There is nothing like a bad economy to bring out the con artists. Cheap advertising on local TV has prompted new versions of an old ploy, seller-assisted marketing scams. The pitch goes something like this: In exchange for up-front fees for sales leads (or software or inventory), you can make thousands of dollars a month just working at home. This offer is irresistible to the unemployed. Buyer beware! Most of these programs are a total fraud.
“Fraudulent marketing schemes change over time, but they share one thing in common: they all involve the use of deceptive or unfair practices to separate consumers from their money,” Robert Pitofsky told Congress in 1998 when he was then Chairman of the Federal Trade Commission. A full transcript of his testimony is available here.
There are many variations on this theme, sometimes called “business opportunity fraud.” Some of these schemes promise to provide leads to seniors who need home care facilities or tenants for group homes. The landlord must make an up-front payment of about $500 for “membership” on a list, a list which may in fact exist nowhere but the bottom of a virtual filing drawer. Leads never materialize. Promoters just rake in the “membership” fees.
Others are pyramid sales schemes, in which the target must sign up friends to become sales “associates,” those must find others, and on and on. So-called “endless chain” schemes are illegal. They not only violate California’s Business & Professions Code and other consumer protection laws, but criminal statutes as well. The prospect may have to contribute more money to the promoter at each level just to stay in the game. This “pay-to-play” feature is particularly insidious, because the scheme hooks people who can least afford it and would never get started if they knew the total cost.
Referring to companies that pitch home-based business opportunities, the Fresno Bee recently quoted current Federal Trade Commission Chairman David Vladeck saying, “Virtually all of them are scams.”
Unsuspecting targets are lured with self-help standards like, “Whatever you can conceive, you can achieve,” or “Have faith in prosperity.” Con artists take cruel advantage of the power of positive thinking just to make a fast buck for themselves.
California laws protect consumers against these scams. For example, certain seller-assisted marketing plans are required to file with the Attorney General’s Office, and in many cases there is a 3-day right of cancellation. Over the years, the California AG has investigated pyramid sales schemes for inventory as diverse as cleaning products and lingerie. The FTC and AG have recently taken an admirably aggressive stand against these bogus business opportunity scams. But the job is simply too big for cash-strapped government to handle alone. Many of these deceptive practices can be challenged through private lawsuits. If you have been cheated by this sort of thing, contact us.
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Home Marketing Schemes Attract Scam-Artists
There is nothing like a bad economy to bring out the con artists. Cheap advertising on local TV has prompted new versions of an old ploy, seller-assisted marketing scams. The pitch goes something like this: In exchange for up-front fees for sales leads (or software or inventory), you can make thousands of dollars a month just working at home. This offer is irresistible to the unemployed. Buyer beware! Most of these programs are a total fraud.
“Fraudulent marketing schemes change over time, but they share one thing in common: they all involve the use of deceptive or unfair practices to separate consumers from their money,” Robert Pitofsky told Congress in 1998 when he was then Chairman of the Federal Trade Commission. A full transcript of his testimony is available here.
There are many variations on this theme, sometimes called “business opportunity fraud.” Some of these schemes promise to provide leads to seniors who need home care facilities or tenants for group homes. The landlord must make an up-front payment of about $500 for “membership” on a list, a list which may in fact exist nowhere but the bottom of a virtual filing drawer. Leads never materialize. Promoters just rake in the “membership” fees.
Others are pyramid sales schemes, in which the target must sign up friends to become sales “associates,” those must find others, and on and on. So-called “endless chain” schemes are illegal. They not only violate California’s Business & Professions Code and other consumer protection laws, but criminal statutes as well. The prospect may have to contribute more money to the promoter at each level just to stay in the game. This “pay-to-play” feature is particularly insidious, because the scheme hooks people who can least afford it and would never get started if they knew the total cost.
Referring to companies that pitch home-based business opportunities, the Fresno Bee recently quoted current Federal Trade Commission Chairman David Vladeck saying, “Virtually all of them are scams.”
Unsuspecting targets are lured with self-help standards like, “Whatever you can conceive, you can achieve,” or “Have faith in prosperity.” Con artists take cruel advantage of the power of positive thinking just to make a fast buck for themselves.
California laws protect consumers against these scams. For example, certain seller-assisted marketing plans are required to file with the Attorney General’s Office, and in many cases there is a 3-day right of cancellation. Over the years, the California AG has investigated pyramid sales schemes for inventory as diverse as cleaning products and lingerie. The FTC and AG have recently taken an admirably aggressive stand against these bogus business opportunity scams. But the job is simply too big for cash-strapped government to handle alone. Many of these deceptive practices can be challenged through private lawsuits. If you have been cheated by this sort of thing, contact us.