.S. Postal Inspection Service), seven additional civil actions by the Postal Inspection Service, and 28 actions by state enforcers.
In one pending case, the FTC has charged that Ivy Capital and 29 co-defendants have taken more than $40 million from people looking to start their own internet businesses. According to the FTC’s complaint, here’s how the operation worked: Ivy Capital’s telemarketers asked people how much credit they had on their credit cards and then talked them into using a big chunk of it — as much as $20,000 — to buy a business coaching program. The FTC says that Ivy Capital’s so-called experts didn’t have the promised know-how and their website-building software didn’t work properly. Last week, a federal judge in Nevada temporarily halted Ivy Capital’s unlawful practices, froze its assets, and appointed a receiver to take control of the corporate defendants.
Other cases run the gamut of business opportunities challenged as deceptive: envelope-stuffing and postcard-labeling operations, a company promising the inside track on postal jobs, services (one advertised as “scam free”) promising access on internet job boards to well-paying positions, a company that claimed to offer roles as TV and movie extras, outfits that promised a heavenly income from assembling angel pins and other merchandise at home – and even one operation that sold products and services they claimed would help people recover money they’d already lost to other business opportunity and work-at-home scammers.
Say you’re interested in a career change or some supplemental income. FTC attorney Dan Hanks has tips for entrepreneurs on evaluating business opportunities:
Tomorrow: More on spotting a business opportunity rip-off.
The author’s views are his or her own, and do not necessarily represent the views of the Commission or any Commissioner.