Crackdown Includes More Than 100 Law Enforcement Actions

The Federal Trade Commission today announced Project FAL$E HOPE$, a federal and state law enforcement sweep targeting bogus business opportunities and work-at-home scams. The crackdown includes more than 100 law enforcement actions by the FTC, the Department of Justice, the United States Postal Inspection Service, and law enforcement agencies in 11 states. In four of the new FTC cases alone, consumers have lost more than $30 million.

“Bogus business opportunities trample on Americans’ dreams of financial independence,” said FTC Chairman Deborah Platt Majoras. “If a business opportunity promises no risk, little effort, and big profits, it almost certainly is a scam. These scams offer only a money pit, where no matter how much time and money is invested, consumers never achieve the riches and financial freedom promised.”

“When the states and the federal government, civil and criminal enforcers, all work together – sharing information, partnering resources, and coordinating our efforts – we can make very significant progress against these unlawful businesses,” said Peter D. Keisler, Assistant Attorney General for the Justice Department’s Civil Division. He went on to describe 23 fraud convictions obtained in 2006, and the sentencing of 25 defendants to a total of over 160 years’ imprisonment for causing over $86 million in consumer loss.

Project FAL$E HOPE$ includes new cases announced today, developments in existing cases, criminal convictions, and state actions, as well as new education materials for advertising sales staff on screening ads for bogus business opportunities.

Federal Actions: The bogus business opportunities targeted in the FTC cases include vending machines, ATM and Internet terminals, display racks for coffee and ink cartridges, Internet-based businesses, envelope stuffing, medical billing, and others.

The FTC today announced nine new cases:

The Results Group – Working out of a boiler room in Phoenix, the operation charged between $99 and $599 to build and host Web sites “affiliated” with the Web sites of Fortune 500 retail companies such as Amazon.com and Overstock.com. Consumers would make money when those retailers paid commissions for sales made through the consumers’ Web sites. In fact, the large retailers were unaware of any such affiliation, and consumers made no money. The FTC charged that the operation falsely represented that purchasers would receive substantial income as well as substantial assistance from an expert staff, and used false and misleading statements to encourage consumers to buy the business opportunity.