Business Crime: USA's FTC targets jobs scams

This is not a simple exercise: "Operation Empty Promises," is a multi-agency law enforcement initiative and on 2 March, the task force announced more than 90 enforcement actions, including three new FTC cases and developments in seven other matters, 48 criminal actions by the Department of Justice (many of which involved the assistance of the U.S. Postal Inspection Service), seven additional civil actions by the Postal Inspection Service and 28 actions by state law enforcement agencies.

"The victims of these frauds are our neighbors – people who are trying to make an honest living," said David C. Vladeck, Director of the FTC's Bureau of Consumer Protection. "Under pressure to make ends meet, they risked their limited financial resources in response to the promise of a job, an income – a chance at a profitable home-based business. But these turned out to be empty promises – and the people who counted on them ended up with high levels of frustration and even higher levels of debt."

Some of the successes are "allegedly" startling in their success.

The following examples are provided by FTC and are unedited:

Ivy Capital Inc. and 29 co-defendants* allegedly have taken more than $40 million from people who paid thousands of dollars believing Ivy Capital would help them develop their own Internet businesses and earn up to $10,000 per month. According to the FTC's complaint, Ivy Capital's telemarketers asked consumers how much credit they had on their credit cards and then talked them into using a substantial portion of their available credit to purchase a business coaching program. But the promised products and services were worthless, the complaint alleged. Ivy Capital's "expert" coaches lacked the promised knowledge and experience, its website-building software programs did not work properly, and the lawyers and accountants the defendants said would provide assistance were nonexistent. Consumers paid up to $20,000 for a business coaching program and related products and services but got very little in return.As alleged in the FTC's complaint, Ivy Capital's telemarketers called people who responded to e-mail and advertising about work-at-home or Internet business opportunities from companies such as Jennifer Johnson's Home Job Placement Program and Brent Austin's Automated Wealth System. The ads originated from fictional companies Ivy Capital created to generate sales leads – potential customers' names and phone numbers – for its operation. The complaint further alleged that in calls that could last for more than an hour, Ivy Capital's telemarketers used high-pressure sales and promised consumers they could make thousands of dollars a week working just 5 to 10 hours. Shortly after signing up for the program, consumers received sales calls from companies affiliated with Ivy Capital offering additional business services, including access to credit, expert tax advice, and other services that could cost thousands of dollars in addition to the original fee. Ivy Capital offered a refund program that, in practice, made it difficult for people to get their money back if they cancelled. According to the FTC complaint, some consumers who repeatedly complained to state and federal agencies were offered refunds, but only if they agreed not to publicly disparage the defendants and kept their refunds confidential.The Ivy Capital defendants allegedly misrepresented their program's earning potential, misrepresented the goods and services they would provide, and failed to fully disclose and honor their refund policy, in violation of the FTC Act. They allegedly misrepresented their services, failed to fully disclose their refund policy, called telephone numbers on the Do Not Call Registry, and did not pay the fee for accessing the Registry, in violation of the Telemarketing Sales Rule.The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the District of Nevada. On February 22, 2011, the FTC obtained an order that temporarily halted Ivy Capital's unlawful practices, froze assets, and appointed a receiver to take control of the corporate defendants.National Sales Group , Anthony J. Newton, Jeremy S. Cooley, and I Life Marketing LLC, also doing business as Executive Sales Network and Certified Sales Jobs, allegedly made false claims to consumers about employment opportunities. According to the FTC's complaint, they advertised nonexistent sales jobs with good pay and benefits on CareerBuilder.com and other online job boards, and their telemarketers falsely told consumers the company recruited for Fortune 1000 employers and had a unique ability to get them interviewed and hired. 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. According to other documents filed in court, the operation has generated more than 17,000 complaints to law enforcement agencies, online forums, and job boards – CareerBuilder.com dropped the company from its website due to complaints – and defrauded consumers of at least $8 million.The Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. On February 22, 2011, the court temporarily halted the company's deceptive practices, froze the defendants' assets, and put the company into receivership. The FTC acknowledges the assistance of the Santa Barbara Police Department, Better Business Bureau of the Tri-Counties, the California Attorney General's Office, and CareerBuilder.com.Business Recovery Services LLC and Brian Hessler allegedly telemarketed products and services they falsely claimed would help consumers recover money they had lost to business opportunity and work-at-home operations, selling hundreds of variations of do-it-yourself kits tailored to particular schemes and priced up to $499. The FTC alleged that they violated the Telemarketing Sales Rule by misrepresenting the nature and effectiveness of their services, and accepting advance payments from consumers for recovering money lost in previous telemarketing transactions without waiting seven business days for the consumers to receive the recovered money, as required by the Rule. According to other documents filed in court, consumers lost an estimated total of $1.5 million in this scheme.The Commission vote authorizing the staff to refer the complaint for civil penalties to the Department of Justice was 5-0. The Department of Justice filed the complaint on behalf of the Commission in U.S. District Court for the District of Arizona in order to bring a permanent halt to these practices. The Department of Justice is also requesting that the court issue a preliminary order to stop the defendants from taking advance fees from consumers for the duration of the case.