MLM Education

FTC’s Project Fal$e Hope$

Federal and state law enforcement officers have been conducting sweeps targeting bogus business opportunities and work-at-home scam as part of the Federal Trade Commission’s Project Fal$e Hope$.

I thought I’d mention this because it’s interesting to see what businesses the FTC is cracking down on, since it doesn’t seem to do anything about the garden-variety MLMs (which appear legal to many, but that legality could surely be challenged).

The Justice Department’s Civil Division reported 23 fraud convictions in 2006, the sentencing of 25 criminals to over 106 years in prison, and over $86 million in consumer losses due to those frauds. Nine new business opportunity scam cases from the FTC include:

  • The Results Group – web hosting scam that falsely claimed participants would receive commissions from sites such as when products were purchased
  • HBG PUblications – an envelope-stuffing scam
  • EDI Health Claims Network – a medical billing scam in which the company promised to give people leads for potential clients; after paying almost $6,000 each the participants were told to go find their own clients
  • Holiday Ink – sold participants ink cartridge display stands for $7,950 (three racks) to $55,950 (20 racks), while misrepresenting locations available for racks
  • Money Making Secret – for fees of $47 to $129, particpants were told they’d receive information on money-making secrets, but the programs for making the big money were bogus
  • Route Wizard – participants purchased candy vending machines for $7,000 to $59,000, and were promised prime locations that had been secured; availlable locations advertised were false
  • Fidelity ATM – the company lied about locations secured for ATMs and misrepresented facts about the opportunity
  • Business Card Experts – advertised that participants could earn $150,000 in the first year by selling color business cards with an investment of $10,000 to $25,000; the company used false income claims
  • Mid-South Distributors – greeting card display racks were sold (for $8,500 or more) with false earnings claims

The list goes on and on, but you get the general idea. The FTC is focusing on false income claims misrepresentations about the business.

Now all the FTC needs to do is get real about companies like Mary Kay, Amway (Quixtar), Arbonne, and the like, and admit that those are bogus business opportunities too. They might appear legal to your average consumer. However, the representatives of these companies regularly misrepresent earnings and make false claims about sales of products. It is time to hold the companies like Mary Kay Inc. accountable for the actis of its representatives, particularly since the corporation is well aware of these things. Make these pyramid schemes clean up their act!

As for the FTC’s proposed Business Opportunity Rule? It will be a long time before the FTC makes a move on that issue. In my opinion, it was a feel-good proposal that made the FTC appear as if it was doing something. Any real changes are doubtful. If any changes are made, it will probably be a year or more before anything will take effect.


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