Posted on Thursday, March 17, 2011
WASHINGTON, D.C. -- Tom Bernard was swayed by a simple e-mail pitch in June 2009: he could make money from home by building his own web site, using the expert software and accounting assets from a company called Ivy Capital.
Out of work and desperate for income, he reluctantly agreed to pay $6,880 on his credit card for a series of online seminars. When his learning didn't live up to his standards, he spoke to another company counselor who suggested he pay another $5,600 for one-on-one coaching sessions.
But the training never materialized. After months of phone calls and e-mails seeking refunds, he was told that a refund request could not be processed after more than three days.
"How could anyone possibly know so quickly that they wanted to quit?" he asked.
Bernard, who lives in California and helped the Federal Trade Commission build a case against Ivy Capital, is now stuck with a $12,000 credit card balance, $200 monthly interest payments and no job. He's among legions of desperate job seekers lured in by unscrupulous scam operations promising money and opportunity in bleak economic times.
Complaints about bogus employment scams have been on the rise, according to the FTC and state prosecutors, who on Wednesday announced a string of indictments and civil enforcement actions against such operators.
The businesses are part of a cottage industry known as "last dollar frauds," which target the meager savings held by economically-distressed people. Many of these scams have built websites that look like legitimate businesses.
"They're targeting people who are vulnerable financially because they're out of work, or they don't have enough work," said David Vladeck, director of the FTC's Bureau of Consumer Protection. "They're deeply in debt, and what these scams do is aim to take the last dollar out of their wallets."
In total, the FTC announced more than 90 civil enforcement actions that enjoined companies from continuing to operate. And the Justice Department has brought 48 criminal cases against owners of such businesses. (Check the FTC's full list of scams here.)
Scams identified by the FTC include Ivy Capital's Internet business opportunity programs, which marketed software that never worked and non-existent business coaches; and a pitch from Darling Angel Pin Creations, which charged customers hundreds of dollars for kits to build custom angel pins.
The catch for the angel pins, according to a complaint filed by the FTC, was that consumers made no money until the pins were approved for quality. Virtually all were rejected by the company.
In a particularly egregious case filed recently in Arizona, a company called Business Recovery Services is alleged to have assured customers that it could help them recover money they lost by participating in other bogus work-at-home operations.
The company would sell kits and other resources to help consumers for hundreds of dollars, but the materials were often publicly available -- some from the FTC's own web site.
Although some business owners are facing prison sentences, the outcomes for those who were defrauded is often questionable. The FTC can seize assets by bringing a civil enforcement action, but victims are often left without recompense.
"When consumers lose their monies in frauds like this, it is very difficult to make them whole," said Tony West, Assistant Attorney General for the Justice Department's civil division. "In more cases than not, consumers cannot get all their money back."
Chris Kirkham, THE HUFFINGTON POST