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FTC Announces More Than 70 Actions Against Biz-Op Schemes

21 Nov, 2012 By: Doug McPherson

WASHINGTON – Last week, the Federal Trade Commission (FTC) announced a major crackdown on scams that falsely promise jobs and opportunities to “be your own boss” to job seekers. The actions are the first cases brought under the FTC’s recently updated Business Opportunity Rule, which requires business opportunity sellers to provide specific information to help consumers evaluate a business opportunity and provides a simple one-page disclosure form.

The FTC alleges such scams have taken millions of dollars from more than 2 million consumers when defendants lured them with deceptive offers to help them start businesses as mystery shoppers, credit card processors, website operators and government insurance refund processors. The defendants allegedly committed multiple violations of the FTC Act, including misrepresenting how much money people could make through the business opportunity.

“The scam artists the FTC shut down lied to people trying to make an honest buck, and robbed them of their money as well as their hopes,” David C. Vladeck, director of the FTC’s Bureau of Consumer Protection, said in a release.

The amended Business Opportunity Rule requires business opportunity sellers – including work-at-home offers such as envelope stuffing – to disclose, in a one-page document: the seller’s identifying information; whether the seller makes a claim about the purchaser’s likely earnings (and, if the seller checks the “yes” box, the seller must provide information supporting any such claims); whether the seller, its affiliates or key personnel have been involved in certain legal actions (and, if yes, a separate list of those actions); whether the seller has a cancellation or refund policy (and, if yes, a separate document stating the material terms of such policies); and a list of persons who bought the business opportunity within the previous three years.

Misrepresentations and omissions are prohibited under the rule, and for sales conducted in languages other than English, all disclosures must be provided in the language in which the sale is conducted.

The operation includes a $478 million judgment the FTC obtained in August 2012 against the DRTV-marketed “John Beck Amazing Profits” product; the return of more than $5 million to consumers this year from FTC actions against Infusion Media Inc., AED Inc. and Abili-Staff Ltd.; and the FTC’s case, filed in May, against North American Marketing and Associates LLC.

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